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Does Technology Play a Role in Rising Rents?

A ProPublica report suggests that AI software tells landlords how much they can charge for rent and, once they do, nearby landlords are told they can charge even more.

NEW YORK – A new ProPublica report suggests that an algorithm from software giant RealPage, called YieldStar, could be artificially driving up rents across the United States, amounting to anti-competitive practices.

According to the company’s website, YieldStar lets property managers “price each unit daily by reviewing all property, market and concession data to set the best rent to help stabilize occupancy and maintain profitability.” RealPage says the software can help property managers “outperform the market 3% to 7%.”

The ProPublica reports says these statements are evidence that the software increases rents. It suggests that managers use the software’s recommendations to justify rent hikes they might not otherwise have attempted, and that higher rents in one building become the basis for rent recommendations in other nearby buildings.

ProPublica says the software is widely used across a multitude of rentals and has “upended” the historical practice of negotiating for rent. It also encourages managers to leave units empty.

Some experts worry that managers use the software to “indirectly coordinate pricing, potentially in violation of federal law.”

Source: Inman (10/18/22) Dalrymple II, Jim

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