DENVER — A White House report released last month shows Denver renters paid an extra $136 per month to landlords who used rent-setting algorithms.
The report estimates the nation’s renters overpaid by $3.8 billion in 2023.
The White House cited RealPage as the primary provider of rental pricing algorithms. Companies like RealPage use their tools to suggest optimal rent for landlords to charge.
In order for the algorithm to work, landlords must provide data that they wouldn’t otherwise share with competitors.
“If you’re trying to figure out what units are going for in a competitive area, figuring out the floor plans, the relevant levels of amenities, the square footage, all the things that factor into how valuable an apartment is, that’s a huge undertaking. And that information, in most cases, is not public,” said Drew Hamrick, general counsel with the Colorado Apartment Association.
White House
Hamrick said tools like these help landlords determine what to charge in rent using more accurate information than they could get otherwise.
“A computerized model allows you to get much more up-to-date information and much more relevant information,” said Hamrick.
Those critical of such algorithms say it could be used for price-fixing and abused by landlords to artificially raise rent. The Department of Justice and eight states, including Colorado, filed a lawsuit against RealPage in August 2024, claiming the company deprives renters of the benefits of competition.
“RealPage replaces competition with coordination. It substitutes unity for rivalry. It subverts the competition and the competitive process,” the lawsuit reads in part.
Hamrick doesn’t believe that’s what’s going on.
“If those people were to use the product to say, ‘Hey, let’s all pretend that rent was higher than it is and unilaterally raise our rents tomorrow for the purposes of achieving monopolistic pricing,’ that would be a problem,” he said.
White House
That potential problem is exactly what state lawmakers are worried about — landlords working together to set their prices. A bill to ban rent algorithms in Colorado failed earlier this year.
The Colorado Apartment Association lobbied against the bill and expects lawmakers to try again this year.
“That efficient market measuring is a critical tool to not underpricing a product but not overpricing it. And overpricing units is very damaging to the financial performance of a housing provider because every day the unit sits on the market unused is a day of rent that’s lost,” said Hamrick.
Denver renters paid $136 more per month to landlords who used rent-setting algorithms: White House report
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