As housing costs continue to dominate local politics, city leaders across the country are under growing pressure to “do something” about rising rents. Increasingly, that has led to proposals for rent control and restrictions on pricing technology used by property managers. But software does not create housing shortages. Nor does it eliminate them. While those ideas may generate headlines, they risk distracting policymakers from the real challenge: America simply does not have enough housing.
The numbers tell the story. Estimates from housing researchers place the nation’s housing shortage somewhere between 4 million and 7 million homes. That supply gap has accumulated due to years of underbuilding, restrictive zoning, lengthy permitting processes, and local opposition to new development. When demand consistently exceeds supply, prices rise.
That reality has left many renters struggling. In communities across the country, housing costs have grown faster than income, forcing families to devote an increasing share of their paychecks to rent. Understandably, elected officials are searching for solutions. The problem is that some are focusing on the symptoms rather than the cause.
Markets function best when participants compete fairly and transparently. When it comes to software pricing tools, the Department of Justice deserves more credit than it often receives
The Department of Justice's recent actions involving algorithmic pricing and data-sharing practices should be understood in this context. Regulators have sought to establish clear standards for how modern digital tools can be used in competitive markets. That approach recognizes an important reality: innovation often moves faster than existing regulations, including those governing antitrust issues. The DOJ recognized that creating updated rules of the road would be far more constructive than simply punishing companies for operating in areas where legal boundaries were not yet clear.
For decades, property owners have used market information to help determine rents. The tools have evolved, but the underlying process has not. Today’s housing software can analyze occupancy rates, seasonal demand, neighborhood trends, and available inventory more efficiently than spreadsheets and phone calls once did. These technologies provide recommendations, but property owners still make their own decisions.
However, some critics are advancing a worldview that treats private enterprise itself as the problem. To them, anything short of throwing the book at providers of market data-based algorithmic pricing – whether for the housing, food, or healthcare industry – represents capitulation. And they paint all services that these technology providers offer as inherently bad, even if they help Americans. For example, the ability to split monthly rent into smaller installments. Most people don’t need protection from themselves and can decide what’s right for their own financial situation.
Reasonable people can debate the details of the DOJ’s settlement addressing concerns with the software, but to say it represents a failure is hyperbole. The same ones pushing that perspective display a broader tendency to treat private-sector participation in housing markets as inherently suspect, regardless of the facts. Importantly, an all-encompassing, anti-“big” ideology is unlikely to produce better housing outcomes.
When housing supply goes up, rents go down. The numbers prove that areas that add substantial amounts of new housing generally experience slower rent growth or even rent declines compared to areas with policies that discourage development. More homes create more options, which reduces upward pressure on prices.
Rent control and bans on property management software discourage investors from building additional housing that is desperately needed in areas with high prices. Elected officials often neglect the underlying shortage while issuing a press release claiming they solved the problem. But time always tells. These policies do not accelerate permitting or reform zoning to expand housing availability.
While rent control may temporarily bring relief for some, it reduces housing investment, pushing prices even higher in units where rents aren’t capped and leading property owners to defer maintenance and needed updates. After some years, much of the city’s housing stock ends up in poor condition. Banning the use of property management software chases investors away, who simply look elsewhere to find places where they can build housing and still use the tools they need to manage their investments.
If policymakers are serious about helping renters, they should focus on reforms that remove barriers to housing construction and increase supply. Effective housing reform may be less politically satisfying than blaming technology companies for high prices, but it’s far more likely to produce lasting affordability.
America’s affordable housing crisis is fundamentally a shortage problem. Efforts to scapegoat software for high rents are not a solution to the challenges renters face every day…they’re a substitute for meaningful reform.