Steve Welty

Issue# 77

December 2025

Happy Saturday, Housing Heroes!

A new California law is arriving on January 1st, 2026, and it’s already creating confusion across the rental industry

Assembly Bill 325 - California’s new restriction on “common pricing algorithms.”

If you’ve seen headlines, you may have noticed dramatic claims like:

“Rent pricing tools could be banned” or “Algorithms outlawed for landlords.”

Today, we want to break down what the law actually says, what it targets, and most importantly what it doesn’t affect.

What AB 325 Is Designed to Prevent

Beginning January 1st, 2026, AB 325 makes it unlawful to:

1. Use a shared pricing algorithm that coordinates pricing between multiple landlords

The law prohibits tools that:

Pull competitor rent data
Align or stabilize prices across companies
Encourage multiple landlords to set similar pricing
Recommend “market rents” using non-public competitor information

This is aimed squarely at coordinated pricing behavior, which regulators view as a potential antitrust issue.

2. Coerce others into adopting algorithm-recommended prices

Even if the tool exists, it cannot be used to pressure or “standardize” pricing across independent owners.

What AB 325 Does Not Prohibit

This is where much of the confusion comes from.

The law does NOT ban:

Independent rent estimate tools
Individual market analysis
Use of public or historical rental data
Human-set pricing
Software that does not coordinate pricing between landlords
Tools that simply display comps or analysis

Put simply:

You can still use rent calculators and pricing tools - as long as they don’t rely on a shared, coordinated algorithm between competing owners.

This includes:

Market rent estimate tools
Days-on-market data
Comparable rental analysis
Internal pricing models used by individual owners or managers

AB 325 is about coordination, not about limiting access to information.

Why the Law Was Passed

AB 325 builds on concerns raised nationally about algorithmic pricing systems that may unintentionally cause rent levels to move in lockstep.

The state’s goal is to prevent:

Price fixing
Artificial stabilization of rents
Coordinated responses to market shifts

The focus is on shared systems where multiple landlords feed data into the same pricing engine and receive similar price recommendations in return.

What This Means for Owners in 2026

1. You can continue pricing your rentals using data-driven tools.

If a tool uses public information, historical data, or internal analysis and does not coordinate pricing across owners it remains allowed.

2. Human judgment still matters.

AB 325 does not limit your ability to set rents manually based on:

Neighborhood comparables
Property condition
Demand trends
Seasonal factors

3. Independent analysis becomes even more important.

Pricing accuracy already has a major impact on:

Days on market
Rental income
Tenant quality
Vacancy loss

The new law reinforces the importance of using your own data and your own strategy, rather than relying on automated group pricing.

How Owners Can Stay Compliant

Here are the key principles for 2026:

Use tools that do not share proprietary data with competitors
Avoid systems that “recommend” rents to multiple landlords from the same AI model
Prioritize tools that are transparent about their data sources
Continue performing your own rent analyses
Document your pricing decisions when possible

If you’re relying on publicly available comps, market reports, or your own evaluation, you remain entirely within the law.

Curious what your home could actually rent for in today’s market?

We put together a free Rent Analysis tool that breaks down your estimated range based on recent public comps and neighborhood trends.

With AB 325 taking effect in January, having your own independent pricing snapshot is more important than ever.

Final Thoughts

AB 325 takes effect on January 1st, 2026, but for most small and midsize rental owners, very little needs to change.

The law targets coordinated, algorithm-driven pricing, not tools that help you understand local rent trends.

Owners can continue:

Checking comps
Using rent estimates
Reviewing market reports
Pricing based on condition and demand
Making independent decisions

If anything, AB 325 puts a renewed emphasis on what has always mattered most:

Accurate, independent, data-informed pricing that reflects your unique property not an algorithm shared by the entire market.

How to Price Your Rental: What To Charge In Today’s Market

Have questions about managing your property?

Our team proudly serves San Diego, Orange, and Riverside Counties. Schedule a call with us today, and let’s chat about how we can guide you through every step of your property management journey.

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