Senate panel signals future work on AI’s impact on housing

Lawmakers on the Housing, Transportation, and Community Development Subcommittee called out the need for a regulatory framework and legislative fixes during a hearing on artificial intelligence’s promise and peril on housing and rental markets.
Sen. Tina Smith, D-Minn., speaks at Earth Rider Brewery on Jan. 25, 2024, in Superior, Wis. (Photo by Stephen Maturen/Getty Images)

Congress and federal agencies have legislative and regulatory work to do on the use of artificial intelligence in the housing and rental markets, lawmakers and experts said during a congenial Senate Banking, Housing and Urban Affairs subcommittee hearing Wednesday. 

Members of the Subcommittee on Housing, Transportation, and Community Development were largely in agreement on the need for regulations in these mostly uncharted waters. While the technology could bring positive outcomes to the housing market, such as expediting application approval processes and expanding access to credit, lawmakers noted that there are plenty of downsides to consider as well, including the possibility of AI models trained on datasets that reinforce bias and discrimination.

“These are powerful tools that hold great potential to cut costs and to target services, to reduce wait times and to even reduce bias,” said subcommittee Chair Tina Smith, D-Minn. “But they also have the potential to bake in existing inequities and to reduce accountability and even limit opportunity.” 

Sen. Cynthia Lummis, R-Wyo., the subcommittee’s ranking member, noted that her sustained push for a regulatory framework for digital assets has “some parallels” with the need for oversight on AI in housing. 


“We have a new technology rapidly changing in a space, and a need for thoughtful consideration of how existing regulations may apply,” she said. “We need rules and regulations governing AI to be scoped appropriately, not using it as an excuse to force decades-old technology to comply with a new and unnecessary set of impractical regulations.”

Dynamic pricing systems in housing is one area that Congress has already shown interest in — and could be ripe for additional action. Sen. Raphael Warnock, D-Ga., cited a ProPublica story that detailed how an algorithmic software program was able to assess data across multiple companies and buildings in the same area and then artificially inflate rents. 

“I am concerned that these tools may enable property management to coordinate pricing, coordinate escalation in fleet rents and stifle competition,” Warnock said. 

Lisa Rice, president and chief executive officer of the National Fair Housing Alliance, said such AI-fueled systems “are contributing to the increase in rental housing prices. And because the systems are operated by a few companies that amass data amongst a number of different landlords throughout a region, there is a great propensity for reducing competition.”

With little transparency surrounding unexplainable rental price increases, Rice, whose trade group represents more than 170 fair housing organizations throughout the country and its territories, said that increased regulations are needed. Warnock concurred, noting that the impact algorithms are having on prospective homebuyers in communities of color represents a “unique threat that Congress has to address.”


Later in the hearing, Lummis asked the witnesses to share what regulatory approach they would pursue on AI in housing, as well as “guiding principles” that could inform the subcommittee’s work. Nicholas Schmidt, partner and AI practice leader at BLDS and the founder and chief technology officer of SolasAI, pointed to “excellent work” that the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency have done in the space.

The CFPB, which last year proposed a rule on algorithms, AI and fairness in home appraisals and issued guidance on credit denials by lenders using AI, has “done an amazing amount of self-education in bringing on really good people. And they’re doing a great job considering the resources they have, but they could use more,” Schmidt said, adding that both agencies “should be empowered to keep going in those directions.”

At the state level, Schmidt said that the New York Department of Financial Services’s recent circular letter on the use of AI systems and external consumer data in insurance underwriting and pricing is an “excellent” example of a document based on existing regulations and laws that “can be very effective.”

Dr. Vanessa Perry, interim dean and professor at the George Washington University School of Business and a non-resident fellow at the Urban Institute’s Housing Finance Policy Center, expressed concern that although “a number of states” have “done some really impressive things” on AI in housing, a patchwork regulatory approach to the issue would “create havoc for companies and in particular, it’s going to be problematic for smaller businesses.”

Sen. Catherine Cortez Masto, D-Nev., acknowledged Perry’s concerns but said it would still be worthwhile for the witnesses to share with the subcommittee “three things we can focus on in the housing space or the best model that a state has put forward.”


“If there’s a good model that can be brought to the federal level,” she said, “I think that’s worth looking at as well.”

Matt Bracken

Written by Matt Bracken

Matt Bracken is the managing editor of FedScoop and CyberScoop, overseeing coverage of federal government technology policy and cybersecurity. Before joining Scoop News Group in 2023, Matt was a senior editor at Morning Consult, leading data-driven coverage of tech, finance, health and energy. He previously worked in various editorial roles at The Baltimore Sun and the Arizona Daily Star. You can reach him at

Latest Podcasts