This San Francisco-based rental auction startup cares not about your housing crisis

This San Francisco-based rental auction startup cares not about your housing crisis

I’ve known about Rentberry since last year when they launched. And until now, I shied away from writing about them because I was uncomfortable about bringing light to a company that turns the housing market into something grotesque resembling eBay. But Rentberry is back in the news cycle again recently, with the Wall Street Journal and BBC writing about its expansion across the United States, Australia and New Zealand.

I hesitated writing this because I know Rentberry thrives off this controversy. I received two press releases from Rentberry CEO Alex Lubinsky — who proudly calls Rentberry a “controversial Silicon Valley startup” — in the past two months. In one interview, Lubinsky sent a list of articles critical about his company to a reporter to show them off like badges of honor.

But my last straw was when I read Lubinsky’s belief that the housing market is inherently fair and that the rent price will adjust according to local supply and demand. He recently told the Wall Street Journal that Rentberry tenants on average saved 5.1 percent on rent compared with what landlords asked, because the bidders are able to bid below the asking price and the local demand was low.

And for markets with exceptionally high demand, like San Francisco and San Jose, the rents increased about 5 percent, according to Lubinsky in an interview with the San Francisco Chronicle last year.

What Lubinsky doesn’t seem to realize is that the housing market has been one of the most unfair markets in the United States, and one needs to only look at local history. Chinatown became Chinatown as we know it because it was the only area San Francisco’s government allowed them to live and work. (After the 1906 earthquake, San Francisco tried to move Chinatown to faraway Hunter’s Point.) Decades of redlining atrophied African-American neighborhoods from mortgages and other capital to maintain their houses and communities in San Francisco and Oakland.

Housing discrimination still lives on in the Bay Area. A 2013 study found the top 12 mortgage lenders in Oakland lent a total 11 home purchase loans to African-American and Hispanic borrowers — 10 percent of the total home purchase loans — that year. In 2016, the San Francisco city attorney sued a landlord and real estate developer for allegedly singling out applicants with Section 8 housing vouchers.

As Rentberry rolls out across American cities, I could not find any webpage that directly addresses how Rentberry will tackle situations when a landlord or market acts unfairly and discriminatory. Despite Rentberry having a long, basic Q&A page on tenants’ rights, it mentions no direct ways the startup will enforce federal housing laws.

Instead, I found something else concerning in its demo video. When a tenant or landlord clicks on a property, a list of applications show with a headshot attached. Headshots in applications are fertile ground for racial and gender discrimination. The U.S. Equal Employment Opportunity Commission prohibits employers from asking for photos with job applications for this exact reason. Did they even do due diligence in researching possible discriminatory practices within its platform?

If Rentberry believes that its socially conscious landlords will step up, then it is fooling itself. Other rental-oriented apps like Airbnb have been struggling with hosts canceling on guests based on their race, gender and sexual orientation for years. As a result, Airbnb devoted an entire team of engineers, data scientists and designers to eradicate host bias from its platform last September. Since Rentberry handles permanent rent rather than a few nights’ stay, the stakes are much higher, and the discrimination may unfold more acutely.

The housing market Lubinsky dreams of — where colorblind landlords and wealthy tenants both sit pretty in a demand-supply see-saw — is an artificial one that has no ground in reality. This issue is all too visible in the libertarian-tinged startups in Silicon Valley, where graphs and data tell the bulk of its origin story while brushing off its possible sociological impact.

In researching for this column, I found a Medium post from another free market thinker titled “In Defense of Rentberry.” It uses elasticity of supply to explain Rentberry’s benefit to housing markets like San Francisco. “When landlords are allowed to raise prices through a market-clearing auction, the true price of renting is revealed faster,” the author writes. “Sure, this squeezes out some people, but ultimately the price signal will go a long way to solve the issue of tight supply.”

Hear me out, but what if it’s possible to relieve the tight supply while not having to squeeze “some people” as collateral damage? Instead of turning something essential and in short supply like housing into a late-stage capitalism game to generate outrage and intrigue, why not help think of solutions and gather political capital to rid San Francisco of its current housing crisis?

The Nexus covers the intersection of technology, business and culture in San Francisco and beyond. Write to Seung at seungylee14@gmail.com.

Editor’s note: The headline of this story has been updated.

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