AI tool helps Seattle landlords collude to keep rents high, report alleges

Why is the rent so high in Seattle? Well, there’s a housing shortage. But there’s also collusion going on between big landlords, according to a new report from the watchdog organization Accountable.US.

The report alleges that big rental companies across the nation, including Equity Residential which owns many properties in Seattle, share data with a third-party artificial intelligence service called RealPage, which then uses the data to make precise rent recommendations.

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“When you're trying to find an apartment and you're going into different buildings, and you don't know who owns which building, it becomes confusing when you start to see that this city's, average rental price is $3,000 for a one-bedroom," said Liz Zelnick, who oversees Accountable.US.’s economic research. "And you come to think that that's the market at play when in reality, it’s price fixing, which we know is illegal.”

On RealPage's website, one promotional video claims the company's tools are "the first of its kind." Another video explains how the company's AI system analyzes millions of lease renewals, along with other factors, such historical data and analysis of the number and quality of renter applications. From all this, the system assesses how much of a rent increase the market will bear, "allowing you to capture the thousands of dollars you were leaving behind."

AI systems are often described as "black boxes" because their inner workings are not visible to the public — or even sometimes to the AI programmers. And so, it's often unclear how vast quantities of data are transformed into answers.

If the Accountable.US's allegations are true, it hints at a way in which AI systems could hide price-fixing and collusion within the black box of their algorithms. Those claims are being further tested in court, including in a lawsuit filed by the Attorney General of Washington D.C. last year.

Of the real estate holding companies mentioned in the recent report, the rental companies AMH, Invitation Homes, and Equity Homes all hold properties in the Seattle metro area. Equity has 40 apartment buildings, whereas the other two specialize in single-family rental homes.

In an email from Invitation Homes' spokesperson Kristi DesJarlais, she said her company does not participate in RealPage's pricing-related services, but did not go into detail. She also said, "Our policy is to comply with all federal, state, and local laws, including antitrust laws."

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There are likely many other Seattle area property companies that also participate in RealPage's service but aren't listed in Accountable.US's report, according to Zelnick.

Equity Homes, AMH and RealPage did not respond to KUOW's requests for comment.

Update notice, Monday 3/18/2024, 11:36 AM: This story was updated to include new comments from Invitation Homes.

Update notice, Tuesday 3/19/2024, 1:00 PM: This story was updated to add information about the report's accusations against Equity Homes.