As Pennsylvania and states across the country grapple with rising housing costs, lawmakers are searching for ways to make rent more affordable. Philadelphia’s policy choices, however, have undermined these efforts. The City has spent years pursuing aggressive housing restrictions, and is significantly more regulated than the national average in terms of land use.
As a result, there’s now a deficit of over 64,500 housing units that are both affordable and available to low-income households in the City of Brotherly Love, according to Penn researchers. As a whole, the United States is short approximately 3.7 million homes, the result of years of underbuilding that has left supply unable to keep pace with demand. Rental housing is the core of the shortage, with quarterly rental vacancy rates at some of the lowest levels this century.
Despite a 2024 city ordinance targeting rental pricing technology under the guise of improving affordability, prices in Philadelphia have kept climbing. The City’s ban on algorithmic rental pricing passed almost two years ago, but the median rent of about $1,900 is up roughly 3 percent over the past year alone.
San Francisco tells a similar story. It banned algorithmic rental pricing in October 2024, yet remains one of the most expensive rental markets in the country because housing supply continues to lag heavy demand.
Jersey City also had to learn the hard way; its “Preventing Algorithmic Rent-Fixing in the Rental Housing Market” ordinance has yet to improve affordability, with that city’s rents continuing to go up. According to Apartment List, rents in Jersey City have increased 1.7 percent since the ban’s passage, while the national average has declined 1.5 percent.
What’s more, PA’s neighbor New Jersey recently became the latest state to pass legislation targeting rental pricing algorithms, claiming that the technology contributes to rising rents by enabling “price-fixing.” While the law has generated headlines, it’s a distraction from the real problems limiting needed housing development and increasing construction costs.
Rental pricing algorithms are actually part of the solution to the housing shortage, not a problem to be banned. These tools that provide information to property owners help them analyze market conditions, manage vacancies, and operate properties more efficiently. Whether a landlord uses sophisticated software or a simple spreadsheet, rents ultimately reflect the same underlying market forces: supply and demand.
If lawmakers in PA and beyond truly want to help their constituents with housing affordability, they should look to reduce zoning and permitting delays, to reverse rising construction costs, and to expand financing availability.
Economically savvy policymakers would recognize that if algorithms raised profits, much more rental housing would be built to take advantage of such conditions. Instead, there’s a lack of supply, and too many are blaming pricing algorithms for high prices, as if the market is unaffordable due to data analysis. False flags like this will only delay relief for the nearly half of American renters who are cost-burdened, spending more than 30 percent of their income on housing.
Strong leaders have recognized that banning technology won’t solve the affordability crisis and have stood firm against potentially harmful laws prohibiting market data-based pricing tools. Last year, Democratic Colorado Governor Jared Polis vetoed legislation that would have outlawed algorithmic rent-pricing software. He realized that banning legitimate property management technology could make Colorado a place where housing providers don’t want to invest and operate, and understood that increasing housing supply to offset demand is the way to improve affordability.
Housing development depends on long-term private investment. In multifamily housing, that means pricing apartments properly so they lease promptly instead of remaining vacant, where each empty unit represents lost revenue. Prohibiting modern tools that enable accuracy and efficiency cuts in the wrong direction.
If lawmakers in PA and beyond truly want to help their constituents with housing affordability, they should look to reduce zoning and permitting delays, to reverse rising construction costs, and to expand financing availability, all of which will create a more inviting environment for investors and developers. Every additional apartment increases competition, expands consumer choice, and helps relieve upward pressure on rents.
Technology should not be the scapegoat for decades of housing policy that led to undersupply in Philadelphia and cities across America. In virtually every sector of the economy, businesses rely on data and software to improve efficiency and decision-making, and to better serve customers. Housing is no different.
Our policymakers have a choice: They can continue pursuing misinformed, politically driven attacks that fail to address the root cause of high housing costs, or they can focus on economically sensible reforms that add to housing options and reduce rents.
Hobbling information resources that can help lower rental vacancy rates gets the equation backwards. Restricting tools that help fill vacant units will only make an already-scarce housing market tighter.
Joseph Mason, Ph.D. is a senior fellow at the University of Pennsylvania’s Wharton School and a former senior financial economist at the Office of The Comptroller of The Currency.
The Citizen welcomes guest commentary from community members who represent that it is their own work and their own opinion based on true facts that they know firsthand.
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