Democratic Governor Jared Polis of Colorado has vetoed a proposed bill aimed at banning landlords from utilizing rent-setting algorithms. This legislation would have made Colorado the first state to enact such a ban, which critics claim are exacerbating rising housing costs nationwide. Advocates for the bill emphasized the need for transparency and fairness in rental pricing, arguing that algorithms often lead to price increases rather than reflecting true market conditions.
The specific software in question is offered by RealPage, a real estate technology company facing a federal lawsuit lodged last year. The lawsuit accuses RealPage of facilitating coordinated efforts among landlords to escalate rental prices, a claim that the company vehemently denies. Despite criticism, RealPage is backed by significant clients who manage millions of rental units across the United States.
Recently, the Colorado legislature passed the bill along party lines, reflecting a clear divide between Democrats, who largely supported the initiative, and Republicans, who opposed it. In his veto letter, Governor Polis acknowledged the bill's intentions but asserted that existing laws would already prevent any collusion among landlords. He contended that algorithms could play a legitimate role in enhancing market efficiency by helping landlords manage vacancies and provide necessary data to consumers in the housing market.
RealPage commended Polis for his decision, describing it as an example of “courageous leadership.” Jennifer Bowcock, a RealPage spokesperson, remarked, “This is the right outcome for all of us who desire a healthy housing ecosystem that benefits Colorado renters and housing providers alike.”
However, Polis's veto sparked outrage among local housing advocates and consumer rights organizations, such as the American Economic Liberties Project. Sam Gilman, co-founder of the Community Economic Defense Project, expressed disappointment, stating, “This veto sends the devastating message that corporate landlords can keep using secret price-fixing algorithms to take extra rent from people who have the least.” This sentiment underscores the continuing struggle between housing advocates and the real estate industry.
RealPage's software provides daily rental price recommendations to landlords, who are not required to adhere to these suggestions. Critics argue that the extensive confidential data accessed by RealPage's software enables its clients to charge maximum rents, thereby undermining competitive pricing dynamics in the rental market. While Colorado was attempting to lead the charge against algorithmic pricing, six cities—including Philadelphia, Minneapolis, and San Francisco—have already enacted similar measures in the past year to regulate the use of these algorithms.
In response to such regulations, RealPage has announced legal challenges, including a lawsuit against Berkeley's ordinance, claiming it infringes on the company's free speech rights and is a result of a deliberate misinformation campaign against its products. RealPage insists that the primary factor behind escalating rents is a substantial lack of housing supply, arguing that their pricing recommendations can also lead to lower rents, as landlords seek to maximize occupancy.
Amidst the ongoing debate over housing regulations, a clause recently added to a Republican-led tax bill prevents states and localities from regulating artificial intelligence for an entire decade. This has prompted concerns among lawmakers, leading five Democratic senators to inquire whether RealPage was involved in inserting this clause into the legislation.
Despite the divergent views surrounding the use of rent-setting algorithms and the broader implications for housing costs, Polis’s veto symbolizes a critical moment in the ongoing dialogue about the intersection of technology, real estate, and affordability in the housing market.
