San Jose housing advocates say corporate property owners are taking advantage of the latest artificial intelligence tech to drive up rent prices — and renters are feeling the financial pain.
Councilmember Peter Ortiz has proposed a policy to restrict the sale and use of “algorithmic devices” to set rents or manage home occupancy levels in the city. The proposal comes after San Francisco passed a similar rule in light of the Justice Department suing software provider RealPage for allegedly allowing its partnering landlords to coordinate housing prices by using private data.
“We know about 66% of multi-family units are managed by property owners who use this software, so they essentially utilize the software to artificially inflate rent,” Ortiz told San José Spotlight. “We should not allow property owners to plot against their renters.”
Software provided by RealPage undermines the free housing market by offering property owners AI-powered tools and data that gives them an unprecedented advantage against smaller landlords, U.S. Attorney General Merrick Garland said, and this could lead to increased rents and home prices.
SV@Home Policy Director Mathew Reed said local landlords who manage less than a handful of properties and can’t afford the emerging tech will be undermined by larger corporations who can now analyze their entire business model at the click of a button.
“The big players are not only potentially working with each other, but they’re likely cutting out good actors in the market,” he told San José Spotlight. “It’s hurting the smaller and mid-size property owners and renters as well.”
Private equity firm Thomas Bravo purchased RealPage for nearly $10.2 million in 2020 just months after the software company announced its now-controversial AI revenue management tool that “unlocks hidden yields in multifamily assets.”
Ortiz said he became concerned about the software’s potential use in San Jose after law enforcement officials and renters across the country began accusing RealPage of allowing property owners to collude in price fixing with its software. His proposed policy to restrict use of such software in setting rent prices and occupancy levels is being analyzed by city employees before it comes to the City Council.
Sacred Heart Policy Director Matt King told councilmembers he is supportive of the proposed legislation.
RealPage did not respond to a request for comment.
Anil Babbar, California Apartment Association senior vice president of local public affairs, told councilmembers there is no evidence such software tools have impacted San Jose.
“Beyond the lack of data to explain the ban, this memo would require additional staff time to enforce the ban — a ban we don’t know exactly how we would enforce because we don’t know if a rent increase or decrease is impacted by the tool or the owners own decisions,” Babbar said at a Sept. 4 meeting.
A California Apartment Association spokesperson told San José Spotlight they had no comment beyond the initial statement given to councilmembers.
Huascar Castro, housing and transportation director for Working Partnerships USA, said the precedent surrounding the multiple antitrust complaints and lawsuits should be enough for San Jose to consider the policy. Thousands of renters are subjected to housing price hikes because of the latest property management technology used by large landlords, he said, and it shouldn’t be allowed to happen in San Jose.
“This is an opportunity for San Jose to do its part given the mass amounts of housing stock that is controlled by corporate real estate,” Castro told San José Spotlight.
Contact Vicente Vera at [email protected] or follow @VicenteJVera on X, formerly known as Twitter.
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