In the past year, the cost of rent in Southern California has been rising at an overwhelming rate across the board. 

Experts say that the reasoning behind this is a new system which many landlords have adopted in order to profit off of AI. 

This new system relies on RealPage, a software company which uses an AI algorithm to aid in determining what landlords should set as the rent prices, based on the average prices of rent in the area.                                                                                          

 Federal prosecutors have expressed concern with the continual use of RealPage as a resource to set prices, calling it an “unlawful information-sharing scheme”, arguing that it is falsely hiking up renting pricing for landlords to reap the benefit.                      

Because of this, some lawmakers and California cities have begun to take action to limit AI’s use in setting rent prices and combat the effects it has already caused.

In San Diego, City Council President Sean Elo-Rivera recently proposed an ordinance to prevent local apartment owners from using RealPage’s pricing software, as he is starkly opposed to its use in setting rent prices, said, “What this platform is doing is providing what we think of as that dark, smoky room for big companies to get together and set prices.”

This push towards the banning of pricing algorithms is not only occurring in San Diego, as earlier this year, San Francisco also showed its dissatisfaction with AI’s use in setting rent through its city wide ban on the use of such software. In fact it was the first city in the nation to impose such a ban. Another example is San Jose, which is also in the process of creating a ban on such software. This is becoming such a severe issue that several states including California have joined a federal antitrust lawsuit against RealPage. Although RealPage was started to be a tool to help Landlords set prices that are both competitive and allow them to have great profit margins, critics argue that the software discourages competition and pushes rent prices higher.

California Attorney General Rob Bonta has said that RealPage’s system “directly made it more difficult” for people to find affordable housing. The U.S. Justice Department has filed a lawsuit accusing RealPage of manipulating the rental market to drive up prices.

RealPage has responded to the lawsuit by defending itself stating that it benefits landlords and renters by making for a more efficient rental process, and arguing that the rising prices are not their fault. “A lack of housing supply, not the company’s technology, is the real problem,” said Jennifer Bowcock, a spokesperson for RealPage.

During this lawsuit, the company continues to fight and argue that the allegations made against it are unfounded, commenting that it has cooperated with the authorities and followed its demands.

Despite this, California continues to feel the impact of increasing rents as its rent prices are already amongst the highest in the nation. In San Diego for example the rent prices have been hiked up by 21 percent in the past four years.

Navy veteran Alan Pickens, who recently moved with his wife to a new apartment in San Diego, shared his frustration and said “The rent goes up, it gets unaffordable, so we look for a new place to stay,” he said. “We’ve given up our gym memberships and downsized our cars just to afford rent.”

To make matters worse experts have said that rising rent prices disproportionately affects low-income families, who are already spending a large portion of their income on rent to begin with.

Some lawmakers are pushing for action to protect renters from this growing problem. Sen. Melissa Hurtado, a Democrat from Bakersfield, introduced a bill this year that would ban the use of pricing algorithms based on nonpublic data from competing landlords. While the bill didn’t pass in 2024, Hurtado plans to bring it back in the next legislative session, saying that “every individual who wants a shot at creating a business” should not be harmed by inflated housing costs.

Despite the use of algorithms like RealPage, the housing crisis in California is a major issue and has been for many years, with rent costs around nine percent higher than the national average. And as rents continue to rise, many lawmakers worry that technology like RealPage is making it harder for people to afford a place to live. 

For now we still have hope as change makers continue to help mediate the issue and eliminate the impacts of AI softwares like RealPage, and fight against the housing crisis.

As Elo-Rivera said, “The only winners in this situation are the richest companies. The rest of us are struggling to get by.”