New York Proposes Strict Transparency Rules for AI-Altered Real Estate Listings

New Yorkers, much like Tel Avivians, are well accustomed to reading real estate listings with a grain of salt: a bedroom that barely fits a bed, an office that is essentially a closet, and a window opening onto a brick wall. Yet artificial intelligence has turned this age-old guessing game into something entirely different. It can replace a kitchen, renew flooring, eliminate water damage, expand a room, and even add a fireplace that was never built.

New York City Mayor Zohran Mamdani wants this deception to end before prospective tenants ever step foot inside a property. Under a newly proposed initiative, landlords and real estate brokers who publish digitally altered photos or videos will be required to clearly and prominently label them within the listing. The move does not seek to ban the use of AI or return the brokerage industry to the days of film. Virtual staging in an empty apartment, lighting adjustments, and minor edits can remain. The goal is to make it transparent to apartment seekers when they are viewing a genuine record of a property, and when they are being shown an enhanced, furnished, or entirely fabricated version.

"You shouldn't have to wonder if the apartment you are seeing online is even real," Mamdani said, before taking a swipe at the city's leading rental portal: "It's called StreetEasy, not StreetHard."

The Rent Gouging Report and Housing Reforms

The proposal is included in the "Rent Gouging Report" by the Mamdani administration, a 68-page document compiled following a series of public hearings across all five boroughs of the city. According to the report, 2,419 New Yorkers participated in the process, 852 in-person listening sessions were held, and 882 digital testimonies were collected. The result is a 23-point action plan, which includes investigating every complaint regarding a lack of heat, thoroughly remediating mold rather than simply painting over it, cracking down on out-of-service elevators, and granting legal recognition to tenant committees.

In June, the city's Rent Guidelines Board also approved a rent freeze for approximately one million rent-stabilized apartments, delivering on a central campaign promise by Mamdani. The mayor chose to present the plan at the Tenement Museum on the Lower East Side. In the historic Orchard Street building, 110 people once lived—virtually all of them Jewish immigrants from Eastern Europe—and for its first forty years, the building lacked running water or indoor plumbing. Back then, a law was required just to force a landlord to turn on a hallway light. Now, the city is trying to regulate what a landlord is allowed to turn on in a photograph.

The Rise of Housefishing

The problem has earned the moniker "housefishing" in the United States, the real estate cousin of "catfishing" from dating apps. Flattering edits are hardly a new invention. Brokers have added furniture, fixed lighting, and photoshopped away unsightly cables long before anyone asked an image generator to insert a Scandinavian rug. Yet today, it takes mere minutes to swap out kitchen cabinets, turn a courtyard lush and green, erase an unsightly utility pole outside the window, or render a sunset the apartment has never witnessed.

In a viral New York case, an apartment that appeared spacious and brightly lit turned out to be cramped, featuring a shower located directly inside the kitchen. In a video for a Portland apartment listed for $260,000, a fire crackled inside a non-existent fireplace. The broker admitted that the AI had added it of its own accord. A 38-year-old graphic designer searching for an apartment in Hoboken, New Jersey, visited a property this summer that looked bright, spacious, and designer-styled on Zillow. Instead, he discovered a queen-sized bed overwhelming the bedroom, an office that was actually a closet with a desk, and rooms that were significantly darker.

According to the designer, this was not an isolated incident: in other apartments, he encountered photos that altered bathroom fixtures, kitchen cabinets, and fireplaces. The broker showing the apartment claimed the editing was intended to clean up the mess left by previous tenants, rather than artificially enlarge the space. Without the enhancements, he explained, half of the prospective leads would not have bothered to show up.

Economic Incentives and International Standards

This is precisely the friction point: what looks to a seller like digital cleaning looks to a renter like a wasted trip to the wrong property. The damage is particularly severe for those searching for an apartment from out of town. A renter moving to New York for work or studies might sign a year-long lease without ever laying eyes on the property. For someone locking down an apartment all the way from Tel Aviv, a deceptive photograph is no longer just an unnecessary subway ride, but an expensive commitment to a place that looks nothing like the promises made.

The economic incentive is equally clear. Physical home staging may require a consultant, movers, and furniture rental, taking days and costing hundreds or thousands of dollars. Certain companies now offer to produce an AI-powered real estate video within ten minutes for just $12 per listing. They argue that the usage is fair as long as it is properly labeled and does not alter the home's structural architecture, such as doors and windows. Yet in practice, even brokers admit they struggle to tell what is real. Common red flags include mismatched light fixtures, an exterior that bears no resemblance to the building on Google Street View, and spaces washed in an unnaturally warm, uniform glow.

The city noted that it has also encountered listings for apartments that do not exist at all, used as bait before brokers demanded illegal fees to show actual inventory. Mamdani noted that Zillow, the largest real estate portal in the U.S., supports clear disclosure when AI substantially alters an image, alongside displaying the original photo wherever possible. The company acknowledges that artificial intelligence has made edited photos faster to produce, harder to spot, and far more prevalent.

StreetEasy stated that it requires listings to accurately represent the property, regardless of whether AI was used, and urged users to report misleading advertisements. California has already gone a step further in sales transactions: a law taking effect in January requires brokers to clearly label photos where structural elements have been altered and provide access to the original version via a link or QR code. The law details a near-catalog of changes requiring disclosure, ranging from furniture and appliances to walls, facades, landscaping, and the view from the window.

Exposure corrections, color balancing, cropping, and straightening that do not alter the property's appearance are exempt. Conversely, the law does not apply to wide-angle lenses that enlarge a room at the moment of capture, targeting instead post-production alterations. In Israel, where renters have long learned to suspect a living room stretched by a wide-angle lens or a balcony photographed from an angle that hides the neighboring building, there is still no mandatory labeling requirement for AI-edited real estate photos. A general legal framework exists: the Consumer Protection Act prohibits businesses from misleading consumers on material matters, and this prohibition extends to advertising. The Real Estate Brokers Law obligates brokers to act with loyalty and fairness and to provide clients with material information about a property. An image that adds a window, erases water damage, or invents a parking space can be considered a misleading representation and trigger severe legal liabilities.

However, there is currently no unified label, no requirement to attach the original photograph, and no simple rule clarifying at what point a virtual sofa crosses the line into a entirely virtual apartment.

Meanwhile, in Rochester, Minnesota, a broker recently arrived with a buyer at a home she already knew from its listing. Waiting for her inside were outdated tiles that completely clashed with the impression left by the photos. Even after years in the business, she wasn't sure she had entered the correct property.