'Renters Are Struggling': Economists Back Tenant-Led Push for Federal Rent Control
"We have seen corporate landlords—who own a larger share of the rental market than ever before—use inflation as an excuse to hike rents and reap excess profits beyond what should be considered fair and reasonable."
Don’t allow companies to own residential properties.. it’s that simple..
And non US citizens.
As a US citizen living in another country and trying to buy a house, you want me to have to change my citizenship to do this? 0.o I've lived in Japan for the better part of a decade and am trying to buy a property where, hopefully, my wife and I can live for the rest of our lives. Having to become a citizen in Japan (which does not allow other citizenships except in some very specific cases) is a non-starter for me. I need to be able to freely enter and leave the US in case my family have any issues. Why should I be fucked like this?
Non-residents, not non-citizens.
Who's going to make apartment buildings? Isn't that the best solution towards making more housing, to have compact apartment structures? How do you think those get built?
You could make every one an HOA and have it be condos.
Honestly I don't think outright prohibition of companies owning buildings is good, but there needs to be a better mix of ownable housing units to rentable ones. There also needs to be better anti-trust enforcement so that three companies don't own and price control nearly all of the housing in a city (I think there's maybe six companies in my city that own almost all of the apartment complexes).
They should mandate that a certain subsection of newly zoned housing be owned by people instead of corporations. It would be a much better, much more competitive market for housing if it were possible to own apartments because you could get small time landlords in those buildings as well as people that own their places outright.
That is a bad idea as owning a house isn't right for everyone.
While that may be, companies should not be able to have a stronghold on what should be considered a basic human need. Housing is already in pretty short supply, and it’s worsened by the fact that these companies buy a considerable chunk of this short supply and then turn the purchased properties into rentals.
The idea being proposed here doesn't outlaw renting, only corporate ownership of residential property. It means that the people you're renting from are human beings who will eventually die and either be estate taxed or the house will be sold, rather than a corporation who owns your property until they go bankrupt or until the sun explodes.
Lol no one gets forced to buy one just because prices become realistic, wth
My understanding is that rent control backfired pretty spectacularly in the long term.
The better plan here would be to stop companies from buying residential properties, to incentivized the conversion of commercial properties into apartments, to penalize banks and individuals who are sitting on unused residential properties.
Oh, and wipe out all student loan debt so that younger generations have a prayer of buying a house someday.
There's also an underlying layer to this problem with a specific type of home owner: the foreign investor. These individuals use American properties to hide their wealth from their home countries. Tax evasion, high ROI, and increased scarcity in every purchase. Homes often go months and years without occupancy, sometimes with minimal furnishings so as not to appear vacant.
I'm not saying foreigners shouldn't buy homes in America. However, if they do buy a home they should be required to occupy each individual property for a minimum of 6-9 months every year. Otherwise, a heavy tax that exceeds the property's/ies annual appreciation to encourage occupancy or selling would be ideal.
My understanding is that rent control backfired pretty spectacularly in the long term.
Yeah, the basic problem with rent control is that it creates the opposite long-term incentive from what you want.
Rentable housing is like any other good -- it costs more when the supply is constrained relative to demand, costs less when supply is abundant relative to demand.
If rent is high, what you want is to see more housing built.
What rent control does is to cut the return on rents, which makes it less desirable to buy property to rent, which makes it less desirable to build property, which constrains the supply of housing, which exacerbates the original problem of not having as much housing as one would want in the market.
I would not advocate for it myself, but if someone is a big fan of subsidizing housing the poor, what they realistically want is to subsidize housing for the poor out of taxes or something. They don't want to disincentivize purchase of housing for rent, which is what rent control does.
Part of the problem with rent control is that it doesn't subsidize the building of new housing. The times in which housing prices dropped in the USA were typically when a government either opened up land to development, subsidized the building of housing, or built the housing themselves.
My understanding is that rent control backfired pretty spectacularly in the long term.
There are critiques against rent control that have persisted for decades that are now seeing a growing body of counter-evidence that it maybe isn't that bad after all. Hence the resurgence of rent control being suggested as a policy tool. It makes sense that the myth that rent control is bad has persisted for so long - high earning economists (yes, they're very high earners) who are thus more likely to own rental units have an incentive to publish research showing that policies that harm their rental income are bad, and have less incentive to publish research that shows policies like these benefit the renter over the landlord.
Here's a great article by J. W. Mason, who has a PhD in economics, who goes over more recent research around rent control. He shows that it's far more nuanced and less clearly "bad" than right wing economists have been trying to push us to believe.
https://jwmason.org/slackwire/considerations-on-rent-control/
This better matches my understanding than OP's take. It's not necessarily that certain folks were being disingenuous (though of course with financial matters that's also common), but more so that rent control is designed to help people closer to the bottom of the financial ladder, and those people are also disenfranchised in other ways, including their results bring unreported or thrown under the rug.
The difference now is that the housing system is so screwed and skewed overall, rent control would likely benefit far more folks than those at the absolute bottom of the financial ladder -- that, or the wealth gap is just so large that there's a huge number of people at the bottom, all roughly equivalent to each other given how rich the rich have become.
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I'm not really worried about commercial landlords. Most of them are okay. A few are great, a few are slumlords.
What I'd really like to see is more and denser housing being built, period. And investment in infrastructure like public transit so that places are more accessible, more livable.
Who told you rent control backfired? Cause that's a lie. It was just never adopted as widely as it should have been, and rich owners always have the ear of lawmakers ... the same can't be said of poor/working poor people.
There's a supply shortage.
You can't sprawl your way out of this problem, despite Texas' best efforts. All you do there is create traffic.
The answer is simple. Legalize housing. More triplexes, more quadplexes, more ADUs, 5 over 1s, more of everything. Developers want to fill this demand. They can't. They're hamstrung by city ordnances and state laws that often only allow apartments or single family housing. Not everyone wants or needs a separate house. Make rent boring again and the corporations will lose interest.
Eh, I mean there is a record number of vacant homes at the moment. The investor class owns a fuck load of housing that could be actually be used to ya know, house people. I'd bet If a large tax was placed on 2nd homes /income property, there'd be no supply shortage. So many people bought homes for AirBNB, and rent seeking in the last decade that in years past would be being bought by families. I know in my town they've been putting up high rise after high rise. Rent still goes up because of (imo) artificial scarcity. Landlords are using software to fix price on rent, banks intentionally trickle out foreclosures to not flood the market, companies with vacant units are not allowed to drop price of rent and keep pricing high because of financing agreements made when the building was built. Most of the luxury apartments that have been built are maybe 30% full. No one wants to live in a duplex/ triplex /multiplex. People want houses, and there are none because companies like Blackstone backed Invitation homes and Chinese companies/ citizens buy them all to rent seek.
The ripple effect from these rate hikes might help drop rents because a lot of commercial loans are ARMs, and when that rate adjusts, landlords are going to feel pain, but they may just pass it on to their tenants and make housing affordability even worse. We've allowed too many people to commodify what was once viewed as a necessity, and the single family home is now an investment vehicle for big business.
The real estate market as a whole feels like a giant game of hot potato at the moment. Something has got to give. The America of today is so much worse than the one I grew up in as a result of all the BS we've allowed the investor class to do. It needs to get reigned in somehow because imo the American dream is dead as a result.
there is a record number of vacant homes at the moment.
We're currently close to the record for all time lowest vacancy rates. We're at 6.3%. The highest (over the past 70 years) was in 2009, at 11.1%. It got down as far as 5% a few times. I downloaded the raw data and it says the average is 7.28%
https://fred.stlouisfed.org/series/RRVRUSQ156N
There's a popular image of a bunch of Scrooge McDucks sitting on giant inventories of housing but the evidence doesn't support that. Someone saying, "I saw a bunch of empty houses." is exactly as logical an argument as a climate denier saying, "It's been cold all week." That's just an anecdote.
The data is very clear on the matter. We don't have enough housing.
A vacant home doesn’t mean affordable or accessible. Single family homes are stupidly inefficient and expensive or in middle of nowhere. Dense cities are the only solution.
The core problem, which causes that shortage, is that we have conflicting views on what housing is for.
On one hand, we want housing to be a right. On the other hand we want our houses to be good investments.
Those are conflicting goals. We need to pick one and be ready to sacrifice the other.
If you want your house to be a good investment, it needs to appreciate in value at a rate higher than inflation. The only way for that to happen is if housing keeps getting more expensive on a real money basis. That's a fancy way of saying that housing will be a bigger and bigger chunk of income.
Every single policy that reduces the cost of housing also degrades its effectiveness as an investment. If people can get housing any time they want, they have no incentive to pay somebody a bunch of money to someone hoping to fund their retirement by downsizing.
Your suggesting to legalize more housing will destroy the ability of homeowners to make a profit off their homes. Even though I stand to earn huge amounts of money from the appreciation of my own house I would support that, but I'm afraid I'm in the minority. The US has a 65.9% home ownership rate and for most people their home is their single biggest asset. If we address the housing shortage those people will all see their single biggest investment asset drop in value.
I mean, boo hoo?
I bought a house, not because I wanted an investment, but I wanted a place to live. Fuck the CCP, but man were they on the money saying "Houses are for living in," their current, ironic, housing bubble aside. Houses are homes. You want an investment vehicle, buy stocks or bonds.
If the people who see housing as an investment are outweighed by the people who simply want an affordable home as a right, it's become an unsustainable and unjust privilege and needs to be rectified.
Also, I think this ignores the larger factors of: poor zoning due to NIMBY-friendly policies at the local level, and corporate greed as companies, not people, buy up supply. Solve these two problems and we don't have to pick between housing as a right and housing as an investment.
On the other hand we want our houses to be good investments.
I don't.
I understand you're speaking in general terms here but no, i think having housing being tied to investments at all is a terrible idea we've just normalized.
The flip side of course we've experienced, like 2008 when the market went sour, putting people out of home and destroying retirement funds
Exactly! We need the missing middle housing.
As someone who worked on multi family property development for fifteen years--for the love of God, force the developers to build to a standard. Simply requiring that the landlords pay all utilities would go a long way toward this, since it would incentavise building a better structure.
more ADUs
This. I own my home and could probably fit at least two ADUs on my property but the permitting fees alone exceed the cost of construction. Not to mention the cost and hassle of obtaining a permit.
2015 - rent was $1200
2017 - rent was $1600.
2021 - rent was $2100 average. I was paying $2400.
2023 - rent was $2500 average. I'm paying nearly $3000.
These are all two bedroom, two bathroom apartments in the same city.
I've asked college age tenants who lived here how they can do it. They split it with roommates (2bd/2bath - like four ppl living there)
My city has been even more dramatic.
2016 - $680
2022 - $2200
Over 300% increase in six years.
That's crazy. I'm in a decent sized city and the average rent for a 2/2 is ~$1800. Hell my mortgage is less than $3k/month.
My PITI for my mortgage is $3350/month. Mortgage is $28xx something. It’ll be nice whenever I can get that mortgage insurance off. I was renting an admittedly very nice 2 bed 2 bath apartment for the same before I bought. Now I have a 3x2 1000sqft rambler and know that, while the mortgage is high, it will be lower than rent in the next 5 years.
that many people in the house has to be breaking fire code...
Your city badly needs zoning reform, not to exacerbate this problem with rent control (further stifling new building)
We should make owning residential, single family real estate for commercial purposes illegal. You own it, you live in it, don't live in it, don't own it. That would make gobbling up houses and renting them out unprofitable and force cities to open up multifamily development
That sounds nice in theory but what happens when you want to sell your house?
The only potential buyers would be people who either currently rent or are ready to sell their old house as soon as they buy yours.
What if someone wants to fix it up first? Nope, they can't do it. It will cut out the flippers but we've also just cut out all the renovators and restorers.
We could do something like this (and it may not be a terrible idea) but there will definitely be a cost. If we add that law, all the people who currently own homes (that includes both investors and owner occupiers) will see the value of their real estate holdings drop. In the US, over 65% of people own their homes and for most of them, their home is their single biggest asset. Richer people can diversify more so while this law wouldn't hurt the 35% who don't currently own homes, it will disproportionately affect the poorer end of the 65% homeowners (who have proportionately more of their savings tied up in their home).
If we don't also address that problem at the same time we'll create a cohort of people who can't afford to retire because we killed their plan of downsizing when their kids move out and living off the difference.
The only potential buyers would be people who either currently rent or are ready to sell their old house as soon as they buy yours.
What if someone wants to fix it up first? Nope, they can’t do it. It will cut out the flippers but we’ve also just cut out all the renovators and restorers.
Not at all. They can buy and renovate all they want. They just have to sell it afterwards rather than rent it out.
This is the most beautiful strawman I've ever seen. Well done!
How about instead of banning it we heavily disincentivize it? After 2 properties you pay 50% in property tax. This allows people to rent out homes to college kids and people saving for a home, without allowing vultures to pick at the bones of the middle class
I live in a rented house, and I've rented out a house I owned because I wanted to move and I was underwater on my mortgage. I get where you're coming from but I do think there should be exceptions. Maybe just capping the rent at 110% of the mortgage payment or 0.5% of the appraised value would be enough to allow some rentals while discouraging people to buy houses just to rent them out.
And cut into profits!? How very un-American of you. String'em up boys!!
Either they fix the rents or we start eating the landlords. Either fucking way we are gonna eat.
Word. What's the saying, "a revolution is only 3 missed meals away"?
I love that phrase because it's so true.
I heard landlord tastes like pork. Long pig...
It's not landlords faults that governments have insane restrictions on building houses. Why the hate towards them?
Why's my rent gotta go up every year, in spite of no actual improvements to my home or the facilities? Why is there a convenience fee for paying my rent online?
They continue to take advantage of demand beyond what's considered fair, whether the demand is due to govt policy or not. That's why landlords get so much hate.
I agree zoning sucks but so does my landlord. He inherited 17 houses and has never worked, every time I ask for something to be fixed he hires someone else out to do it, at one point he was saving up all my checks so I had to switch to money orders, he tried hitting on my wife, and he talks to me like I am not his fucking customer who pays for his mother fucking stable.
So fuck him and everyone like him. Inherited everything while the rest of us have to work.
Housing should NEVER have been part of determining ones worth or wealth etc. People need places to live...fuck this shit. Idgaf about people that boohoo about selling their home later in life when soooooo many of us can barely afford a rental in shitty areas these days. I have zero sympathy for any owners concerns as I can't even own and I make more money than I ever have in my life. Can't win vs the rich bastards that swoop in and pay 100k above asking price and just destroy any chances many of us have at just having a home and a life. Fuck your "starter home" boomer mentality. I want a home to die in someday and it can be the first home I buy if I ever get to
Yet another negative side effect of supply side economics. More money in the investor class than there are good investments. So they dump money in real estate which drives up the price.
We have to wait for the people that love Reagan out of nostalgia to die off. Then we can tax the bloated investor class and have a healthier economy.
It's more a symptom of artificially low interest rates. A lot of the money currently buying up places to rent them would happily buy mortgage backed securities instead, but that market bottomed out when rates were 2-3%, so they bought property directly instead.
It's going to take time, but eventually some companies will prefer the low risk 7-10% MBS vs managing property to get roughly the same return if you're lucky.
More than 30 U.S. economists have signed a letter expressing support for strong federal tenant protections and rent control as housing costs remain sky-high, even amid broadly cooling inflation.
The economists note in their letter, released Thursday, that the median rent in the U.S. "has surpassed $2,000 for the first time, and there is not a single state where a worker earning a full-time minimum wage salary can afford a modest two-bedroom apartment."
"We have seen corporate landlords—who own a larger share of the rental market than ever before—use inflation as an excuse to hike rents and reap excess profits beyond what should be considered fair and reasonable," the letter continues. "Renters are struggling as a result."
The letter's signatories—including Mark Paul of Rutgers University, James K. Galbraith of the University of Texas at Austin, and Isabella Weber of the University of Massachusetts Amherst—call on the Federal Housing Finance Agency (FHFA) to require rent regulations as a condition for federally-backed mortgages and reject the "economics 101 model that predicts rent regulations will have negative effects on the housing sector," likening it to typical arguments against raising the minimum wage.
"Empirical research on local rent control policies in San Francisco, CA and New York, NY found that rent regulations lower housing costs for households living in regulated units," the economists wrote. "In Cambridge, MA, empirical research showed that the repeal of rent stabilization laws resulted in an average rent increase of $131 for tenants."
Given that "Fannie Mae and Freddie Mac mortgages on the secondary market support nearly half of rental units in the U.S.," they argued, "Government Sponsored Entities (GSEs) have the influence needed to meaningfully change the trajectory of the housing crisis."
The economists' letter is part of a broader push by tenant rights groups and housing justice organizations to secure federal protections against egregious rent hikes and wrongful evictions.
Earlier this week, 17 U.S. senators wrote in a letter to the FHFA that "renters also have too few protections, making them vulnerable to steep rent increases and deteriorating housing conditions—factors that are out of their control."
"Tenant protections vary drastically from state to state and even sometimes from county to county, often leaving renters without recourse," the senators added. "There have been repeated reports of investors using low-cost financing from Enterprise-backed loans to buy properties and then sharply raising rents, mistreating tenants, and allowing buildings to fall into disrepair."
More than 140 academics, over 70 climate researchers, and dozens of local elected officials have also joined the call for nationwide rent regulations.
Tara Raghuveer, director of the Homes Guarantee campaign at People's Action, said in a statement Thursday that "tenants are coming for rent regulations, and everyone from senators to economists agree: tenant protections are common sense."
"Due to lack of regulation, affordable housing is lost quicker than it can be built," said Raghuveer. "Corporate landlords call the shots with federal financing through Fannie Mae and Freddie Mac. That's why tenants spent this summer organizing to win what we need: federal tenant protections like caps on annual rent increases."
In late May, the FHFA issued a request for public input on tenant protections at multifamily properties with mortgages backed by GSEs.
Tenants with the Homes Guarantee campaign responded by knocking on more than 4,000 doors at GSE-backed properties and organizing more than 2,000 comments in support of tenant protections and rent regulations.
"The system as we know it today has failed everyday people, many of whom make impossible choices between rent and food, their homes or their medications," said Raghuveer. "The status quo is not working for the people, it is only working for the profiteers, and it is time for change. It is time for the federal government to make changes to that system, to correct the imbalance of power between landlords and tenants, to protect tenants, and to stabilize the American economy."
“We have seen corporate landlords—who own a larger share of the rental market than ever before—use inflation as an excuse to hike rents and reap excess profits beyond what should be considered fair and reasonable,” the letter continues. “Renters are struggling as a result.”
Literal rent-seeking.
Rents are out of control, especially in big cities, but come on. Rent control, by all measures and by all historical policies, are terrible.
We don't need rent control. We need them to stop allowing single family dwellings to be owned by huge conglomerates, and particularly foreign interests. It's insanity.
Rent control doesn't fix the problem of inequitable ownership of housing or the bad incentives that prevent the building of more housing or the lack of support for public housing. Rent control is a bad bandaid
It helps remove the incentive to buy up all of the single family homes. The calculus is pretty simple -
Renting a home shouldn't cost enough for that cycle to be self sustaining.
I don't think it actually fixes that. Rent control numbers are in the hands of politicians who may just act as toadies for landlords. Maybe they'll control rent on the higher side some but ultimately they have an incentive to keep that cash flowing.
I work in municipal development.
100% of the single-family home projects that have been proposed in my area for the last year have been rental-only communities.
Like - they don't even want to give the houses individual water meters. They want to hook them all together, which means they can't even be converted down the line to something else without digging up all the damn infrastructure.
There is no way the corporate-loving leaders of our country will agree to this, but I wish them luck anyway.
Rent has been high for a LONG time... and yet somehow it keeps going up. I'm very fortunate in my rental situation.. but I do see the other side of the crunch, which is LIFE is fucking expensive. Every last thing we do these days is expensive. When you are getting squeezed in every single direction...
I just got a 24% raise. Went to negotiate it lower and they basically just said "the market is the market"
I'm not getting a 24% better apartment. Their property tax has gone up only 6.9 % and I know based on two employees their labor costs didn't change.
The sad thing is moving to a slightly cheaper, and much worse, apartment will cost me about the same over the course of one year as staying. Because of paying a deposit and pet deposit etc
I just got a big raise and it's all gone to rent now. One step forward one step back for a decade I feel like. Doubling my salary in 5 year means nothing to my quality of life
Foreign investors and real estate speculators are squeezing the middle class dry. The only options out there if you don't want to live in the middle of bumfuck nowhere are either really really old properties, really really shitty properties, or too far above your means to be able to afford it.
Renting should be the most affordable option, yet if you actually look at the numbers, you are paying almost as much as the value of an entire mortgage with one monthly rent check in some areas. Properties built in the 60's that are falling apart and lacking modern amenities should not be going for $2,500/month, but that's the reality I live in right now. I'm on the fucking brink and I'd do anything to have a chance at climbing on the real estate ladder right about now. I don't care if my house never gains a cent in value, at least it would be mine.
I manage the business lending department at a credit union ($400MM in assets) and lately we've just had a ton of investors looking for single family homes. For the most part, they're all just couples looking for properties and they only have a few of them but we also have some realtors buying up a bunch of them. Looking for a new job solely because of that. Feel like I'm contributing to the lack of affordable housing. I liked the job more when we were doing loans for farmers/truckers/commercial real estate/or people that needed equipment. I hate dealing with single family homes.
We need legislation now.
50% tax on any property past your 2nd. Let people downsize and rent their home to young families, while buying a condo for retirement or whatever. But if we keep on this path we will truly be living our entire lives as a subscription model and never own a thing
It's been the case in my town for decades that a mortgage is much less expensive than rent. The only way renting makes sense if you don't plan to live here more than a few years or don't want to deal with maintenance and taxes.
If foreign investors were a serious issue, local legislation would have already solved the issue. This is all about domestic greed.
rent control and stop cooperate take over of housing, especially foreign companies.
Time to organize
All I can say is the absolutely shit apt I lived in in South Florida, wasn't maintained, gross and expensive for 2300 a month wanted to raise our rent to almost 2400 a month for an apt that should cost 1600(being generous).
Fuck corporate landlords
Why don't we just move into vacant homes? Don't pay rent or buy, just move in. There's so many in my area that if I did get caught and kicked out of one I could just go down the street to the next.
If a space goes unrented long enough it should be repossessed from the landlord. The law should work both ways. Manifest destiny but for homes.
I happen to agree. I am sick of perfect fine forests being torn down for new construction while old buildings stay vacant. Often on the same block.
There are rules around this. Its called squatting.
Then you get arrested for breaking and entering. We are really good at keeping people out of places not so good at putting them into places.
Yup. I currently am renting a house built in the 60s. Hasn't been updated since the 70s, so not only is rent sky high, but so is our utility bill. My landlord doesn't give a shit enough to upgrade the house. Why should he? He's raking in the cash without having to spend a dime, and the fucking state I live in allows it to happen.
Used to live in a 110 year old house with paper thin wall, leaky roof, a basement that flooded at every drizzle, a shit claw tub"Shower" and the rent was stupid high for that crap box.
Ok what is the catch? No way in heck economists are on our side.
"The enemy of my enemy is my friend."
Economists want a perfect supply-demand capitalist dreamland. Demand drastically outstripping supply indicates something is wrong with The SystemTM and that's not acceptable, so they want to fix The SystemTM .
It's clear the demand is there, so it's not a consumer problem. The supply is super-limited and being reduced every day. That's a supply problem. The only options are incentives (don't really work in this situation) or regulation (which economists hate but no other choice).
I assume most economists just don't want to see what happens when that system reaches an absolute breaking point, so sign on for regulations it is.
Maybe they are noticing that if enough slaves die they are next to pick up the shovel.
They want us to buy up property at inflated values (both price and interest rate) then default in a few years so they can buy them up in foreclosure auctions at a steep discount.
Probably.
I think all leases should be month-to-month. Making it easier to move would help renters shop around, move if their landlord is shit, move if their neighbors are shit, move if they get a new job, etc.
That would just cause rents to go up because landlords wouldn't have the security of the contract. You want rents to be even higher than they are now?
no one is going to actually be able to tell a property owner what they can and can't do with their property, or how much rent they can charge.
saying otherwise is just circlejerking.
I think you're circlejerking. Rent control exists in a lot of places and you also have leverage through taxes and tax incentives to help shape the market. Not to mention rentals are covered by a different set of rules than your own property that you use personally.
No thanks to that, hustle more, spend less, invest smart and you can get a house easy!
So you’re saying I need to pull myself up by my bootstraps?
Ok boomer. “Fuck you, got mine” am I right?
Pretty sure you forgot the /s
Remember, sarcasm doesn't translate well on the internet.
Point is, you only have so long to live. Why do we all have to hustle, day in and day out? That's not the point of existence, at least I refuse to believe so.
I feel like you might have forgotten the /s