A bill aimed at protecting Hawaiʻi renters from algorithmic price-setting has cleared the Senate Commerce and Consumer Protection Committee, which has recommended passage on second reading and referral to the Judiciary and Ways and Means committees.
Senate Bill 157 Senate Draft 1 would prohibit the use of algorithmic price-setting in Hawaiʻi’s rental market. It would require the Department of the Attorney General to develop and undertake a public education program regarding the prohibition, and it would establish fines and penalties. A YouTube video of the committee hearing can be seen here.
According to a committee report, the bill’s purpose is to prevent artificially inflated rental prices by banning the use of algorithmic price-setting, which has been used in local housing markets to share private data, including current prices, available square footage, vacancy levels and the number of applicants for a particular unit.
The committee found that third-party price setters use that data to recommend rent and occupancy levels and advise landlords to hold some units off the market to raise the price of a unit, creating artificial scarcity and displacing island renters.
“Because Hawaiʻi already has the highest median rent in the nation, this measure will help ensure units are filled via competitive pricing, rather than through cooperation to set prices,” the committee report says.
In public testimony on the bill, Maui Chamber of Commerce President Pamela Tumpap said that while the chamber agrees that Maui rents were inflated by post-wildfire rental support practices of the Federal Emergency Management Agency, the bill might be “challenging to enforce effectively.”
“We would encourage the consideration of additional proposals and innovative ideas to address the broader issue of escalating rental prices,” she said.
“We share this concern and are increasingly witnessing residents being forced to sleep in their cars due to the lack of affordable rental options,” Tumpap said.
Jordan Hocker, education and outreach coordinator for the Maui Housing Hui, a grass-roots organization formed after the 2023 Maui wildfires, said that rents in Maui County have gone up 44% in the last two years and were climbing even before the wildfires disaster.
“The rate of houselessness in the state of Hawaiʻi has grown by 87%,” she said. “We acknowledge that renters, those making 70% area median income and below, are most at risk of becoming unhoused and face the greatest challenges under our housing crisis.”
Hocker said a forward-thinking bill such as Senate Bill 157 is needed “to protect Hawai’i’s renters from the unrelenting condition of corporate greed and price-fixing to the detriment of our community.”
“Hawaiʻi’s renters cannot afford any additional compounding factors,” she said.
Michael EKM Olderr also supported the bill, saying: “These algorithmic, AI-driven rent pricing schemes prey on vulnerable tenants and exploit those who are struggling to have enough money to support themselves. They are driven not out of necessity to cover damages, mortgages, or upkeep costs but as a lazy attempt to satisfy a landlord’s greed.”
Lyndsey Garcia, director of advocacy for the Hawai‘i Association of REALTORS®, noted that in August 2024, the Department of Justice and eight states (not including Hawaiʻi) filed a lawsuit against software company RealPage.
The department alleges an unlawful information sharing scheme that allowed property managers to increase apartment rental prices through the use of RealPage’s algorithmic pricing tools. The lawsuit, which is still ongoing, does not currently target the property managers who utilize the tool, according to Garcia.
RealPage Inc. registered as a business with the Hawaiʻi Department of Commerce & Consumer Affairs on Sept. 11, 2024, or 19 days after the US Department of Justice announced an antitrust lawsuit against the property management software company headquartered in Richardson, Texas.
Garcia said property managers often rely on property management software to operate their businesses, using market trends and publicly available housing market data to guide decisions.
“However, they may be unaware or have no knowledge on whether the software they are using has algorithmic processes embedded in these programs,” she said.
The Hawai‘i Association of Realtors believes the current Senate bill is “premature pending the outcome of the ongoing litigation, which will address this issue by determining whether there were any antitrust violations stemming from these software providers using such algorithms,” Garcia said.
Testimony in support of the bill came from the American Economic Liberties Project.
Voting unanimously in favor of passage of the bill on second reading were Commerce and Consumer Protection Committee Chair Jarrett Keohokalole of windward O‘ahu, Vice Chair Carol Fukunaga of urban Honolulu and Sens. Angus McKelvey of West and South Maui, Herbert “Tim” Richards III of Hawai‘i Island and Brenton Awa of windward and North Shore O‘ahu.
As of Tuesday afternoon, there were no public hearings scheduled before the Judiciary or Ways and Means committees.
Companion House Bill 831 has been referred to committee, but it hasn’t been scheduled for a public hearing.
On Tuesday, Maui County announced that the Department of Housing has contracted with Ward Research Inc. to conduct a Fair Market Rent Survey in Maui County. The survey started in January and aims to collect accurate and up-to-date information about rental costs countywide.
