Election Special: Real Estate Antitrust

Would the DOJ's aggression change depending on who is in the White House?

I’ve been meaning to write this for a while now, though frankly other topics took precedence. But a recent comment on one of my posts, talking about how NAR is wise to defer decision on CCP until we know who will be sitting in the Oval Office, got me thinking it’s time to speculate like crazy.

Let us start where literally every news story, commentator, and analysis on the topic starts: nobody knows anything. Neither Trump nor Harris have made antitrust a big issue in their campaigns. None of the people running have any kind of a real background in antitrust, and only Trump has any kind of a track record. Everybody is speculating based on a comment here, a comment there.

Having said that, after reading what tea leaves I can, I believe that the outcome of the election will not matter for NAR or for real estate. Antitrust enforcement on the industry is unlikely to change no matter who gets into the White House.

Let us think out loud together.

The Past is Prologue

I don’t think it is necessary to rehash every little thing that has happened the past eight years, but it might make sense to at least put together a broad narrative.

Fact is that antitrust scrutiny of NAR and the real estate industry began under Trump in 2018. Two congressmen, Tom Marino (R) and David Cicilline (D) sent a letter to the DOJ and FTC asking them to “examine competition-related issues in the real estate brokerage industry.” That triggered an inquiry, which then led to the lawsuit-and-settlement in 2020.

We know that the Trump DOJ chose to settle the lawsuit with NAR, with NAR making four concessions that don’t mean anything at all, in order to protect cooperative compensation and Clear Cooperation Policy. We know from all of the filings from the NAR v. U.S. lawsuit that a whole bunch of back and forth went on between NAR and the DOJ. We don’t know what prompted Makan Delrahim or his superiors to settle instead of pursuing NAR further.

Because NAR did not finalize the settlement until the new Administration came in, the Biden DOJ withdrew from the settlement, triggering all that happened after. The clear implication there is that the staff attorneys at the DOJ, who actually do all the work and actually have the institutional memory as opposed to political appointees, did not want to settle the lawsuit, but were forced to by higher ups.

We also know that both the Trump and the Biden DOJ intervened in a number of civil lawsuits filed by class action attorneys. We know that the DOJ in both administrations intervened in Moehrl, Sitzer, Nosalek, Rex v. Zillow, PLS v. NAR, etc. We know from Michael Ketchmark directly that he has communicated extensively with the DOJ in his lawsuit and in his settlement discussions.

We know that Biden directed the FTC to look into regulating real estate in his Executive Order on Competition. I wrote about that pretty extensively.

And we know that after winning the appeal from the shocking NAR v. U.S. decision, the DOJ has recommenced sending out Civil Investigative Demands to a number of organizations, including NAR, MLSs and large brokerages. CIDs typically come before some kind of an enforcement action, so that’s where we are.

With the whole world kind of holding its breath to see what happens in a few days with the election, the current conventional wisdom appears to be that a Trump victory might mean changes to the antitrust fervor of the Biden DOJ and FTC.

I’m not so sure about that.

J.D. Vance, Populism and Antitrust

While it is true that Trump has been generally more pro-business than most Administrations — and certainly more than any Democratic administration since… I don’t know… JFK? (who would today be considered a right-wing extremist) — his selecting J.D. Vance as his running mate has changed that calculation.

NY Post has the take intended for a general audience:

But President Biden’s Federal Trade Commission Chair Lina Khan may find herself some new and strange bedfellows in a Trump-Vance administration. The lower half of the ticket said so himself, floating a possible role for Khan working alongside an even more controversial figure: billionaire tech mogul Elon Musk.

Legal Dive has a take intended for lawyers:

JD Vance, the former venture capitalist and Republican senator running for vice president, is one of FTC Chair Lina Khan’s supporters — a stance that’s thrown an unknown policy variable into Donald Trump’s campaign.

“I look at Lina Kahn as one of the few people in the Biden administration that I actually think is doing a pretty good job and that sort of sets me apart from most of my Republican colleagues,” Vance said at a February policy conference co-sponsored by Y Combinator and Bloomberg’s venture capital fund.

That story goes on to interview other Republicans who also support (?) Lina Khan:

“As the Republican Party becomes more working class, we’re less captive to the neolibertarian view that everything big business does to people is OK,” Florida Rep. Matt Gaetz told the Journal in March. Gaetz, along with Missouri Sen. Josh Hawley, has also publicly supported Khan’s muscular approach toward competition regulation.

Many conservatives riding with Khan have also become disenchanted with large business owing to various corporate ESG and DEI initiatives, sparking a wave of backlash, with the pejorative term “woke” cast against companies from Anheuser-Busch to the Hershey Company to Walt Disney.

They also agree with the FTC majority view that antitrust regulation has been conducted too narrowly for decades, aligned primarily on financial injury. “I think the one thing I appreciate about Lina Khan’s approach is that she recognized there has to be sort of a broader understanding of how we think about competition in the marketplace,” Vance said at the February conference in Washington D.C. [Emphasis added]

Then you have New York Law Journal looking at what antitrust under a Trump 2.0 administration might look like. It’s probably the most in-depth work I’ve found researching this topic. Now, the article is really focused more on M&A dealmaking, but it does make some political points worth considering.

First, NYLJ points out that the Biden administration has been the most aggressive in antitrust:

Under Biden, who has proudly made antitrust enforcement a hallmark of his tenure, the agencies have only become more hawkish. Respectively led by Lina Khan and Jonathan Kanter, the FTC and DOJ Antitrust Division under Biden have increased the burdens of deal-making, roughly doubling the average number of complaints seeking to enjoin transactions filed each year, compared to agency filings during the Trump administration.

Second, NYLJ talked about how Vance changed the calculus for what a Trump 2.0 would do in antitrust, and asks whether “Vance would have meaningful influence on the administration’s antitrust policy.” I think the answer to that question is Yes.

Of all of the people around Trump, (at least the ones we know about) the two with the deepest policy chops are J.D. Vance and Vivek Ramaswamy. Vance is a leader in the National Conservatism movement, both politically and intellectually. Vivek is opposed to Vance in economics, as he is far more libertarian, but his intelligence and grasp of policy issues cannot be honestly questioned.

The NYLJ does write this:

Vance has seemingly positioned himself to play a significant role in antitrust enforcement and to pick up where Trump’s previous administration left off.

…

At a minimum, a second Trump presidency would likely continue the pro-enforcement stance from his first four years. If Trump entrusts Vance with significant control over competition policy, their administration may look surprisingly similar to the current, potentially including the appointment of someone with a similar populist agenda to Khan to the helm of the FTC.

How would populism influence antitrust?

The basic idea is that populism includes skepticism of and hostility to big anything — big government, big pharma, big tech, big banks, etc. To protect and advance the interests of the average American, it is necessary to break up, weaken, and otherwise limit the power of big organizations.

Also included in overall populist philosophy is the idea — best articulated by Tucker Carlson — that government should improve the lives of its average citizens and everyday workers. In the Trump campaign, that has led to a focus on several big themes: forever wars, too-big federal bureaucracies, and of course, the cost of living. Absolutely critical to the cost of living issue is the cost of housing. Trump, Vance, Vivek, and numerous others have pointed to how unaffordable housing has become over and over and over again and have promised to change that.

Which means that in a Trump 2.0 administration, housing will be a major focus. The goal will be to bring the cost of housing down, so that the average American worker (who presumably will get jobs in manufacturing that Trump/Vance industrial policy will bring back to the U.S.) can afford to buy a home.

To the extent that antitrust is seen as important for bringing home prices down — and the recent set of commission lawsuits have at their core the idea that real estate commissions have kept prices high — it will remain a priority in the Trump/Vance DOJ and FTC. If that requires breaking up Big REALTOR (i.e., NAR) then that is perfectly in line with the Lina Khan theory of competition and perfectly in line with populism’s fear and loathing of Big Anything.

Having said that… just today, Matt Stoller at BIG reported that Elon Musk tweeted that Lina Khan will be fired once Trump takes office:

Today, SpaceX and Tesla CEO Elon Musk, the richest man in the world, tweeted that he will get rid of his own regulator, Federal Trade Commission Chair Lina Khan.

https://x.com/elonmusk/status/1851985438933668337

His pledge to remove Khan comes after he stood on stage and said he would personally oversee a $2 trillion cut to the Federal budget, which would cause, in his words, “hardship.”

So who knows?

Harris and the Continuation of the Status Quo

If Harris were to win, there is even less to say. Since she has not stated clear policy positions… and I am being charitable here… no one knows exactly what she wants to do, what she plans to do, or what she will do.

The NYLJ does point to one episode that might shed a clue:

More than a month into her campaign, Harris has largely remained quiet on antitrust, but may have concerned those critical of enforcement in her first major economic policy speech in midAugust when she took aim at price gouging in the grocery and food industries. She stated her intention to pass a federal ban on price gouging and also said she would “take on corporate landlords and cap unfair rent increases” and “take on Big Pharma to cap prescription drug costs.” While she did not explicitly mention antitrust, Harris’ rhetoric could be interpreted as furthering the Biden administration’s competition agenda.

The NYLJ does note that much of that is the anti-corporate rhetoric common in elections, so it could just be handwaving to seduce voters.

CNBC, in an article about Harris and antitrust, suggested that Harris will scale back the aggression in Biden’s antitrust program:

Wall Street dealmakers said they believe Vice President Kamala Harris, if she were to win the November presidential election against Donald Trump, is a clean slate on antitrust regulation and a prime opportunity to loosen the Biden antitrust regime.

“This ‘big is bad’ hostility [from Biden] will fall by the wayside” in a potential Harris administration, according to White & Case partner George Paul, who advised an attempted merger between Kroger and Albertsons. “I don’t think Harris will go that far. I think she’s going to take a step back.”

Of course, there’s no real evidence to suggest such a step back since we’re all just shooting in the dark. CNBC does point out that Democrat politics may play a role as well:

Though Biden often polled poorly on the economy, his public battle against big corporations occasionally scored him points with voters.

Biden’s antitrust regime also kept the progressive wing of Capitol Hill happy, including allies such as Sen. Elizabeth Warren, D-Mass., and Sen. Bernie Sanders, D-Vt. who helped the president push through his legislative agenda.

If housing remains a major issue under the Harris Administration, which it will, and she isn’t going to pursue things like deporting illegals or Drill, Baby, Drill… then she will need to do something to make it seem like she cares about getting home prices lower. Going after corporate landlords is a given, but what else? If antitrust plays a part in the narrative of government trying to do the right thing against greedy corporations, then I expect she will give the DOJ and FTC the go-ahead to pursue NAR and the industry further.

The only other hint that might be persuasive to me is the now-famous quote by Harris on The View when she said she couldn’t think of a single thing she would do differently from Biden. If that’s true, then well, there is no reason to expect any change in antitrust enforcement.

Institutional Factors

The one thing that really could change everything is the oft-stated and oft-repeated assertion by the Trump team that they would actually drain the Swamp this time around.

Vivek has been the most outspoken about the need to simply reduce the size of government, suggesting that mass layoffs are the way to do it. Elon Musk, who has been put forth as the new government efficiency czar by Trump, has proven that he can fire 80% of the staff at Twitter with near-zero impact on functioning. The populist MAGA base absolutely wants Trump to do to Washington DC as Javier Millei has done to Argentina: AFUERA!

It is possible — perhaps even likely — that Trump 2.0 would begin by eliminating 50-75% of the federal workforce. That will have an impact, of course.

If the staff at the DOJ and the FTC are cut by 70%, then there are simply fewer people to do the work. That means picking and choosing which cases to file, which industries to go after, etc.

With all of the economic woes of the country, and after the civil cases have achieved so much in the NAR settlement, would the DOJ and the FTC really still prioritize real estate?

No one knows, of course, but I think the answer as of right now, is Yes.

One reason is that as referenced above, housing is a major issue in the election and would be a major issue in any Trump 2.0 administration. If you get into office promising to lower the cost of living, promising to bring back the ability of the average worker to buy a house, then you have to deliver on that. While most of the work will be done through liberalizing housing regulations (which really inhibit supply), through lowering the price of energy (which affects the prices of everything else), and through stopping then deporting illegal migrants (which drops demand, and is something Vance has specifically addressed), if antitrust enforcement remains something that the DOJ and the FTC are expected to continue doing, then that which touches housing will be a priority.

Second reason is institutional memory. I have written about the 100 year war between NAR and the DOJ/FTC. The staff attorneys at the DOJ and the FTC, the ones who are not political appointees, are likely to carry the institutional memory of both against Big REALTOR. Add in the fact that NAR embarrassed and annoyed the DOJ with its lawsuit, which won at trial and lost on appeal and now NAR is trying to get it in front of the Supreme Court, and you have real motivation for the remaining 30% of the workforce at the DOJ and the FTC to prioritize real estate, if possible.

I do agree with those who think that Big Tech and Big Pharma and Big Food may take precedence over Big REALTOR, but I do want to point out that there is institutional hostility to NAR at the DOJ and FTC that go back a hundred years.

It goes without saying that if Harris wins, there are no expected institutional changes at the DOJ and the FTC so the status quo would continue.

Whoever Wins, Not Much Changes

Let’s wrap up.

Again, with the caveat that nobody knows anything and that the world of politics is hardly the world of logic and reason, as things stand today, it appears that the outcome of the election will not matter greatly for all of the antitrust challenges to NAR and to the industry.

A Harris win likely means continuation of the Biden antitrust policies. There is no strong reason to change, and Harris has suggested she will simply continue what she has been part of for the past four years. (If there are changes, it will likely be limited to her billionaire donors in banking, pharma and tech.)

A Trump win could signal major disruption, especially if he carries out some sort of an Elon Musk-led decimation of the federal workforce. Elon has already said Lina Kahn would be fired; what we don’t know is just how much of an axe he would take to the DOJ and the FTC as institutions.

On the other hand, the signals that Vance has sent and continues to send vis-a-vis corporations in the new NatCon-MAGA worldview suggest that whether Khan herself survives as head of the FTC or not, populism and its suspicion of big organizations and big corporate power could point the way to leaving the antitrust divisions more or less intact.

With NAR being one of the successes that the DOJ can point to, and with housing being such a critical political issue, I think it is reasonable to expect that antitrust scrutiny of real estate would continue under Trump 2.0. That track is going to play on and on and on.

In the end then, not much changes. Vote your conscience; it isn’t likely to impact the industry’s woes with antitrust.

-rsh