President Biden tonight stated in his press conference he will push for a national rent control policy limiting rent increases to 5% (???). This, from an administration which claimed to believe - until tonight apparently - the way to bring down housing costs was to build more housing. In fact, just this spring the administration’s Domestic Policy Council Director was quoted in Politico magazine saying, “We know we need to increase housing supply to ensure that we can bring down the rents and the cost of homeownership.” So what has changed? The laws of economics still apply: build more housing and prices come down. For a succinct explanation of why rent control doesn’t work, take a look at the below article. A couple quotes: “The basic problem with rent control is well-known: A broad cap on rent increases means that many middle-class and even upper-middle-class renters get reduced rents because of the legislation, and the proportion of benefits that go to low-income households who are the ostensible beneficiaries is low.” And, “Developers faced with tangible constraints on prices—and the prospect of those constraints becoming more constricting in the future—find it less profitable to build new buildings, further reducing supply.” #housing #sfr #btr https://lnkd.in/e_rsqMXa
Would you be able to promote and propose an alternate solution? The problem that I see in the Omaha, Nebraska area are individuals who are unable to afford increased costs in general. Everything has gone up due to inflation. If it would be a proposal for rental housing. Why not try to champion a method for helping renters grow equity to help them buy existing homes? As the price of housing goes up. Younger generations will find it much harder to purchase the higher valued houses. They will find themselves becoming trapped within the rental market with it becoming harder and harder to buy that first home as time goes on. With help from local and national programs specifically geared toward rewarding good renters who do not damage the dwelling or engage in criminal activity. I’m intentionally leaving out late payments as this seems to only cause additional financial burden in an already burdened financial environment. I’m sure there is a responsible solution there. Maybe a tax program setting aside some money for renters year over year to help save up for their home purchase? I imagine some people downsize to a rental from a home and have to start over to purchase another home as well.
Todd Dexheimer
3mo
It’s called lying to try to get votes
Andrew Cushman
3mo
An idiotic proposal no doubt, but my guess is this is more designed to look presidential and attract/buy votes from certain groups that don't understand economics. While just the fact that national rent control is being floated is concerning, I don't think this has any real chance of happening in the near term. Way too many members of Congress own real estate!
Virginia Roy
3mo
I don’t understand why the plan isn’t to build/convert more units that are income capped and have lower rents? Am I missing something?
carnell oliver
3mo
David Howard and Andy Allen I want to put the facts out there about our free market system. The largest single-family rental landlords in the US: Progress Residential (about 85,000 houses), a privately-held company. Invitation Homes (about 80,000 houses), a publicly traded REIT [INVH]. The company was formed by Blackstone during the Housing Bust in 2012 and later spun off to the public. Blackstone sold is last shares in 2019.
In addition to that 5% cap, he is taking away (his promise) the Trump 2017 tax cut which EVERYONE will feel. His tax, inflation, is why so many things are unaffordable to so many. He did that. Can't find good paying jobs? Are they taken by someone that came here illegally - some part of 20 million imported illegals are working somewhere. Living somewhere - probably in those rentals with government payments. Kristopher Warren - here's a plan that has worked every time - increase investment tax credits/faster depreciation/incentivize building lower cost housing. There are dozens on dozens of builder/developers who would jump at the chance to do the work - but there has to be a value. Don't dump a Trillion bucks into the economy on debit cards to buy votes - just make it viable for someone to make the investment and the housing will happen.
Rent control is great ... for those lucky enough to live in rent-controlled housing. For everyone else, it's bad. Basic economics of supply and demand. Everyone knows we need more housing. The biggest impediments to that are local zoning and NIMBY. The solution is not more government intervention or taxpayer subsidies; it is allowing the free market to work by making it easier to build new housing anywhere and everywhere there is demand for it.
Paul Carter
3mo
If rent increases are capped, are they going to cap increases in insurance, property taxes, and utilities? Not withstanding the increased M&R expense related to labor, materials, appliances, etc. No one in the current administration understands basic economic principles.
The "Market" is a force of nature. Government Diktats cannot change nature. Rent Control will ultimately reduce housing production and drive up the price of housing. Too bad the leftists never had a course in basic economics.
Transportation Engineer at Michael Baker International
3moPrice controls are always the end game of failed states. The policy makers will always try to shift blame from their bad governance to “corporate greed” as causing inflation. Whether the price controls be on housing or at the gas station or the grocery store, it always results in shortages of the product which price is being controlled. The producers will go out of business as the economic context that is increasing the costs will destroy their margins while their ability to compensate by raising prices is capped. What we would reasonably expect next is for the rates on treasuries to blowout as the debt accelerates and the cost to service the interest payment on the debt becomes the primary government outlay (likely within the next 12 months). The federal reserve will have to end the charade of not monetizing the debt directly by monetizing the debt directly to keep the credit market from freezing. That requires massive amounts of dollars to be created. Everything changes once the dollar begins a rapid devaluation - the politicians will respond with price controls and society unravels as extremely few in the US are used to the experience of widespread product scarcity. Most of the citizenry is sleep walking into this.