The San Francisco City Council is smashing mirrors because it doesn’t like that face staring back at it. The council just approved a ban on websites that provide local rental market data and help landlords determine rents. The committee blames these tools for causing explosive increases in housing costs. This is a classic case of killing the messenger, which does nothing to solve a problem of the city council’s own making and violates the First Amendment.
Landlords frequently use the following websites real page and Yadi Rental prices are recommended based on local market data. Recently, activists have begun accusing these sites of driving up rents simply because they provide accurate data on local market rents. The San Francisco City Council has now joined the party regulations This will disable “algorithm device [that] Calculations are performed on non-public competitor data on local or statewide rent or occupancy levels to advise landlords on whether to leave their units vacant or the amount of rent the landlord can receive from tenants. Landlords can’t use them either.
But these sites provide a valuable service. Prices are signals. They provide important information to buyers and sellers, guide business decisions, help businesses and consumers adapt to economic changes, and support a healthy economy.
Knowing what your competitors charge can help your business stay competitive and attract customers. This is true in the housing industry as well as in other industries. If a landlord charges too much, someone will lower the price to steal customers. If they charge too little, they will see a surge in demand and respond by raising prices. Market information simply stimulates the process.
However, the sites have sparked calls for price collusion and collusion among landlords. In fact, they just provide information. The fact that landlords arrived at similar prices after analyzing market data does not indicate collusion or price manipulation. This is just a standard economic practice.
Businesses often analyze competitor pricing to align their own pricing with the current market. For example, a bakery won’t price a dozen donuts just because they typically cost around $10. Should we start hiding donut prices so bakeries have to guess at profit margins? This kind of economic deception not only fails to reduce costs, but may increase costs by wasting time and energy on price discovery.
Even though these sites may help landlords collude or fix prices, that is no reason to ban information. Under the First Amendment, the government cannot suppress information because it fears what people will do if they know it. In the 1976 case Virginia Board of Pharmacy v. Virginia Citizens Consumer Council, Inc.the Supreme Court struck down a law that prohibited pharmacists from advertising prescription drug prices. The court ‘exactly chose that’ explain“Between the dangers of suppressing information and the dangers of misuse of information if it is freely available, that’s what the First Amendment has for us.”
It’s a good thing that the First Amendment gives us this decision, because almost any information—no matter how valuable—can be misused and put into the crosshairs of hasty legislators. Public voting records can be used to scare people, real estate listings can facilitate property fraud, and public online profiles can be exploited by identity thieves. Of course, all this information has valuable uses. In a free society, governments punish wrongdoing rather than restrict access to information.
In this case, the San Francisco City Council shot the messenger because they didn’t like the message. The fact that housing in San Francisco is expensive didn’t start with RealPage or similar sites. The root cause of high housing costs lies with councils themselves. If the City Council is serious about addressing this issue, it should review its own anti-housing policies: single-family zoning policies that limit housing supply, rent control laws that impede economic growth, and disastrous permitting processes that hinder and delay housing projects. To give a few examples.
Ironically, these sites publish information that could help the City Council better understand why San Francisco remains one of the most expensive cities in the country. If the city is serious about its housing crisis, maybe it should subscribe to RealPage.
