The opaque process of setting rental prices is facing a new wave of scrutiny as municipalities begin to question the role of algorithms in determining housing costs for millions of residents. In Evanston, this debate has culminated in a proposed ordinance, championed by Alderman Juan Geracaris, that is now before the Housing and Community Development Committee for a crucial vote. This legislative measure aims to directly prohibit the use of sophisticated software that leverages non-public, competitively sensitive data shared between landlords to recommend rental prices. The core concern driving this action is the potential for such technology to create an environment of artificially inflated rents by eliminating natural competition. Rather than individual landlords assessing the market independently, these platforms can create a de facto cartel, where rent-setting decisions are guided by a centralized, data-driven system that benefits property owners at the expense of tenants searching for affordable housing options in an already challenging market.
A Nationwide Push for Regulation
Evanston’s legislative effort is not occurring in a vacuum but is part of a much larger, national movement that gained significant momentum following a landmark 2022 investigation that exposed these controversial industry practices. That report brought to light how major software providers, such as RealPage, were facilitating a system that could lead to coordinated rent hikes across entire cities. The revelations triggered widespread public outcry and intense legal scrutiny, culminating in a significant settlement between the federal Department of Justice and RealPage. As part of that agreement, the company consented to cease using the non-public data from competitors that formed the backbone of its price-setting algorithm. This federal action set a powerful precedent, signaling that such data-sharing practices could be viewed as anti-competitive and validating the concerns of tenant advocates. Consequently, cities and states across the country began to examine their own housing markets and consider local legislative solutions to curb the influence of these powerful digital tools.
Empowering Tenants and Setting Precedents
The proposed ordinance in Evanston was designed with a clear focus on empowering local renters and establishing a firm legal precedent against algorithmic price-fixing. Under the new rules, tenants were granted the ability to file formal complaints if they suspected their landlord was using prohibited software to set rent. The legislation stipulated clear consequences for violations, with landlords facing fines of $500 for each infraction, creating a significant financial disincentive. Critically, the ordinance also established a private right of action, a powerful tool that allows tenants to pursue legal action against landlords directly in court over the use of such software. While the measure took a hard line against the sharing of non-public competitor data, it carefully exempted legitimate industry practices, such as the publication of aggregated rental price information in monthly reports from trade associations. This local ban mirrored actions taken in other major cities, including San Francisco and Philadelphia, and supported a parallel effort at the state level, where legislation for a statewide prohibition was introduced in Illinois.
