Pounding the gavel, Supervisor and board president Aaron Peskin said that San Francisco is the first city in America to pass such a law. It will render civil penalties of up to $1,000 per violation, plus fines that cover damages, restitution and attorneys' fees.
Peskin, who is also running for mayor, said: "This ordinance will be an example for cities all over this country.”
Residential landlords traditionally set rental rates by comparing their properties to similar ones in the same market area. They factor in the condition of the property, the economic climate and tenant improvements.
But with the rise of artificial intelligence and rental pricing software like RealPage Inc., property owners have started using real-time dynamic pricing that updates regularly.
According to a board presentation in July from the American Economic Liberties Project – an anti-monopoly non-profit research organization – those rates are based on a model trained on a large dataset of over 16 million units.
The software is also improving as new property managers are added to their list of clients. It is currently responsible for the pricing of eight percent of all rental units nationwide.
The Federal Trade Commission data shows rents increasing 20 percent nationwide since 2020. Economic data from the U.S. Bureau of Labor Statistics shows that rents in the San Francisco-Oakland-Hayward metropolitan statistical area have increased at a faster rate than the rest of the country.Multiple investigations and lawsuits around the U.S. have charged that the software has driven double-digit rent increases and encouraged landlords to hold tens of thousands of units vacant to create artificial scarcity.
In August, the U.S. Department of Justice, together with the attorneys general of eight states, including California, filed a civil antitrust lawsuit against RealPage for its alleged scheme to decrease competition among landlords in apartment pricing.
