California’s battle over rental algorithms heats up as RealPage files lawsuit

Berkley, California – Real estate software company RealPage filed a federal lawsuit against the city of Berkeley, California, on Wednesday, challenging an ordinance set to go into effect this month that bans landlords from using algorithms to set rental prices. The lawsuit, which marks the latest development in the ongoing debate over rent-setting algorithms, argues that the ordinance infringes upon the company’s free speech rights.

RealPage, based in Texas, claims that Berkeley’s new law is the result of an “intentional campaign of misinformation” about the company’s software. The company, which provides pricing algorithms used by landlords nationwide, insists that the ordinance targets free speech by prohibiting the advice and recommendations RealPage offers to its clients.

“Berkeley is trying to enact an ordinance that prohibits speech — speech in the form of advice and recommendations from RealPage to its customers,” said Stephen Weissman, an attorney for RealPage, in a conference call with reporters.

The lawsuit comes amid broader concerns over the impact of algorithmic pricing on housing costs. Berkeley’s ordinance aims to address claims that rental algorithms are driving up rents and contributing to housing instability. The city argues that these algorithms have led to “double-digit rent increases, higher vacancy rates, and higher eviction rates.”

RealPage counters that these claims are unfounded. The company argues that the main driver of high rents is the shortage of housing supply, not the use of rental software. RealPage further denies that its product functions as a “price-fixing software,” stating that its pricing recommendations—whether to raise, lower, or maintain rent—are based on the objectives of individual property owners.

The company’s software is used by large landlords who manage millions of rental units across the country, and the lawsuit also highlights the U.S. Department of Justice’s ongoing case against RealPage. In August, the DOJ filed a lawsuit accusing the company of facilitating illegal price collusion by enabling landlords to share data in a way that suppresses competition and drives up rental prices. RealPage denies these allegations and says its software simply helps landlords maximize revenue and maintain high occupancy rates.

The lawsuit also targets the American Economic Liberties Project (AELP), an advocacy group critical of monopolistic practices, accusing it of spreading false claims that led to the Berkeley ordinance.

The company’s attorneys assert that they were not given an opportunity to present their case to the Berkeley City Council before the ordinance passed and suggest that similar legal actions may be pursued in other cities that have enacted similar bans, such as San Francisco.

Berkeley city staff declined to comment on the lawsuit, and a spokesperson for the AELP did not immediately respond to requests for comment.