The use of algorithmic software in setting residential rents has come under scrutiny in recent years. In 2024, the Joe Biden administration sued real estate company RealPage, alleging that its algorithm, which aggregates and analyzes private data on the housing market, enables landlords to collude in pricing and stifles competition.

There's no word yet on what the second Donald Trump administration's Justice Department will do with this case. But in the meantime, some cities are banning the use of these algorithms completely.

Marketplace’s Meghan McCarty Carino spoke with Robbie Sequeira, who has been reporting on the issue for Stateline. The following is an edited transcript of their conversation.

Robbie Sequeira: So there are four cities currently that have banned the type of software. You have San Francisco, Philadelphia, Berkeley, California. And then Minneapolis was the most recent. And these four cities aren't supersurprising because we have seen renter legislation kind of pass through it, whether it's been eviction protection, maybe stuff that's just short of rent control in some places. But I think what the surprise has been is how quickly it's been enacted upon, given how slow housing legislation can be.

Meghan McCarty Carino: Are there any cities that are sort of regulating these systems, but maybe not outright banning them?

Sequeira: So that is one of the big things that we're trying to figure out is, how are these being regulated? It does seem like the enforcement side of this is lacking a little bit outside of fines. Something about policy is that a lot of cities and states kind of operate in a copycat way. If they see what's working in one state, they're going to, you know, take the things that work well. I think, you know, over this next year, we will see some of these cities as kind of a model. How are they being able to rein in some of these places? Are the fines working? Now, when it comes to the fears of collusion, that's obviously all, you know, geared towards the bigger fish. But I've talked to some small mom and pop landlords who are worried about them being caught in the crosshairs of this. There's a different balance, right? Landlords look at this as a business. It's, you know, for some of them, it might be their only source of income. And for tenants, this is their home. This is the place that you go after work. And you know you want to make sure that you can keep it every month that you're paying rent. So without, you know, an understanding of how enforcement is going to be done, it may, you know, not have the effects intended.

McCarty Carino: As you note in your reporting, it seems like cities are really outpacing states when it comes to banning these algorithms. Are there any states trying to do this on a statewide basis?

Sequeira: Washington state. They have gone, I would say, the farthest this [legislative] session. You know, other states like New York have tried to float out another one. They failed last year. Colorado is another one that's introduced legislation. They also were unsuccessful last year. But in a sense of why states may be lagging behind cities is that ultimately, it's hard to get things passed in state legislature. And then also, if you want to think about how many people at the state legislative level are actually renters, that plays a part in it. There's a pretty low amount who may feel the sting of having to look for rents in big cities. So that also plays a part. It's gonna be interesting to see if Washington passes it this year, I would imagine that another one would pass. That's just the nature of some of these policies. It just takes one to kind of break it open, but they're an interesting state to track.

McCarty Carino: And what about the stance from landlords on the use of these algorithms?

Sequeira: Yeah, so landlords say that this market data helps them be able to make the best pricing decisions possible. RealPage, you know, they've pushed back that these are being used to collude. You know, they're saying that, hey, we're just getting as much data and insight that we can. And for people who want to use it, they can use it, but we're not forcing people to buy it. Another thing that we're also seeing is Berkeley, they are being sued by RealPage for passing this ban. So now we're starting to see a little bit of pushback from this. We know that there is a current Department of Justice case started last year against RealPage and some of these third-party softwares. It expanded to some of the bigger corporate landlords, but a new administration has taken over, so it's gonna be interesting to see if that Department of Justice case is going to stand as is, and maybe something that goes to the back burner, and that also could influence how cities and states react in terms of a regulatory standpoint. And for landlords, you know, if there isn't going to be any heat elsewhere about this, they will continue to use it as is.

McCarty Carino: As you know, critics have alleged, sometimes in court, that these systems go beyond, you know, market research for landlords and amount to basically a kind of price fixing, right?

Sequeira: Yes, and all this, I think, is giving us more transparency in how rents are being set. You think about it, you know, there really wasn't much about eviction policies until people started writing about it, until people started talking about it. And now we're talking about a new way in which the market has been changed. If there's gonna be a crackdown on this particular part of rent setting through algorithms, well, what other ways might landlords try to get ahead of the game? In what ways will enforcement keep up with them? In what ways will people try to figure out the best way to make, you know, a profit, and what ways will people try to rein in practices that they seem to be illegal or maybe breach upon antitrust issues? And you know, in the housing space, we're seeing a very interesting conversation with that.

McCarty Carino: Although when I see cities like San Francisco and Berkeley sort of leading the charge to ban these systems, I mean, these are places that have notoriously unaffordable housing markets for a long time, largely because of constrained housing supply. I kind of get an alarm bell in my head, like, is this technology just serving as an easy scapegoat for housing policy problems that go a lot deeper?

Sequeira: You know, I think that when it comes to policy, the really, truly transformative policy that housing advocates want, that, you know, are actually going to meaningfully make a huge difference in the affordability and the availability of housing, that's going to take a lot of time and also going to take a lot more agreement with, you know, lawmakers. I think for some housing advocates who I've talked to, they're cautious about it. Hey, how much is this actually going to change the day to day for people if, you know, rents were high and they weren't really using these softwares, you know? That's a whole other issue entirely. So I think when it comes to housing policy, there are so many things that need to be done. This is one way that they're hoping to fix it, but I think tenants and advocates definitely are saying that more needs to be done when it comes to actual true availability and true affordability.

More on this

As Sequeira mentioned, RealPage filed their lawsuit against the city of Berkeley, California, this month. According to the Associated Press, RealPage alleges that Berkeley's ban of its software is a violation of the company's freedom of speech.

RealPage attorney Stephen Weissman told reporters on a conference call, “Berkeley is trying to enact an ordinance that prohibits speech — speech in the form of advice and recommendations from RealPage to its customers."

The company said it's considering legal action against other cities that have banned algorithmic rent software.