Apartment for Rent sign.
San Diego, California – In a decisive move to address San Diego’s escalating housing crisis, the City Council voted 8-1 on Tuesday to approve an ordinance banning the use of artificial intelligence-driven software in setting rental housing prices. The measure, introduced by Councilmember Sean Elo-Rivera and backed by City Attorney Heather Ferbert, targets algorithmic rent-setting tools that critics say fuel artificially high housing costs.
The ordinance, which must pass a second reading before it takes effect this summer, would prohibit the sale, license, and use of software that advises or recommends rental rates or occupancy levels—tools Elo-Rivera calls “modern-day price-fixing services.”
“When corporations use AI software to manipulate rents, they’re putting profits over people and turning homes into commodities,” Elo-Rivera said. “We are taking a stand to stop this artificial inflation and protect our neighbors from price gouging.”
A 2022 ProPublica investigation into RealPage, a Texas-based company that sells rent-setting software called YieldStar, revealed how the program uses private market data to calculate optimal rent prices—often recommending landlords accept lower occupancy rather than reduce prices. Critics argue this practice contributes to inflated rents and undermines competition.
RealPage denies wrongdoing, claiming landlords act independently. However, a 2024 analysis by the White House Council of Economic Advisers indicated that algorithmic pricing tools may add an average of $99 per month to rent, and that eliminating such practices could significantly reduce price mark-ups.
San Diego renters are already under extreme pressure. The average monthly rent across the city is now $3,000—roughly 65% above the national average. The median household income for a family of four is $119,500, but homeownership requires an income of around $275,000, according to the San Diego Housing Commission.
The ordinance includes exemptions for software used to publish publicly available rental reports or determine affordability levels in accordance with government housing programs. It follows similar legislative efforts in other cities: San Francisco passed a comparable ban in September 2024, and Philadelphia followed suit in October.
Despite wide support, legal challenges are expected. The ordinance may spark a prolonged battle over the role of AI in real estate—a conflict playing out amid lawsuits from the Department of Justice and California Attorney General Rob Bonta against RealPage.
“This is about standing up for renters and restoring fairness to the housing market,” Elo-Rivera said.
