Housing Policy Doesn’t Have To Be Rocket Science, But Ignoring Real Issues To Make It Appear More Simple Is Wrong.
Matthew Yglesias is a certified YIMBY, and that’s fine. Exclusionary zoning, fake historical designations, height restrictions, and overburdensome public input on housing are all genuine issues in the creation of more housing.
At its core,The “YIMBY” movement (Yes In My Back Yard for those readers who are not chronic Twitter users) posits that there are unnecessary restrictions on the development of housing that results in a lack of new construction, creating housing shortages that drive up prices and force people into homelessness. And to some extent, they are right – the affordability crisis that millions of tenants face every month cannot be fixed without an increase in the supply of affordable housing that could be spurred by YIMBY policies.
But an issue arises when this stance is taken to the extreme and YIMBYs begin to attack any other policy demand on housing. This is perhaps most commonly seen in a hatred of rent control and other protections for tenants, though some YIMBYs agree that these are important policies to be pursued jointly with removing unnecessary barriers to housing development.
Even more strangely, this refusal to discuss any non-supply side fixes to housing issues sometimes morphs into an anger at the mention of the (alleged) rental price-fixing software RealPage. To some, any discussion of housing issues that do not conform to the core YIMBY policy of deregulation are a dangerous distraction from the goal of their ethos. In this view, it’s crazy to suggest that a market worth a cumulative $47.5 trillion could have multiple issues worth addressing. We, on the other hand, think that more than one thing can be ailing housing at the same time.
For those unaware, RealPage is a private equity-owned tech company which allegedly decided to “disrupt” the rental market in the same way that Uber “disrupted” labor laws and by which cryptocurrency hopes to “disrupt” securities law; ie., by flagrantly disregarding it. In short, RealPage created a software that recommends rent prices to landlords using their algorithm’s analysis of local housing markets. Through the software, RealPage encouraged price hikes whenever possible and pushed landlords to accept more vacant units from price hikes as a cost of maximizing profits. This obviously sucks, but is probably not illegal.
What is allegedly illegal: the fact that RealPage’s rent pricing software is trained on a trove of “nonpublic, competitively sensitive data” on rental rates and lease terms that the company collected from its landlord clients. Basically, RealPage wasn’t using an algorithm that scanned Zillow and Craigslist postings to create its rental rate suggestions. It bundled private information from landlords, (landlords who are supposed to be, you know, competing with each other) and pushed out coordinated rate hikes across a market.
RealPage then successfully encouraged landlords to “auto accept” their software’s pricing recommendations (which were allegedly based on the nonpublic data it gathered from its other clients in the same market) and enforced their ‘suggestions’ by tracking when property managers rejected their pricing. The company went so far as to report employees to their superiors if they did not comply with RealPage’s pricing recommendations. This not only allowed for rate hikes, but also allegedly helped prevent rent decreases when market forces would otherwise dictate them.
RealPage’s actions, according to the US Department of Justice and a bipartisan group of state attorney generals, decreased competition among landlords and violated antitrust laws. Despite the high-tech facade, RealPage allegedly created a fancy computerized version of a cartel, something that has been illegal since Benjamin Harrison was president.
So what does this have to do with YIMBYs? You would assume that RealPage using their algorithm to allegedly scheme with landlords and undermine fair pricing would be something the YIMBYs would oppose. After all, formation of price cartels would invalidate the very basic premise of YIMBY policy – that increasing supply will lower rents through market forces – by eliminating the basic market forces their program depends on. Some YIMBYs certainly did embrace the lawsuits against RealPage, but many prominent ones have instead made it out to be a distraction. We’ve written about this before, as many prominent housing pundits just decline to even mention the scandal. Some (like a policy manager at the prominent YIMBY group, California YIMBY) have even claimed that RealPage is nothing more than a software that helps landlords set fair market rents despite having supposedly read the lawsuit filings. But others still, Yglesias in particular, are just annoyed by the mention of RealPage.
Yglesias’ latest consternation about the mention of RealPage came out in his Wednesday newsletter, where he brushes off the issue of rental price fixing by implying that those wishing to discuss the scandal of a major firm assisting landlords across the country in price fixing is “leading us off track.” About the issue, he dismisses the concern about RealPage-like price fixing by saying “We know what the jurisdictions with more abundant housing look like. They do not have robust social housing programs. They do not have wildly different antitrust policies.” The problem with this brush-off is that the difference between jurisdictions with and without RealPage isn’t necessarily a different set of antitrust laws, but a willingness (and the capability) to enforce them.
Yglesias’ assertion not only ignores the impact of RealPage’s presence, which state Attorneys General have shown through their lawsuits, but implies that to care about RealPage’s impact on housing comes at the exclusion of all other factors. We are not dishonest enough to pretend it is easy to isolate the effect one factor like RealPage has on a broad housing market. But we are bold enough to say price fixing is bad, and the DOJ and state lawsuits show RealPage has had an effect even among the many other factors that make up the current housing market: price functions are not univariable.
RealPage is currently facing accusations from tenants and enforcers around the nation for the violation of existing law. Discussing RealPage isn’t a distraction from the real issues, it is a part of them. By including it in discussions of the ongoing housing affordability problem, Democrats not only get a chance to point to an ongoing win against illegal corporate price gouging (something that is extremely popular in crucial swing states), but is easy to understand. As real as the issue of single-family zoning may be, it is both complicated to explain and its elimination is controversial. It makes sense then that things like RealPage would be a part of a quick stump speech where explaining missing middle housing would not. And as antitrust enforcement is a matter of federal law, discussing RealPage also makes more sense to discuss on the presidential or congressional campaign trail than something like zoning, which is controlled at the state or municipal level.
As someone who frequently publishes newsletters on why Democrats should campaign on popular moderate issues, Yglesias should be willing to concede that a popular real issue is worth bringing up on the campaign stump. Unfortunately, since the RealPage scandal has become associated with his enemies on the left (including us), he too has fallen prey to negative polarization and embraced the dogma that RealPage is a fake issue.