Airlines do it. Hotels do it. Car rental companies do it. What is it? Dynamic Pricing. This is the practice that uses software to analyze supply and demand and adjust rates accordingly. When a big convention in town and hotel rooms are in short supply, naturally the hotel's prices increase. At Candlewood, we use similar pricing for our short-term rentals (ie Airbnb) and our rates will change daily based on market conditions. While relatively new to the long-term market, some companies are starting to use this practice for rents and that has sparked scorn from the general public given recent housing supply issues.
Following an investigation by ProPublica into the use of algorithms by landlords to set rent prices, U.S. senators are stepping forward with a bill aimed at outlawing this practice. The report highlighted how software, notably developed by RealPage, allows for potential rent price coordination among landlords, a situation likened to cartel behavior. This has raised concerns over artificial inflation of rents and the exacerbation of the housing crisis.
Senators, including Ron Wyden (D-Ore.), are leading the charge with proposed legislation that seeks to make algorithmic rent setting illegal, comparing the practice to traditional price-fixing methods. The move comes amid rising rents and increasing homelessness, pointing to a significant affordability and availability crisis in housing.
The proposed legislation, spurred by evidence of widespread use of such software among landlords, aims to clarify antitrust laws and prevent any form of collusion in rent pricing. It targets not only the use of algorithmic price-setting software but also seeks to curb mergers between companies that facilitate such practices.
This legislative push claims to be a critical effort to address modern challenges in the housing market, aiming to ensure fairness and protect consumers from predatory pricing strategies. As the housing crisis deepens, the bill, if passed, could mark a significant step toward ensuring that technology serves to enhance, rather than hinder, housing affordability and availability according to those supporting the bill.
What are your thoughts? Is this price-fixing and collusion among landlords, or is this the free market of supply and demand and just another step by legislators to remove more rights from property owners?
