Is AI Destined to be Abused in Real Estate?

How can introducing AI into an industry that doesn't rely on labor actually hurt it? Well, AI is creeping its way into the housing industry, and it’s causing real concern. RealPage is an AI software company that has recently been in headlines about possibly colluding with landlords to artificially increase rent. 5 Senators recently wrote a letter to RealPage CEO Dana Jones. RealPage has been accused of using information from tenants and inputting it into an algorithm to determine non-competitive rental prices.

While the DOJ, Jersey City, Philadelphia, and a few other states and cities have filed lawsuits against RealPage, some states have banned rent-setting software altogether. Now, states like New York, Connecticut, Massachusetts, and Washington are also in the process of banning it.

https://www.propublica.org/article/yieldstar-realpage-rent-doj-investigation-antitrust

This all stemmed from a 2022 report from ProPublica, which showed the relationship between RealPage and rising rent prices. The accusation was that RealPage allowed landlords to coordinate pricing via the algorithms used by the service.

However, RealPage and other AI platforms are now at risk. In Congress, legislation is being proposed that would limit the ability of states to restrict the use of AI. It’s backed by AI giants like OpenAI, but RealPage has also found itself dragged in. If the bill is passed, it could create an AI boom in all sectors. I have my eye on real estate, though. The housing sector could be significantly disrupted—for good or for bad—by an influx of AI. Despite the potential for AI to revolutionize the housing industry in a way that benefits both renters and landlords, having no restrictions on its use will most likely lead to the abuse of algorithms to the detriment of renters. It could mean out-of-control rent prices, while also creating a new era of housing in certain areas that generate an immense amount of competition.

As someone who focuses intensely on the role of AI in real estate, it saddens me to think that we're in a spot where either AI has to be restricted, or renters will have to suffer because of it. AI, if used correctly, has the power to benefit both parties. Landlords could use algorithms to determine which new properties to acquire, while renters could use it to determine which location or housing unit they'd like to live in. The possibilities with AI are endless, and with this legislation, it’s especially true.

So, I ask the question: if there were no enforcements against AI, how would real estate react? My best guess is that affordable housing will become increasingly irrelevant, and expensive cities, such as New York, will become even more costly than ever. But only time will tell.

https://www.theverge.com/news/676378/senator-realpage-budget-reconciliation-bill-involvement