Pricing Software
Consumers, policymakers, and the media are paying closer attention to how artificial intelligence (AI) is used across the economy—but especially in rental housing.
As the nation navigates the transformative nature of AI technology in housing, policymakers should take a balanced approach to considering safeguards and understanding AI’s benefits for both consumers and rental housing providers. AI presents new and innovative opportunities to address longstanding housing challenges by accelerating the development of much-needed housing supply, reducing operational costs, and improving housing affordability. AI also creates better opportunities for transparency and consumer choice. Some legislators have raised concerns over using new technology in rental housing, with an eye toward limitation without understanding how it works, or the opportunities it presents.
That’s why RETTC is committed to educating policymakers, the media, and the public about the positive role that technology can play in rental housing. RETTC will continue to advocate for the responsible development and use of AI and other emerging technologies that can improve the lives of renters and the communities we serve. In the end, we believe that real estate technology is a force for good and we must, collectively, leverage it to address our nation’s long-term housing challenges.
The Growing Spotlight on Pricing Software
Most recently, policymakers have acted on unproven allegations that pricing software violates antitrust laws and is responsible for rent increases. These unproven allegations have spurred hearings, legislation, and new laws at the federal, state, and local levels aimed at limiting its use. Unproven allegations have also led to federal and state legal claims against rental housing providers and software suppliers, as well as class action lawsuits by private plaintiffs.
Pricing software is not new. It has long been used across multiple industry sectors, from hospitality and retail to manufacturing and agriculture. In fact, the federal government itself uses the same aggregated rental data collected from multiple sources, including some of the very companies targeted by lawsuits, to determine rent thresholds for the Section 8 Housing Choice Voucher Program—the largest federal housing subsidy program.
These unproven allegations persist despite evidence that it is in fact broader market factors—including the growing housing shortage and rising operating costs—not algorithms that have resulted in rent growth. Ironically, the same pricing software systems are making recommendations to reduce rents in areas where more housing supply is coming online. Without the pricing software, renters would not be able to take advantage of the price reductions as they occur. In a recent BisNow article, several housing providers offered their perspectives on the use of pricing software to help determine rents. Multiple housing providers noted that pricing software “frequently recommends downward adjustments.”
“In Houston, where we own maybe a dozen properties, [the pricing software] has been adjusting downward almost every day. That's not a very nefarious trust violation, conspiring to decrease our revenue,” explained one housing provider quoted in the article.
How RETTC is Advocating for Real Estate Technology
The National Multifamily Housing Council (NMHC), recently published an article refuting media reports blaming pricing software for America’s high housing costs while ignoring the real culprit: the housing shortage.
While America’s housing affordability crisis has developed over decades, it is only recently that public attention has been focused on this issue. In truth, America’s housing crisis won’t be solved by limiting pricing software that provides real-time data. The housing shortage is rooted in failed public policy, like convoluted local zoning codes and other cumbersome regulations that increase costs and cause delays. In cities like Austin, where local leaders have grown the housing supply dramatically by cutting red tape, rents are going down. And Austin is a city where pricing software is routinely used.
This and other data points raise the question: If pricing software makes rent go up, why not in Austin? The answer is simple: Rents are dictated by supply and demand, not software. To suggest otherwise is simply not borne out by evidence.
Rental Housing Must Build Trust & Transparency Around the Use of Technology
As with all technology, when used well, pricing software can be advantageous to consumers. It gives manufacturers, service providers, and, in this case, rental housing providers real-time information on market conditions that may prompt adjustments to pricing—both upward and downward, depending on the conditions. In the housing context, this data enables them to more efficiently rent the right unit to the right customer at the right price and the right time. Matching renters and homes quickly is even more critical now that we are facing a housing shortage.
But for technology to achieve these ends, it must be trusted. This is where RETTC sees an opportunity to educate policymakers, the press, renters, and the general public about why and how technology is being deployed—often in order to meet residents’ needs.
In the end, we all want to create a better, more trusting experience for residents. That’s why regardless of the technology or issue being debated, RETTC is working to empower transparency and knowledge. It’s the key to better understanding by renters, policymakers, and the broader public about the power and promise of technology in helping to address our nation’s long-term housing challenges.
Rent Pricing Software Advocacy Toolkit
RETTC and NMHC have developed a toolkit that provides rental housing advocates with essential resources—including policy background, talking points, draft communications, and a legislative tracker—to help effectively engage policymakers and defend the responsible use of technology in housing.
RETTC Members Only: Log in to download Toolkit