Seattle’s ill-conceived ban on algorithmic rent-setting software illustrates what critics see as a textbook case of unconstitutional government meddling in private markets. Now Bellingham is poised to repeat the same mistake. Local activists with Community First Whatcom are gathering signatures for Initiative 26-01, which would prohibit property owners from using apps and AI to determine the market rate for rents on properties. This follows Seattle’s unanimous City Council vote in June 2025 enacting similar restrictions.
The core argument against these tools, like RealPage, is that the apps somehow enable “price fixing” and drive-up rents. This claim collapses under basic economic scrutiny. Property owners have always analyzed market data to set rents. Algorithms simply make that process faster, more data-driven, and less prone to emotional guesswork. Banning them doesn’t lower prices; it forces leasing agents to eyeball competitor listings and round up aggressively to avoid “leaving money on the table”. Humans with incentives to maximize revenue are likely to replace the software calculations, often with less precision and more upward bias.
In Seattle, the ordinance raises serious constitutional red flags. It potentially violates the Takings Clause by devaluing rental properties without compensation, restricts commercial speech under the First Amendment by limiting the use of publicly available market data, and runs afoul of the Fourteenth Amendment’s Due Process Clause through vague language that leaves property owners guessing what tools might trigger a $7,500 penalty. Property owners retain the right to accept or reject algorithmic recommendations. According to Department of Justice filings, between 2017 and 2024 only 40–50% of property owners adopted prices within 1% of RealPage’s recommendations, according to the Department of Justice. This is not collusion; it is competition informed by supply and demand.
Bellingham’s rents have risen 71% over the past 11 years, now averaging $2,275 per month and sitting 14% above the national average. Chronic under-supply caused by restrictive zoning, endless permitting delays, high property taxes passed on to tenants, and a regulatory environment that discourages new construction are the real reasons rents are so high. Washington’s cost of living has climbed faster than nearly anywhere else in the country. No algorithm created those barriers.
Trying to control the free market this way is not just ineffective; it is economically illiterate. Rent control experiments and price-fixing bans across history have consistently reduced housing supply, degraded quality, and created black markets. Property owners facing uncertainty will convert units to owner-occupied housing, short-term rentals, or simply exit the market. Tenants gain nothing while innovation in property management is stifled.
The free market is not perfect, but it remains the best mechanism for allocating scarce housing. When demand exceeds supply, prices rise, signaling to investors the need to build more units. Government interference that attacks the pricing mechanism only distorts that situation further. Seattle has shown no evidence so far of measurable relief for renters after the ban. Bellingham should learn from that failure before November’s ballot.
Policymakers serious about affordability must focus on root causes: slashing red tape, reforming permitting, reducing development taxes, and expanding housing supply through market incentives. Performative bans on technology may feel good to activists, but they punish small property owners, reduce efficiency, and ultimately harm the very renters they claim to help.
It’s time to stop the stupidity of pretending government can outsmart supply and demand. Washington needs more housing, not more restrictions on how property owners discover its true price.
