Portland’s new City Council is contemplating its first significant policy change aimed at addressing one of the city’s most pressing challenges: rising housing costs. Last week, council members discussed a proposal to prohibit landlords from utilizing algorithmic software to determine rental prices. This technology analyzes local rent trends and vacancy data provided by landlords to suggest monthly rental rates.
Proponents argue that this “algorithmic pricing” tool aids property managers in setting competitive rates in a saturated market, while opponents deem it an illegal form of price manipulation that hampers competition and contributes to soaring rental prices. The proposed policy would make it illegal for landlords to employ such software, with violators facing fines of up to $1,000. Additionally, the policy would empower renters to sue landlords who contravene these regulations, potentially allowing for damages exceeding $10,000.
Advocates for the ban believe it will help mitigate Portland’s affordable housing crisis. However, local property management groups and landlords contend that using algorithms for rent comparisons does not equate to price fixing. Some landlords opposing the ban have expressed concerns that the policy’s vague language could negatively impact the rental market.
Portland is not alone in considering a ban on algorithmic rent pricing. Four other cities have enacted similar measures, and the Oregon Legislature is currently reviewing a bill that would implement a statewide prohibition. Last year, Oregon joined seven other states in filing a federal antitrust lawsuit against RealPage, a leading algorithmic software company, and seven landlords, alleging collusion to reduce competition. Notably, five of the landlords implicated in the lawsuit manage properties in Portland.
According to the lawsuit, over 54,000 rental units in the Portland-Vancouver metropolitan area are overseen by landlords utilizing RealPage software. In response, RealPage has initiated a lawsuit against Berkeley, California, challenging its ban on algorithmic software and claiming it infringes on free speech.
This discussion comes at a time when the city is experiencing a slowdown in development. Governor Tina Kotek and Mayor Keith Wilson have established a task force to explore ways to expedite rental construction. Some council members have raised concerns about the potential impact of strict penalties on development, especially as the city struggles to meet its target of constructing 6,000 new housing units each year. Meanwhile, other councilors have expressed their support for the proposed ban.
