With rents and home prices skyrocketing in the Grand Canyon State, renters received some relief as the state Legislature’s repeal of the residential rental tax went into effect on New Year’s Day. According to Arizona State University, rents have skyrocketed by 72% recently, partly because of a statewide housing shortage of over 65,000 units. Rather than address the real causes of rent price hikes, many politicians would instead find a scapegoat, which is precisely what Attorney General Kris Mayes has done.

Mayes has filed a lawsuit against several Arizona landlords, alleging that they used a rent management software service called RealPage to form an apartment cartel. She claimed the cartel was responsible for a “large part” of the 30% increase in Arizona rents over the past two years. In theory, the cartel works by holding vacant units off the market until they fetch elevated rents.

There are several problems with this theory.

Rental vacancy rates in Arizona have averaged about 10% since 1986. However, construction of new homes collapsed after the 2008 financial crisis, and because of the lack of adequate housing, vacancy rates have been well below the average for the past decade.

Rents rise when vacancies are low and decline when vacancies are high. Rents have been rising because vacancies have been too low. This is reliably how rental markets work in all cities at all times.

Mayes’ theory is nonsensical and contradicts all historical experiences regarding the relationship between vacancies and rents. Cartels work by limiting production. If Arizona had a bagel cartel, the members would agree to limit the number of bagels they baked. They wouldn’t each bake the regular number of bagels, refuse to sell some of them, and let them go stale each day.

That is what the supposed apartment cartel is doing. They are going to all the trouble of building and maintaining apartments, only to let them sit empty.

In the real world, functional cartels, as opposed to Mayes’ imagination, prevent new bagel stores or apartment buildings from opening. After limiting their production, they sell all the limited products they have produced.

Of course, the defendants in Mayes’ case don’t do that at all. They couldn’t begin to do that. They are trying to build as many new apartments as they can. And what do you think stops them from building more?

The recent failure of the proposed Sonoran Landings project in Chandler makes that clear. The project was an apartment development that would use federal subsidies to lower rents. It was located a quarter mile from Hamilton High School in one direction, Paseo Vista Recreation Area in the other direction, and residential neighborhoods across the street. It was originally proposed in 2021 as a 518-unit project for families. By the hundreds, residents sent angry letters and attended county meetings to express opposition.

The developer attempted to compromise, reducing the project to 272 units limited to seniors and veterans. At the project’s last Maricopa County Planning and Zoning Commission hearing, the developer’s representatives repeatedly assured the opponents that they had “eliminated all school-aged children.”

It was not enough. The zoning commission approved, but the city of Chandler would need to provide the utilities. The city reported that it did not intend to, so facing further opposition from the Maricopa County Board of Supervisors, the developer finally gave up.

That is how you enforce a cartel.

Maricopa County, the city of Chandler, and the hundreds of locals who wrote letters of opposition or attended hours-long meetings to ensure that families, seniors, and veterans would live elsewhere are not listed as defendants in Mayes’ lawsuit.

Most incredibly, when asked whether rents would be lower if there were more apartment buildings, Mayes responded, “That’s bunk!”

Is Mayes running interference for the actual cartel? Or is she just honestly confused? Who should the kids who won’t be walking to school at Hamilton or visiting their grandparents down the road from it, or whose families will be paying 30% elevated rents elsewhere or living on street corners, blame? The city, the county, the attorney general, or RealPage?

Gilbert resident Kevin Erdmann is the author of “Shut Out: How a Housing Shortage Caused the Great Recession and Crippled Our Economy” and “Building from the Ground Up: Reclaiming the American Housing Boom” and writes at the Erdmann Housing Tracker.