New legislation in Congress targets high rent prices nationwide. A bill introduced by Senator Amy Klobuchar aims to regulate companies that collect rental market data from landlords and use it in algorithms to broadly determine rents.
“It’s clearly illegal for these landlords who compete with each other to get together for dinner one night and go, ‘Hey, let’s all set our rents high and then we won’t compete with each other.”
Sen. Amy Klobuchar, D-Minnesota
In an interview with ABC News, Sen. Klobuchar said, ‘It is textbook collusion.’ She went on to say that companies using these models are widely sourcing rents from competitors and colluding to drive up costs for consumers.
Klobuchar’s new legislation targets property software companies like RealPage, the most-used company providing algorithmic pricing. In 2024, the U.S. Justice Department sued RealPage, alleging that the company colluded with landlords, resulting in higher rents across the country.
New Legislation: The Cost of Anticompetitive Pricing Algorithms in Rental Housing
The Justice Department lawsuit was filed after The Cost of Anticompetitive Pricing Algorithms in Rental Housing was published. The Biden administration’s Council of Economic Advisers report found an average $90 increase in rent prices in Phoenix, Las Vegas, San Diego, Tampa, and Washington, D.C. The increase rose to an average of $130 in Dallas, Denver, and Atlanta.
According to the report, algorithmic pricing added a total of $3.8 billion to rental prices nationwide. Additionally, the report found that RealPage determines rent for nearly 1 in 4 multifamily properties. In response to the lawsuit, RealPage stated, ‘We remain unwavering in our belief that RealPage’s revenue management software benefits both housing providers and residents.
Rising rents remain one of the most persistent drivers of post-pandemic inflation, increasing by 4.3% over the past year, according to the government’s latest Consumer Price Index report. That growth surpasses the overall annual inflation rate of 2.9%.
“Housing is still the largest monthly expense for most households, and that includes rent. We have clear documentation from economists that this price-fixing by algorithms increased the rents by nearly $4 billion in 2023 — we know this is happening, and it’s so hard for people to get by now anyway.
Sen. Amy Klobuchar, Minnesota
Klobuchar’s new legislation is called the Preventing Algorithmic Collusion Act. If passed in Congress, it would require rental companies to disclose if they are using algorithms to set rents. It would also direct the Federal Trade Commission to study how these algorithms affect competition.
