Is artificial intelligence artificially inflating San Diego’s rent prices? Some local community advocates think so and they’re calling on San Diego City Council to take action.
An annual survey by the Southern California Rental Housing Association found that despite San Diego County's average rental prices dropping year-over-year, San Diegans are still paying a lot more for rent than the national average.
The high prices are due to a number of factors, including San Diego’s housing shortage, but some argue that price-fixing software like RealPage is also to blame, because the algorithms allow landlords to align their prices and avoid competition that would otherwise keep rents down.
A news conference was held on Wednesday morning outside San Diego City Hall to call for a citywide ordinance banning this type of software.
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Serving Seniors is one of the local organizations supporting this ban. CEO Paul Downey said price-fixing software is driving rents up and pricing the city's seniors out of their homes.
“About one-third of the folks on our streets are now older adults,” Downey said. “The data shows that many of those are there simply because they live on a fixed income and rent continues to go up.”
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Downey said most of the seniors they see live on $1,200 a month or less, often having just $300 to live on for all their other expenses, so even small increases in rent can have a big impact.
The Justice Department, California Attorney General and others have all filed complaints against this type of price-fixing software.
Following a 2022 ProPublica investigation into RealPage, the company's practices were scrutinized after it suggested it could be a reason for fast rent increases. After that, some Democratic lawmakers have been critical of the company, including Sen. Amy Klobuchar of Minnesota, who in February introduced a bill that would prevent companies from using algorithms to scheme and fix prices, according to the Associated Press.
While RealPage is not the only company offering an algorithmic tool to help property managers set prices, the Justice Department's lawsuit claims the company is by far the biggest in the industry and controls 80% of the market.
