For decades, cities have slogged through a depressing trend: limited housing options have forced rents higher than ever. A New Yorker even founded a political party to argue that “Rent Is Too Damn High.”
While some advocates have pushed policies that actually make the affordable housing issue worse (like rent control, and affordable housing “fees” on new construction), solutions like upzoning or stripping away onerous permitting requirements can help tamp down housing costs.
In Seattle, the city with perhaps the worst housing issues in the country, the city has finally begun to recognize, and change, some causes of the affordable housing crisis. For years, the majority of Seattle was zoned for single-family houses. This severely limited housing options in the city by making it impossible for developers to build apartment buildings, or for families to build multi-family homes and rent to outside tenants. Fewer housing options means housing becomes more expensive.
Fortunately, Seattle is changing its zoning laws to allow more apartments and multi-family properties. But just because Seattle is begrudgingly combatting one bad policy, doesn’t mean they understand the cause of their crisis. Seattle still bans housing innovations that can help reduce rental costs—like “rental bidding” websites.
Starting in 2017, a few startups unfurled a new kind of housing website that’s basically a mashup of eBay and Zillow. Rentberry is one example. On Rentberry, landlords post an initial asking price on rent and security deposit, and potential tenants can post a bid above or below that price. The website also seeks to be a one-stop shop for housing: eventually you’ll be able to shop for housing, pay for rent, make maintenance requests, and so on—all on the same site.
But after Rentberry started operating in Seattle, it didn’t take long for passionate people with little understanding of economics to fear-monger. Sites like Rentberry were accused of being run by predatory capitalists taking advantage of an already-inflated housing market. That’s why Seattle, with no meaningful evidence of harm, slapped a ban on the use of those sites before even a handful of people had ever used them. PLF represents Rentberry and a local landlord in challenging this website ban.
Seattle frets that bidding will inflate housing costs. But that isn’t how the bidding process works. Bidding helps buyers and sellers more easily settle on the prevailing market rate for that particular unit. If that happens to be high, that isn’t the website’s fault. Bidding may result in a higher or lower price, depending on many factors, like location, unit quality, and a host of other factors. Blaming bidders for a high price is basically just killing the messenger.
A bid is just a price signal, and there are good reasons why we need efficient price signals. For one, without a bidding process, landlords are left to simply make educated guesses about what their unit will rent for. This can increase the time that a rental sits vacant while the landlord blindly adjusts the rental offer until he gets a hit. And without a bidding process, a house hunter desperate to grab a unit in a hot market may end up entering into a more expensive lease than he could’ve gotten if he’d made a lower offer. If, on the other hand, the unit ends up renting for an amount below the market rate, a renter may have an unpleasant surprise when the landlord ratchets up the price as lease renewal time rolls around.
Yes, the rent is too damn high in many cities across the country. Yet cities like Seattle all too often fail to recognize how bad policy creates the problem in the first place. Now, despite the city realizing how zoning laws have hurt renters, rental bidding platforms are still being used as an easy scapegoat. High rent is not an inevitability. But until we begin pointing the finger of blame in the right direction, it will be.