San Francisco Landlords Use AI to Set Higher Rents, City Bans Software

Amid already high rental costs, some San Francisco landlords have been using artificial intelligence software to increase rent prices further. In response, San Francisco supervisors swiftly banned certain AI rental software during their first discussion on the issue.

The Controversial AI Software

The software in question, RealPage and Yardi, compiles landlord data to determine optimal rent prices using competitors' rental data. Concerns arise from potential collusion among landlords to keep prices high. The software has been linked to increased rent, vacancy, and eviction rates, and has faced lawsuits in other parts of the country.

Supervisor Aaron Peskin’s Stance

"Banning algorithmic price gouging is pro-housing policy," stated Supervisor Aaron Peskin. "Let’s build housing for renters, not for real estate investors."

Legal and Market Implications

Earlier this year, two major companies using RealPage software settled claims of artificially inflating rental prices in U.S. District Court in Tennessee. Lee Hepner, senior legal counsel for the American Economic Liberties Project, highlighted that RealPage software influences 8% of rental units across the U.S., leading to significant market manipulation.

RealPage's Defense

RealPage claims its software is used by too few landlords in San Francisco to cause collusion. The company asserts that its products can suggest rent adjustments but do not enforce them, benefiting both landlords and residents. RealPage argues that allegations against it are unfounded.

Awaiting Final Approval

The ban on AI rental software awaits final approval by the supervisors after their August recess, according to a representative from Peskin's office.