Transcripts For CSPAN Hearing 20240702

Judiciary subcommittee this is just over 1. 5 hours. I dont know. The hearing is called the order. I dont know why wed be discussing the house right now. I dont know why we have this excitement right in our chamber, but i wanna welcome everyone to this very important hearing and im actually really excited to hear from our witnesses. I would like to thank Ranking Member lee and his staff for working with us to plan this hearing. So, everyone looks back fondly maybe at the first place they ever lived. For me in 1960, my parents wallpapered the last room in their house on a dirt road. 1315 oakview lane in plymouth, minnesota. I still remember that the whole, my whole time growing up, we lived in the same house and it had exposed wood ceilings. I had no dishwasher to the end, but it had exposed wood ceilings. And my grandma who grew up on the iron range in minnesota would come down to the cities to see the house and she would every single time my grandma, mary klobuchar say to my mom and dad, when are you gonna finish the ceiling . And the brightly colored appliances, butter yellow colored oven. That was all part of our lives. And my dad paid for that house with a gi loan. And today i think we all know that houses are not available to many young families in the same way that my parents could afford them on a teachers salary and a starting a newspaper reporter salary. In 19 said the 1960, the median home value was 11,900. That is about 123,000 in todays dollars. And this was of course, in the midst of the post war housing boom today, the median singlefamily home cost more than 400,000. If you look at it across america, this is an increase of more than 500 since 1980 more than 40 since 2020. Affordable options are too few. Freddie mac estimates that we need to build 3. 8 million new to make up for the housing deficit. And according to the national lowIncome Housing coalition, the Affordable Housing gap for those with low incomes is more than 7. 3 million rental units. We know rents have always gone up jumping more than 12 since august of 2022 alone. And in some 20 million households, they spend more than half of their income on housing. So what do we do . The Affordable Housing crisis is a result of complex longstanding issues. Many of which are the focus of our colleagues over in the banking, housing and urban affairs committee, chaired by senator sharon brown and tina smith. My colleague chairs the subcommittee. We know theres issues of workforce to build housing, theres issues of the cost of building housing and the component parts. But today were gonna focus on the role that competition policy changes to help address these market failures. So some of the issues ill put on the table that are relevant to our committee. First, renters face real challenges to compare and contrast prices. More and more of the costs of renting are hidden from view through the proliferation of junk fees. As a result, renters struggle to take advantage of price competition because the true costs of housing are not transparent. Second, housing is an area in which we have seen the widespread use of algorithmic pricing tools designed to raise prices even at the expense of higher vacancy rates. A growing number of Companies Like realpage and yardi offer services that collect competitively sensitive pricing information from competing Property Management committees , feed that data through sophisticated algorithms and recommend unit by unit prices. So landlords can charge a certain rent. Landlords have figured out that it is better for them and their bottom lines to use these products to price units high. So that some of them actually sit empty, but it is easier to have them priced high for them in the long term. And so, i believe landlords should be competing on price. And i dont think you see that happening when you have this algorithmbased game going on. Third, families are being boxed out of the market for Single Family homes by Institutional Investors. There have been wide range news reports about this where Institutional Investors will just buy up homes in a neighborhood making it out of reach, especially for first time home buyers. The institutional buyers are often backed by large private equity funds seeking reliable revenue through rental income instead of allowing families to achieve the dream of home ownership. The presence of these institutional actors drives up home prices because they can make all cash offers and waive inspections to outbid everyday people. And unlike mom and pop landlords, these absentee owners are more like to charge junk more likely to charge junk fees affect families and increase instability in our communities. Finally, this is all made worse by the fact that we are not building enough Affordable Housing. The number of starter homes being built has plummeted since the 2008 financial crisis which put hundreds of thousands of small builders out of business. This has left us reliant on fewer and fewer Large Company Home Builders that dominate Home Building in major metropolitan areas. The builders tend to focus on high end homes rather than starter homes, the consolidation in the Home Building market has been shown to reduce the number of new homes built by more than 100,000 houses every single year. So while we recognize a competition policy is no Silver Bullet and i will emphasize that as we talk about, im sure some of the other issues at hand. While it is no Silver Bullet for solving our Affordable Housing crisis, we shouldnt dismiss its importance. We should at least explore it and look at what possible solutions we can agree on. The antitrust laws were actually used in the 19 sixties to make the 1960s to make sure that there was fairness in sales of homes. And we now need to examine whether antitrust and Consumer Protection laws need to be updated to eliminate predatory junk fees from rental market. Root out anticompetitive tools that facilitate price fixing instead of competition and ensure the market is more responsive to the increased demand for housing. I look forward to exploring these issues with my colleagues and our esteemed Witnesses Today and now turn it over to senator lee. Rep. Lee thank you, madam chair. Thanks to all of you for coming. This is an important issue and im glad were holding the hearing. Millions of americans all across the country, including uh so so many in my own home state of utah are paying significantly higher prices to own rent or otherwise live in a home in 2023. Home ownership is even further out of reach for americans than it has been at any other time in modern history. And this has created problems, problems that we hope to address and discuss today just since discuss today. Just since july of 2021, just over two years ago, the affordability of a home has declined significantly even in that narrow time frame. According to the home ownership, affordability monitor housing accounted for about 28 of americans Median Income in january of 2021. Its a lot of money thats up then from what it had been just a few years earlier when it used to be much lower than that. But it is a sizable chunk. People were spending over a quarter between a quarter and a third of their income on housing. But lets look at what happened since then. Its jumped to a whopping 44 by september of 2023. These rates are worse than those seen during the financial crisis of 2008. Homes are less affordable today than at any other time since we starting keeping track of this particular set of records back in 2006. Weve never seen anything this bad since we began keeping those records. The monthly mortgage payment on a median price home is more than doubled in just two years in in two years. In 2021, it was 979. Well, today, that payment is 2059. It cost a family almost 13,000 more per year to live in the same house than it did just over two years ago, 2. 5 years ago. It was the moment our current president took office. And with rents at record highs, Many Americans have limited Housing Options available to them. If americans are spending 44 of their income, close to half of what they make on housing and 13,000 more per year than they did it two ago, it leaves families with less income, fewer resources and less savings left over to pay for basic essentials such as groceries, gasoline cars, all of which have become dramatically more expensive. At the exact same time that housing has become unaffordable. So, with less ability to pay for these basic, there isnt money left over from anything else. Anything else, whether thats an emergency, unforeseen expense related to a car repair or a health condition, a Family Member who needs help or a desire to go on a Family Vacation or buy something that the family needs. There isnt room for it because Everything Else has been taken up. And ultimately, the increased share of a familys income spent on housing may cause them to take on even more debt to make ends meet. And this in turn over time, it is going to lead to more bankruptcies. Many failures may contribute to the sudden, abrupt, and severe rise in housing costs. Weve got a number of things that we could look at. The first one i want to mention involves state and local regulations, which account for a significant constraint on housing supply. Any time we look at the price of a particular thing, whether its a good or a service or something as basic as a home, you have to look at supply and demand and how those two are interacting. And these things, these regulations impose significant constraints on housing supply at the same time when demand is hardly going away. And in many states like utah, its increasing rather abruptly and dramatically. In cities across america, residents are burdened with zoning and overburden some land use regulations at the federal state and local levels. And these regulations decrease the housing supply and, in many cases, directly prohibit Housing Development, increase costs, create uncertainty and they produce significant delays. For example, the affirmatively furthering fair housing rule originally adopted by the obama administration, increased Compliance Costs and the cost of housing by an additional by adding additional federal zoning restrictions. Those restrictions arent always things that show up as obviously the product of federal action because they translate into these local units of government , adopting new regulations, new restrictions in response to the affh rule because they have to comply with those rules in order to continue receiving federal funds. For example, under the Community Development block grant program. And it appears that the same will be true of the Biden Administrations version of the same rule, which has not yet taken effect but will soon. Second, americans are suffering through an extended period of high inflation generally, which has been particularly acute in the Housing Market. Throughout 2021, the inflation rate jumped to as high as 9 more than four times the Federal Reserves target inflation rate of 2 in large part due to profligate federal spending and irresponsible Monetary Policy. Home prices rapidly increased over the last five decades. They have been eclipsing the inflation rate by 150 since 1970. In fact, if home prices grew at the same rate as inflation since 1970, the median home price today would be just 177,788 rather than 408,100. Finally, federal, the federal governments Land Ownership is also a critical factor, especially in parts of the United States like utah, our home to vast swaths of federal land in holdings. In 20, in 2021, the states with the highest increases in home prices year over year were not coincidentally, arizona at 28. 8 . Idaho at 28. 7 . And utah 24. 5 . This comes as no surprise to us in the west. The federal government owns a really obscenely large percentage of our land in utah. The federal government owns about 67 of all the land in utah. Thats two thirds. Well, a small portion of this land consists of Scenic National parks. Most federal land in the west is managed by the bureau of Land Management or the us forest service. And most of it doesnt look like the postcard worthy picturesque view scapes that you see associated with National Parks. Its just land, land that the federal government owns holds, refuses to sell, refuses to allow development on and very often is used to lock people out of access to all kinds of things in the state, including on occasion their own property. Now, the United States now has a record shortage of over 5 million homes in 2021. 5 million homes. In 2021, the states with the highest increases in home prices were located in the west. Unfortunately, finding available land to increase housing supply is a real struggle. I mean, its very, very difficult simply because its not there because we dont have very much of this rare commodity known as private land and you have to have private land in order to build a house. So ive introduced a bill called the houses act, which would create a process by which local communities could nominate small tracts of run of the mill blm managed land to be used to quickly address housing shortages and availability and these are in holdings that are in or immediately outside of a city or town boundary, a place where people live. The houses act would help solve utahs land and housing scarcity by allowing parcels of federal land to be purchased by a state or a unit of local government at a reduced price, giving them muchneeded flexibility to address housing constraints. The act would require that land be subject to a density requirement and would protect against the development of expensive second homes purchased from the federal government on the parcels at issue. Now in utah, there are almost 23 million acres of federal land. They happen to be managed by the bureau of Land Management in the state, accounting for 43. 24 of the total land in the state. Typical home prices in utah have increased by 89 just over the last five years, 89 in five years. If just 1 of the acreage in utah managed by the bureau of Land Management in my state were made available for housing under the houses act, at least 774,000 additional homes could be built. We have large families in utah, and we reproduce rapidly so were going to need those homes. This hearing is intended to examine some of the factors contributing to the increased costs of homes, specifically, some of the factors that members of the subcommittee might be able to help mitigate or potentially eliminate and i look forward to this conversation. Thank you. Rep. Klobuchar very, very good. I note weve been joined by senator blumenthal, who got in at 3 00 a. M. From a trip to the mid east. So it is total devotion to our subcommittee, as well as senator hirono, i look forward to hearing from, given the loss of homes in the maui fires and my i know she will be focused on that. Thank you. We have with us our witnesses. Diane yentel is the president and ceo of the national lowIncome Housing coalition. Shes worked in Affordable Housing for over 25 years. Vanessa brown calder is the director of opportunity and family policy studies at the cato institute. She previously served as executive director and staff director uh at the joint Economic Committee under senator lee. Luis quintero is with us. He is an assistant professor at Johns Hopkins Carey Business School with a phd in economics from Carnegie Mellon university. His research focuses on real estate economics and Housing Affordability. Ej antoni is a Research Fellow at the Heritage Foundations Grover M Herman center for the federal budget. And Maurice Stucke is the douglas a. Blaze, distinguished professor of law at the university of Tennessee College of law, where his teaching and research focuses on competition and antitrust law and policy. And he recently served as a Senior Adviser to the ftc and has spent years litigating antitrust matters with the department of justice. So with that, im gonna swear in the witnesses. Here we go. If you guys could rise. Do you swear that the testimony you will give before the subcommittee shall be the truth, the whole truth, and nothing but the truth, so help you, god . I do. Rep. Klobuchar thank you. You can be seated. Now, we will begin you can get started. Ms. Yentel thank you. Thank you, chair klobuchar. Ranking member, lee and senator hirono. Thank you for the opportunity to testify today. Across the nation the lowest , income renters face a severe shortage of affordable and available homes and a significant gap between incomes and housing costs. There is a National Shortage of 7. 3 million homes that are affordable and available to the lowest income renters. This shortage is a longstanding structural feature of the countrys housing system , consistently impacting every state and nearly every community. For example, in both chair klobuchars state of minnesota and Ranking Member lees state of utah, there are fewer than four Affordable Homes available for every 10 of the lowest income renter households without households. Without Affordable Housing options, more than 10 million of the lowest income renters who are disproportionately, people of color pay at least half their limited income on rent, leaving them without the resources they need to put food on the table, purchase needed medications or otherwise make ends meet, putting them one financial shock away from facing eviction and in worst cases homelessness. While the wages have risen in recent years, these gains have not closed the persistent and significant gap between renter incomes and the rising cost of rent. During the pandemic, policymakers responded to the growing threat of housing and security by providing unprecedented support to keep renters housed. These protections and resources cut evictions in half lowered eviction filing rates the lowest on record, and kept millions of people who otherwise would have lost their homes during the pandemic stably housed. But just as these emergency resources were depleted and pandemic era renter protections expired, renters reentered a Housing Market with skyrocketing rents and high costs elsewhere. The gao has found that every 100 increase in median monthly rent is associated with a 9 increase in homelessness in that same community. Over 2021 and the first half of 2022, rents increased by about 200 a month. And as a result, eviction filing rates have now reached or surpassed pre pandemic averages in many communities resulting in increased homelessness. Even with the stabilization of rental prices this year, the rapid inflation we saw during 2021 and 2022 has done significant damage to affordability especially for the lowest income renters Median Income renters. Medium rent of new leases just last month were 24 higher than at the beginning of 2021. Rent increases are driven by several factors, including a growing demand for rental housing and limited supply. Rent increases can also be attributed to a mostly unregulated rental market with few tenant protections that especially in markets where demand far outstrips supply , permits landlords to raise rents as high as the market will allow without regard to the impact on tenants with the lowest incomes. And in addition to high rent, landlords are increasingly imposing costly fees. Further increasing costs for low income renters. Renters, particularly those with the lowest incomes have severely limited options in the Housing Market. The lack of National Renter protections leaves tenants vulnerable to unjust treatment. Housing instability and evictions. Landlords can engage in abusive and predatory behavior with few consequences. Renters facing exorbitant rent increases or excessive fees have little to no ability to move to a new home. Instead, they can face retaliation for reporting unsafe Housing Conditions or illegal actions by landlords. And because so few renters have access to legal representation, many are unable to assert their legal rights strengthening and enforcing federal renter protections is a critically needed solution to americas housing crisis. Along with eliminating restrictive local zoning laws to increase supply increasing investments to make Homes Affordable to people with lowest incomes through expansions of housing choice vouchers and the National Housing trust fund and preventing evictions and homelessness with the National Housing stabilization fund. Thank you again for the opportunity to testify. Today, i look forward to your questions. Rep. Klobuchar thank you, miss calder. Chair klobuchar, Ranking Member lee and members of the subcommittee, thank you for the opportunity to testify today. My name is Vanessa Brown calder and i am the director of opportunity and family policy studies at cato institute. The views i expressed today are my own. They do not represent the official position of my employer. Accessible lowcost housing is vital to the health and prosperity of americas families and communities. When housing is abundant, it is more affordable, abundant housing provides educational and economic opportunities. It allows families to be part of the community that they desire. Policies that support abundant , Affordable Housing are associated with reduced homelessness and better homeless policy outcomes. Although junk fees, Institutional Investors and similar matters have received some recent attention , inaccessible high cost housing is largely a result of existing federal state and local policy. Government policies that constrain Housing Development are particularly detrimental in this regard. State and local regulations constitute some of the most significant policies, constraining housing supply,. Supply,zoning and land use regulations are nearly ubiquitous across american cities. These regulations directly prohibit Housing Development, increase costs, create uncertainty and produce delays. Zoning regulations have a meaningful impact on family budgets. A wellknown paper finds that zoning pushes up the cost of apartments by around 50 in manhattan, San Francisco and san jose. A recent paper reviewing 24 metropolitan areas finds a massive zoning tax up to 500,000 per acre per quarter acre in cities with restrictive land use regimes. In addition to state and local policy, federal policy also plays a role in limiting housing supply. In western states, the federal government owns a substantial portion of the land which cannot be developed. The nevada, utah, and idaho, the federal government owns between 60 of the land in other western states. The federal government owns more than a third to a half. Contrary to public perception, the vast majority of federal lands are not National Parks, monuments, or bureau of Indian Affairs land. Instead, most federal western land is managed by the bureau of Land Management or us forest service. This land is often close to urban areas with a significant portion of land within city or county boundaries. Presented with a similar set of facts, in the 1990s, former Senate Majority leader harry reid led a group of legislators in passing the Southern Nevada public Land Management act. This legislation allowed local governments in the landlocked Las Vegas Area to nominate federal land for competitive market auction. The sale of federal land in clark county subsequently resulted in hundreds of millions of dollars allocated to nevada Public Schools and environmental initiatives. It created a winwin for nevadas developers, conservationists and residents,. Ranking member, lee and cosponsors of the houses act propose extending a similar solution to other western states. The houses act would allow local governments to nominate and purchase federal land and develop the land for housing projects that meet certain density minimums and other criteria. The Southern Nevada public Land Management act proceeds from the houses act would be made available for environmental initiatives. Research suggests that the houses act could have a meaningful impact on Housing Affordability. A recent us congress joint Economic Committee study finds that houses reforms could lead to the construction of almost 3 million homes. And this increase in Housing Development would be possible with the conversion of just 0. 1 of existing federal land holdings. In addition to policies that directly constrain development, additional federal state and local policies are also relevant to Housing Affordability. When supply limiting policies are addressed, the participation of investors in the Housing Market will be largely inconsequential. Furthermore, the gains that result from performing supply limiting policies exceed potential gains from regulating junk fees or Market Participants when considering reforms to improve housing policymakers. And analysts should keep in mind that the government is the dominant regulator and player in the Housing Market. As a result, ample reform opportunities exist reforms that expand housing supply will unleash the Housing Market and ensure that American Families have the choice opportunity and upward mobility that they desire. Thank you, and i look forward to your questions. Rep. Klobuchar thank you. Professor . Chair klobuchar, Ranking Member lee, and members of the committee, thank you for inviting me to participate in todays hearing and for your attention to the topic of competition and Consumer Rights in Housing Markets. An issue of Critical National importance. My name is luis quintero. Im an economist and have spent eight years at Johns Hopkins where i do research on Housing Markets and policy. In my work, i have documented the increasing consolidation of Housing Markets in the United States and its detrimental effects on Housing Affordability. And i am pleased that this congress is taking a proactive step to incorporate competition in the legislative discussion. Concentration in Housing Markets has been growing since the great recession. This trend follows the longterm decline in competition documented in so many other sectors of the us economy. Although market consolidation is not the only factor driving the Housing Affordability problem, it is a critical one. During the great recession, many local and regional Home Builders stopped operations leaving Large National builders dominant in many local markets. Furthermore, many of these large Home Builders have since merged. My work identifies at least 12 mergers that significantly increase the market share for the resulting firms. One of those cases formed the largest Home Building company in the country. Although National Home prices have recovered since 2011, the number of building firms has not , while prices are up by about 30 with respect to their peak of 2008. The number of for sale builders is down 80 . The competitive Market Forces that incentivize entry when prices increase are not being realized in american Housing Markets. I estimated that 56 of markets exhibit concentrations that would fall into the category of highly concentrated as defined by the ftc. Most of the gains in market shares in recent years come from the increase in the activity of two Home Builders. Large mergers in the sector have most likely not been challenged because regulating authorities may not be defining relevant Housing Markets narrowly enough. The whole country is not a single Housing Market. For example, Home Building in pittsburgh or cleveland is not a threat to the ability of a hypothetical monopolies to impose a significant and nontransitory increase in price in philadelphia. Accordingly, Housing Markets must be correctly spatially defined to ensure estimated market shares are useful in assessing concentration. We should care about market consolidation because it affects housing supply and affordability. My estimates predict that if we had kept the 2006 levels of competition, the us would have built 112 billion more last year , equivalent to approximately 160,000 units, additional units. This roughly equals to 10 of the private residential fixed investment predicted for 2023. We should encourage agencies to enforce competitive policy in Housing Markets more effectively , and ask housing policies to incorporate Market Structure considerations. I would like to offer six recommendations for this committees consideration. First, encourage regulatory agencies to carefully define local Housing Markets especially spatially when revising mergers. Two, consider legislation that shifts the burden of proof to Home Building companies in large scale mergers asking them to show they cannot exert monopoly power in any local relevant market where they have building activity. Three, encourage enforcement agencies to request mandatory divestitures in markets where a merger will cause high concentration. Four, encourage the federal government to make increasing competition a pillar of housing policies. For example, by requiring a minim number of Home Builders participating in areas that get low Income Housing tax credits. Five, encourage the same for statewide policies. Recent initiatives to relax restrictive zoning may be ineffective if local developers can just withhold production by exercising monopoly power. And six, when considering the Philadelphia National bank presumption, make sure market shares are defined using relevant spatial definitions of local Housing Markets. Thank you, and i would be pleased to answer any questions you may have. Rep. Klobuchar well thank you very much. Mr. Antoni eco chair klobuchar, Ranking Member, lee member of the subcommittee. Thank you for the invitation to discuss with you today. The current state of competition in the Housing Market and the impact Public Policy has had on the american consumer. I am a Public Finance economist at the Heritage Foundation where i research fiscal and Monetary Policy. I am also a senior fellow at the committee to unleash prosperity. Americans today are facing historic challenges to achieving the American Dream of homeownership, a dream which might now be better described as a nightmare. Homeownership affordability is arguably at a record low today with 43. 8 of the median household before tax income needed to purchase the median price home in several major metropolitan areas of the country, over 100 of the median household after tax income is needed to purchase the median price home. A recent report showed that a median price home is unaffordable for the average income earner in 99 of the 572 counties examined. Another report indicates that a potential homebuyer needs an annual income over 50 higher than the Median Household Income to afford a median price home, which is a record high. While recent data shows that homeownership is 70 more expensive today than renting the largest spread in 23 years. Rent prices are also at record highs according to a variety of data including figures from the bureau of labor statistics. The unaffordability of housing today has largely been caused by Public Policy. By manipulating Interest Rates to facilitate spending and borrowing by the federal by the Treasury Department, the Federal Reserve created disruptions in the economy. The unprecedented size of fiscal and monetary interventions in the last three years made the magnitude of these disruptions historic. The creation of trillions of dollars predictably spawned 40year high inflation which caused prices everywhere to rise. Low Interest Rates also made increasingly larger mortgages affordable which drove home prices to new highs. Because Interest Rates were held so much lower than their natural equilibrium, investments which would not ordinarily be profitable suddenly became so Institutional Investors were able to buy swathes of housing for the purpose of renting. When the Federal Reserve belatedly raised Interest Rates to reduce the inflation it had helped cause, financing costs rose dramatically, especially for mortgages. Fixed Interest Rates on 30year mortgages have more than tripled from their lows only a few years ago. And the monthly mortgage payment on a median price home has more than doubled since january 2021. While higher Interest Rates put downward pressure on home prices, that is being countered today by at least two factors. First, most existing homeowners cannot afford to sell their home because doing so would mean losing a mortgage with a rate of 2 3 in exchange for a new loan at 7 8 . That would drastically reduce the size of the loan sometimes by half that the borrower could afford on the new home. Thus, the supply of existing homes has been severely hamstrung so much so that the Price Premium on new homes has been reduced almost to zero. Second, the price indexes faced by homebuilders are at or near record highs. Homebuilders therefore cannot afford to lower their prices. A new home at an affordable price for the median household would be priced below the homebuilders profitability threshold. So those homes simply arent being built. Thus, the supply of new homes has also been curtailed, putting additional upward pressure on prices even as Interest Rates continue rising. The unaffordability of homeownership has forced Many Americans to rent. And that shift in demand coupled with inflation has increased the price of renting. While algorithmic pricing aides have come under scrutiny recently, amid accusations of their role in higher rent prices, there is no empirical evidence that such tools have increased prices absent collusion among landlords an act which is illegal whether algorithmic pricing aids are used or not. There is even reason to believe that algorithmic pricing aids reduce rents for the marginal renter. Additionally, while the purchase of homes by Institutional Investors have reduced the supply of homes for sale and increased home prices, it has also increased the supply of homes for rent and decreased rent prices. Unfortunately, Public Policy mistakes have created a situation where an entire generation of americans may never be able to afford their own home. Persistent inflation has made it almost impossible for Many Americans to ever afford a down payment large enough for the Monthly Payments on a mortgage to be affordable. The solution is a drastic reduction in the amount of money that the Federal Reserve creates and that the Congress Spends if if there is an antitrust problem regarding housing, it is the monopoly control of the nations money supply. Thank you and i look forward to your questions. Rep. Klobuchar very good. Thank you very much, dr. Antoni. Next up, professor stucke. Mr. Stucke thank you so much for inviting me to testify today. So what does antitrust have to do with the concerns in the Housing Market . Now, you already heard about mergers increasing concentration in the Home Building market. And another concern that my colleague here mentioned is algorithmic collusion. Many of the nations larger Property Managers rely on pricing algorithms provided by realpage and yardi Property Managers using real pages algorithm. For example, saw their revenues increase on average 3 to 4 while their occupancy rates declined from 97 to 95 . One economic study found the same thing in geographic markets where Property Managers increasingly relied on algorithms for their rent, namely higher rents on average 3 higher and lower occupancy rate than markets where pricing algorithms werent prevalent after controlling for observable Market Characteristics and local market conditions. So after heather vogels pro publica article, there have been now over 20 antitrust lawsuits brought against realpage and some of the nations largest Property Developers. Theyre all in the middle district of tennessee, and all of the lawsuits allege that realpage colluded with Property Developers to raise rents and reduce output. So one issue for you is can the antitrust laws effectively punish and deter this alleged anticompetitive behavior . And the short answer is yes, if humans agreed among themselves to fix price and real pages pricing algorithm was then used to facilitate their collusion. But the antitrust law as currently applied by the courts cannot punish and deter this anticompetitive behavior in three scenarios. First is tacit algorithmic collusion. This is where the algorithms learn to tacitly collude without any agreement. Second is a hub and spoke algorithmic collusion scheme where rivals gradually drift to one algorithm without any agreement among the algorithm. Among the rim. Third is what we call secondary tacit collusion where rivals rely on several different hubs for their pricing. But those hubs then learn to tacitly collude. Now, the harm from these three scenarios is the same as if the executives were agreeing among themselves in a smokefilled hotel room. Namely, higher prices and reduced output. But this is not just the us problem. Many jurisdictions recognize that its hard to challenge this type of collusion under their current antitrust law and its not just simply an issue in Housing Markets. Two recent studies have found evidence of tacit algorithmic collusion in germanys retail gas station market as well as on bol. Com, the Largest Online shopping marketplace in the netherlands and belgium. So, as more Companies Adopt pricing algorithms, this can be at times procompetitive, but it also can be anticompetitive and beyond the reach of the antitrust law. So, if i can impress upon you one thing today, it is this. Ai will only compound the legislative deficit to date. These problems will not go away , and you need then to then look at this holistically from three different approaches. First, congress should endorse the ftcs use of its authority under section five of the ftc act to tackle algorithmic collusion. And in addition, consider displacing the unwieldy rule of reason standard with clearer legal presumptions concerning certain vertical restraints. Second, the primary weapon to deal with algorithmic collusion is merger review. And the good news is that congress has already proposed some of the tools necessary such as restoring the incipient standard in the merger review. And to note, it would be the competition and antitrust Law Enforcement reform act and then the prohibiting anticompetitive mergers act of 2022. Finally, any comprehensive policy response must address not only algorithmic collusion but also the other myriad risks involving ai. And this concludes concerns over behavioral discrimination. So we need privacy legislation where individuals without penalty can opt out of the collection of their data for behavioral advertising. They can opt out of having their Data Collected about them in order to profile them. They can opt out of personalized services, and then they can also decide the right to limit at the onset what personal data is collected about them and what for what non advertising purpose. And this is just necessary. I mean, we see that in europe they already have the d ma and theyre taking these additional steps. We need to do something as well to address the risks of ai and i look forward to your questions. Rep. Klobuchar thank you. That is music to my ears and thank you for looking at this in that larger context of some of the need for reform of our antitrust loss. So thank you all of you. Im gonna give my first slot of time to senator hirono whos been patiently waiting and then well turn to senator lee. Rep. Serrano rep. Roe no. Thank you madam chair and Ranking Members for having this hearing. Theres no question that the cost of housing is an issue throughout our country. And i am very well aware of how critical that is in hawaii. In july, hawaii, governor josh green issued an emergency proclamation on hawaiis housing crisis and then not a simple thing on the way. The average Single Family house in oahu now costs over 1 million and less than one third of households can afford to buy a home. Another third cannot afford rent. In part because of these figures, hawaii loses another resident every 36 minutes. Let that sink in. As of 2022, there are more native hawaiians living on the mainland than in hawaii. All of that predates the fire that devastated lahaina and destroyed 3000 homes and apartments. Many of which house working class families. Why do i bring up these facts . Well, junk fees, invest your own homes and supply Chain Shortages arent entirely responsible for this crisis. But in such a tight market, they have an outsized effect for. For professor stuckey, this is the antitrust subcommittee. So, im interested to know what can we do with our antitrust laws . I believe you mentioned some changes we could make to the ftcs ability to go after algorithmic collusion. But perhaps some sherman act changes could also be helpful. Can you just talk a little bit more about some of the kinds of antitrust changes that you mentioned . Mr. Stucke sure, certainly. I outlined them at the end. And one thing is that the concern about junk fees, you have to ask yourself, why isnt competition addressing this . In fact, why are firms increasingly competing to find better ways to manipulate consumers . And this might happen in markets that arent monopolistic or arent having just a few competitors. So, one area for competition authorities is to understand when competition isnt working. What are the assumptions underlying competition, and what is happening that is preventing competition from being a race to the top rather than a race to the bottom . So this happens not only with junk fees, its also with pricing and the like. And the ftc can go after that as an unfair method of competition, they can provide the necessary guardrails. The other area is with respect to pricing algorithms. I mean, your principal weapon is going to be mergers to prevent markets from becoming highly concentrated that this algorithm can occur. But the problem is is that courts have drifted away and view themselves basically as fortune tellers that have to predict what will happen after the merger and expect the agencies to prove higher prices, poster and as an enforcer of yourself of antitrust laws, you know how difficult that could be. So basically, i mean, while we can i i think possibly clarify and strengthen some of the antitrust provisions, it seems to me the bottom line in our housing situation is demand. There is so much more demand than there. There is availability of affordable for purchase and, and rentals. You and i cowrote in back in 2019 about the Affordable Housing crisis and my pathway bill. How would combating getting back to junk fees and other predatory fees be part of a comprehensive solution to our countrys housing crisis . Well as, as you and i have talked about in the past and raised awareness around when, when youre looking at the lowest income people who have maybe a combined Household Earnings of 25,000 or a senior or a person with a disability whos on an extremely limited fixed income of 15,000. They are already living doubled or tripled up. Theyre already paying 50 60 70 of their very limited income just to keep a roof over their heads. So what can we, were running out of time . We know what the theres so many challenges. But what can we do . From the congressional level to one thing, we could fund some of the housing support. Absolutely. We have to, we have to build more housing thats affordable to the lowest income people. We have to make existing housing affordable to the People Living in it. With rental assistance, we need robust and enforced tenant protections and when it comes to extra fees that landlords are paying, we need full transparency and they need, they need to be minimized to the nber of fees that landlords can charge tenants because every dollar adds up. And thats another bill than a tenant. I think theres a bill that, that puts the price of 25 more in these kinds of fees. Theres a lot we can do. Thank you very much for all of your testimony. Thank you madam chair. Thank you, senator ron, senator lee. Thanks so much madam chair, ms calder. Id like to start with you if thats all right in your experience, where have you seen the most acute impact of significant federal Land Ownership in housing prices . Where in the United States does that show up . Well, your staff at the joint Economic Committee actually put together a great report on this and went sort of state by state. And i think a couple of the states that stood out to me, california actually has a huge housing shortage. There are certainly utah nevada, of course, nevada ismostly federal land. And there are some others that are listed there as well and you sort of go state by state on those, i think, you know, broadly speaking, the federal lands issue is something that affects all western states. So its not a single state that is impacted to a much greater degree than the others, but all of them would benefit substantially from federal lands reform. Right. Right. And its, its an interesting thing to study because it, in any state. First of all, there is no comparable landowner to the United States in america, nowhere nobody could afford to own that much land. But even if there were, they couldnt exempt themselves from all economic forces, including Property Taxation and it certainly wouldnt exceed a few percentage points. But from a competition policy standpoint, there would be concern if any one individual Corporation Nonprofit ngo whatever owned more than i dont know, five or 10 of the land in the state, it would be pretty concerning. And so its not surprising that in a state like utah where 67 of the land, two thirds of it is owned by one owner that owner exempts itself from Property Taxation and all economic forces. Its going to have a significant constraint on the availability of housing supply, especially in a rugged state where a lot of our land is mountainous and youve got a limited nber of places where people could live to begin with, but its drastically more limited when most of the land that could be inhabited by hans is owned by the federal government. What do you think can be done to alleviate some of the problems created by the significant landownership . It doesnt have to necessarily result in a housing shortage, does it . Well, i think certainly, you know, zoning reform is part of the answer, right . So you can get more units by by reforming zoning at the local level, you can build, you can build two directions, you can build up and you can build out. And so i think both pieces are part of the equation when it comes to making improvements to Housing Affordability. And i certainly think that the houses reforms or Something Like unto it is part of the equation when it comes to improving housing supply in western states, right . You mentioned in your testimony that it would require just 0. 1 of federal landholdings in order to substantially increase the availability of housing in in western states, even eliminating altogether. What are known as the the housing availability shortages in in some states . Is it your impression that this 0. 1 change in federal landholdings would, what, what would that do to the overall experience of federal lands . I mean, does that cause a meaningful change for these Land Management agencies and those who enjoy accessing those lands to, to affect 0. 1 of the federal landholdings in those states. Yeah, i think we need to think about what type of land again this is. And as i mentioned in my testimony, its with the houses act anyways, it would be blm land thats really impacted by this, that would be you know, that would be nominated and then purchased and then developed into housing. So blm land for those that arent familiar history, it was land that homesteaders had passed over, it was land that other agencies, other federal agencies didnt want to manage. Oftentimes when were thinking of sort of the desert or intermountain west, what this ends up looking like a sagebrush and desert land. And so its not the scenic vistas, its not National Parks, its not bureau of Indian Affairs land. So from that perspective, i dont think the public would probably notice very much. What i think the public would notice is the funding that is being transferred into improvements to National Parks and other types of infrastructure that they are going to benefit directly from. And thats something that the houses act allows for and significant benefits that go along with cost of living improvements along with that mister antoni. What, what role has Government Spending in irresponsible Monetary Policy at the federal level played in more than doubling of the cost of homeownership just in the last two years. Thank you senator for the question, it has been the main driver and without that cause we would not have had the effect that we currently have today where homeownership is just grossly unaffordable for the vast majority of americans. When the Federal Reserve set out to create the trillions of dollars that the Treasury Department needed to spend over the last several years. It created inflation which caused the price of everything to rise, especially homes. But its low Interest Rate policy essentially a 0 Interest Rate compounded that because it made the Monthly Payment on a mortgage incredibly low. And so you could afford a much larger mortgage for the exact same payment relative to a, lets say a normal Interest Rate or the Interest Rates that we had at the end of 2019 or even the first two months of of 2020. And so if you take away that, that root cause you essentially remove the first link in the chain that we have had that we are have been dealing with and are still dealing with today in terms of the unaffordability of homeownership, which has also compounded the problems in renting because the shift of demand as people move away from trying to buy a home to rent a home because homeownership is simply too unaffordable. They are now increasing the demand for rents which is driving up the price of rental units. And so it is not simply a problem contained to homeownership, but it is housing in general in the distribution of the victims that are harmed by this is not exactly even across the economic spectr. I mean, it is disproportionately affecting the middle class and lowincome earners, certainly senator in and this is true for inflation generally. But, but specifically for housing, those who, who have the least are are hurt the most by it, an extension of the matthew principle, i suppose you could say. And so what we are seeing today is essentially an entire generation of americans who for the first time in recent history may never be able to own their own home because as they continue saving the savings that they have are losing value every day in the bank from inflation while the price of homes go up. And so they need an ever growing down payment in order to buy a home and the down payment needs to be especially large so that they can afford the Monthly Payment at such high Interest Rates. And the problem is that that in that rat race, essentially, they will never actually to get to the point where they have enough money for that down payment because as you were saying earlier, they are constantly seeing their earnings decrease in terms of what they can buy. And so there is less left over at the end of every month after they have paid for all of their necessities, including their ever increasing rents to be able to save for that down payment. Rich people made out pretty well in this rich people who, who wanted to buy up a lot of stuff they made out really well. They did. So at the expense of the poor middle class and all of this, if im understanding you correctly has to do with the manipulation of the Interest Rates by the fed, in part, to a significant degree anyway, to help facilitate the financing of reckless federal spending by congress. In other words, congress doesnt want to exercise the discipline to spend no more than it takes in or anything close to it. It wants the praise of spending more money without having to do the hard work. And in order to finance all of that, theres pressure on the Federal Reserve to keep rates low, that makes it easier for congress to avoid doing the difficult work. And it perversely helps rich people while hurting poor middleclass americans. Is that a Fair Assessment . I think so, senator, especially when you consider that those who were already homeowners or those who in the initial stages of the pandemic, for example, were able to take advantage of these historically low Mortgage Rates. They were able to acquire that capital at relatively low prices before the inflation set in, in the months and years that followed. And so they were able again to acquire capital at a relatively low cost and then to see the price of that capital appreciate noticeably in the months and years that followed. Thank you. Thank you very much, senator lee. Ill start with you ms yel. Can you talk about the type of junk fees that renters are faced with . I dont think people are always who dont rent anymore. May be rented at some point are not familiar with whats going on. There can be a whole, thank you, senator klobuchar. There can be a whole host of fees added on to a renters rent payment each month ranging from first rental application fees to get into the apartment in the first place and then fees related to late payments. Notices of late payments can have an extra fee. Theres pet fees, theres fees for using a garage or fees for an internet use thats mandatory and somebody cant opt out of , theres been stories of these fees adding up to as much as 400 a month in addition to the rental payment and sometimes they can be very egregious. We have a partner in idaho who worked with a tenant whose son brought home from school one day, a praying mantis in a jar and that month they were charged a pet fee from the landlord. The good news was that, that spurred a Successful Campaign for the state of idaho now to have a law that requires full transparency upfront about any fees that might be paid and requires that they be made reasonable, but they really can be egregious and they certainly add up. Wow. Just remembering back, my mom was a second grade teacher and sometimes these type of animals would get lost when they went home. They were usually found like the rabbits and things. Thats incredible. But i do think it gives us a sense of that and those of us who rent when were here actually know some of this as well. Professor stuckey, just to go through this again because i think its a hard thing to get a grasp on. There have been nerous reports and lawsuits highlighting these price setting tools that collect the pricing data. And as you rightly point out, theres no federal privacy law in place which is a problem to coordinate price increases among competing landlords. So theyre able to get this data. Could you explain how these pricing tools could facilitate these higher prices . So they get the data and then its shared and how can that lead to these higher prices . Where you could see it as a not a traditional way of fixing prices maybe . But a way of doing it in the modern digital age. Ok. So, i mean, there are several scenarios. One scenario is where every firm has their own pricing algorithm. So when you go to like marthas vineyard, one thing youre surprised by is the high price of gas. But what one study found is that when gasoline stations start having these pricing algorithms, the speed and the response can prevent any company from getting an advantage by discounting. So what happens then in these markets is that prices start then elevating up. So algorithms can help facilitate collusion and markets are already susceptible to it, but it can also increase it. Another scenario. And this happened in las vegas is where allegedly 90 of the hotels are all using one hub. And so no competitor is going to give commercially Sensitive Information to the hub if the hub can then use it to help the rivals. So there must be some understanding that theyre going to share on a real time basis, commercially Sensitive Information with the hub so that its going to benefit all of them. Ok. So you rightfully noted these, some of the bills, some of them are my bills that you could do generically to fix the antitrust laws, tweaks things you could do. Because its very hard to bring any cases including in tech and other things right now, where weve had no specific laws really passed except for some which im the proud cosponsor bill on not changing venues and then our bill to change the merger fees at grassley and i had to, to get more money to the agencies. Could you talk specifically what you could do about this specifically to update our Competition Laws so that these tools as they are called, are prices setting tools as they can be used for, cannot be used to raise rent above what would occur in a competitive marketplace. Right. I mean, i think there are several things that can be done. Number one is to restore the incipient standard in antitrust that courts are adrift. They used to interpret the antitrust laws with the aim that congress had intended. Right . Seller. In 1950 enacted these amendments to the antitrust laws and the Supreme Court construed the law as congress intended. Thats no longer the case. So one way would be to restore the incidency standard, which your bill does. The second thing then would be a different standard than the rule of reason for information exchanges just because the rule of reason is just amorphous and unwieldy. And then the third thing and i think this is what like jon stewart mill said, one of the good things that the government can do is collect a lot of information and then disseminate it. So one nice thing about your bill is improving the knowledge that we have about what antitrust policies work and not work. I mean, when i was at the doj, it was always surprising that we would allow these mergers to happen and then we never followed up this years later to see if it was right. And im sorry, my mind just went to something else. But i would think thats one of the most important aspects that we can have. And then we could learn more about what markets are susceptible to tacit collusion. Is there a specific threshold . Like one study found once it went beyond eight sellers, the use of pricing algorithms became quite vigorous. And so we just need to have a better understanding and the United States can play an Important Role in that. One of the most pressing issues is not enough Affordable Homes. We just talked about that Single Family starter homes, the like mr quintero, doctor quintero, could you explain how having fewer Home Builders in a market reduces the supply of new homes . Thanks for the question, chair klobuchar. The underlying concern about competition in general is how fewer suppliers of any good or service are just going to supply less of it. And as a consequence with a fixed demand or in this case for housing with a growing demand, prices would go up. This is what has been happening in housing. We have fewer and fewer developers building and its in their own interest to charge higher prices. And that is not a new story. Thats an old story. Thats a story of Housing Markets. The problem is that as prices have gone up since 2011, we have not seen an entry of new developers that compete with those that are incbent. And so what we find is that those that have an interest in supplying less to charge higher prices are not being threatened by competitors in many of the local markets. And so do you think thats something antitrust enforcers should look at in the future when mergers are presented to them . Yes, theres been at least 12 mergers that if you look at the Housing Markets, well defined spatially should have been challenged by any regulatory agency. They would have been challenging other sectors. My belief and my understanding is that what theyre doing is theyre defining in some cases whole regions of the United States in one case that i could find the whole us as a single Housing Market. I think that is wrong. We, i talked to the people in Jackson County as potential homeowners. Were not substituting between the possibility of living in dc and living in l a, right . So, so yeah, so that was that last comment. Then ill turn it over to senator jon or senator lee for additional question, then senator jon for a second round. But one of the things that ive been troubling to me is in some of our rural areas where we have very steady employers, we really do and whether its the ag economy or whether its a manufacturing, we have a lot of major companies. Theres still issues with this housing and theres just not enough builders and the land is not as expensive this is, we dont have the land issue that senator lee was referring to in our state. And i just, i cant help but think that in the old days there were just more smaller people that were coming in in the Home Building industry because we just cant get, ive called bill. Ive done everything cause and weve looked at what incentives can we have to bid them . These are usually maybe theyre a mix of housing, right . Theyre starter homes. Some of them are traditionally affordable, some of that next step up and its really hard and its hurting our rural employers because its like chicken and egg, they want to expand. These are like manufacturing but they cant really expand because they dont have the, have the housing and some of it is getting seniors to move into town, but then you need the condos. If they build them, theyll come and then that frees up the single, Single Family. So thank you. Senator lee. Thank you. My next question is going to be both for ms calder and mister antoni. In your testimony. You, you both mentioned one way or another that the impact of government regulation, whether it be state, federal or local on housing prices. What, what government regulations do you think specifically cause the greatest increase in home prices . Well start with you, ms golder. Well, i think theres a broad body of research on again, state and local zoning regulations really thats coming from a local level. And among those regulations, i think they all sort of add on augment each other in ways where you cant, its not totally easy to pull anyone out and say, if you just fix this one thing, then you would fix Housing Affordability and housing supply. Because if you fix the one regulation, then the other regulations are all manipulatable and they can also be made more restrictive in ways that wont allow for housing to be developed. That said, i think density regulations are really problematic. So where you sort of zone the whole city as Single Family homes, thats going to be an issue because of course, it limits housing. And i think aside from that, you know, minim lot sizes that are very large, those are going to be issues as well. And you know, just permitting processes that are very lengthy and very uncertain. And very open ended that doesnt give developers a lot of confidence as theyre going through these processes and trying to make plans. So its the amalgamation of all of them, the combined effect of all of them, particularly some of those that you mentioned, like minim lot sizes and things like that end up creating an environment in which relatively few people can navigate this byzantine labyrinth of regulations to be able to get it done. That in turn probably leads to more consolidation, which might help explain. At least some of the answers is what senator klobuchar was talking about by the fact that there arent, arent as many sort of smaller builders in many communities as there once were because theres such an advantage that goes to a larger producer who has the experience and the extra resources to be able to devote to complying with those things. Mister anthony, do you have anything you want to add to that . Senator, i think another key thing thats important not to overlook here are regulations dealing with the financial sector. And and the reason that is that has such an impact in the context of housing is because almost everyone who buys a house does so through financing. And so when we have regulations that force lenders to look at things essentially other than risk, what you are doing is you are, are divorcing the individual, the borrower from their ability to repay a loan. And so from the lenders perspective that builds losses into their business model. And as a consequence of that, they need to spread out those losses among all borrowers. In other words, it increases the cost of capital, it increases the cost of lending and that trickles down into more expensive mortgages for everyone. But one other thing that i i think might be getting missed here because so much of what were focusing and rightly so is the price of the home. But also what about what is in the home, things like appliances. We have all kinds of regulations, for example, that are aimed at increasing the efficiency of what it could be your refrigerator, it could be your dishwasher, your clothes washer, dryer, et cetera. And so many of these regulations that do increase appliance efficiency are actually a net loss for the conser because of the increased cost. And when were talking about these regulation imposed cost increases, they tend to be completely missed because of hedonic adjustments in things like the cp i. So theyre typically not included in inflation metrics. And actually a colleague of mine, casey mulligan, whos a professor at the university of chicago. He has pointed out that the cost of regulations today are on the average American Family are literally thousands of dollars more per year than they were just four years ago. Yeah, that, that sort of thing adds up. Plus a lot of the appliances dont do as good of a job, but thats a, thats a conversation for a, for a different day, but youre exactly right. Those add up. And unlike our tax bill where we can see at the end of the year how much were paying, you cant see the regulatory Compliance Costs. Theres no comprehensive bill for it. We have in our minds, this idea that those are all paid for by corporations and in a sense they are but, but not really because they get passed down to hard working americans who pay higher prices for goods and services, everything they buy and they also pay for it in meaningful ways through diminished wages, unemployment and underemployment. What have you, you observed in your Market Analysis throughout the country . Are there factors that apply uniquely to metropolitan areas have more heavily Populated Areas . What do you see there in terms of Home Affordability specifically in major metropolitan urban environments . Well, what we find senator typically is in those major metropolitan areas, a higher level of regulation and we also find higher taxes, you know, on average. And so we have higher costs of homeownership in those areas. On on page four of my testimony, for example, you look at the most expensive areas in the country, almost all of them are in california in terms of owning a home. In fact, in several of those areas, the median, the Median Income, it actually requires more than 100 of the median after tax income to buy the median priced home in those areas. In other words, its literally impossible for the typical American Family to buy a home in those places adversely as you start getting into typically more suburban or rural areas. And you typically see taxes and regulation go down homeownership affordability on average does tend to rise and that in turn ends up creating even more disparities as you look across the economic spectrum. Because if youre in one of those areas, youre unfortunate enough to live in there. Setting aside the graduated income tax system that we have some of the benefits associated with home ownership, like the mortgage Interest Deduction either phases out or ends at, i think around 500,000 or Something Like that. So if you happen to be in one of those areas, even if youve got the cheapest home in your community, you might be priced out of it in multiple ways and making it even harder for people who are just below the economic threshold of people who could otherwise purchase in that area. You may never get there. Thank you, madam chair. Ok. Thank you, senator roa. Thank you. I just have a few follow up questions and one new question, professor quintero. Well, there is a severe shortage of Affordable Housing in our cities and that the new work from home dynamic means that there is often a glut of office space available. So some cities and developers that Work Together to convert underutilized office space to residential. For example, in honolulu, you can now live in the Office Building that houses the federal bankruptcy court. Could relaxing or altering building codes and incentives to encourage office to residential conversion to be part of the solution to our Affordable Housing crisis. Anything that increases the effective supply of homes, whether it be new homes or existing would help towards a solution. The case, im, im most familiar with is baltimore where theres been a significant move towards conversions from commercial to residential. Theres a significant barrier in terms one structural, the other one in legal terms and, and zoning regulations that prevent these conversions from being done cheaply and quickly. I think theres a long way to go for conversions to actually solve the problem, but they would be a step in the right direction. But to the extent that all these states and counties also have the, the zoning regulations, there may be a way for us to approach the supporting these kinds of conversions with health and safety in mind, of course, on a national level. So if you have some ideas along those lines, please pass them on for professor sty in the multi district litigation that has been filed against real page. One of the allegations was from, from someone who has utilized real page. He said that although we meaning him, we are, they are all technically competitors. Real page helps us to Work Together to make us all more successful in our pricing. And so short of an agreement that is definitely price fixing. And so, based on the Supreme Courts current posture in price fixing task, tacit collusion or conscious parallelism, these are not price fixing. So, is this now that we have these new tools or new entities such as real page with algorithms. This is not bob giving you information, this is a whole system. Dont you think that we need to have some changes as i mentioned to our antitrust laws to, to address the new tools that are being utilized that basically results in fixed prices. Absolutely. So antitrust needs to be modernized for the digital economy. In the last time youve had meaningful antitrust regulation was update to to the legislation was over like, you know, what is it 50 years ago . Tacit collusion is very tricky to get at by itself because it can just be the response of Market Participants. Like you can have tacit collusion in markets where like i one way to explain to my students, tacit collusion is i say break up into groups of two or three. Heres the monopoly price, heres the Competitive Price just show each other the price that youre going to charge for that day. And then after 10, 15 rounds, they report their results invariably its close to the monopoly rate. And so how as an enforcer can you get at that . Right . You cant tell a competitor not to look at its rivals rates. So getting at this collusion directly head on is very difficult. So the best way to do it is to get at it indirectly that would be through merger review and then any sort of facilitating practices that can help achieve that algorithmic collusion. For example, sharing of confidential information with the hub, i think we need to do something because theres just a lot of these new kind of tools a i all of these new tools that did not exist 50 years ago when they basic nit trusts laws were first being articulated. And i do think that we need to as you say, modernize and if you have some language that you can propose to the committee, i would certainly be interested. But the, the fact that you have all these investor purchases now of housing stock, a huge percentage, it could be a huge percentage in certain areas like atlanta, they seem to go to certain areas. I think they just increases the chances of the these kinds of collusive, what i would call collusive parallel pricing. And i think we need to do. Im asking you for some ideas on how we can go forward. Thank you madam chair. Thank you very much senator hirono for those good questions. And next up, we have senator blackburn. Then i have a very brief question and then i think were gonna end things as where theres a conflict with an a i meeting. But we are very focused on this issue right now. Thank you so much and yes, youre right. Its a busy day. There is a lot happening. Professor stuck. Welcome. Were delighted that you are here from ut and appreciate that you would make the trip. So, thank you for that. Ms calder. Let me come to you, you know, in tennessee, we have a lot of people that are moving there and they are wanting to leave other areas. We even have some minnesotans that have come to tennessee to. Thats exactly right. They like our weather a whole lot better. Theres a need to focus on some Common Sense Solutions and some of us have really done that. What we have found is over 10 million families spend more than half of their income on housing. And of course, this makes it very difficult for the rest of their budget. Some of us at finance committee have brought forward a bill, the Affordable Housing credit improvement act, which would expand and strengthen the low Income Housing tax credit and that bill would increase the number of credits available to states by 50 and it would improve that program so that its better serving veterans, individuals in rural areas like in tennessee and victims of domestic violence. So id like for you to talk a minute about why it is so important to modernize that low income tax credit. Well, thank you for the question. I appreciate it. I have written critically of the low Income Housing tax credit in the past. Im not familiar with all the details of this particular bill. But i do think that the low Income Housing tax credit certainly needs modernizing and changing. Some of the issues that i see with the low Income Housing tax credit in general right now, are that for one thing, it is more expensive than various demand side vouchers or demand side assistance. Most of the benefits also at the present time, they flow to developers is what Research Suggests rather than flowing to low income tax, which is something that worries me because of course, you know, we have limited resources and we need to allocate those resources accordingly to low income tenants wherever possible and extremely low income tenants, first and foremost. Ive also seen that because its a production side subsidy. Research finds the program contributes to greater concentrations of poverty and racial minorities and thats kind of something thats similar among production side housing subsidies. So again, not familiar with all the details, but certainly like the idea of improving the low Income Housing tax credit. Ok, thanks senator blackburn. Can i add on to that . We support your legislation and appreciate your leadership in pushing it forward. The affordable, the low Income Housing Tax Credit Program is an important tool to develop Affordable Housing across the country and can be further improved as your legislation would do. And we especially appreciate the provisions in the legislation that would allow for developers to ensure that these low Income Housing Tax Credit Properties are more affordable to the people who need it the most, the lowest income people, people in rural and tribal communities. And we appreciate the additional transparency with you. We hear a lot about biden nomics and the inflation rate that is out there. And the fact that the home price, the average home price, median home price is up over 27 Mortgage Rates have increased twofold since 2020. And homeownership is a part of the American Dream. So many people want to own their own home and this administration seems to have some misguided policies that are making that more difficult. So as you all are doing your work, ms gentle. Do you see biden nomics . The inflation rate, all of that having a negative impact. No, id say the opposite. Actually, the low income renters certainly are struggling to afford their rent. Now, in some cases, more than ever and Housing Affordability for the lowest income renters has worsened recently, but it has been a long standing systemic issue in our housing. My time is running out, but i would say gallup disagrees with you. They found 21 of americans believe its a good time to purchase a home. And that number is way down from what it has been. Thats the lowest that has ever been recorded and inflation is having a negative impact. Ive got two more questions for ms gentle, but i know time has run out and i will yeild my time. Ok. And you could put those on the record. Is that all right . Ok. Thank you. One last question. Another factor many discussed today that disrupts healthy competition in the Housing Market is the prevalence of private equity backed Institutional Investors buying up large swaths of Single Family homes in some neighborhoods, these types of investors own an incredibly High Percentage of homes. Ive seen this like theres been major major news reports on this well documented. Can you talk about how Institutional Investors came to own a significant share of Single Family homes in certain markets and how it affects Housing Affordability . Well, especially on the second point, i would focus on the data that shows that Institutional Investors tend to be among the worst landlords. So theres clear evidence that Institutional Investors are more likely to be serial eviction, filers to evict to file evictions more often to add predatory fees to use serial evictions and predatory fees as a profit generating scheme. So as those institutional invent investors especially are targeting communities that are disproportionately people of color or have disproportionately high rates of poverty, then were seeing the harm of these practices fall even greater on people with the lowest incomes and the most marginalized households. All right. Well, thank you very much. Yes, i just want to give a chance to respond to senator blackburns question about bidens and what impact its had on Housing Affordability. Certainly, senator, just very briefly, if you look at the, the performance of wages versus price indexes such as the conser price index, you find that for a record 26 consecutive months of the bind administration, the Consumer Price index had larger annual gains than Weekly Earnings did. And so as a result of that, the typical American Family has lost thousands of dollars in, in income, not in terms of the size of the paycheck, but what that paycheck can actually buy. And then you couple as you pointed out this connection between spending and inflation and the creation of money. When you also include the fact that Interest Rates have gone up so dramatically that has increased the borrowing costs for families by thousands of dollars a year. And these effects combined make the typical American Family about 7300 poorer today as compared to january of 2021. In other words, take what the typical American Family was earning at the time of the start of this administration and compare that to today. And it is as if you took 7300 off of their annual earnings, and he wouldnt wanna add anything more here. Are we good . Ok. Well, just to finish what i was saying with senator blackburn, is that to their credit, despite Housing Affordability worsening for the lowest income rent renters to their credit, the Biden Administration and this congress provided Historic Resources during the pandemic that staved off what could have been an eviction tsunami and instead those resources kept eviction filing rates at their lowest on record. And those are the kind of investments and programs that should be continued and made permanent. I wanna thank all of you. Its been a very informative hearing. There are so many issues that are clearly related. When you have housing prices go up in part because some of the factors we discussed here today and then people go over and rent, they cant own their own home and then those rents go up, you can kind of see whats been going on here. And i do think looking at this in a way that doesnt argue that the only thing at issue by any means is competition policy and algorithms, but it is part of it. And especially when you look at some of the recent changes and you think about, lets look at all the factors going on here with consolidation with algorithms. I think its actually of fodder for future work. So i wanna thank all of you for being here today. I know that the record will remain open for the next week for senator submit any additional questions. I wanna thank you all for coming and the hearing is adjourned. Ok. Good. Yeah. Ok. Yeah. Yes. Right. Cspans washington journal, involving you to discuss the latest issues and government, politics and Public Policy from washington and across the country. Wednesday morning we will discuss the House Speaker race with axios reporter. 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