San Diegans face skyrocketing prices everywhere — including the cost of rent.
The San Diego City Council is considering an ordinance that would prohibit artificial intelligence-driven software from being used to set rental housing prices.
Councilmember Sean Elo-Rivera will bring forward the proposal, which would ban software involved in numerous complaints as a “modern-day price- fixing service that directly and indirectly inflates rent prices, harming millions of Americans,” a statement from his office said.
If passed, the ordinance would ban the sale, license, and use of automated rent-setting software that advises or recommends rental rates or occupancy levels. The measure is supported by City Attorney Heather Ferbert.
The practice, which is called algorithmic pricing, makes it possible for apartment landlords to set market rates, which “deprives renters of the benefits of competition on apartment leasing terms and harms millions of Americans.”
“When corporations use AI software to manipulate rents, they’re putting profits over people and turning homes into commodities,” said Elo-Rivera last year. “We are taking a stand to stop this artificial inflation and protect our neighbors from price gouging.”
San Diego is one of the most expensive rental markets in the nation. In 2024, the median income for a family of four in San Diego County was $119,500, according to the San Diego Housing Commission. The salary required for a mortgage is even higher, at $275,000.
Meanwhile, the current average rent in San Diego for all bedroom and property types is $3,000 a month — at least 65% higher than the national average.
In 2022, investigative journalism outlet ProPublica explained how a Texas company called RealPage use its YieldStar software. “To arrive at a recommended rent, the software deploys an algorithm — a set of mathematical rules — to analyze a trove of data RealPage gathers from clients, including private information on what nearby competitors charge,” the article said.
ProPublica further found that RealPage actively discourages bargaining with renters and recommends that landlords accept a lower occupancy rate rather than take rent payments that the AI arbitrarily scores as less than “optimal.”
Elo-Rivera said that the AI price-fixing software, along with other factors such as limited housing supply and private investment, is artificially inflating the cost of housing — hurting working San Diegans.
In December 2024, the White House Council of Economic Advisers released a report detailing the effects of algorithmic price-fixing software. The Department of Justice and California Attorney General Rob Bonta joined other Attorneys General to sue RealPage last year.
RealPage has dismissed the claims, saying landlords do not coordinate to set rents higher.
The analysis “indicates that if price coordination was eliminated, there would be an economically meaningful decrease in price mark-ups for rental units using pricing algorithms.” Additionally, it found that use of the software and others like it account for $99 per month in over market valuation.
Elo-Rivera’s proposed ordinance does not ban the use of software that publishes reports regarding rental rates or occupancy levels from existing information available to the general public or software used to establish rental rates or income limits in accordance with local, state, or federal affordable housing program guidelines.
The San Francisco Board of Supervisors adopted a similar ban in September 2024. The Philadelphia City Council adopted a similar ordinance in October 2024.
City News Service contributed to this report.
