On October 24, 2023, the Senate Judiciary Committee, Subcommittee on Competition Policy, Antitrust and Consumer Rights, held a hearing entitled “Examining Competition and Consumer Rights in Housing Markets.” Several themes emerged from opening statements and witness testimony, including the adverse impact of institutional actors backed by private equity, “junk fees” in housing, algorithmic tools that purportedly artificially increase rents, calls for changes to federal anti-trust policy to align with the modern economy and the dire need for more affordable housing supply.
Witnesses appearing before the Subcommittee were as follows:
- Diane Yentel, President and CEO, National Low Income Housing Coalition,
- Vanessa Brown Calder, Director of Opportunity and Family Policy Studies, Cato Institute,
- Luis Quintero, Assistant Professor, Johns Hopkins Carey Business School,
- EJ Antoni, Research Fellow, The Heritage Foundation, and
- Maurice Stucke, Douglas A. Blaze Distinguished Professor of Law, University of Tennessee College of Law.
Highlights
A hearing of this kind in the Senate Judiciary Committee is unusual; however, Subcommittee Chair Amy Klobuchar (D-Minn.) made the connection with housing markets immediately in her opening statement, noting that housing affordability was connected to competition policy. She pointed specifically to challenges for renters in comparing and contrasting prices, the use of algorithmic pricing tools in setting rents (and in her view designed to raise prices) and the role of institutional investors in buying up vacant homes and driving up prices. Klobuchar went on to assert that institutional landlords, unlike mom-and-pop firms, are more likely to charge “junk fees,” evict families and increase community instability.
Drawing the connection even closer, she suggested that antitrust laws, within the purview of her subcommittee, were designed to “ensure fairness in the sale of homes.” Further, she asked whether these laws could be updated to “prevent junk fees, root out anticompetitive tools that incentivize price fixing and ensure the market is more responsive to the increased need for housing.”
Subcommittee Ranking Member Mike Lee (R-Utah) in his opening statement pointed to state and local regulations and how they constrain the local housing supply in many areas, while demand is increasing. He said that people across the US are burdened with zoning and overburdensome land use regulations, which in many cases, directly prohibit housing construction. Lee also highlighted the high inflation environment.
Chair Klobuchar asked Professor Stucke about price setting tools and how, in her words, they “use data to increase prices among competing landlords.” She went on to ask how these pricing tools could facilitate higher prices. Stucke described two scenarios. The first being that every firm has its own pricing algorithm. The other is where all firms use one “hub” and where there is understanding that they share sensitive information to the benefit of all of them. Senator Hirono inquired on this same topic, citing the pending litigation around algorithms and asking Professor Stucke if there should be any updates to antitrust laws to address fixing of prices. Stucke said yes, antitrust laws need to be updated to the modern economy.
The National Apartment Association (NAA) continues its advocacy to educate federal lawmakers about the rental housing industry. Our statement for the record for this hearing, along with the National Multifamily Housing Council, speaks directly to the topics raised during the hearing. Presently, we are not aware of any legislation to be drafted on these topics, however, we are aware of federal agencies’ interest in enforcement actions and changes to housing policy. Learn more about NAA’s advocacy related the Federal Trade Commission notice of proposed rulemaking on “hidden and falsely advertised fees” and the White House Executive Order on Artificial Intelligence. As we have at every stage of the White House Blueprint for a Renters Bill of Rights, we will need every NAA member and affiliate in our network to ensure the industry’s voice is heard in these regulatory discussions.