After a long, destabilizing pandemic and a stretch of rip-roaring inflation, low income renters are struggling mightily. Recent data from the US Census Household Pulse Survey suggest that one in eight Washington renter households is behind on rent payments. One in two renters reported a rent increase of at least $100 in the past 12 months; for 16%, it was greater than $250. The nationwide figures are similar, and evictions are spiking across the country, from Texas to Arizona to Colorado to Wisconsin.
In these circumstances, you’d hope that elected leaders at all levels of government would be looking for ways to assist renters. Here in Seattle, unfortunately, some of our councilmembers are instead talking about rolling back laws that were intended to prevent harmful evictions and make it easier to find and keep rental housing.
While renters and advocates prepare to defend these protections, we can also dream: What would the council be doing if they wanted to make life better for tenants, not worse? Specifically, what can they do about the high cost of rent?
Thanks to a state law banning local governments from regulating or controlling rents, the city can’t actually limit rent increases — though rent stabilization is likely to be a top issue in next year’s state legislative session. But there is a meaningful action Seattle can take now: ban algorithmic rent-setting.
Late last month, the Department of Justice sued the company RealPage for price fixing: acting as an intermediary that reduces competition among landlords by pooling their data, effectively setting their rents, and raising their profits at the expense of tenants. This antitrust suit was joined by the attorneys general of eight states, including Washington.
The heart of RealPage is its software, YieldStar, whose algorithm churns through masses of private data provided by its landlord clients, including current rents, square footage, floor plans, lease terms, and vacancy rates. It combines all that with publicly available data sets in each geographic area to generate rent recommendations that promise to boost landlords’ revenue.
Landlords don’t technically have to obey these recommendations, of course. But there is human pressure to do so, including “pricing advisors” who monitor landlords’ justifications for rejecting the algorithms’ advice and “escalates” such cases to a “regional manager” who gives them an earful. In the end, according to former employees, RealPage gets its way up to 90% of the time.
It’s hard to say with certainty to what extent algorithmic price-fixing is the culprit behind the last few years of eye-popping rent hikes in cities like Seattle. But, as reported in ProPublica, RealPage executive Andrew Bowen has claimed that his company is driving the increases: “As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually.” The algorithm’s “auto accept” features make it easy.
Matt Stoller, director of research at the American Economic Liberties Project (AELP) and author of the Substack newsletter BIG, did some back-of-the-napkin math and estimated that “up to a quarter of rental inflation between 2020-2024 is potentially due to this alleged [price-fixing] conspiracy.”
Some consequences of large rent increases are obvious. More tenants are forced to move because they can’t afford to stay. But when all the landlords are doing it — because they use rent-setting software like YieldStar, or take cues from nearby landlords who do — tenants may renew or enter into leases at rents they can’t afford because there’s nowhere affordable to go. Then they’re at greater risk of falling behind and being evicted.
It also turns out that when landlords collude to maximize profit, that may mean setting rents so high that more units stay vacant, effectively decreasing housing stock. The complaint of one Arizona court case against RealPage claims that “RealPage also encourages participants in this scheme to stop focusing on occupancy and turnover and instead push for rent increases — even if that means leaving some units vacant.”
The DOJ case is far from the first legal action against algorithmic rent-setting. Three lawsuits filed in 2022 on behalf of Seattle tenants named RealPage along with many of the corporate landlords and property management firms that use the company’s software. Another antitrust lawsuit was filed on behalf of a Seattle tenant in 2023, this time against Yardi Systems and the management firms that use its rent-setting software RENTmaximizer.
But the Seattle City Council doesn’t need to wait for all these lawsuits to resolve. It can take action right now to ban algorithmic rent-setting, as San Francisco has already done.
On September 3rd, San Francisco’s Board of Supervisors passed legislation banning the sale or use of algorithmic devices to set rents or occupancy levels. With this new law in place, the city will be able to sue companies like RealPage and property owners if it suspects them of continuing the practice. San Jose may soon consider a similar law.
RealPage claims that its “three revenue management software products collectively serve only 10% of the rental housing units in San Francisco.” However, according to AELP, “approximately 70% of multifamily apartment buildings [in San Francisco] use revenue management software like that offered by RealPage.”
The Seattle market may be similar. A class action complaint against RealPage that’s pending in Tennessee states that “Lessors and property managers who use revenue management software account for approximately 74% of all multifamily rental units in the Seattle Submarket.” In August, Lee Hepner, senior legal counsel for AELP, told KIRO 7’s Jesse Jones that about half of Seattle’s 300,000 multifamily apartments use RealPage.
And it’s not just the software. The Tennessee complaint also alleges that the Rental Housing Association of Washington and the Washington Multi-Family Housing Association — lobby groups that renter protection advocates know as constant adversaries against expanding protections — “serve as conduits of the cartel, by providing venues for RealPage and participating Seattle Submarket Lessors to further their cartel’s goals.”
Of course, algorithmic price-setting isn’t the only force driving rent increases in either city. It’s undeniable that San Francisco’s notoriously strict zoning regulations and byzantine approval process have prevented the city’s housing stock from expanding at pace with its growing housing needs. The same can be said of Seattle, even if our situation isn’t quite as dire. But even if banning algorithmic price-setting isn’t a magic bullet, it’s worth doing.
King County Councilmember Teresa Mosqueda has already begun calling attention to this issue.
“Households in King County and across the state and country deserve a fair shake at a fairly priced place to live,” she says. “This can’t happen if software platforms are being used by corporate landlords to evade competition and inflate their rents.”
Because King County governs landlord-tenant law only in unincorporated areas, it’s not the ideal locus of action. But Mosqueda sponsored an amendment to the county’s Comprehensive Plan to create a policy disapproving of rent gouging, and she says she “will keep working locally and with our state and federal partners to create legislation to protect our communities.”
The Comprehensive Plan language (H-167) reads: “King County should support federal and state legislation that prohibits rental property owners from: (a) contracting with companies that coordinate rental housing prices and housing supply information; and (b) coordinating price, supply, and other rental housing information with other rental property owners.”
No states have yet banned the use of rent-setting algorithms, but a bill has been proposed in Colorado. I expect more states and cities will begin to act in the months ahead.
Our Seattle councilmembers needn’t let everyone else have all the fun. Instead of scheming to weaken renter protections, they should step up and stamp down on tech-enabled rental price-setting.
Katie Wilson is General Secretary of the Transit Riders Union, a Seattle-based organization advocating for improving transit quality and making access more equitable.