California cities, including San Diego, are pushing back on rent-setting software programs used by apartments, according to reports.
Some landlords use a single company’s software – which uses an algorithm based on proprietary lease information – to help set rent prices.
San Diego’s city council president is the latest city to join the movement, proposing to prevent local apartment owners from using the pricing software, which he maintains is driving up housing costs.
The proposed ordinance, now being drafted by the San Diego city attorney, comes after San Francisco supervisors in July enacted a similar, first-in-the-nation ban. It put the ban in place on “the sale or use of algorithmic devices to set rents or manage occupancy levels” for residences. San Jose is considering a similar approach.
The San Diego council president, Sean Elo-Rivera, explained it like this to ABC eyewitness news:
“In the simplest terms, 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,” he said. “The technology is being used as a way of keeping an arm’s length from one big company to the other. But that’s an illusion.”
San Diego has the fourth-highest percentage of renters of any major city in the nation.
Arizona and 7 other states have sued also
California and seven other states have also filed lawsuits against the leading rental pricing platform, Texas-based RealPage. The complaint alleges that “RealPage is an algorithmic intermediary that collects, combines, and exploits landlords’ competitively sensitive information. And in so doing, it enriches itself and compliant landlords at the expense of renters who pay inflated prices…”
A RealPage spokesperson, Jennifer Bowcock, told CalMatters that a lack of housing supply, not the company’s technology, is the real problem .
She said its technology benefits residents, property managers, and others associated with the rental market. She later wrote that a ” misplaced focus on nonpublic information is a distraction… that will only make San Francisco and San Diego’s historical problems worse.”
The California Justice Department contends RealPage artificially inflated prices to keep them above a certain minimum level. Department spokesperson Elissa Perez this was particularly harmful given the high cost of housing in the state. “The illegally maintained profits that result from these price-alignment schemes come out of the pockets of the people that can least afford it.”
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