Seattle approved a similar ban in July, joining other major cities like San Francisco, Philadelphia and Minneapolis amid mounting concerns and lawsuits alleging that artificial intelligence algorithms are used by groups of landlords to raise rents without fear of being undercut by their competitors.
It's not the use of algorithms that is at issue, nor are they banned outright under Spokane's new law. Instead, it is the use of proprietary, nonpublic data across the tech company's clientele to recommend price hikes higher than landlords would make in the free market that critics argue violates antitrust laws.
It would be illegal for the same landlords to sit together in a room, share their prices and agree to all raise their rents by $100; critics argue that those laws are being circumvented by companies like Texas-based RealPage, allowing landlords to collude with a degree of separation.
The Spokane City Council vote approving the ban was approved 5-2. Council members Jonathan Bingle and Michael Cathcart voted no. Cathcart argued that such regulations would be better handled by the state.
Software including some programs from RealPage, a company creates software for real estate management firms, wouldn't directly tell a specific property manager what a property manager down the street is charging, but instead provided aggregated, anonymous data from all of its clients. That collective data can be used to suggest the highest possible rents that the market can bear, sometimes with much larger increases than property managers would think to charge.
"These tools don't simply analyze the market," said Terri Anderson , director of the Spokane office of the Tenants Union of Washington State. "They can effectively shape it by synchronizing rent increases across competing properties ... the result is not competition, but coordination."
Local Impact
In 2016, as the rental market in Spokane became one of the tightest in the nation and rents soared, RealPage's chief economist blamed the city's high prices on demand outpacing supply.
"This is kind of the peak, but as construction activity picks up things will quiet down a bit again," Greg Willett told the Spokane Journal of Business in 2016.
That was not the case. Over the next six years, vacancies would decrease from 1.6% to 0.7% and average rents would balloon from $850 to $1,280, according to data collected by the University of Washington. Vacancies have since significantly rebounded to 5.5% in the latest quarter, but while the rate of rent price hikes has slowed, it hasn't stopped, with average rents now over $1,320 per month.
As RealPage has faced mounting scrutiny for its alleged role in helping to artificially inflate rents nationwide, it has repeatedly made similar arguments: it is a slowing construction industry, not their software, making rents increasingly unaffordable for so many Americans.
Prosecutors have alleged RealPage worsened the crisis. Notably, 2016 was also a big year more broadly for the revenue management industry that RealPage dominates, with one trade group, the National Apartment Association, arguing it was reaching a "critical mass" of market share. Like all algorithms, RealPage's became more useful the more data it had access to.
Both RealPage and California-based tech company Yardi have gotten tied up in lawsuits accusing the companies of helping landlords collectively set rents in a cartel-like way, allegedly diminishing free-market competition that should have benefited tenants by lowering rents.
The U.S. Department of Justice sued RealPage in 2024, and later six of the nation's largest landlords, alleging the software had been used to coordinate pricing in a way that violated antitrust laws. RealPage settled its federal suit in November, agreeing to cease using the private data of its clients to collectively inform its revenue management software. The company did not have to admit any wrongdoing and has argued it had already removed nonpublic data despite its view that the technology was legal.
Yardi has faced two class-action suits alleging the same, one of which it won on the merits in October.
RealPage is by far the most prolific of the companies under scrutiny. Last December, the White House estimated its allegedly anti-competitive software was being used in at least 10% of all rental units nationwide and as many as 1 in every 4 multifamily units, such as duplexes and apartment buildings.
The legal issue was not the use of algorithms overall, the White House stressed, arguing algorithms could be used to increase competition and market efficiency. A Wharton School study suggested standard algorithms could actually benefit renters by encouraging landlords to lower rents more quickly during economic downturns.
It was only when the algorithms facilitated price coordination through the use of data that wasn't publicly available — which they alleged RealPage was doing — that the practice could illegally harm renters.
Estimates on the degree of that harm vary significantly. The same Wharton School study suggested price coordination via these apps resulted in rents being $25 higher per month than they would have been through standard free-market competition. The White House's own estimate was closer to $70 a month, estimating the apps cost U.S. renters a collective $3.8 billion in artificially inflated rents in 2023 alone. The researchers called this "likely a lower bound on the true costs."
But the alleged impact varies wildly between markets and individual properties. One landlord told federal prosecutors that they raised rents by more than 25% within 11 months of adopting RealPage's software.
The use of this kind of software can be widespread in a given market. In a 2022 report, ProPublica found more than 70% of apartments in Seattle's Belltown neighborhood were overseen by 10 property managers, all of which were using RealPage's pricing software.
It's less clear how widespread the software's use is in Spokane. Jeffrey Roper, who was hired by RealPage in 2004 to improve its software, told ProPublica in 2022 that this type of software was more common in more expensive markets such as Seattle.
As the perception towards vendors like RealPage has shifted from a cutting-edge competitive advantage to being increasingly viewed as a potentially illegal anti-competitive burden on the rental market, property management companies have become increasingly less likely to brag about their use of these programs.
Only two of twelve companies contacted by The Spokesman-Review responded to a request for comment: Kiemle Hagood, which left the residential rental market earlier this year and never used the programs; and GreyStar, the largest landlord in the nation. GreyStar has a small footprint in Spokane, managing four properties in the city and 11 across the county, and in November the company agreed to pay $7 million and stop using RealPage to settle a lawsuit with nine states and the U.S. Department of Justice that alleged price fixing.
"We are pleased this matter is resolved and remain focused on serving our residents and clients," Greystar wrote in a prepared statement, not responding to further questions.
Unable to get firsthand confirmation from local property managers, The Spokesman-Review reviewed current job postings for property managers in the area, every single one of which listed experience with RealPage or Yardi as at least a recommended qualification for applicants. These include job listings from CCI, Widmyer and Avenue 5 Residential, which collectively manage hundreds of units in Spokane, including one building, The Warren Apartments in downtown Spokane, which was built with an affordable housing tax credit.
None of these companies responded to a request for comment or clarification about their use of these programs. Not all programs offered by RealPage and Yardi have faced legal scrutiny, only specific revenue management software the companies offered.
Goodale and Barbieri and Black Realty Management are two of the largest residential property managers in the city. In both cases, several employees listed experience with Yardi on LinkedIn. Goodale and Barbieri did not respond to a request for comment; after this story initially published, a representative from Black Realty stated the company has never used revenue management software.
Military Housing
RealPage also has faced mounting scrutiny over its role in skyrocketing rents for military housing, including in the Spokane-area.
In February, U.S. senators led by Elizabeth Warren and Ruben Gallego, wrote a letter calling for Department of Defense Secretary Pete Hegseth to investigate whether landlords were using RealPage's software to "price gouge military families." They pointed to the Basic Allowance for Housing that servicemembers receive to help cover the costs of owning or renting off-base housing.
"There are long-held concerns that landlords are raising rents to pocket these BAH increases, rather than raising rents because of market conditions," the letter stated. "Services provided by RealPage may enable landlords to raise rents more aggressively..."
Federal and state prosecutors alleged that RealPage contributed to excessive rental increases in areas where the Department of Defense had raised the housing allowances, including Spokane, the letter highlighted. In 2021, Spokane was one of only five markets that saw as high as a 20% increase in the housing allowance due to soaring rents.
Councilwoman Kitty Klitzke, a former army reserve medic, stressed the financial strain many servicemembers already faced.
"People that rank below E-3 usually qualify for SNAP benefits in this country because our military does not pay them well," she noted.
In many cases, military families are also uniquely unable to shop around communities to find lower rents due to requirements to live within a certain distance of their base.
"And so what an algorithmic price fixing scheme could do is look at that and say, 'We're going to all of our properties that we consult with and will raise our rents in those areas because we know that service members have to locate there,' " Klitzke argued.
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