Departing RealPage Exec’s Flimsy Rant Against Rent Control

March 1, 2024

As he leaves the scandal-plagued firm, Jay Parsons offers one last defense of rent-gougers.

If you’re a regular reader of this newsletter, you’ll be familiar with real estate tech firm RealPage. According to a bombshell ProPublica investigation, RealPage’s rent-setting software YieldStar has helped corporate landlords illegally collude to keep rents artificially high.

This week Arizona Attorney General Kris Mayes joined the fight to hold RealPage accountable, filing a lawsuit that alleges the firm and nine major landlords (including a company owned by Clarence Thomas benefactor Harlan Crow) entered into a price-fixing agreement which “directly contributed to Arizona’s affordable housing crisis.” AG Mayes’ suit argues that RealPage is “in large part” to blame for soaring rents in Phoenix and Tucson, owing to the company’s software creating a price-fixing “conspiracy that stifled fair competition and essentially established a rental monopoly in our state’s two largest metro areas.”

AG Mayes’ lawsuit adds to RealPage’s mounting legal woes: the DC State Attorney General filed a similar lawsuit last November, while multiple tenant class action lawsuits against the company continue to make their way through the courts. RealPage is also reportedly under investigation by the Department of Justice’s Antitrust Division (which has officially backed one of the tenant lawsuits). Last month, eight Democratic Senators introduced legislation to crack down on YieldStar and other price-fixing algorithms that allow landlords to collude on rent increases.

It appears that at least one prominent RealPage executive won’t be sticking around to see where all this legal and regulatory scrutiny leads. This morning, RealPage Chief Economist Jay Parsons announced his departure from the firm after 15 years at the company. Parsons, who was allegedly involved in pitching YieldStar to industry clients (and blocked us on Twitter for pointing that out), has long been an outspoken opponent of rent regulation—and his final week at RealPage was no different.

Just a day before AG Mayes filed her lawsuit, Parsons published a Bill Ackman-esque screed on Twitter criticizing a New York Times article on statewide rent caps and likening proponents of rent control to climate deniers and anti-vaxxers. Parsons cited several sources to make his “scientific” case against rent control, including:

A survey of 464 economists from the American Economic Review (AER) indicating they believed that rent control “reduces the quantity and quality of available housing.”
A study of New York City’s mid-20th century rent controls (Olsen, Gyourko and Linneman) finding that rent control “reduces availability for lower-income earners”
A 2017 paper by Stanford’s Rebecca Diamond claiming that San Francisco’s rent control increased rents and gentrification while reducing the available supply of housing.
An MIT Study claiming the repeal of rent control in Cambridge, MA improved housing quality (Autor, Palmer, and Pathak).
Looks convincing—until you take a closer look at Parsons’ sources.

Let’s first consider the AER survey and New York study, which were both published over 30 years ago (in 1992 and 1972-89, respectively). As Rutgers economist Mark Paul has written, decades-old theoretical assumptions about rent control are being increasingly challenged by contemporary evidence:

  • A 2018 University of Southern California review of academic rent control research found that rent regulations increase housing stability and have a “minimal impact on new construction”.
  • A 2018 UC-Berkeley Haas Institute report found that “claims that rent control has negative effects on development of new housing are generally not supported by research.”
  • A 2007 study of rent control in 76 New Jersey cities found little to no statistically significant effect of rent controls on new construction.
  • The 2014 Autor, Palmer, and Pathak study cited by Parsons himself (more on this later) suggested a lack of a causal relationship between rent regulations and housing supply in Massachusetts.

A 2023 letter co-signed by Paul and 31 other economists likens this situation to the minimum wage, which was long theorized to be a job-killing policy until empirical research in the 1990s (including by Nobel Laureates David Card and Alan Krueger) found that higher minimum wages increased living standards for low-wage workers with minimal job loss. These 32 economists (who Parsons would presumably consider “anti-science”) include luminaries like Leontief prize-winner James K. Galbraith, former Department of Labor chief economist Janelle Jones, and the groundbreaking University of Massachusetts professor Isabella Weber, who challenged neoliberal orthodoxy and got inflation right.

Stanford’s Rebecca Diamond, a former Goldman Sachs analyst, is another dubious source cited by Parsons. According to the AIDS Healthcare Foundation’s Housing is a Human Right initiative, Diamond’s 2017 rent control paper is riddled with flaws and biases, including a skewed dataset, manipulation of mathematical models across different iterations of the study, and burying the paper’s own positive conclusions about rent control (including about the policy’s anti-displacement effects). California renters rights group Tenants Together has also criticized Diamond’s methodology, which ignored landlord-created loopholes in San Francisco’s rent control law, the tech boom’s housing demand shock, the city’s refusal to enforce local laws against short term rental conversions, and other exogenous factors that drove rent increases over the study’s timeframe.

But it is Parsons’ suggestion that the end of rent control in Massachusetts proves the policy’s failures that is the most questionable. As Techdirt’s Leigh Beadon noted, the 2014 Autor, Palmer, and Pathak study undermines Parsons’ purported concerns for renters and supply. According to the study, the repeal of rent control in Cambridge led to an immediate rise in nominal rents (by as much as 40% in formerly-controlled units and 13% in never-controlled units) and a sharp increase in resident turnover at formerly controlled units. New residential investment, according to the authors, explained “only a small fraction” of the $7.8 billion in residential property appreciation following repeal.

Wherever Jay Parsons ends up next, his rabid hostility to rent control will continue to help deflect blame from the main culprits of the housing affordability crisis: rent-gouging corporate landlords. Parsons himself has somewhat given the game away; in a subsequent tweet, he bemoaned tenant advocates’ “kamikaze mission against landlords” and attacked public housing as “America’s most prolific evictor.” (journalist Roshan Abraham, who authored one of the articles cited in the tweet, called out Parsons for ignoring how austere fiscal policy has affected public housing)

Parsons may claim that his opposition to rent control is out of concern for renters, but his 15-year career at RealPage speaks louder than his tweets. The science should, as he says, be “front and center” in housing coverage—but it is Parsons, not rent control advocates, who is ignoring new evidence that conflicts with his decades-old hypothesis.

The Revolving Door Project, March 1, 2024

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