A local think tank is urging the Boston City Council to steer clear of mirroring housing policies off San Francisco, with the recommendation coming after councilors approved a hearing order on algorithmic price-setting for rentals.
San Francisco became the first city in the country to ban algorithmic software for setting multifamily rents and managing occupancy over the summer. Boston city councilors say they are interested in investigating the “predatory” practice here.
The so-called “algorithmic devices,” allegedly reduce competition and contribute to rent increases as they allow “landlords to utilize non-public competitor data to set or recommend rental prices and occupancy levels,” according to the hearing order the councilor approved on Wednesday.
As of September, the digital marketplace, Zumper, listed the median rent for all bedroom counts and properties in Boston at $3,200, a figure 66% higher than the national average.
“While there are many factors contributing to the crisis, we must scrutinize every practice that could artificially inflate rents and exacerbate the problem,” said Councilor Sharon Durkan, the lead sponsor of the hearing order.
An “appropriate (council) committee” will hear from renters and housing experts to assess the use and impact of the algorithmic price-setting tools and “investigate the potential for an ordinance to be passed in Boston banning the use of non-public information driven algorithmic price setting,” the order states.
Gregory Maynard, executive director of the Boston Policy Institute, called the hearing order a “red herring,” saying that the city and state are dealing with a housing supply problem and not a “landlord collusion problem.”
Maynard, in a statement, took exception that Durkan brought up how San Francisco approved an ordinance to ban algorithmic price-setting. He highlighted how California passed a law this summer forcing the resistant city to build more housing.
“With a record like that, San Francisco is the last place Councilors should be looking to for housing policy advice,” Maynard said.
“If the Council is serious about addressing the cost of housing in Boston,” he added, “they will stop chasing red herrings like algorithmic price setting and corporate homeownership and focus on making it easier to build homes.”
Boston Policy Institute earlier this year, in conjunction with Tufts University’s Center for State Policy Analysis, found that the city’s eroding commercial tax base could result in a more than $1 billion budget shortfall in five years.
Real estate software company RealPage is at the center of an antitrust lawsuit that the Justice Department filed in August, with it being accused of an illegal scheme that allows landlords to coordinate to hike rental prices.
The lawsuit, filed alongside eight attorneys general, alleges the company is violating antitrust laws through its algorithm that landlords use to get recommended rental prices for millions of apartments across the country.
In a statement, RealPage said the Justice Department’s claims were “devoid of merit and will do nothing to make housing more affordable.”
U.S. Sens. Ed Markey and Elizabeth Warren and Rep. Seth Moulton, D-Massachusetts, sent a letter to 13 of Massachusetts’ largest apartment owners in September, questioning their use of the software.
Councilor Liz Breadon said her neighborhoods of Allston and Brighton could be “disproportionately impacted” by the practices because roughly 80% of residents are renters.
“This is not how the market is supposed to work,” she said. “This is predatory manipulation of rents, and it is unethical and unfair in a housing market which is one of the most expensive in the country.”
The Associated Press contributed to this report
