Tag Archives: housing affordability

Kamala Harris’s recent embrace of rent control, explained

Originally published in Vox on August 6, 2024.
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At her first major campaign rally since becoming the presumptive Democratic presidential nominee, Vice President Kamala Harris made a relatively unexpected promise.

Speaking in Atlanta to a crowd of 10,000 supporters, Harris pledged to “take on corporate landlords and cap unfair rent increases.”

Harris’s remarks to cap rents echoed a recent proposal from the Biden administration just two weeks earlier to limit rent hikes to 5 percent nationwide over the next two years for all landlords who own more than 50 units. (They estimate this would cover over 20 million units across the country.) The Biden plan — which would require congressional approval — would exempt not-yet-built units, so as to not discourage much-needed new housing. The two-year rent cap, Biden officials said, would serve as a way to drive down costs while new housing was under construction.

Harris’s seeming embrace of the Biden plan isn’t the first time she’s expressed support for rent control. In 2019, after Oregon adopted a then first-of-its-kind statewide rent control measure, she tweeted in praise of the bill signing. “No one should ever have to choose between paying their rent each month or feeding their children,” Harris wrote. As a senator, she also introduced legislation to offer tax relief to renters who earned less than $100,000 if they spent more than 30 percent of their income on rent and utilities.

Still, it wasn’t clear Harris was going to stick to a pro-renter position on the presidential campaign trail — she’s already abandoned several more left-wing stances she previously embraced while a candidate in 2020. Over the last ten days, Harris has rejected Medicare for All, distanced herself from a federal jobs guarantee, and said she would no longer oppose fracking.

But when it comes to affordable housing, Harris has so far stuck closely with the political playbook of the president, who started campaigning on lowering housing costs more aggressively this year.

Over 22 million households now spend more than a third of their income on rent, and home mortgage rates have soared since 2022.

Rent caps, however, have long been controversial among economists, most of whom argue that the policy hurts housing markets and ultimately limits supply, thus driving costs up further. A review of more than 200 empirical rent control studies released in March found a “wide range of adverse effects” for communities with rent caps, and that landlords were more likely to allow rent-capped units to fall into disrepair.

Still, a growing movement of housing activists has been pressing federal lawmakers to embrace the policy, citing the imminent threat of displacement many tenants face. More than 650,000 people in America experience homelessness on any given night, and federal data published in late 2023 showed a rise in homelessness in most states.

From a campaign perspective, rent caps poll quite well. In one May survey published by Navigator, a Democratic-aligned research group, pollsters found most voters overwhelmingly support cracking down on rent-gouging by corporate landlords, and cracking down on misleading rental fees. Measures to build more homes as a way to drive affordability were far less popular with voters, by contrast, than providing financial aid to renters and regulating rents.

The rent cap pledge didn’t come out of nowhere

Biden’s announcement in mid-July to embrace rent caps on “corporate landlords” came from mounting political pressure, and a sense that he needed to do more to court voters who were feeling badly about the economy and their daunting housing costs.

A Redfin-commissioned survey from February found almost two-thirds of homeowners and renters said that housing affordability made them feel negatively about the economy. Other surveys have suggested that many of the young people and voters of color who helped Biden win in 2020 were now wavering in their support for him, and those voters are more likely to be renters.

Activist pressure came largely from the Tenant Union Federation, a national group that seeks to mobilize renters to advocate for higher standards. This group, formerly known as the Homes Guarantee Campaign, had successfully pushed the Biden administration to release a non-binding “blueprint” for a renter’s bill of rights in January 2023, and since turned its sights to rent control. Activists were specifically interested in rent control Biden could enact without going through Congress, and homed in on the Federal Housing Finance Agency, which regulates the entities that issue billions in government-backed mortgages every year.

In January 2023, these activists helped push a Congressional letter, led by Democrats, asking Biden to take on corporate landlords and end “price gouging in the real estate sector.” The leaders proposed a suite of executive actions the government could take, with their top recommendation to direct the Federal Housing Finance Agency to establish new renter protections, including rent caps.

By July 2023, a new letter from Democratic senators directly urged the Federal Housing Finance Authority to enact “limits against egregious rent hikes” in properties with government-backed mortgages.

While most economists have long warned about negative effects of rent control, tenant activists and their progressive allies in academia and law have been working to challenge perceptions that rent control inevitably hurts housing markets. They point to the debate around the minimum wage, where for decades economists argued that raising the wage would invariably hurt workers and the economy, yet more recently researchers have determined that such increases can actually be effective at boosting living standards for low-wage workers with little to no impact on job loss.

Advocates argue that empirical studies are similarly challenging the conventional wisdom that rent control limits new construction or the overall supply of housing, and they point to examples in New Jersey, Massachusetts, Minneapolis, and California to make their case.

In a letter the Tenant Union Federation sent to the Federal Housing Finance Agency last fall, activists noted that 182 cities and municipalities across the country had some form of rent regulation as of 2018, and California, like Oregon, had passed new statewide rent limits in the last five years.

Despite successfully pushing federal lawmakers to embrace potential new renter protections and even rent control, Biden and, so far, Harris have declined to go as far as the Tenant Union Federation wants. Some activists, for example, oppose the idea that rent caps would be temporary and exempt new units. The president also declined to endorse a plan that relied solely on his own executive power.

“The whole fact that [Biden] went to Congress to deal with it is messed up,” Elizabeth Olvera Perez, a tenant and leader in the Louisville Tenants Union, told the Nation recently.

Tara Raghuveer, the director of the National Tenant Union Federation, praised Harris’s announcement in Atlanta, acknowledging that it had not been a given that it would be a priority for the vice president. “Rent caps are a winning issue,” Raghuveer tweeted. “Candidates up and down ballot should take heed.”

Most economists remain against rent control

Skeptics of rent caps point to St. Paul, Minnesota, as a cautionary tale.

In November 2021, St. Paul voters approved a ballot measure to cap annual rent increases at 3 percent for most apartments in the city, beginning in May 2022. (The city council loosened this policy in September 2022, to exempt new development for 20 years.)

Developers and investors sounded the alarm, and a year into the experiment, the federal housing department reported that new building permits in St. Paul had plummeted nearly 50 percent compared to a year before, while those in nearby Minneapolis were up 16 percent.

St. Paul planning officials said they weren’t jumping to any conclusions about whether rent control was responsible for the declining construction, and reported their own permitting numbers were somewhat higher. (Tenant activists also argue it’s too soon to legitimately assess the policy’s impact.)

Still, opponents and conservative intellectuals say St. Paul is confirming their worst fears that rent control will make housing more expensive in the aggregate, even if it provides relief to some existing renters in the short term.

Conservatives characterize Biden and Harris’s new embrace of rent control as further evidence that the administration is against landlords. Writing in City Journal, Manhattan Institute senior fellow Judge Glock argued that he doubts the Biden administration’s proposal would actually be limited to just two years. “Almost all rent control laws make such promises; governments often can’t help themselves and keep expanding the laws’ reach anyway,” he said, pointing to New York City’s experience.

Even some prominent liberals have come out against the Biden administration’s new embrace of rent caps.

“Rent control has been about as disgraced as any economic policy in the tool kit,” Jason Furman, the top economic adviser to the Obama administration, recently told the Washington Post. “The idea we’d be reviving and expanding it will ultimately make our housing supply problems worse, not better.”

Colorado’s Democratic governor, Jared Polis, echoed the criticism, saying Biden’s plan “would lead to less affordable housing being built and substantially increase housing costs.”

Legislative tea leaves suggest that Congress is likely to move forward with some sort of federal housing package next year. If Democrats sweep in November, and Harris continues to champion rent control, a national rent-cap policy looks a lot more likely. Whether that takes the form of a broad restriction on corporate landlords, or something more targeted to properties with government-backed mortgages is less clear. However, if Republicans retain control of at least the House or Senate, then the odds of rent caps being passed through Congress are virtually nonexistent.

Tenant activists, meanwhile, will continue to pressure Biden, and Harris, to use presidential executive authority to limit rent hikes. At this point, it’s unclear whether Harris would embrace such a move if she wins the election, even as her boss has thus demurred. The Harris campaign did not return a request for comment.

After decades of inaction, states are finally stepping up on housing

Originally published in Vox on April 30, 2024.

For years, the easiest thing to do about building new housing was nothing.

The federal government largely deferred to state and local governments on matters of land use, and states mostly deferred to local governments, which typically defer to their home-owning constituents who back restrictive zoning laws that bar new construction.

That’s slowly changing as the housing supply crisis ripples across the country. Experts say the US is short somewhere between 3.8 million and 6.8 million homes, and most renters feel priced out of the idea of homeownership altogether. The lack of affordable housing is causing homelessness to rise.

In Washington, DC, Congress has held more hearings on housing affordability recently than it has in decades, and President Joe Biden has been ramping up attention on the housing crisis, promising to “build, build, build” to “bring housing costs down for good.”

But it’s at the state level where some of the most consequential change is taking place.

Over the last five years, Republican and Democratic legislators and governors in a slew of states have looked to update zoning codes, transform residential planning processes, and improve home-building and design requirements. Some states that have stepped up include Oregon, Florida, Montana, and California, as well as states like Utah and Washington. This year, Maryland, New York, and New Jersey passed state-level housing legislation, and Colorado may soon follow suit.

Not all state-level bills have been equally ambitious in addressing the supply crisis, and not all states have been successful at passing new laws, especially on their first few tries. And some states have succeeded in passing housing reform one year, only to strike out with additional bills the next. Real housing reform requires iterative and sustained legislative attention; it almost never succeeds with just one bill signing.

Trying to determine why exactly a housing reform bill passes or fails on the state level can be difficult, though advocates say it certainly helps when a governor or other powerful state lawmaker invests time and political capital in mobilizing stakeholders together. Given that housing challenges are not spread equally across a state, sometimes it can be hard to decide whether to pass statewide laws that apply equally to all communities or to pass more targeted legislation aimed only at certain areas.

Partly due to pressure from voters and from more organized pro-housing activists, legislative trends are starting to emerge. More states and housing experts are thinking not only about passing laws to boost housing production, but also about how best to enforce those laws, close loopholes, and demand compliance.

States can make it easier to build more housing in a wider variety of places

While states typically grant local communities a lot of discretion in land use policy, more lawmakers are realizing that balance may have tilted too far.

As researchers with the Federal Reserve Bank of Minneapolis outlined last fall, some states are now looking to increase housing production by enabling more multifamily housing and accessory dwelling units (ADUs) to be built without having developers first seek approval from local planning agencies or elected boards. This accelerated construction process is known as building “by right.”

For example, Oregon passed a law in 2019 allowing fourplexes (a multifamily home that typically houses four families under one roof) to be built anywhere in large cities and for duplexes to be built anywhere in mid-size cities. Before, a developer would have needed to seek special permission to build such housing.

States like Utah and Massachusetts are incentivizing the construction of new multifamily housing near public transit, while states like California and Florida are making it easier to build residential housing in places zoned for retail. Other states, like Maine and Vermont, are making it easier to build ADUs, which are second (and smaller) residential units on the same plot of land as one’s primary residence, like apartments or converted garages.

State lawmakers sometimes impose new rules on localities to adjust their housing planning requirements, which can mean lowering the barriers builders must go through to begin construction or incentivizing cities to set more ambitious targets for production. Sometimes it means easing requirements like minimum lot sizes or parking spot mandates.

Not all state-level bills will move the needle on the housing crisis

Under pressure to do something about the housing crisis, some state lawmakers are advancing bills that allow politicians to claim they’re taking action, although the legislation itself is weak and unlikely to make big dents on the various problems. Some bills may even make affordability issues worse over the long term.

For example, after failing to pass housing reform last year, lawmakers in New York came together again this year to push something through. Democratic Gov. Kathy Hochul and her allies in the state legislature are cheering their recently agreed-upon housing package, which includes tenant protections and incentives to spur new construction, but experts and activists say it lacks real ambitious zoning and production measures and will be unlikely to drive new affordability.

Likewise in Maryland, Democratic politicians are cheering the passage of a new statewide housing reform package that includes renter protections and incentives to spur new affordable and dense development, though Yes-In-My-Backyard pro-housing advocates concede they do not expect the legislation to create much new housing, at least in the near term. Still, given that it was housing advocates’ first real attempt at passing statewide legislation in Maryland, they are hailing it as an impressive first step.

“This is the first time the Maryland legislature overrode local zoning in a pro-housing way, and I would say this is a surprisingly drastic shift from the status quo even though it’s not enough,” said Tom Coale, a housing lobbyist in Maryland.

When it comes to state-level housing reform, implementation and compliance matter

Passing legislation for housing reform on the state level is often just the first step, as opponents then sometimes seek to challenge the new laws in court or localities search for loopholes or other ways to avoid compliance. Sometimes lawmakers water down housing production mandates and other enforcement mechanisms before the bills even pass through the legislature.

While it’s not uncommon for local communities to try and avoid compliance when a housing law is first passed, some states have also been firing back in subsequent sessions to close loopholes and ramp up penalties for local governments. While some statutes have strong enforcement mechanisms built in to begin with, many lawmakers are recognizing the housing reform process will just need to be dogged and responsive to resistance and new challenges.

Housing experts with the Lincoln Institute of Land Policy say it’s likely to take at least three to five years after a statewide policy is passed before the public should expect to see any real changes in housing production, and they urge patience before claiming a reform has failed or succeeded.

“Many of the ambitious state housing policies that have been adopted are still in the early stages of implementation, so we don’t yet have definitive evidence about what works and what doesn’t,” they wrote in September. “Without realistic expectations about this time frame, pro-housing advocates may get discouraged, while opponents claim that zoning changes are ineffective—all before the policies have kicked in.”