Renters fight back as cities curb homeowners’ price hikes

“We are starting to see a change,” said Malcolm Torrejón Chu, director of affordable housing and tenant advocacy group Right to the City Alliance programs. “We are definitely looking forward to more support, and our member organizations are preparing to re-engage in city and statewide efforts to secure rent control.”

The revival of rent control policies long derided by economists, including one of President’s top advisers Joe Biden, comes as officials at all levels of government scramble to contain rising prices for a range of goods and services. The historic housing supply crisis in the United States has blocked federal and local authorities, who have yet to find ways to speed up construction enough to meet demand. Rent caps promise immediate relief, though critics warn they could backfire by hampering development.

“People are trying to fight inequality,” said Joseph Gyourko, professor of economics at the University of Pennsylvania. “It’s just not a good fit: it’s actually going to hurt the supply, and it’s going to hurt the supply pretty quickly. … The idea of ​​making housing more affordable is to increase supply, not reduce it.

The first rent control laws in the United States were passed locally in the 1920s. They gained popularity as the economy recovered from the Great Depression and cities saw an influx of workers. during World War II, increasing the cost of housing. New York, for example, has imposed price caps and rent freezes accordingly. But most cities abandoned policies during the post-war housing boom the following decade.

In the midst of soaring inflation in the 1970s, a more nuanced version of rent control took off in coastal cities with limited housing stock and high prices, mainly in the Northeast and California.

Today, only six states – California, Maryland, Minnesota, New Jersey, New York, and Oregon – plus Washington, DC, have localities with some form of rent restrictions in place or coming into effect. More than 30 states have banned cities from enforcing rent controls.

The measures are making a comeback as the US economy emerges from nearly two years of Covid-19 restrictions and faces soaring house prices. The national median rent rose 16.4% from January to October, according to Apartment List.

Affordable housing advocates say they were also emboldened by the success of nationwide eviction bans imposed by the Trump and Biden administrations during the pandemic, before the Supreme Court blocked the policy in August.

“There has been a tectonic shift in housing defense in a way that I think is really important,” said Lindsay Owens, former assistant to Senator Elizabeth Warren (D-Mass.) And executive director of the progressive Groundwork Collaborative. “A lot of things don’t seem achievable until they are, and rent control seems doable now. “

Opponents say rent control discourages development and induces owners to sell to owner-occupiers to win the market price for their real estate.

Gyourko, who specializes in housing markets and real estate finance at Wharton Business School, said a better way to help struggling tenants make ends meet “is to just give them money. ‘money”.

“Don’t distort the housing market,” he said. “Don’t waste the supply and don’t make it more unaffordable in the long run.”

Fifty-three percent of St. Paul voters this month approved what could become the toughest rent control policy in the country, what city officials have six months to implement. It will cap rent increases at 3% per year, regardless of inflation. And unlike most rent control laws across the country, the St. Paul initiative does not include exemptions for new buildings or for small landlords.

“We wanted to make sure the coverage was universal, whether you live in a house that was built a year ago or 20 years ago,” said Tram Hoang, Keep St. Paul Home’s campaign manager, who pleaded for the measure of the ballot.

An opposing campaign led by the Minnesota Multi Housing Association, which represents apartment developers and managers, spent about $ 3.6 million until Oct. 12 to fight the proposal, according to a financial disclosure. Keep St. Paul Home has spent just under $ 200,000 through October 14th.

“What our campaign has shown is that the grassroots organization can beat the financial opposition,” Hoang said.

The Minnesota Multi Housing Association declined to comment.

The National Apartment Association, which represents homeowners, is rallying to fight similar voting measures next year, said Greg Brown, the group’s chief government officer.

“Due to the supply problem, there is upward pressure on rents,” he said. “These types of policies, which at first glance seem like a quick and easy fix, are becoming more and more popular.”

Wu has public support for imposing rent restrictions in Boston – 59% of those polled in an October voter survey said they would support rent controls.

But Wu faces an uphill battle because voters in Massachusetts banned rent controls in 1994. Rescinding the ban would require accession from the state legislature, where there doesn’t appear to be much. appetite, as well as Republican Governor Charlie Baker.

While Baker remains skeptical, he said in a recent interview that he would “leave the door open a bit” to help deal with soaring housing costs, which he called “probably the biggest cost of living problem we have. have in Massachusetts.

Wu and Baker spoke about the issue on Nov. 17, in a high-profile meeting after he was sworn in as mayor. Baker maintained that “her own personal experience with an old style of rent control was not positive,” Wu told GBH News on November 23, but she said rent control “doesn’t necessarily have to look like what he was in the past “.

The Biden administration has remained silent, although it has urged states and cities to enact eviction bans during the pandemic and relax restrictive zoning rules to make room for more affordable housing.

White House Council of Economic Advisers Chairperson Cecilia Rouse was among 81% of economists polled by the Chicago Booth Initiative on Global Markets in 2012 which disagreed that rent control ordinances had a positive impact on affordable housing in the cities that enacted them.

“While they are well intentioned, they theoretically also limit expansion of supply and improvement in quality,” Rouse said at the time.

The White House did not respond to a request for comment on Rouse’s position and whether she has changed.

Advocates of rent control dismiss many of the criticisms as fear-mongering by industry lobbyists.

“It is fundamentally about housing being a human right and a necessity rather than a commodity to be taken advantage of,” said Torrejón Chu. “We see rent control as a solution that allows reasonable market regulation. “

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