Despite occasional political friction, the United States and Canada remain deeply intertwined economically and culturally. Their similarities make them ideal for comparison — especially when investigating the causes of rising rents and housing prices, which have surged in lockstep in both countries.

Between 2019 and 2024, Canada’s median home price skyrocketed 45 percent to CN $481,745, according to Zoocasa. In the United States, the increase was 34 percent over the same period, landing at $426,800, per the St. Louis Fed.

Rental costs followed suit. Nerdwallet reported Canadian average earnings rose 74.3 percent from 2003 to 2023, but home prices ballooned 227 percent. US income grew 86 percent, but home prices climbed 135 percent. Rents nearly doubled in both nations.

So, what’s to blame for this housing inflation? According to regulators on both sides of the border, the culprit is property management software — specifically, artificial intelligence-driven pricing tools like RealPage’s rent optimization algorithm. These tools suggest optimal rent levels based on a property’s characteristics and local market conditions. Politicians allege these AI tools amount to collusion, functioning as high-tech price-fixing. This regulation-happy narrative couldn’t be further from the truth.

A Fallacy of Central Planning

In Canada, a class-action lawsuit filed last December targets RealPage and 14 property management firms. However, the AI pricing tool in question is barely used there — it accounts for no more than 1 percent of the Canadian rental market, and even then, the pricing algorithm is not used — the software is largely relegated to back-office bookkeeping. Yet, Canada’s rent still surged. The software didn’t cause the crisis — it’s merely a scapegoat for deeper systemic problems.

Still, politicians and the press are pressing forward.

In the US, the now-departed Biden DOJ launched an antitrust suit that mirrors the Canadian claims. Senator Amy Klobuchar has also introduced legislation aimed at “curbing” rental AI software.

As Friedrich Hayek warned, “The more the state ‘plans,’ the more difficult planning becomes for the individual.” 

This is a textbook case of regulatory overreach founded on a flawed assumption: that prices are made in boardrooms or by algorithms, rather than in the marketplace through voluntary exchange and supply-demand dynamics.

The Real Drivers: Cantillon Effects and Regulatory Distortion

If we’re serious about diagnosing the problem, we must consider the Austrian theory of malinvestment and Cantillon effects. Central banks’ decade-long policy of artificially low interest rates — pushed under the guise of stimulus — has distorted capital allocation. Cheap credit flooded into real estate markets, fueling speculative bubbles and driving up housing prices beyond what middle-class incomes could support.

At the same time, government-imposed zoning restrictions, construction permit delays, and rent control laws have stifled the supply of new housing. This is a classic example of what Ludwig von Mises called interventionism — a patchwork of state interference that produces unintended consequences worse than the problems it seeks to solve.

A Toronto survey by Simplydbs reveals the public understands what many policymakers do not. Renters cited inflation, limited housing construction, and high ownership costs as the primary causes of rising rents. Landlords ranked lowest. The market participants themselves see the truth.

Spontaneous Order, Not Bureaucratic Panic

The market process is decentralized. Prices convey knowledge dispersed among millions of actors — what Hayek called the “use of knowledge in society.” AI pricing tools merely aggregate this knowledge more efficiently. They do not override it. Banning such tools won’t bring prices down. It will only cripple landlords’ ability to respond to local conditions in real time — likely causing even more inefficiencies.

Moreover, this crackdown on AI rent tools is not a principled stand against monopoly or collusion. It’s a case of political theater — an attempt to externalize blame for inflation that was caused by governments and central banks themselves. As Mises wrote, “Government is the only agency that can take a useful commodity like paper, slap some ink on it, and make it totally worthless.”

We are living with the consequences of unsound money, bad regulation, and housing policy shaped by political expediency, not market principles. That is the root of rent inflation — not software, and certainly not landlords using modern tools to navigate distorted markets.

If the goal is affordable housing, the answer lies in removing the regulatory roadblocks, ending monetary inflation, and letting the market perform its coordinating function free from coercive interference. Anything else is just a detour on the road to serfdom.