Daily I receive the notification “I am being tracked by nearby AirTag”

Again, this AirTag will continue to alert you when your iPhone is within Bluetooth range of it. Your iPhone is notifying you because it's not your AirTag.

If you don't want this to happen, ask your housemate to share their AirTag with you.

Ref: Share an AirTag or other item in Find My on iPhone - Apple Support

Not sure how to best answer your question ... but let me try.

First we have to set some parameters for your example scenario:

• The stranger has an AirTag and let's say its attached to their car keys.
• You have an iPhone that has an active connection to the Internet.
• This stranger walks with or near you for several blocks.

In this case, at some point in time after the stranger gets within Bluetooth range (~30-40'), your iPhone will get a notice that an "AirTag is following you."

Now a variation to this would be, whether or not, that stranger also has their iPhone with them.

• If they did, and they looked at the Find My app on their phone, they would see that the tag was with them. The location would be where they are at ... which may correspond to where you are as well. However, the tag is NOT tracking you at this point.
• If they did not have their phone with them, then the tag is transmitting its ID information to your phone (or any other iPhone nearby), and in turn, your phone will relay that ID (along with your phone's GPS location) encrypted to the Apple servers. Since they didn't have their phone, they would also not be tracking you at this point. Even if they were to go back and retrieve their phone, there would be no permanent location history or their tag. In addition their tag would start beeping to let them know that the tag is separated from their phone.

What Apple designed into the tags, to prevent tracking, is to alert iPhone or Android users that a unexpected AirTag (that they didn't own) is with or near them ... and traveling along with them.

The AirTag is not actually tracking you as it doesn't have any ability to do so.

Instead, it works with the Apple Find My Network, which consists of literally millions of iPhones, that relay the tag's ID, along with the phone's GPS location to the Apple servers. That is where the tag's owner would see the tag's location on the Find My app on their iPhone.

Any iPhone, or Android phone, within Bluetooth range of the tag, will get these notifications. It's how Apple designed the tags to work to thwart unwanted tracking. In this case, it's your housemate's tag ... so, when your iPhone is near their tag, it will provide location updates to their phone. The only way to prevent that is to remove the tag's battery.