The fee and availability of housing stay among the many most urgent issues for Californians navigating financial uncertainty. But some Golden State cities are channeling power right into a coverage experiment that dangers making the housing affordability disaster worse.
In Santa Ana, metropolis officers lately accepted an ordinance to ban the usage of rent-pricing algorithms — software program that analyzes information utilized by property managers to grasp the market and shopper preferences. Politicians parroted unfounded claims of price-fixing and claimed to be defending renters.
Below the measure, landlords could be prohibited from utilizing software program instruments that assist advocate rental charges acceptable for market circumstances. The ordinance handed regardless of warnings from critics that it’s predicated on a misunderstanding of what these instruments really do and will invite litigation.
Latest metropolis ordinances in San Francisco, San Diego and elsewhere focusing on pricing software program mirror a pattern of blaming know-how for prime hire, regardless that each state and federal guardrails exist already that govern information use and forestall pricing coordination.
At finest, blaming know-how that helps property managers deflects from the actual concern. 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 an alternative? Then enhance provide: Construct extra housing.
Sure, the housing market is massive, dynamic and sophisticated. However one basic actuality is inescapable: Onerous ranges of laws in California have been an ongoing impediment to the housing provide that Californians want.
Typically, politicians’ push to pile on much more laws, like focusing on software program or pursuing hire management, is completed within the title of selling reasonably priced housing and defending renters and others with decrease incomes.
However apparently, any new housing that’s constructed helps all renters, even these with decrease incomes. For instance, research shows that even higher-income households transferring into new luxurious flats frees up models that develop into extra reasonably priced for lower-income customers — an impact recognized 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 residence models in 2025.
Examine this with San Francisco, the place rents proceed climbing because of a persistent undersupply of housing. San Francisco pursued the identical path as Santa Ana by outlawing pricing software tools in 2024, however rents didn’t go down and, in actual fact, 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 houses more and more unaffordable for a lot of Individuals, significantly low-income renters. They spotlight that restrictive zoning is essentially in charge for underproduction relative to job development and concur that hire management is counterproductive because it discourages the addition of provide, even with sturdy demand.
These common sense ideas are compelling sufficient that they garner assist throughout the ideological spectrum.
Economist Edward Glaeser of the right-leaning American Enterprise Institute supplied testimony to the Senate Committee on Banking, Housing, and City Affairs final 12 months explaining the damaging results throughout the nation of the massive underproduction of houses in contrast with even 20 years in the past. Glaeser cited information displaying that, throughout the nation, areas with extra housing laws have a lot greater costs.
And lately the left-leaning Middle for American Progress put forth a proposal to chop purple tape that impedes housing building, emphasizing that their suggestions are “constructed on the truth that we can not make headway on housing affordability over the long term with out critically scaling up house constructing on the similar 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 may make politicians really feel higher, however it’s not an actual repair for California’s housing affordability disaster.
Policymakers up and down California ought to acknowledge that rising provide to match demand is by far the best method to convey down housing prices. Californians deserve insurance policies grounded in financial actuality — and in relation 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.
