Arizona Attorney General Kris Mayes recently told the media that she is so concerned that the Justice Department might drop its antitrust case against RealPage – an online aggregator of market data for landlords – that she is “actually considering sending a letter to (U.S. Attorney General) Pam Bondi.” On March 11th, she did just that.
So while we’re bringing out the big guns, General Bondi please consider this my open letter. Cancelling what Andrew Surabian, campaign advisor to Vice President J.D. Vance, called “a transparently obnoxious case of politically motivated lawfare” would be an act of leadership in support of the rule of law and in the interests of actual renters.
RealPage is an AI modeling algorithm that takes in public and private data on rents, competitor prices, and other market information, anonymizes it from 16 million of the nation’s approximately 50 million rental units, and analyzes this data to calculate and predict price elasticity. Many landlords use RealPage to discern the optimal rents they can charge. Consumers can get much of the same benefit by going to Zillow or apartments.com.
Biden’s antitrust chief at Justice, Jonathan Kanter, blamed RealPage for high rents. He said that such algorithms “can be even more effective than the smoke-filled rooms of the past” by allowing landlords to collude on price. Kanter was only more than willing to put his regulatory powers in service of the Biden-Harris, which desperately needed cover as rents soared by 25 percent or more in some urban markets. This was part of the campaign strategy to blame high energy prices on Putin, food inflation on greedy grocers, and quite possibly the high price of eggs on the hen cartel.
Now this legacy antitrust lawsuit continues into the Trump era. Does it have any merit? Former presidential candidate Jimmy McMillian said it first and said it best: “[√]The rent is too damn high!” But why?
One reason was the Biden Administration’s decision to pour unprecedented levels of peacetime spending on top of blowout pandemic spending, sparking inflation and causing interest rates to soar. That administration’s decision to print an extra $2 trillion, despite liberal economists waving their arms to warn of inflation, is the main reason the rent is too damn high. If you build an apartment complex today, depending on your creditworthiness and local market conditions, you might pay between 8 to 16 percent in interest. The Pacific Research Institute of San Francisco reports that if you are in a regulation-heavy state like California, environmental reports alone can easily add $1 million to the cost of a housing development. Add to that the costs of all the other NIMBY and zoning rules. No wonder that last year, Zillow estimated that the United States is short 4.5 million homes to meet Americans’ needs.
What can we do? Deregulation frees markets to produce more of a good or service. Precise market information lowers pricing by letting consumers and businesses shop for the best deal. We saw this principle at work with airlines. In the 1970s, the price of an airline ticket was out of reach for most Americans. Now you can make the airlines compete for your business online. And if you don’t feel like flying, you can find the cheapest gas in a given location with the GasBuddy app.
Similarly, when landlords understand the market, they can make better decisions on whether or not to build, and whether to raise, lower, or maintain rents. The Sherman Antitrust Act is clear – they cannot collude. But giving a broad section of the market access to market data is not collusion. With the right economic conditions, landlords could just as easily maintain or lower rents.
But controlled markets, not competitive markets are the true goal of the progressive antitruster. The DOJ lawsuit is based on the idea, to paraphrase George Orwell, that “ignorance is strength” – that somehow consumers will benefit if we force markets to use less information.
There is no reason why this lawsuit concocted to meet the campaign needs of the Biden-Harris era should be continued by the Trump Administration. If this administration wants to make housing more affordable, it can reduce the deficit and spur deregulation, relieving inflationary pressure on interest rates. It wouldn’t hurt for the president or housing secretary to go big urban areas and call out all the environmental, zoning and other red tape that raises the price of construction.
Many Americans are still traumatized by rents that are too damn high. The housing deficit is partly a result of the national deficit, and partly the result of short-sighted decisions made by state and local governments. We can fix this by fixing policy. America needs more housing, not more lawsuits.
