Rant: Algorithmic drive is inflating rental costs. It's high time to halt this phenomenon.
The U.S. Department of Justice, along with several states, has filed a lawsuit against RealPage and six major landlords for using algorithmic pricing schemes that are alleged to have harmed renters. Meanwhile, New York state is sponsoring a bill (S.7882/A.1417) in the Legislature to outlaw price-fixing algorithms in the rental housing market.
If passed, the bill would be the first of its kind in the nation to address the issue of price-fixing algorithms in the rental housing market. The proposed legislation is intended to ensure fairness and transparency in the rental housing market by preventing landlords from using algorithms to artificially inflate rents or reduce housing supply.
The use of these algorithms enables competing landlords to collude by sharing proprietary information to set rental prices, ultimately inflating the value of their properties. If landlords were meeting in person to discuss their prices, make changes based on what they learned from each other, and agree on a set of prices that most benefits them, then it would be considered price fixing and illegal under both federal and state law.
However, the use of algorithms by landlords instead of directly negotiating with tenants is a growing concern. Tenants in New York City have reported notable increases in their rents and abnormally long apartment vacancy periods due to landlords using this technology. The algorithm considers market data, including private pricing information provided by real estate companies, and recommends rents for landlords to charge prospective tenants.
The 2022 ProPublica investigation discovered that landlords in New York City are using real estate management software that sets rental prices using algorithms. The bill aims to update New York's antitrust laws by prohibiting landlords and property managers from setting rents or determining changes to rents based on algorithm-driven recommendations that take into account private pricing information.
The bill also prohibits companies from knowingly operating platforms that facilitate collusive algorithmic rent-setting or doing so with reckless disregard. The federal government's decisive action on this issue under President Joe Biden is unlikely to continue under the current administration, making it essential for New York state to take action.
To find more information about this specific bill, you can visit the official New York State Senate or Assembly websites and search for bill number S.7882 or A.1417. These sites provide bill texts, summaries, legislative history, and status updates. You can also use legal and government databases like LegiScan, GovTrack, or OpenLegislation to look up detailed bill information. Checking news outlets or housing advocacy organizations’ websites and reports often covers significant legislative proposals in housing policy. Additionally, contacting New York State legislators' offices or relevant committees for more insights or public statements on the bill may be helpful.
The use of price-fixing algorithms by landlords is harming renters and significantly impacting their ability to afford their apartments. Given the housing crisis in New York City, it is unconscionable for landlords to employ algorithms to inflate rents on hard-working New Yorkers. A 2024 analysis by the White House Council of Economic Advisors found that anticompetitive pricing technology charged tenants across the country an extra $3.8 billion in rent in 2023 alone. The bill, if passed, would make clear that rent price-fixing via artificial intelligence is against the law and set clear boundaries against behaviors that lead to anticompetitive practices and price fixing.
- The bill (S.7882/A.1417) in New York's Legislature aims to address the issue of price-fixing algorithms in the rental housing market, seeking to outlaw such practices and ensure fairness and transparency by preventing landlords from artificially inflating rents or reducing the housing supply.
- To combat the harmful use of price-fixing algorithms by landlords, this proposed legislation intends to update New York's antitrust laws, prohibiting landlords and property managers from setting rents or determining changes to rents based on algorithm-driven recommendations that take into account private pricing information.
