When Algorithms Become Slumlords: Chicago’s Rent Crisis by Design

INTRODUCTION  

Chicago is amid a full-blown affordability crisis. Nearly half of residents now spend more than 30% of their income on rent, and 1 in 5 spend over half.i The newest, and most troubling driver of this crisis isn’t a landlord or a zoning map, but an algorithm. AI-powered rent-setting platforms like RealPage are quietly reshaping the city’s rental market, using data sets to drive up prices in near-perfect coordination.  

Over the past year, rents in Chicago’s 77 neighborhoods have jumped 10% even as demand outpaces a shrinking supply.ii RealPage, a Texas-based data company, feeds landlords pricing recommendations based on historical rental data and occupancy patterns. Those ‘recommendations’ often translate to rent hikes 5-10% above market value, effectively allowing landlords to move in lockstep, and renters to pay the price. In Chicago alone, roughly one-third of all multifamily rentals, about 100,000 units, are now influenced by RealPage’s algorithm. iii 

The pain of RealPage’s impact is not evenly spread. RealPage’s rent spikes hit hardest in the South and West side, communities already scarred by redlining, exclusionary zoning, and decades of disinvestment. Yes, Illinois has joined a multistate lawsuit accusing RealPage of illegal rent-fixing, but a suit won’t solve the deeper problem. Chicago’s affordability crisis stems from both yesterday’s racist zoning laws and today’s data-driven speculation. Fixing it requires confronting both.  

If Chicago’s policymakers are serious about protecting renters, they cannot wait for the courts. Chicago must move now, ban AI-based rent-setting tools, expand zoning for multifamily housing, and strengthen Affordable Requirement Ordinances to deliver real relief, not just rhetoric.  

A LEGACY OF MISSED OPPORTUNITIES  

Chicago’s housing history is littered with policies that promised equity and delivered displacement. In 1966, six Black residents sued the Chicago Housing Authority for intentionally segregating public housing. iv The resulting Gautreaux Program helped some families move to safer, more integrated areas, but integration came at the expense of belonging as many lost their previous social networks. v   

By the 2000s, federal programs like HOPE VI promised “mixed-income communities” vi but delivered mass demolition. High-rises like Cabrini-Green came down, but the promised replacement housing never materialized, with a total deficit of 16,000vii  units, and another generation was pushed out.  

Even local efforts, like the 2003 Affordable Requirements Ordinance (ARO), fell short. Developers met their obligations by building token affordable units in affluent areas—or paying fees to avoid them entirely. The ARO’s intentions were sound, but its impact was limited to wealthier, whiter neighborhoods, leaving much of the city behind.  

Mayor Brandon Johnson’s “Cut the Tape” imitative and the Northwest Side Preservation Ordinance (NWSPO) were both meant to be the game-changing policies. Instead, “Cut the Tape” fast-tracks permits but not affordability. NWSPO gives tenants first rights to buy their homes—but few can afford to exercise that right. Meanwhile, the lawsuits against RealPage slowly grind forward. The company insists it’s being scapegoated for a problem of supply. viii When AI colludes with scarcity, the result isn’t efficiency, it’s exploitation.   

WHAT CHICAGO MUST DO  

It’s time for Chicago to take control of its own market. That starts with a citywide ban on AI-driven rent-setting platforms. No landlord should be allowed to outsource price-setting to a profit-maximizing algorithm. Minneapolis and San Francisco have already moved to curb these tools. ix  

Chicago’s 7.0-7.2% vacancy is above the optimal 5%, yet units remain unaffordable because supply does not match the income levels residents require. x Next, the city must break down its outdated RS (Residential Single Unit) and RT (Residential Two Flat) zoning codes that lock neighborhoods into single-family and two-flat homes.xi Opening those areas to moderate-density multifamily housing would expand supply and finally offer middle and low-income families a foothold in every part of the city. Minneapolis’s 2040 Plan proved this work can: zoning reform curbed rent growth and increased affordability within two years.xii Finally, Chicago must overhaul the ARO. Developers should no longer be allowed to buy their way out of inclusion. Affordable units must be built, not just promised, and they must be located where the need is greatest: in the South and West sides, not clustered in wealthier enclaves.    

Chicago’s housing crisis didn’t begin with RealPage, but RealPage made it worse, faster. The city’s failure to confront its legacy of segregation, its addiction to ‘luxury’ development, and its hesitation to regulate technology have created a perfect storm for renters.  

The longer city leaders wait, the higher the rent climbs. While banning the algorithm is step one, expanding affordable supply is step two. Without it, Chicago will keep recycling the same housing failures under a shinier name. The promise of a fair, affordable city will not be coded into existence by software, rather it will be built by political courage.  

Citations: 

1 Institute for Housing Studies-DePaul University, “Key Housing Challenges in the City of Chicago,” Institute for Housing Studies – DePaul University, accessed April 12, 2024, https://www.housingstudies.org/blog/key-housing-challenges-city-chicago/.  

2 “Ilepi-Pmcr-Housing-Shortage-and-Affordability-in-Illinois-Final.Pdf,” n.d., accessed September 4, 2025, https://illinoisepi.wordpress.com/wp-content/uploads/2025/06/ilepi-pmcr-housing-shortage-and-affordability-in-illinois-final.pdf.  

3 Amy Qin and Andjela Padejski, “Chicago’s Rental Crisis: Is an Algorithm Rigging the System?,” WBEZ, October 22, 2024, https://www.wbez.org/data/2024/10/22/chicagos-rental-crisis-is-an-algorithm-rigging-the-system.  

4 “Gautreaux v. Chicago Housing Authority 1:66-Cv-01459 (N.D. Ill.) | Civil Rights Litigation Clearinghouse,” accessed October 5, 2025, https://clearinghouse.net/case/11085/.  

5 Melody L Boyd, The Role of Social Networks in Making Housing Choices: The Experience of the Gautreaux Two Residential Mobility Program, n.d.(48)  

6 Todd Sink and Brian Ceh, “Relocation of Urban Poor in Chicago: HOPE VI Policy Outcomes,” Geoforum 42, no. 1 (2011): 71–82, https://doi.org/10.1016/j.geoforum.2010.10.001. 

7 “Line of Inquiry: Milena Almagro on Public Housing Demolition and Urban Inequality,” The University of Chicago Booth School of Business, accessed October 8, 2025, https://www.chicagobooth.edu/review/line-inquiry-milena-almagro-public-housing-demolition-urban-inequality.  

8 Amy Yee, “Illinois Joins Justice Department Lawsuit against RealPage and Big Landlords,” Chicago Sun-Times, January 10, 2025, https://chicago.suntimes.com/real-estate/2025/01/09/illinois-justice-department-lawsuit-realpage-landlords.  

9 “Thoma Bravo-Owned RealPage’s Latest Actions: Lawsuits and Lobbying,” Private Equity Stakeholder Project PESP, July 24, 2025, https://pestakeholder.org/news/thoma-bravo-owned-realpages-latest-actions-lawsuits-and-lobbying/.  

10 “Chicago Multifamily Market Outlook | Chase,” accessed September 4, 2025, https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/chicago-multifamily-market-outlook.  

11 2nd City Zoning, “RS-3 – Residential Single-Unit District,” 2nd City Zoning – An Interactive Map of Chicago’s Zoning Code, accessed October 8, 2025, https://secondcityzoning.org/zone/RS-3/.  

12 Helena Gu and David Munro, Zoning Reforms and Housing Affordability: Evidence from the Minneapolis 2040 Plan, n.d.2