Belfast Mill Irish Pub

Zillow and Open Door

Affordable housing is a big challenge in many U.S. cities today, including Charlotte, North Carolina. I hadn’t thought about this until today, but both Zillow and Open Door may play a BIG role in exacerbating our housing crisis. In this post, I’ll explain what I’ve learned and understand at this point about large real estate companies, “the affordable housing crisis,” and the state of related government regulation.

Tonight I had an opportunity to seek some “bartender wisdom” in uptown Charlotte, and this is what I learned. One of the dynamics that happens today in urban housing markets involves big real estate companies like Zillow and Open Door outbidding smaller scale buyers. When an individual, couple or family puts a bid down on a house, they can often be outbid by one of these large real estate companies. Wicked smart accountants, financial experts, and computer programmers have created complex algorithms / computer programs which provide a database of statistics on all the residential and commercial properties in a given market. These programs analyze not only the current market value of a property, but also the estimated future value, including the market requirements to update / refurbish / flip a property so it can be rented or sold. The depth of this kind of real estate data is NOT available to the general public, but it’s shallowly glimpsed when viewing a website like Zillow.

The effect of these dynamics is often to prevent an individual or couple from being able to purchase a home or property in a desirable location, or to purchase it for a more reasonable amount. When my wife and I were selling our home in Oklahoma last year, we learned about Open Door almost by accident. As I recall, we had a conversation in a neighborhood Starbucks one morning with a real estate agent, and they mentioned the site. Our realtor worked with us to get a quote on the Open Door site, which was definitely a “low ball offer” but did provide a helpful data point about what some buyers in our area, at that time, were willing to pay for our home.

We live in an era of history in the United States when “government regulation” has very negative connotations with lots of voters. This stems in large part, I think, to the Presidency of Ronald Reagan and the efforts of his administration (“successful” in many respects) to “de-regulate” American government. Costly and cumbersome government regulations were painted as “the enemy” during the Reagan years, and allegedly open, “free-market” policies were portrayed as the beneficial condition for which governments at all levels (local, state and federal) should aspire and work towards.

Speaking in broad philosophical terms, I definitely think the limitations imposed by government regulations and restrictions can be important in many contexts. Look at banking, lending, and the financial meltdown of 2007 – 2008 specifically. I’m not an economist or a financial expert, but I did listen to the 2011 book, “All the Devils Are Here: The Hidden History of the Financial Crisis” by Bethany McLean. When key elements of the laws which governed banking and financial lending were eased, the results were terrible. We almost had a complete meltdown of our entire financial system. In fact, I heard recently that it was the swift intervention of the Chinese government, purchasing LOTS of US treasury notes, which was the biggest stabilizing factor in that financial dumpster-fire. It’s sobering to consider whether the Chinese government would make the same decision today to support our U.S. and global economy, if a similar situation happened again.

Here’s what I asked OpenAI’s ChatGPT tonight to answer:

What factors primarily led to the global financial crisis of 2007-2008? Specifically, what role did de-regulation play?

Query to ChatGPT on 7 February 2023

This was the answer:

The global financial crisis of 2007-2008 was caused by several factors, including:

  1. Subprime mortgage crisis – widespread issuance of risky mortgages to people with low credit ratings
  2. Housing market bubble – a significant increase in housing prices that was not supported by the underlying economy
  3. Lack of risk management – financial institutions did not properly assess the risks associated with mortgage-backed securities

De-regulation played a significant role in the crisis as it allowed financial institutions to engage in high-risk lending practices and to operate with minimal oversight. The repeal of the Glass-Steagall Act in 1999, which separated commercial and investment banking, allowed banks to enter the high-risk securities market and fueled the growth of complex financial products, such as mortgage-backed securities. Additionally, the lack of regulation in the shadow banking system allowed for the growth of non-bank financial institutions, which were heavily involved in the subprime mortgage market and magnified the impact of the crisis.

We are harmed as a community when middle and lower income families and individuals are prohibited from purchasing homes or (in some cases) even affording to rent apartments in a downtown, metro area. “Mono-culture” is harmful to the environment in an agricultural context, and I think the same dynamic is true in the housing market. Our world is diverse in many ways, and when conditions and circumstances create costly harms for particular sub-groups (in this case, the urban poor and middle class) then the community is hurt.

I’m wondering tonight what role local and state governments can play in changing these dynamics? If you are a property owner and are willing to sell, it can be financially beneficial when housing prices are pushed up by a variety of factors, including the previously mentioned bidding pressure of large real estate companies. In the long run, however, these dynamics can create a situation where it’s just RIDICULOUSLY expensive for “normal people” to buy or even rent a home, condo or apartment in an area.

This certainly seems to be true today in the Bay Area of California, and also in many parts of Colorado / the “Front Range” of the Rockies. Those dynamics also seem to be playing out here in Charlotte, North Carolina. So I’m wondering, is there a constructive role for government regulations to play in changing these “market dynamics” for the better?

When it comes to any political topic today, I think the root issue we need to grapple with and change involves campaign finance reform. The wealthy in our nation (whether we’re talking about individuals, corporations or other groups) should NOT be able to use the influence of their money to basically buy the legislative changes they want and which benefit them the most. Larry Lessig’s presentations and work with groups like the Sunlight Foundation have strongly influenced by ideas on this, which I readily admit are incomplete and imperfect. That said, I think we need to address CORE issues as well as ancillary effects, and I suspect the affordable housing crisis is really a related consequence to bigger political and cultural issues which relate to the role of money in politics.

I definitely enjoyed the opportunity to experience the ambiance and beverage fare of a new uptown pub in Charlotte, tonight. My conversations with the bartender definitely got me thinking about some big issues which relate not only to affordable housing but also homelessness and poverty in our community more generally.


  • Wes Fryer

    Resident of Matthews, North Carolina, and member of Caldwell Presbyterian Church. Middle school teacher. US Air Force veteran.





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