The associated fee and availability of housing stay among the many most urgent considerations for Californians navigating financial uncertainty. But some Golden State cities are channeling vitality right into a coverage experiment that dangers making the housing affordability disaster worse.
In Santa Ana, metropolis officers not too long ago authorized an ordinance to ban using rent-pricing algorithms — software program that analyzes information utilized by property managers to know the market and shopper preferences. Politicians parroted unfounded claims of price-fixing and claimed to be defending renters.
Below the measure, landlords can be prohibited from utilizing software program instruments that assist suggest rental charges applicable for market circumstances. The ordinance handed regardless of warnings from critics that it’s predicated on a misunderstanding of what these instruments truly do and will invite litigation.
Current metropolis ordinances in San Francisco, San Diego and elsewhere focusing on pricing software program replicate a pattern of blaming know-how for top lease, although each state and federal guardrails exist already that govern information use and stop pricing coordination.
At finest, blaming know-how that helps property managers deflects from the true difficulty. The issue is an acute scarcity of housing.
Historical past and financial proof are abundantly clear — when provide lags behind demand, costs rise. Wish to decrease costs as a substitute? Then enhance provide: Construct extra housing.
Sure, the housing market is massive, dynamic and complicated. However one basic actuality is inescapable: Onerous ranges of rules in California have been an ongoing impediment to the housing provide that Californians want.
Typically, politicians’ push to pile on much more rules, like focusing on software program or pursuing lease management, is finished within the title of selling reasonably priced housing and defending renters and others with decrease incomes.
However curiously, any new housing that’s constructed helps all renters, even these with decrease incomes. For instance, analysis reveals that even higher-income households transferring into new luxurious flats frees up items that turn into extra reasonably priced for lower-income shoppers — an impact identified to economists as filtering.
Actual-world examples throughout the state underscore the purpose. Rents in Los Angeles have lastly begun to average following the addition of greater than 15,000 new house items in 2025.
Examine this with San Francisco, the place rents proceed climbing due to a persistent undersupply of housing. San Francisco pursued the identical path as Santa Ana by outlawing pricing software program instruments in 2024, however rents didn’t go down and, the truth is, have risen as a result of the town has but to embrace pro-construction reforms.
Specialists writing for the Michigan Journal of Economics clarify that the U.S. housing scarcity has continued to make properties more and more unaffordable for a lot of Individuals, significantly low-income renters. They spotlight that restrictive zoning is basically accountable for underproduction relative to job progress and concur that lease management is counterproductive because it discourages the addition of provide, even with sturdy demand.
These common sense ideas are compelling sufficient that they garner help throughout the ideological spectrum.
Economist Edward Glaeser of the right-leaning American Enterprise Institute offered testimony to the Senate Committee on Banking, Housing, and City Affairs final 12 months explaining the destructive results throughout the nation of the large underproduction of properties in contrast with even 20 years in the past. Glaeser cited information displaying that, throughout the nation, areas with extra housing rules have a lot larger costs.
And not too long ago the left-leaning Middle for American Progress put forth a proposal to chop pink tape that impedes housing development, emphasizing that their suggestions are “constructed on the truth that we can not make headway on housing affordability over the long term with out severely scaling up house constructing on the identical time.” The headline on the middle’s web page for the plan reads: “Construct, child, construct.”
Having a roof over your head is a basic human want and is a basis for monetary stability and upward mobility. Outlawing generally used enterprise instruments in pursuit of catchy headlines would possibly make politicians really feel higher, however it isn’t an actual repair for California’s housing affordability disaster.
Policymakers up and down California ought to acknowledge that growing provide to match demand is by far the best technique to carry down housing prices. Californians deserve insurance policies grounded in financial actuality — and relating to housing, meaning constructing extra.
Mario H. Lopez is the president of the Hispanic Management Fund, a public coverage advocacy group that promotes liberty, alternative and prosperity for all.
