Transcripts For CSPAN2 Hearing 20240702

[inaudible conversations] the hearing is called to order. I dont know why we faced discussing the house right now. I know we have excitement in her chamber but i want to welcome everyone to does very important hearing and im really excited to hear from our witnesses. At that like to thank Ranking Member lee and his staff are working with us to plan this hearing. So everyone looks at their first house fondly and tape it to first place they have live. For me in 1960 my parents wallpaper the last room wallpaper the last room in their house on a dirt road in plymouth, minnesota. I still remember the 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 wood ceilings and my grandma who in the iron iron range said would come down to the cities to see the house and every single time my grandma mary klobuchar would say to my mom and dad when he is going to finish the ceiling . The brightly appliances yellow ovens was all part of our lives. My dad paid for that house with the g. I. 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 news paper reporter salary. In 1960 the median home value of 11,900 but thats about 123,000 in todays dollars. This was a course in the midst of the postwar housing boom. Today the median singlefamily home costs more than 40,000. If you look at it across america but but this is an increase of e than 500 since 1980 and more than 40 since 2020. I think we know why this is. Affordable options. Freddie mac estimates we need to build 3. 8 million new homes to make up for the housing deficit and according to the National Low Income Housing Coalition the Affordable Housing for those with low incomes is more than 7. 3 million. The no rent have always gone up, jumping more than 12 since august of 2022. And in some 20 million households its more than half of their income on housing. So what do we do . Affordable housing crisis involves complex longstanding issues. Many of which are the focus of our colleagues in the banking housing and urban Affairs Committee chaired by senator sherrod and my colleague of the subcommittee. We know issues of workforce the cost of building housing in the Component Parts but today we are going to focus on the role that competition policy changes plays to help address these market failures. Some of the issues i will put on the table that are relevant are renters face real challenges to address the crisis. More and more of the cost through the proliferation of junk fees. All rental struggle to take advantage of price competition because the true cost of housing are not transparent. Second housing is an area in which we have seen of pricing tools designed to raise prices even at the expense of higher rates and a growing number of Companies Offer services that collect competitively sensitive pricing information from competing Property Management committees and feed that data through the algorithm and recommend unified unit prices so landlords can can charge certain rents. Landlords landlord to figure out that its better for them and their bottom line to use these products to price units high so some of them said they its but its easier to have them priced tie for them in the long term. I believe landlord should be competing on price and i dont thank you see that happening when you have this algorithm based game going on. The third families are being boxed of the market for singlefamily homes by Institutional Investors and thereve been wide range news reports about institutions Institutional Investors will buy a pump the neighborhood taking it out over reach especially for firsttime homebuyers. They are often backed by a large equity funds seeking rental income instead of allowing families to achieve the dream of homeownership. The presence of these institutional actors drive up home prices because they can make offers and waived inspections. Unlike momandpop landlords these owners are more likely to charge fees and increase instability in our communities. Finally the fact that we are building enough Affordable Housing in the number of starter homes being built at plummeted since the 2008 financial crisis which put hundreds of thousands of small builders out of business. This is left as relying on fewer and fewer largecompany homebuilders to dominate homebuilding in major metropolitan areas. The builders focus on highend homes rather than starter homes to consolidation in the homebuilding market has been shown to reduce the number of new homes built by more than 100,000 houses every single year. While we recognize the competition policy is no Silver Bullet and i will emphasize that as youve talked about im sure some of the other issues. While its no Silver Bullet resolving our Affordable Housing crisis we shouldnt dismiss it and we should at least explored and look at what solutions we can agree on. The antitrust laws were used in the 1960s to make sure 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 junk fees from rental market without 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 explaining the issues with my colleagues and our esteemed Witnesses Today and i will turn it over to the senator. Thank you madam chair and thanks to all of you for coming. This is an important issue and an important hearing. Millions of americans across the country including so many in my home state of utah are paying significantly higher prices to own, rent or otherwise live in the home and 2023. Homeownership is further out of reach for an americans than it has been at any other time in modern history. This has created problems that we hope to address and discuss today. Just since july of 2021, over two years ago affordability of the home has declined significantly during that narrow timeframe. According according to the homeownership Affordability Housing accounted for 28 of americans immediate income in january of 2021. Thats a lot of money up from what it had been a few years earlier. It used to be much lower than that but its a sizable chunk people are spending and a third of their income on housing. Lets look at what has happened since then. Its jumped a whopping 44 in 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 started keeping track of this particular set of records back in 2006. We have never seen anything this bad since we began keeping records. The mortgage payment a mortgage payment and median price thomas more than doubled in just two years. And 2021 it was 979 but today that payment is 2059. It cost the 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 since our current president took office and with record highs Many Americans have limited Housing Options available to them. 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 just two years ago. Yet that leaves families with 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 less ability to pay for these basic needs. The money left over from anything else whether thats an emergency or an aunt for seeing expense related to a car repair or health condition. A Family Member has a desire to go on a Family Vacation or buy something that the family needs. There isnt room for because Everything Else has been taken out. The increase share of the familys income is on housing and they take on even more debt to make ends meet in this and turn over time leads to more bankruptcies. Many failures may contribute to the sudden abrupt and severe rise in housing costs. We have a number of things that we could look at but the first one i want to mention involve state and local regulations which account for a significant constraint on housing supply. Anytime we look at the price of a particular thing, whether its a good or service or something as basic as a home you have a look at supply and demand. And how those two interact. These regulations impose significant constraint on housing supply. At the same time when demand is hardly going away and in many states like utah is increasing rather abruptly and dramatically. Cities across america residents are burdened with over burdensome land use regulations at the federal state and local level and these regulations decrease the housing supply and in many cases directly prohibit Housing Development, increased cost, create uncertainty and create significant delays. For example the formidably furthering their housing row originally adopted by the obama and mr. Zhang increased the cost of housing by an additional, by adding additional zoning restrictions. Those restrictions arent always things that show up as obviously the product of federal action. They translate into these local units of government, adopting new regulations, new restrictions in response to the rules. They have the comply with those rules in order to continue receiving federal funds. For example under the Community Development Block Grant Program it appears that the same will be true of the bidens version of the same role which is not taking effect but will soon. Americans are suffering from extended period of high inflation generally which has been virtually acute in the Housing Market. Throughout 2021 the inflation rate jumped to as high as 9 . More than four times the Federal Reserve target inflation at 2 . In large part due to federal spending and irresponsible monitoring policies. Home prices rapidly increased over the last five decades. Eclipsing the inflation rate by 150 since 1970. 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 the federal Government Land ownership is also a critical factor especially in parts of the United States and like utah or home to vast swaths of federal land. And 2021 the states with the highest increases in home prices yearoveryear were not coincidentally arizona at 20. 8 , idaho at 28. 7 in utah at 24. 5 . It comes as no surprise to us in the west the federal government owns a large percentage of our land. In utah the federal government owns about 67 of all the land in utah. Thats twothirds. A small portion of this land consists of. National parks. Most federal and the list is managed by the bureau of Land Management or the u. S. For service and most of it doesnt look like the picturesque views gave to see associated National Parks. Its just land. Land that the federal government owns and refuses development on and used to lock people out access of all kinds of things including on occasion property. The United States has a record shortage of homes and 2021 the states with highest increases of home prices were located in the west. Finding available land to increase housing supply is a real struggle. Its very difficult. The money is not there because we dont have much of this rare commodity known as private land. You have kept private land to build houses. Ive introduced a bill called the house act to create a process by which local communities could blm managed land to be used to quickly address housing shortages and availability and holdings that are and are immediately outside of the city or town a place where people live. The houses act would help solve the housing scarcity by allowing federal and to be purchased by state or local government at a reduced price giving them much needed flexibility to address housing constraints. It would require that land be subject to a density requirement that would protect against the development of extensive second homes purchased from the federal government of the issue. In utah there almost 23 million acres of federal land that happened to be managed by the bureau of Land Management in the state. It accounts for 43. 24 of the total end of the state. Typical home prices in utah have increased by 89 just in 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 at leased 774,000 additional homes could be built. Writ large families in utah reproduce rapidly so we will need those homes. This is intended to examine some of the factors contributing to increased costs of home specifically some of the members of the subcommittee might be old to help mitigate or potentially eliminate and i look forward to this conversation. Thank you. Very, very good. We have been joined by senator blumenthal returning at 3m after trip to the middle east so total debate total devotion to her subcommittee. We have with us are witnesses. Dianne yentel is with the Housing Coalition has worked in Affordable Housing for over 25 years. For nasa calder is the director for opportunity and family policy studies at the cato institute. She previously served as executive and staff director at the joint Economic Committee under senator lee. Luis antero is an assistant professor at Johns Hopkins have Business School with a ph. D. And economics from Carnegie Mellon university and his research focuses on the real state economics and Housing Affordability. Ej antoni is a Research Fellow at the Heritage Foundation Hermon Center for the federal budget and Maurice Stucke is the douglas plays distinguished professor of law at the university of tennessee and her teaching and research focuses on competition and antitrust law policy and he recently served as a Senior Adviser to the ftc and has years litigating antitrust matters with the department of justice. So with that im going to swear in the witnesses. Here we go. Do you swear the testimony shall be the truth the whole truth and nothing but the truth so help you god . Thank you. You can be seated. Now we will begin safe get started miss yentel pitts chair klobuchar Ranking Member we can senator rob thank you for the opportunity to testify today. Across the nations lowincome renters face severe shortage of affordable and available homes and a significant gap between incomes and housing costs. Theres a National Shortage of 7. 3 million homes that are affordable and available to low income renters for the shortage of longstanding structural feature of the countrys housing system consistently impacting every state in nearly ever committee. For example and senator klobuchars minnesota and rank member lee state of utah there home without Affordable Housing options more than 10 million of the lowest income renters are disproportionately people of color to it 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 in the worstcase homelessness for low wages have risen in recent years these gains have not closed with consistent and significant gaps between incomes and the rising cost of rent. During the pandemic will say makers responded the growing threat of housing and security by providing unprecedented support to keep renters house. These protections and resources cut evictions in half lowered eviction battle enraged 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 are completed and winter protection expired renters reentered the Housing Market with skyrocketing rents and high costs. The gao found that every 100dollar increase in median monthly rent is associated with a 9 increase in homelessness in that same community. In 2021 in the first half between 20 to rent increase by 200 a month and as a result the rates have reached or surpassed prepandemic averages in many communities resulting in increased homelessness. Even with the stabilization of rental prices this year the rapid inflation we saw during 2021 in 2022 has done significant damage to affordability especially for the lowest income renters. Medium rents a newly homes where 20 higher than the beginning of 2021. Rent increases are driven by several factors including a growing demand for rental housing in limited supply. Rent increases can be attributed to a mostly unregulated rental market with you 10 that protections especially in markets where demand outpace supply landlords raise rents as high as the market will allow without regard to impact of the lowest income in addition to high rent landlords are increasingly imposing fees for the increasing costs for lowincome renters. Rinchers particular those at the lowest incomes have severely limit the options in the Housing Market. The National Winter protection is vulnerable to unjust treatment housing ability and eviction. Landlords can engage in abusive and behavior with few consequences. Ranchers facing exorbitant rent increases are 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. Because so few renters have access to legal representation many are unable to assert their legal rights. Strengthening and enforcing federal winter protections as a critically needed solution to americas housing crisis. Along with eliminating restrictive zoning laws to increase supplies, increasing investments to make Homes Affordable especially for the lowest income to expansion of vouchers in the National Trust fund in preventing infections in homelessness with the Housing Stabilization fund. Thank you again for the opportunity to testify today and i look forward to your questions. Thank you ms. Calder. Chair klobuchar pranking amber lee and members of the subcommittee thank you for the opportunity to testify today. My name is Vanessa Calder on the director of policy studies at cato institute. The insights are my own and they dont represent my play. Accessible lowcost housing is vital to health and prosperity of americas families and their communities. Housing is abundant its more affordable. Abundant housing provides educational and Economic Opportunities and allows families to be part of the communities that they desire. Policies that support abundant Affordable Housing are associated with reduced homelessness and better homeless policy outcomes. Although these Institutional Investors and similar matters have received recent attention and accessible highcost housing is largely result of the existing state and local policies. Government policies that constrain Housing Development are detrimental. State and local regulations constitute some of the most significant policy constraining housing supply. Building and land use regulations are nearly ubiquitous across american cities. They prohibit Housing Development increased costs create uncertainty. Zoning regulations have been impact on families budgets. The wellknown paper by the smithsonian pushes up the rents by 50 . A recent paper became 24 metropolitan areas find a zone tax up to 5000 per quarter acre in states with restrictive landuse regimes in addition to state and local policy and federal policy plays a role in limiting housing supply. In western states that federal govern a substantial part of me cant be developed with the federal government owns between 1680 of the land. In other western states the federal government owns more than one purge one have. Contrary to Public Perception the vast majority of federal lands are not National Parks and monuments or barrels. Instead most federal western land is with the bureau of Land Management or u. S. For services. The land is often close to urban areas with a significant portion of plant within city or county boundaries. Presented with a similar set of facts in the 1990s majority leader harry reid led a group of legislators impacting the Southern Nevada Land Management packs for the legislation allowed local governments and the landlocked Las Vegas Air to nominate federal land for competitive market options. The sale of federal land in clark county resulted in hundreds of millions of dollars allocated to the nevada Public Schools and Environmental Initiative creating a winwin for nevadas developers conservationists and residents. Ranking member of the best has cosponsored the housing sector promoting a similar solution to other western states. The houses that would allow local governments to nominate them purchase their land and develop land for housing projects that meet certain minimums and other criteria. Public Land Management act made it available for environmental issues. Research suggests it could have a meaningful impact on Housing Affordability. A recent u. S. Congress joint Economic Committee study found that housing reforms can lead to the construction of three Truman Thompson is increased housing tacoma would be possible with just 1. of federal Land Holdings. In addition to policies that directly constrained Development Additional federal state and local policies are also relevant in Housing Affordability. When supply limits policies are just the participation of investors in the Housing Market will be largely inconsequential and furthermore keep supplies limiting policies and regulating junk fees to when considering reforms to improve housing policymakers to keep in mind that government is the dominant regulator and required in the Housing Market as a result ample for your attention to the topic of Consumer Rights and Housing Markets and consumer importance. Im lewis and spent eight years on Housing Markets and policy. I have documented the increasing consolidation of Housing Markets in the United States and the effects on Housing Affordability. I am pleased the congress is taking proactive steps to incorporate competition in the session. This trend follows the long time declining in the u. S. This is not the only factor driving the problem but its a critical one. During the Great Recession many local homebuilders stopped operations and leaving them dominant. Farther more, many of the builders have since merged. My work identifies at least 12 mergers that increased the market share for the consulting firms. One of the cases formed the largest Home Building company in the country. National home prices recovered since 2011. The number of building firms have not. While prices are up by 30 with respect to their peak of 2008. The number or for sale builders are down. The competitive Market Forces that incentivized entries are not realized in american Housing Markets. I estimated 56 of markets fall into the category of highly concentrated. Most of the gains come from the increasing deactivety of two homebuilders. Large mergers have most likely not been challenged because regulating authorities are not defining the Housing Markets narrowly enough. The whole country is not a single Housing Market. Home building in pittsburgh and cleveland is not a threat to the monopoly in the significant price in philadelphia. They must be defined to ensure the shares are successful in a concentration. We should care about market consolidation because it effects the supply and affordability. If we had kept the 2006 levels of competition the u. S. Would have built 112 billion more last year equivalent to 160,000 units additionally. This roughly equals to 10 of the private residential fixed for 2023. We should encourage agencies to enforce competitive policy inHousing Markets more effectively and ask policies to consider market structure. Id like to suggest some things first encourage agencies to define Housing Markets spatially. Two consider legislation that shifts the burden of proof to large scale mergers. They cannot excerpt Marketing Power in any local relevant market where they have building activity. Three, encourage enforcement agencies to request mandatory divestures in markets. Four encourage the federal government to make competition the bill lar. Require the minimum number of homebuilders participating in areas that get low Income Housing tax credits. Five, encourage the same for statewide policies. Recent initiatives might be ineffective if they can with hold production by exercising monopoly power. Six when considering the philadelphia and National Bank presumption make sure market shares are defined using relevant definitions of local Housing Markets. Thank you, and im pleased to answer any questions. Thank you very much. Chair, thank you for the invitetation to discuss the current state of competition. I research fiscal and monetariry policy. Im a senior fellow to unleash prosperities. They have a dream homeownership a dream thats described as a nightmare. This is arguably at a record low with 43. 8 of the median household before tax income needed to purchase the median home. Over 100 of the median house after income is needed to purchase a median priced home. Its unaffordable in 99 of the 572 counties examines. A potential homebuyer needs an income 50 higher than the Median Household Income to afford a median price homed which is a record high. Homeownership is 70 more expensive today then renting. Rent prices are also at record highs according to a variety of data including from the bureau of labor. The unaffordability was by public policy. By manipulating rates. The Federal Reserve created disruptions in the economy. The size of interventions made the magnitude of these disruptions historic. The creation of trillions of dollars spawn 40 year high inflations that caused prices to rise. Low interest mades mortgages affordable drying home prices to new highs because rates were held so much lower than their natural state. When they raised rates it helped cause financing costs rose especially for mortgages. Fixed Interest Rates have more then tripled from their lows a few years ago and the monthly mortgage payment has more then doubled since january of 2021. Higher rates but pressure on home prices that countered by two factors. First most existing homeowners cant afford the sale their home because that means losing a rate of 2 to 3 for a new loan at 7 to 8 percent drastically reducing the size of the loan by half that the barrower could afford on the new home. The supply has been hamstrung that the Price Premium has been reduced to zero. Its faced by homebuilders at record highs. Homebuilders cannot afford to lower their prices. A new home would be priced below the homebuilders profitability threshold so they arent being built. Many americans have been forced to rent and increased the price of renting. Among accusations in the role . Higher rent prices there is no evidence such tools increased prices absent collusion among landlords, an act illegal whether pricing aids or used are not. There is reasons to believe they reduce rents for the renter. The purchase of homes have reduced the supply of homes for sale and increased home Prices Public policy created a situation where an entire generation of americans might not be able to afford their own home. Inflation made it impossible for a down payment large enough for a Monthly Payment to be affordable. If there is an antitrust problem regarding housing its the ma monopoly control of the money supply. Thank you, and i look forward to your questions. Very good, thank you very much. Next up is dr. Stuckie. What does antitrust have to do with the Housing Market. Another concern that my colleague mentioned is collusion. Many of the larger Property Managers rely on pricing algorithms. Those using real pages algorithm saw revenues increase 3 to 4 . Property managers increasingly relied on algorithm. 3 higher and lower occupancy rate and local Market Conditions after heathers article there has been 20 antitrust articles brought against real page they are all in the middle of tennessee. They worked together. The short answer is yes, if mu mans agreed to a fixed price and real pages pricing algorithm was used to facilitate the collusion. They cannot punish and stop the behavior in three scenarios. First is collusion. This is where they Work Together. They rely on several hubs for pricing but they learn to coclude. The harm is the same if the same as if they agreed in a smoke filled hotel room. Higher prices and reduced output. This is not just a u. S. Problem. Its hard to challenge this under their current antitrust law. Its not an issue inHousing Markets as well as on bol. Com. The Largest Online shopping marketplace in belgium. As more Companies Adopt pricing algorithms this can be pro competitive and can also be anticompetitive if i can impress upon you one thing today. Ai can compound the latest deficit. You need to look at this from three different ways. Tackle collusion in addition. Consider displacing the unwildey rule with clear or legal presumptions concerning restrains. The primary weapon to deal with cocollusion is merger review. The good news. Congress proposed the tools necessary such as restoring the standard in the merger review. To note, its the competition and antitrust reform act and antimergers act of 2022. Any comprehensive policy must address cocollusion and the other risks involving ai. This includes concerns over behaval discrimination. We need privacy regulations. They can opt out of the cocollection of their data. They can opt out of having their Data Collected about them to profile them. They can opt out of Personalized Services what data is checked and for what nonadvertising service. In europe, they have the gma. They are taking these steps. We need to reduce the risks of ai. Thank you. Music to my ears thank you for looking at this in the larger context of some of the need for reform. Thank you all of you. Ill give my first allotted time to senator roano. Im very well aware of how critical that is in hawaii. In july. Josh greenished an emergency proximation. Not a simple thing. The average Single Family home cost 1 million and less then onethird can afford to buy a home. Another third cannot afford rent because of these figures hawaii loses another resident every 36 minutes. Let that sink in. As of 2022 there were some living on the mainland. All of that with the devastation why do i bring this up. Its responsible. For professor, this is an try trust subcommittee. Im interested to know what can we do with the laws that we mentioned some changes we could make to the ft cs ability algorithmic collusion. Sure, certainly. At the end, one thing the part about junk fees. Why are firms recently competing to find better ways to manipulate. This might happen in markets that are not monopolistic and dont have a few competitors. One area for competition authorities is to understand when competition isnt working what are the assumption underline competition and prevent them from being at the top rather than the bottom . This happens not only with junk fees and pricing. The ftc can go after that. They can provide the necessary guardrails. The other area is with respect to pricing algorithms. Your weapon will be mergers. Prevent markets from becoming highly concentrated that this algorithm can occur. Courts view themselves as fortune tellers that have to predict what will happen and prove higher prices. As enforcer you know how difficult that could be. While we can i think possibly clarify with antitrust provisions. The bottom line is demand, there is so much more demand then availability of for purchase and rentals. We corote an op ed about the crisis. How would combatting getting back to junk fees and other predatory fees part of a solution to the housing crisis . Well, as you and i talked about you are looking at the lowist income people that have a combined Household Earnings of 25,000 or senior person with a disability on an extremely limited fixed income of 15,000. They are all ready living doubled and tripled up and paying 50, 60, 70 percent of the income so what can we do. We know there are so many challenges what can we do from a congressional level. We can fund support. We have to build more howing with rental assistance we need robust and enforced protections. When it comes to extra fees we need fullrance parentcy and they need to be minimized to the number of fees landlords can charge. Every dollars adds up. A bill puts 25 more in these kinds of fees. There is a lot we can do. Thank you for your testimony thank you, maryland dam chair. Ner lee. Id like to start with you. Where have you seen it most acute impact. Where does that show up . Well, your staff put together a great report on this and went state by state. Calls for a legal conclusion has a huge housing shortage. There is United States and nevada thats mostly federal land. There are others listed there as well. Broadly speaking the lands issue is effecting allstates. Its not a single state impacted. All would benefit. Right, right. In any state there is no comparable landowner to the United States of america nowhere. No one could afford to own that much land if there was they couldnt exempt themselves. Including property taxation. It wouldnt exceed a few percentage points. From the policy standpoint anyone individual or corporation or nonprofit. I dont know, 5 or 10 of the lands would be concerning. Its not surprising in a state like utah twothirds is owned by one owner. They exempt themselves from property an exation especially in a rugged state. The land is mountainous and limited number of places were people cold live. Its more limited when it could be inhabited by humans. What could be done to aleve ate the problems . It doesnt have to necessarily result in a housing shortage, does it . Well, i think zoning reform is part of the answer. Get more units by reforming zoning you can build two directions up and out. So, i think, both pieces are part of the equation when it comes to making improvements to Housing Affordability the houses reforms are part of the equation when it comes to improving housing supply in western states. Rising. You mentioned it would require 0. 1 of federal Land Holdings to increase the availability of housing in western states. Eliminating altogether what are known as the housing availability shortages in some states. Is it your impression the change, what would that do to the overall experience of federal lands. Does it cause a meaningful change to those accessing land to 0. 1 of the federal Land Holdings in the state. We need to think about what type of land it is with the housing act its blm land impacted by that would be nominated and purchased and then, developed into housing. Blm land for those that arent familiar it was land homesteaders passed over. Land that other agencies, other federal agencies didnt want to manage. When we think of the desert or Intermountain West this was stage brush and desert land. Its not National Parks or bureau of Indians Affairs land. I dont think the public would notice very much. What i think the public would notice is the funding that is being transferred into improvements from National Parks and other types of infrastructure they will benefit from thats something the housing act allows from. This goes along with the cost of living improvements. What role has Government Spending in irresponsible monitoring played in more then doubling of the cost of homeownership within the last two years. Thank you, senator. Its the main driver and without that cause they needed to spend over the last several years. Especially to homes. They compounded that. It made the payment low. You could afford a larger more administration for the same payment relative to a normal Interest Rate or what we had at the end of 2019 or first two months of 2020. People move from trying to buy ahome. They deceased the demand and its not simply a problem contained but housing in general. Its not even across the economic spectrum. Its effecting the middleclass and low income easterners. Certainly, senator. This is true for inflation. Specifically for housing, those who have the least are hurt the most by it what we are seeing today, essentially an entire generation of americans who for the first time in history might not be able to own their own home because, as they continue to save, the savings they have are losing value everyday from inflation while the price of homes go up. They need an every growing down payment to buy a home and it needs to be especially large to afford the Monthly Payment. The problem is. In that rat race, essentially, they will never get to the point where they have inform for the down payment. They are constantly seeing earnings decrease in terms of what they can buy. There is less leftover after they paid for necessities including their rents to be able to save for that down payment. Rich people made out well in this. They wanted to buy up a lot of stuff and made out well. They did at the expense of the poor and middleclass. All of this has to do with the manipulation of the agencies to a degree to facilitate the financing of reckless spending by congress. Congress doesnt want to exercise discipline to spend no more than it takes in or close to it. They want the praise of spending more money this will make it easier for congress to avoid more money this will make it appreciate noticeably in the months and years that followed. Thank you. Thank you very much, senator lee. Ill start with you, ms. Yentel, can you talk about the junk fees that people who dont rent anymore 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 given to the to get into the pardon me in the first place, and and then fees related the late payments. Notices of late payments can have an extra fee. Theres pet fees, fees for using a garage or fees for an internet use withage thats mandatory and somebody cant opt out of. Theres been stories of these fees adding up to as a 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 prey 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 up front about think fees that might be paid and requires that this they be made reasonable, but they really can be egregious, and they certainly can add up. Wow. Im just remembering back, my mom was a second grade teacher, and sometimes these types of animals would get lost [laughter] they were usually found. Like rabbits and things. But anyway, 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 great e grasp on, there have been numerous reports and lawsuits highlighting these pricesetting tools, and as you rightly point out, theres no privacy law in place which is a problem to coordinate price increases among competing landlords. So theyre able to get this data, and and could you explain how these pricing tools could facilitate these higher prices . So they get the data and its shared, and how can that lead to these higher prices where with 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. Okay. So, i mean, theres several scenarios. One scenario is where every firms 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 found was when gasoline stations starting is these pricing algorithms, the speed and the response can prevent any company from getting an advantage by discounting. Then prices start elevating up. Algorithms can can help facilitate collusion in markets already susceptible to it, but it can also increase it. Another scenario, and this happened in las vegas are, is where allegedly 90 of the hotels are all using one hub. And so no competitor going to give commerciallysensitive information to the hub if the hub can then use it to help the rivals. So this must be some there must be some understanding that theyre going to share on a realtime basis commerciallysensitive information with the hub so that its going to benefit all of hem. All of them. Okay. So you rightfully noted some of the bills, some of them are my bills, that you can 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 senator lees, which im the proud cosponsor, on not changing venues and then merger fees, and i had to give more money to the agencies. Can you talk specifically what you could do about specifically to update our Competition Laws so that these tools, as they are called, pricesetting tools that they can be used for cannot be used to the raise rent above what would occur in a competitive marketplace . Right. I mean, i think theres several things that can be done. Number one is the restore the [inaudible] standard in antitrust. Courts are adrift. They used to interpret the antitrust laws with the aim that congress had intended. 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 [inaudible] 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 is just amorphous and unwieldy. And then the third thing, and i think this is what john stuart mills said, one of the good things the government can do is collect a lot of information and disseminate it. So one nice thing the about your bill is improving the knowledge that we have about what antitrust policies work and not work. When i was at the doj, it was always surprising that we would allow these mergers to happen, and then we never followed up year, later. Yeah, to see if it was right. Ticketmaster, live nation. Anyway, im sorry, my mind just went to something else. Keep going. 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, 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 with that. [inaudible] one of the most pressing issues is not enough affordable homes. We just talked about that, singlefamily, starter homes, the like. Dr. 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. If this is what has been housing in housing. We have fewer and fewer developers building, and its in their own interests to charge higher prices. And that is not a new story the, thats an old story. Thats a story of Housing Market. 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 in companies. 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. 9 and so 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 looked at look at the Housing Markets well defined spatially should have been challenged by a regulatory the agency. They would have been challenging other sectors. My belief and my understanding is that what theyre doing is they are defining in some cases whole regions of the United States. In one case that the i could find, the whole u. S. As a single Housing Market. I think that is wrong. Yeah, they should audiocassette to the people in jackson county. Talk to the people in jackson county. Right. Potential homeowners are not deciding between the possibility of living in d. C. And living in l. A. That was my last comment, and ill turn it over to senator hirono senator lee for additional questions, and then senator hirono for a second round. 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, there are the still issues with this housing. And theres just not enough builders, and the land is not as expensive. If we dont have the land issue that senator lee was referring to the in our state, and i just, i cant help but think that in the old days there were just more mauler people smaller people that were coming in in the Home Building industry. Because we cant just get ive done everything, and is weve looked at what incentives can we have. These are maybe, there are the a mix of housing, right . And its really hard. And its the hurting our rural employers because its like chicken and egg. They want to expand with manufacturing, but they cant really expand because they dont have the housing. And some ofs it is getting seniors to move into homes, but then you need the conocos, and that frees up the condos, and that frees up the singlefamily. So thank you. Senator lee. Thank you. My next question is going to be both for ms. Calder and mr. Antony. You both mentioned the impact of government regulation, whether it be state tasker 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. K calker. Well, i think theres a broad body of research on zoning regulations really thats coming from the roque level, and 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 any one 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 that said, i think density regulations are really problematic. So where you sort of zone the whole city as a singlefamily homes, thats going to be an issue because, of course, it limits housing. And i think aside from that, you know, minimum lot sizes that are very large, those are going to be issues as well. And, you know, just permitting processes are very lengthy, very uncertain and very openedged. That doesnt give ended. That dun give developers a lot of confidence as heir going through these processes and trying to make plans. So its the amalgamation of all of them, particularly some of those you mentioned like minimum lot sizes and things like that, and creating an environment in which relatively few people can navigate this labyrinth of regulations. That, in turn, leads to more consolidation which might help explain some of what senator klobuchar was talking about. The fact that there arent are as many sort of smaller builders in many communities as will once were because theres such an advantage that goes to a larger producer who has the experience and the extra the resources to be able to devote to deal with those things. Mr. Antoni, do you have anything you want the add to that one . I think another key thing thats important not to overlook are regulations keeling with the Financial Sector dealing with the Financial Sector. And the reason that has such an impact in housing is because almost everyone who buys a house does so through financing. So when we have regulations that force lenders to look at things essentially other than risk, what youre doing is you 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 with model. And as a consequence of that or, 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. One other thing that i think might be getting missed here because so much of what were focusing on, 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 could be a refrigerator, could be your dishing washer, your clothes washer, dryer, etc. , and so many of these regulations that do increase appliance efficiency are actually a net loss for the consumer because of the increased cost. And when were talking about these regulationimposed cost increases, they tend to be completely missed because of the adjustments in things like the cpi. Theyre typically not included in inflation metrics. And, obviously, a colleague of mine, Casey Mulligan 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 sort of thing adds up. Plus, a lot of the a appliances just dont do as good of a job, but thats a conversation 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 bill how much were paying, you cant see the Regulatory Compliance costs. Theres no comprehensive bill for it. We have in our minds this idea of those are all a paid for with by corporations, and in a sense they are, but not really because they get passed down to hard working americans who pay higher prices for goods and services, everything they buy. They also pay for it in meaningful ways through diminished wages, unemployment and underemployment. What have you observed in your market analyses throughout the country . Are there factors that apply uniquely to metropolitan areasing more heavily Populated Areas . What do you see this in terms of home affordability, specifically in major metropolitan, urban environments . Well, what we find, senator, typically is in these major metropolitan areas a higher level of regulation, and we also find a higher higher taxes, you know, on average. And so we have higher costs of Home Ownership in those areas. On page 4 of my testimony the, 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 aftertax income to buy the medianpriced home in those areas. In other words, its literally impossible for the typical American Family e to buy a home in those places. Conversely, as you start getting into typically more suburban or rural areas and you typically see taxes and regulation go down, Home Ownership affordability, on average, does tend to rise. And that in turn ends up creating even more disparities. As you look across the economic spectrum, if youre in one of those areas, youre unfortunate enough to live in there, some of the setting a aside the graduated income tax system that we have, some of the benefits associated with Home Ownership like the mortgage Interest Deduction east phases to 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, making it even harder for people who are just the economic threshold of people who could otherwise purchase in that area, you may never get there. Thank you, madam chair. Okay, thank you. Senator hirono. Thank you. I just have a the few followup questions and one new question. Professor quintero, while theres a severe shortage of Affordable Housing in our cities, the new work from home dynamic means that there is also a glut of office space available. So some cities and developers are working together to convert underutilized office space to residential. For example, in honolulu you can now live in the Office Building that houses the federal the bankruptcy court. Could relaxing or altering building codes and incentives to encourage office to residential conversions be part of the solution to our Affordable Housing crisis . Mig that increases anything that increases the effective supply of homes whether it be new homes or existing would help towards a solution. What im most familiar with is baltimore where theres been significant move towards conversions from commercial to residential. There is a significant barrier in terms one structural, the other one in legal terms and zoning regulations that prevent these conversions from being done cheaply and quickly. And so 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. To the extent that all these states and counties also have the zoning regulation ares, there may be a way for us to approach 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 stucke, in the multidistrict litigation thats been filed against real page, one of the allegations was from someone who has utilized real page. He said that although we, meaning him, theyre 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 the. [inaudible] tacit is collusion or conscious these are not price fixing. So is this now that we have these new tools, new entities such as real page with algorithms, this is not bob giving you information,s this is a whole system. Dont you think that we need to have some changes, as i mentioned, to our antitrust laws 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. The last time you had meaningful antitrust regulation was updates to the ott to the legislation was over, you know, what is it, 50 years ago . And so you but tacit collusion is very icky to get ay itself. You can have tacit collusion in markets where one way to explain to my students is i say break up into groups of two or three. Heres the monopoly price, heres the competitive price. Show each other price youre going to charge that day the, and after 10, 15 rounds they report their results. Invariably, its close e to the monopoly rate. So how as an enforcer can you get at that . You cant tell a competitor not to look at 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 merger review and 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 if 50 years ago when the basic antitrust 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 fact that you have all these investor purchases now of Housing Stock the, 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 increase the chance of these guys are collusive, what i would call collusive parallel pricing. 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 hi row know, for the good questions. And next up we have senator blackburn, then i have a very brief question, and then i think were going to end things as theres a conflict with an a. I. Meeting. But we are very focused on this issue right now. Senator senator blackburn. Yes, youre right, its a busy day. There is a lot happening. Professor stucke, welcome. Were delighted that you are here from ut and appreciate that you would headache trip. Make the trip. So thank you for that. M. D. Calder do ms. Calder, let me come to you. In tennessee we have a lot of people that are moving there, and theyre wanting to leave other areas. We even have some minnesotans that have come to tennessee for the winter. Thats exactly right. They like our weather a whole lot better. But we know that 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 budge. Budget. So 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 a 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 we have 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 certainly have i have written critically of the low Income Housing tax credit in the past, and so i, 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, changing. Some of the the, 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 demandside vouchers or demandside assistance. Most of the benefits also at the present if time, they flow to developers is what Research Suggests rather than flowing to low income tenants which is something that worries me because, of course, you know, we have limited resources, and we need to aloe kite those resources allocate those resources according wily to extremely low ten income tenants first and foremost. And ive also seen because of the 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. Okay. Senator blackburn, can i add on to that in. Yes, you hay. We support your legislation and appreciate your leadership in finish 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 insure that these low Income Housing Tax Credit Properties are more affordable to people who need it the most, the low income people, people in rural and tribal communities, and we appreciate the additional transparency. Yeah. Let me stay with you. We hear a lot about bidenomics and the inflation rate. That is out there. And the fact that the home price, average home price, median home price is up over 27 . Mortgage rates have increased twofold since 2020. Finish and Home Ownership 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 with, ms. Yentel, do you see bidenomics, 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 longstanding, systemic issue in our housing finish. Yeah. Well, my times running out, but i would say gallup disagrees with you. They found 2 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. Yentel, but i know time has run out. You can put those on the recorder. Is that all right . Thank you. One last question, ms. Yentel. Another factor many discuss today that disrupted healthy competition in the Housing Market is the prevalence of private equitybacked Institutional Investors buying up large swaths of singlefamily homes. In some neighborhoods these types of investors own an incredibly High Percentage of homes. Ive seen this spike, theres been major, major news reports on this, well documented. Can you talk about how Institutional Investors came to own a significant share of singlefamily 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 profitgenerating scheme. So as those Institutional Investors especially are targeting communities that are disproportionately people of color or have disproportionately high rates of poverty the, then were seeing the harm of these practices all even greater on people of lowest incomes and the most marginalized households. All right. Well, thank you very much [inaudible] yes. I just want to give e. J. A chance to respond to senator blackburns question about bidenomics and what it says about Housing Affordability. Certainly, senator. Just very briefly, if you look at the performance of wages versus price indexes such as the Consumer Price index, you find that it, for a record 26 consecutive months of the Biden 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 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 the 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 time of the start of this administration and compare that to today, and it is the as if you took 7300 off of their annual earnings. Housing of an renters of the credit and the Biden Administration of the congress, provided historic resources, during the pandemic that stavedf what could been an eviction tsunami. And said those resources kept eviction filing rates at the lowest on record. Those are the kind of investments programs that should be continued and made permanent card. Very good. I want to thank all of you, for this very informative hearing and there are so many issues that are clearly related. We have housing prices go up in the factors to be discussed here today and then people go over the rent their own home and those rents go up and you can kind of see what is been going on here and i do think that looking at this in a way that does not argue that the only thing as you 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 anything about lets look at all of the factors going on here with god consolidation algorithms i think its actually a father for future work and so owner think all of you for being here today and i know that the record will remain open for the next week for the senators to submit any additional russians and without, i want to thank you all for coming in the hearing is adjourned. Good and thank you. Foreign intelligence you ever miss any of cspans coverage you can find it anytime online it cspan. Org, videos of key hearings and debates and other events, feature markers the guide you through interesting and is where the highlights, these points of interest markers appear on right hand side of your screen when you hit play unselect videos. This timeline makes it easy to quickly get an idea of what was debated and decided in Washington School through its been a few minutes on cspan point of interest. Live on sunday november 5th, on indepth, author and former aclu president joins book tv, to talk intake calls about civil rights, free speech and sensors are under censorship and more shes the author of descending pornography, hate, and the recently published, free speech when Everybody Needs to know. A guide to free speech law in the debates surrounding it and joining the conversation with your phone calls, facebook comment, and text. Indepth with Nadine Strauss and come alive sunday november 5th, at noon eastern on book tv, on cspan2. You Supreme Court associate justice, Justice Amy Coney barrett considers the potential benefits of a code of ethics for the nations highest court, during a conversation with law students and faculty at the university of minnesota. Or, seven the week of stories with ethical concerns among some of the court justices. [applause] [applause]