- The San Francisco Board of Supervisors unanimously passed an ordinance banning the use of algorithmic devices to set multifamily rents or manage occupancy levels.
- The ban specifically targets software from companies like RealPage and Yardi, used by major landlords.
- The decision aims to reduce rents and increase availability, amid debates over housing affordability and market manipulation.
- Similar lawsuits and legal actions are underway in other cities, indicating a growing scrutiny of revenue management software in the housing sector.
In a groundbreaking move, the San Francisco Board of Supervisors unanimously passed an ordinance prohibiting algorithmic programs that set multifamily rents and manage occupancy levels.
This legislation specifically targets controversial tech developed by companies like RealPage (RP) and Yardi, marking San Francisco as the first U.S. city to implement such a ban, as reported in Bisnow.
First of Its Kind
The new law aims to curb the influence of third-party revenue management companies, which provide price and occupancy recommendations to major corporate landlords like Brookfield Properties, Greystar, Equity Residential, and UDR.
Aaron Peskin, Board of Supervisors president and San Francisco mayoral candidate, stated these technologies have been instrumental in the pricing strategies of the city’s largest landlords.
Meanwhile, RealPage spokesperson Jennifer Bowcock criticized the ordinance, arguing it misdirects focus away from addressing the fundamental shortage of rental units in San Francisco. Bowcock emphasized that RealPage’s software is legally compliant and can be adjusted to adhere to the new regulations.
Market Implications
According to Peskin, revenue management software is used by landlords controlling 70% of San Francisco’s multifamily units. The Board of Supervisors believes that eliminating these automated systems will lead to a more functional market, potentially reducing rents and improving availability.
The ordinance follows similar legal actions, including a lawsuit filed by Washington, D.C. against RealPage for alleged price collusion. Additionally, consolidated class-action lawsuits from renters in cities like Boston, New York, and Seattle are currently being heard in a Nashville federal court.
Despite low levels of new multifamily construction, NAI NorCal’s report predicts rent growth of 3–5% for 2024 in San Francisco. Vacancy rates fell to 6.4% in Q2, the lowest level since 1Q20.
Why It Matters
The passage of this groundbreaking ordinance represents a significant shift in how rent and occupancy levels are managed in San Francisco.
As the first city to ban such tech—while notably being one of the most famous tech cities in the country—San Francisco is taking a strong stance and setting a precedent that could influence similar actions nationwide.
The broader impact on housing affordability and market dynamics remains to be seen as legal and market responses continue to evolve.
