Banning Algorithmic Tools Won’t Lower Rents in Montgomery County - Building More Housing Will
ROCKVILLE, Md.—The Apartment and Office Building Association of Metropolitan Washington (AOBA) today testified in opposition to Montgomery County Bill 8-26, which would ban the use of algorithmic pricing tools in the County’s rental housing market. AOBA argued that the legislation targets a symptom of a political narrative rather than the actual cause of rising rents—an undersupply of housing.
Rents rise when there isn’t enough housing to meet demand—and fall when there is. That relationship holds regardless of what tools housing providers use to manage their properties. Montgomery County has a development problem, not a software problem, and this bill doesn’t address it.
— Lisa Mallory, President and CEO, AOBA
These tools allow housing providers to quickly respond to market dynamics. A study from the University of Pennsylvania’s Wharton School, examining algorithmic pricing across the 50 largest U.S. metropolitan areas, found that property managers using these tools lowered rents and increased occupancy more quickly than non-users when market conditions weakened. This is evidence that these tools make recommendations in both directions, accelerating responses to market conditions that would occur regardless of the software used. In Austin, Texas, rents fell 6% from 2023 to 2024, despite nearly half of the city's housing providers reportedly using algorithmic devices. The driver of that decrease was an increase in housing supply; the algorithmic tools simply allowed housing providers to respond more quickly, benefitting renters in the process.
The bill’s reach extends well beyond algorithmic rent recommendation software. It does not define what encompasses a recommendation, meaning the bill could be interpreted to ban listing sites that aggregate rental data, standard market analysis software, and even Excel spreadsheets. These are basic business tools, not facilitators of collusion.
Moreover, the specific conduct driving this legislation, the use of competitors’ nonpublic data in real-time pricing decisions, was addressed by the 2025 settlement between RealPage and the Department of Justice. That settlement imposed court-monitored reforms, including restrictions on data use, geographic modeling, and software features that could suppress rent decreases. As a result, the issues at the center of the case have already been resolved.
The County’s attention to affordability is warranted, but the diagnosis underlying Bill 8-26 is not accurate. Depriving housing providers of valuable business tools based on a faulty premise would make the County less competitive with its neighbors in the DC region and exacerbate its supply problem in the process.