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Hack WatchNewsletter | December 15, 2023

Bidenomics Needs A Corporate Crackdown On Rent-Gougers

Anti-MonopolyDepartment of JusticeEconomic PolicyFTCHousingMedia Accountability
Bidenomics Needs A Corporate Crackdown On Rent-Gougers

This article first appeared in Hack Watch, our weekly newsletter on media accountability. Subscribe here to get them delivered straight to your inbox every week, and check out our Hack Watch website.

Earlier this week, our colleague Emma Marsano wrote for The New Republic about a huge opportunity that the Biden Administration (which is facing flagging approval ratings heading into the 2024 election) should take advantage of: pick big fights with the corporate crooks rigging our economy.  This would be a sharp break with Biden’s current strategy, which as Emma notes largely entails “whining to anyone who will listen about unfair voter views of [his] economic policies.” With housing costs (the largest monthly expense for millions of Americans) now at an all-time high and half of renters now spending 30% or more of their income on rent, it doesn’t take a political genius to figure out why so many voters (particularly working families) are turned off by Biden’s triumphalist economic messaging.

Conversely, publicly picking fights and punching back against greedy rent-gougers could win Biden back the working-class support he needs for 2024. Standing up for tenants against predatory investors would give Biden a great opportunity to show voters that he’s made the right enemies by (to borrow a phrase from Franklin Roosevelt) “welcoming the hatred” of corporate landlords. It would also make Biden the perfect foil to Donald Trump, a shady real estate developer and former slumlord

Readers of this newsletter will be familiar with Emma’s suggested target: RealPage. As we wrote in August, the private equity-owned real estate software company is currently facing a legal firestorm for helping corporate landlords orchestrate exorbitant rent hikes.  According to a bombshell ProPublica investigation, RealPage facilitates landlord coordination via its algorithmic rent-setting software Yieldstar, which is used by property management behemoths like Greystar, Camden Property Trust, and Crow Holdings (the family real estate firm of Harlan Crow, Justice Clarence Thomas’ billionaire benefactor). 

Since we last checked in on the RealPage scandal, the company’s legal woes have only gotten worse. In early November, D.C. Attorney General Brian Schwab sued Realpage and 14 of its landlord clients for colluding to illegally raise rents for tens of thousands of DC residents. Just two weeks later, the Department of Justice Antitrust Division sided with tenants in a separate class-action lawsuit against RealPage. 

Amidst this scandal, RealPage executives have desperately tried to counter the damning facts unearthed by ProPublica and the Yieldstar lawsuits by branding their company as a neutral, credible source of data and analysis on the rental housing crisis. As Emma notes in TNR, RealPage executive Jay Parsons is at the forefront of this PR push. Parsons, Emma writes, “regularly argues that private equity and institutional investors have no culpability for rising rent prices (blaming a supposed lack of supply of housing), even as he and RealPage sell their services to these same landlords on the promise that they can increase rental profits.” Just this week, Parsons used his perch as a 20,000-follower “rental housing economist” to argue that Senator Jeff Merkley’s bill to ban hedge fund investors from buying up single-family homes (a key driver of rent hikes) would “make single-family rentals less accessible and more expensive for renters.” This is despite the fact that Parsons, according to ProPublica, has publicly bragged about RealPage’s success in driving up rents at industry conferences. 

Parsons, a former reporter himself, has also been adept at getting self-serving quotes into media reports about the rental housing crisis—quotes that shift blame away from predatory rent gougers and omit any mention of his company’s crimes. Back in August, we sent a letter urging the editors-in-chief of six major media outlets (including his former employer, the Dallas Morning News) to stop quoting Parsons on housing issues without at least disclosing RealPage’s ongoing legal controversies. Unfortunately, the mainstream media has largely ignored our advice and continued to treat Parsons as a credible independent expert: 

  • NBC News, 12/13/23:  “Jay Parsons, chief economist for the property management company RealPage, said landlords and builders wanted to get in after they saw demand and rental prices spiking during the early stages of the pandemic. ‘That cycle led to apartment construction jumping to the highest in 50 years,’ he told NBC News.”
  • Axios, 12/11/23: “The vast majority of young renters aren’t buying for lifestyle reasons, preferring the flexibility to move, RealPage chief economist Jay Parsons tells Axios.”
  • Dallas Morning News, 12/6/23: “‘Apartment rent growth has been rapidly cooling off since peaking in March 2022,’ RealPage chief economist Jay Parsons said in the report. ‘The rent slowdown has everything to do with supply and little to do with demand.’”
  • CNBC, 10/21/23: “Demand for rentals, however, is rising. ‘It appears slowing inflation and a still-strong job market are boosting consumer confidence and, in turn, spurring household formation among young adults most likely to rent apartments,’ said Jay Parsons, chief economist at RealPage.” 
  • GlobeSt, 9/25/23: “Wages are finally outperforming rents and by a wide margin. The trend is expected to continue in the immediate future, according to Jay Parsons, Chief Economist of RealPage, who also authored this recent report.” 
  • Reuters, 8/11/23: “Strip out shelter, and ‘inflation is basically gone,’ according to RealPage housing economist Jay Parsons. ‘Rent is the most important variable in the CPI’s largest component, which is shelter. And we know where shelter costs are going. Lower,’ Parsons added.” 
  • The Hill, 8/8/23: “‘The research tells us that most apartment renters are happy being apartment renters,’ Jay Parsons, chief economist for RealPage, said in a press release.”

As we’ve said before, this failure to properly inform readers of Parsons’ and RealPage’s business with corporate landlords (and thus, their financial incentive to oppose rent regulations and promote deregulatory supply-side solutions while distracting from antitrust concerns) is media malpractice. Parsons’ misleading claims about declining shelter costs also merit further scrutiny and context. The miniscule recent slowdown in rent growth (which means rent levels are simply growing slower, not declining in absolute terms) is nowhere near enough to offset the astronomical rise in rents over the last twenty years (and particularly from 2021-2022, when rents rose by a massive 7.5%) that has far outpaced renters’ median wages. This imbalance between rent and wage growth has taken a severe financial and emotional toll on poor and working-class tenants. As the New York Times reported earlier this week, nearly two-thirds of households in the bottom 20 percent of earners now pay more than half their income for rent and utilities, an all-time record high. 

VICE reporter Roshan Abraham provides a great example of how the media should address both of these points when covering Parsons and RealPage:

  • VICE, 10/13/23: “Jay Parsons, chief economist at RealPage, which itself is under federal investigation for the role its price-fixing software played in inflating rents, said on Twitter that the numbers showed rent growth cooling. (Rent growth is slower than it was last Spring.) He said there was a lag between asking rents and CPI. […] Of course, rent growth slowing down doesn’t mean that it will get any cheaper; just that it will get more expensive at a slower pace.” 

If the mainstream press won’t hold RealPage accountable, then the Biden administration should. As Emma suggests, President Biden or Vice President Kamala Harris should leverage the bully pulpit by holding a press conference outside RealPage headquarters and “calling out the corporation’s greed in extracting excessive profits from renters who are just trying to afford housing.” Executive branch agencies like the Consumer Financial Protection Bureau and Federal Trade Commission (led by consumer champions Rohit Chopra and Lina Khan) could likewise crack down further on RealPage’s sloppy handling of tenant rental application data. On top of backing tenant class action suits, the DOJ could also file its own charges against RealPage for antitrust violations or seek to break up the company’s anticompetitive 2017 acquisition of Rainmaker Group—formerly RealPage’s biggest pricing competitor. And President Biden himself could use the opening provided by a RealPage crackdown to defy the landlord lobby and embrace a robust executive agenda for rent regulation and tenant protections.

In the coming months, we hope to see the Biden Administration and more State Attorneys General take the fight to RealPage and fully investigate just how much they’ve fueled the rental housing crisis. Going after price-gougers like RealPage speaks to the majority of Americans who identified corporate greed as the top factor driving up costs. Not to mention, a corporate crackdown could help Biden to win back voters, a majority of whom see housing affordability as a very big problem. While neoliberal pundits like Matt Yglesias and Eric Levitz have urged a single-minded focus on supply-side solutions, RealPage’s role in rent gouging demonstrates that the housing affordability crisis does not stem from hindrances to supply alone. Not enough of current housing is or will be realistically affordable  in the next few years, and any lingering affordable units today are increasingly subject to unfair corporate machinations like collusion to squeeze profits out of tenants.

Biden’s team has already done more than Trump would have (indeed, RealPage’s growth was fueled by the 2017 Rainmaker merger approved by the Trump administration). And Trump is deeply interconnected with America’s greediest private equity landlords. But how many voters know about this salient difference? 

If “Scranton Joe” wants to rally working-class voters into a reelection victory, our advice is simple: embrace a corporate crackdown. 

READ MORE: It’s Time to Punch Some Corporate Villains by Emma Marsano

IMAGE: Official White House Photo by Adam Schultz, 9/14/23

Anti-MonopolyDepartment of JusticeEconomic PolicyFTCHousingMedia Accountability

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