Algorithmic Rent-Setting in a Post In re: RealPage, Inc. World
Federal and state regulators continue to scrutinize the use of algorithmic pricing tools and other AI instruments that help set rental rates for multifamily housing. However, proponents of these pricing tools argue that their use promotes operational efficiency and leads to more informed decisions –a natural evolution for pricing practices in today’s market. This tension between regulatory oversight and free-market innovation reared its head at the District Court in New York, as a federal judge responded to the question: How far can the government go in restricting algorithmic rental pricing without also unduly restricting commercial speech?
In 2025, Otten Johnson discussed Colorado’s HB25-1004, a bill that attempted to prohibit certain uses of algorithmic pricing tools for multifamily rentals by residential landlords. Governor Polis vetoed that legislation – claiming that price-fixing and collusion were already illegal under the existing antitrust statutes. Instead, Governor Polis expressed a preference to let the ongoing lawsuits against companies like RealPage run their course.
This issue did not end when HB25-1004 failed to become law. As Governor Polis had alluded to, litigation charted the course. Specifically, the RealPage lawsuit produced concrete consequences for property owners and renters nationwide (summarized below). At the time of our last alert on the issue, RealPage litigation was still pending. However, in the year that followed, several companies reached hard-fought settlements in their cases with resulting implications for all those watching.
United States et al. v. RealPage, Inc. et al.
The Case: Initiated by the Department of Justice and multiple states, including Colorado, against RealPage Inc. and multiple institutional landlords, the lawsuits alleged that the use of algorithmic software to coordinate rental pricing violated antitrust laws.
The Settlements: Although each settlement agreement differed, the majority focused on banning the use of nonpublic data by algorithmic tools to generate recommended rates. RealPage themselves agreed to stop pooling non-public, real-time competitor data (gathered through competitor market surveys) to fix rent floors.
The Aftermath: The question for property owners is increasingly not simply whether they can use artificial intelligence to make pricing recommendations, but what data the algorithmic tools use to generate recommendations and whether the tools facilitate horizontal coordination among competitors.
RealPage talked: States listened
Instead of waiting for settlements to roll out, state legislatures acted. New York became the first state to outright ban the use of pricing tools using data algorithms to establish rental prices (SB 340-B). The bill’s sponsor pointed to a ProPublica investigation that described software companies gathering nationwide data to help owners coordinate rental prices, exactly the argument referenced by the Government in the RealPage litigation. The bill further states that any such use of an algorithm to adjust rental levels is unlawful collusion.
RealPage v. James: A Constitutional Limitation
Shortly after New York’s bill rolled out, RealPage went on the offensive by initiating a lawsuit challenging SB 340-B. But, instead of fighting on antitrust grounds, RealPage argued that the state’s ban violated the First Amendment. The court agreed. On September 26, the Southern District of New York issued a preliminary injunction to prevent SB 340-B from applying to RealPage, on the grounds that the algorithm’s pricing recommendations constituted commercial speech, thus protected by the First Amendment and subject to intermediate scrutiny.
The court reasoned that RealPage had, in response to settlements with the Department of Justice, eliminated most nonpublic information from the model’s system and that the legislature could not ban landlords from using user-inputted data and publicly available information, irrespective of whether the recommendations were issued by an artificial intelligence tool or by a human applying a math formula.
While the case has not yet been resolved on the merits, the preliminary findings represent a legal victory for RealPage and might indicate a growing acceptance of algorithmic tools, so long as those tools avoid the use of nonpublic information and comply with the boundaries set by the earlier RealPage litigation.
However, this is not a green light for the use of such tools. Instead, property owners interested in leveraging artificial intelligence to build custom rental quotes for tenants should critically evaluate the types of information consumed by each technology system, whether competitors’ nonpublic information is involved, and if the software facilitates any unlawful coordination amongst market competitors. This complicated legislative and litigation timeline further reflects uncertainty among courts and regulators about how to respond to rapid technological advancements related to artificial intelligence, which continue to generate equal parts fear and excitement. For property owners, these developments emphasize the importance of staying up to date on ever evolving rules and regulations and carefully evaluating the use of artificial intelligence not only in rental pricing decisions, but in all aspects of real estate operations.