SAN JOSE, Calif. (KRON) — Several weeks after San Francisco became the first US city to ban AI-powered rent-fixing technology, which later led to a federal investigation, its neighbors in the South Bay are now attempting to follow suit.
On Wednesday, San Jose City Council member Peter Ortiz proposed a “groundbreaking” memo to the Rules Committee, calling for a ban on apps that facilitate price fixing in the housing market through artificial intelligence.
“Artificial intelligence should be a tool for innovation and progress, not for creating monopolistic practices that drive up housing costs,” Ortiz said. “Our goal is to protect renters in San Jose from unfair pricing strategies and ensure a competitive and transparent rental market.”
According to the San Francisco Board of Supervisors, the first to ban the software, AI technology “enables price collusion among large corporate landlords for the purpose of rent-gouging.” By having access to a large landlord data set, the technology maximizes the possible rent hike based on local conditions.
“We’ve noticed dramatic increases in rent for new tenants and new tactics to harass and displace long-term tenants, who are particularly vulnerable because their homes are viewed by real estate investors as underpriced,” Lenea Maibaum, a tenant organizer for the Housing Rights Committee and Veritas Tenants Association member, said.
This move comes in response to growing concerns over the misuse of AI technology by companies such as RealPage. According to lawsuits from tenant groups in San Jose, companies like RealPage — often referred to as “software 1” — allegedly manage 66% of multifamily units in the area.
According to the SF Board of Supervisors, RealPage executives told investors that its software has driven “double-digit increases in rent, higher turnover rates, and increased vacancy rates.”
In a statement regarding the San Francisco ban, RealPage told KRON4 that they do not “set” a landlord’s rent but rather advise them on potential rent changes.
The ordinance’s misplaced focus on nonpublic information is a distraction that will only make San Francisco’s historical problems worse by banning an important component of pricing technology that RealPage uses responsibly and that benefits residents, property managers, and the rental housing ecosystem as a whole… We encourage the Board of Supervisors to identify real solutions to increase the supply of rental housing and access to affordable housing.”
Jennifer Bowcock, Senior Vice President, Communications & Creative at RealPage
On Aug. 23rd, the U.S. Department of Justice announced its lawsuit against RealPage for rental price-fixing, together with the Attorneys General of California and seven other states.
“Some corporate landlords collude with each other to set artificially high rental prices, often using algorithms and price-fixing software to do it,” said Vice President Kamala Harris at a campaign event on Aug. 16 last month. “It’s anticompetitive, and it drives up costs. I will fight for a law that cracks down on these practices.”
The proposed San Jose ordinance will be reviewed by the Rules Committee later Wednesday at 2:00 p.m. in the Council Chambers at 200 E Santa Clara St.
