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NJ lawmaker looks to ban algorithms blamed for jacking up your rent
By
Mike Hayes
Published Jul 6, 2024
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Nodar Chernishev / Getty Images
By
Mike Hayes
Published Jul 6, 2024
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A New Jersey lawmaker is looking to ban rent-setting algorithms that housing advocates blame for driving apartment prices sky-high.
Assemblymember Yvonne Lopez, a Democrat from Perth Amboy, said she is crafting legislation that would prohibit landlords from using RentPage and other similar rent-setting software. The services collect data on rents from participating landlords, then use their algorithms to suggest rates — a practice the Federal Trade Commission and U.S. Department of Justice argue amounts to price-fixing.
“As the costs of housing, especially in the rental market, continue to increase, the last thing working families need is to be victims of a rent-setting scheme,” Lopez said in a statement.
A spokesperson for the company declined to comment on any as-yet unintroduced legislation. But in a statement last month, RealPage said its revenue management software “contributes to a healthier and more efficient rental housing ecosystem.” It also said onerous local zoning and an undersupply of affordable housing are largely driving up rents.
The legislation is being eyed as New Jersey struggles with an affordability crisis, including a shortage of more than 200,000 affordable rental units, according to the National Low Income Housing Coalition. RealPage, its competitors and client landlords are also facing increasing scrutiny over the technology's use: Renters and agencies in multiple states have filed nearly 30 lawsuits to stop the use of such software, and the FBI recently raided an Atlanta property management company amid a DOJ antitrust probe that Politico reports includes a criminal investigation of RealPage.
Officials in Jersey City — the state’s second-largest city, where more than 70% of residents rent their homes — are also calling for the state Legislature to institute a ban on rent-setting software. According to Zumper.com, Jersey City’s $3,290 average rent for a one-bedroom apartment is the second-highest of any city in the country, one step down from New York City’s average of $4,300.
Lopez said her office is “still in the preliminary stages of research” on legislation, which she said she is pursuing in partnership with building workers union 32BJ.
Brent Garren, deputy general counsel for 32BJ, said the union believes large landlords who control a significant portion of the apartment market in New Jersey are using rent-setting software.
“So instead of competing — which is what drives our economy and creates any bargaining power for the tenant — it is suppressing competition and allowing, we believe, landlords to jack up rents, and it appears to jack up rents far beyond the levels that a competitive market would set,” he said.
He said rent is skyrocketing, “and this suppression of competition takes a bad situation and makes it much worse.”
But Ron Simoncini, a New Jersey residential real estate consultant and head of the Jersey City Property Owners Association, said the algorithms from companies like RealPage are “appropriate.”
“These algorithms just reflect what demand is and what fair pricing is in the marketplace,” he said.
He added that activists pushing for a ban should instead focus on figuring out how to build more housing.
“If you build more housing, you'd have more supply, and the demand would decrease, and then you'd get your prices under control,” he said.
Rents ‘skyrocket’ in New Jersey
Realpage and companies like it have been under particular scrutiny since a a 2022 ProPublica story cited a RealPage executive telling other real estate tech executives the company’s service was “driving” never-before-seen rent prices. The story described the executive saying rents had recently increased as much as 14.5%.
In 2023, the DOJ weighed in on a class-action federal lawsuit by renters, arguing in a memo: “Put simply, RealPage allegedly replaces independent competitive decision-making on prices, which often leads to lower prices for tenants, with a price-fixing combination that violates” antitrust law.
Garren said “some of the largest landlords” in New Jersey use the software, adding “we've seen rents skyrocket in New Jersey as badly as any place in the country.” A Rent.com survey found that in 2022, New Jersey rents increased 11.7% over the prior year, while the average increase across the nation was 4.8%.
But Simoncini noted that “if you look across the country, there are many instances where rent is declining, not increasing.”
A June report from Zumper.com found that average median rent fell for one-bedroom apartments by 2% to 4% over the last year in some cities, including Memphis, Colorado Springs and Omaha.
Garren, from 32BJ, said about 13,000 of the union’s members work in New Jersey, often in the buildings owned by landlords using this software. He said the union is interested in protecting renters in part because by allying with renters, it might be able to better help advocate for its workers — “the concierge and doorman and porters and cleaners [and] maintenance workers.”
Jersey City pushing state lawmakers
Last month, the Jersey City Council unanimously passed a resolution calling on the state Legislature to ban rent algorithms.
“We, Jersey City, have some of the highest rents in the country and we want to be at the forefront of setting public policy to get rents under control,” Councilmember James Solomon said.
Solomon said that the algorithms allow big corporate landlords to “operate as a cartel.”
“They obviously allow these large landlords to collude with each other to set rents at the highest rates and in fact, punish landlords who try to lower rates. So basically it's a way to avoid competition and it drives up rents,” he said.
The resolution cites a 32BJ analysis of the U.S. Census data showing that from 2019 to 2022, median rents in Jersey City increased by 19% – but that renters’ median income only grew 11% in the same period.
The resolution also cited Census data showing 41% of Jersey City residents are rent-burdened, meaning they spend more than 30% of their income on rent.
Solomon said that he’s heard from constituents in Jersey City who have had their rents raised as much as 30% to 40% in a year.
“The word that comes to mind is ‘unconscionable,’” he said.
Garren said 32BJ hopes to see more cities introduce resolutions calling on the Legislature to act.
“We expect more – and we're going to try to urge more,” he said.
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Mike Hayes
Mike Hayes covers equity and access to opportunity in New Jersey. He joined WNYC and Gothamist in 2023. Before that, he worked as a freelance journalist writing about policing and criminal justice. He has written for ProPublica, CNN, HuffPost, BuzzFeed News and The Appeal. He is also the author of the book, “The Secret Files: Bill De Blasio, The NYPD, and the Broken Promises of Police Reform.” In 2019, he was a finalist for the Livingston Award for Young Journalists.
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