So it happened: https://www.kron4.com/news/bay-area/san-francisco-becomes-first-u-s-city-to-ban-automated-rent-fixing-technology/

The first “ban” on pricing and revenue management (PRM) software or “algorithmic pricing” in rental housing has passed. And make no mistake, this is just the first domino. With the American Economic Liberties Project behind this and the general tenor of the political environment given persistent rent inflation, it isn’t a stretch to expect other cities (and probably even a few states) to pass similar legislation.

Time to Panic?

“San Francisco 1st in U.S. to ban rental-price software” is certainly a scary headline—especially for someone like me, a 25-year PRM veteran and CEO of a company that sells a best-in-class PRM solution.

So why am I so sanguine as I read this? As I wrote back a few months ago on a variety of proposed legislation at the local, state and federal level, the reality is nowhere near as stark as the headline. You have to read 10 paragraphs in (2+ scrolls on my laptop screen) to get to the punch line. That’s where the article explains that the new legislation, “Bans the sale and use of software that ‘combines non-public competitor data to set, recommend or advise on rents and occupancy levels…’”

This means it’s true that SOME legacy software will now be illegal in the city of San Francisco independently of whether the software is judged to violate anti-trust laws. But it is equally true that there are options that are not outlawed by this legislation.

So What’s an Executive to Do (and, maybe, not do)?

• Don’t throw the baby out with the bathwater, i.e. don’t fall prey to the fear-inducing headline
• Don’t abandon years of experience with how data-driven rent decisions improve your business and move back to the dark ages of manual pricing
• Do assume this legislation will spread even if you don’t have San Francisco properties
• Do analyze whether your current solution is legal or illegal under this standard
• Do research available solutions to at least get familiar with options
• Do make plans for if, when, and how you would make a change
• Do support NMHC, NAA and local apartment organizations that are our best collective voice with politicians

These developments are sure to continue to change over time, and we’re staying on top of them as best as possible.