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rent control
Ignore the Wall Street-Funded "Science" Attacking Rent Control
We’ve seen that corporate landlords—and the economists who do their bidding—will do anything to generate billions and billions in profits by charging excessive rents year after year to vulnerable tenants with no ability to fight back.
Sep 12, 2024
If you tune into CNBC on any given morning, you will hear various economists proclaim with confidence wildly different interpretations of economic events. The same goes for what market indicators will mean for the 2024 election.
Many an investor has lost a fortune following the advice of "expert" economists. Despite its lofty claims, economics is not a “science”; it is a social science which relies on interpretations of human behavior with a subjective component. It is about as reliable as seismology: Have you noticed that most earthquakes occur on faults previously unknown?
Economists have a lousy track record at predicting recessions, which should be a source of humility. How many economists warned us of the Great Recession? Almost none.
Sure, economists are smart people, and their academic work can help to steer the ship of state and industry. However, they have no business wading into the political realm to influence voters based on their "expert" opinions.
If a lack of precision wasn't enough to expect economists to act with caution, there is the matter of corruption. Economists are paid by corporate interests to bless their profit motives. There is an inherent conflict of interest in being paid by an industry to provide the best opinion and supposed objectivity that only big money can buy. Economists are routinely paid vast sums by the highest bidder to render opinions in anti-trust lawsuits.
When the pre-purchased masters of dismal science tell you that helping renters put food on the table will destroy affordable housing, look closely at who is footing the bill for the "scientific" research.
Unlike writing for a major medical journal that rigorously investigates potential conflicts of interest, economics is an accountability-free zone. You seldom hear disclaimers that a particular economist is paid to have an opinion that supports a selfish motive. The public is rightly cynical or just flat-out ignores economists. Case in point: Tens of millions of people didn't get the memo that the U.S. economy is thriving because it isn't thriving for them. Economic terms like "pricing power" mask that the true meaning is price gouging.
A basic flaw in most economic thinking is that it begins with this premise: Maximizing profits benefits everyone. This is glaringly false when it comes to housing. In recent years, a massive wealth transfer has taken place, squeezing money from the poor and the working class and transferring it to billionaires. Some of these very same well-heeled economists are telling us that rent control is inherently disastrous economically. Yet some of the greatest cities in the world, such as New York, regulate rents.
In reality, there are many economists who believe that rent control helps keep people in their homes. Rent control is much like the minimum wage—the sky doesn't fall when the minimum wage goes up. And the real estate market won't tank because of rent control. When workers or tenants have more money in their pockets, it keeps them afloat and generates more economic activity.
In fact, a group of 32 top economists wrote a letter to the Biden administration last year, supporting rent control. They wrote that rent control will “protect tenants, stabilize neighborhoods, promote income diversity in regional economies, and improve the long-term outlook for housing affordability.” They also added, referring to predatory landlords, that “we have seen the devastating impact of a poorly regulated housing market on people’s livelihoods, as already unaffordable rental prices outpace wage growth.” They understand that only rent control will rein in the greed of corporate landlords.
That’s important. We’ve seen that corporate landlords will do anything to generate more billions by charging excessive rents year after year, and the RealPage scandal is the perfect example. Using a RealPage software program, a cartel of corporate landlords—many of whom are the largest landlords in the country—wildly inflated rents in cities across America. Now, the Department of Justice—along with numerous state attorneys general—has sued RealPage, while dozens of tenants have filed anti-trust lawsuits against RealPage and corporate landlords. It’s yet another reminder that rent regulations are glaringly needed.
So, when the pre-purchased masters of dismal science tell you that helping renters put food on the table will destroy affordable housing, look closely at who is footing the bill for the "scientific" research. Use your horse sense to determine what you know to be best for helping people in need: Rent control.
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50+ Groups Demand Biden Go Further on US Housing Crisis
"With the Supreme Court decision to criminalize people who are unhoused, we need you to stand up and create more humane housing policies today."
Aug 13, 2024
In the wake of a U.S. Supreme Court ruling that is devastating for homeless people, over 50 organizations on Tuesday urged President Joe Biden to take immediate action to address the nation's housing emergency before his first term ends next January.
"We appreciate the steps your administration has taken to address America's affordable housing crisis," the coalition wrote, applauding his proposed 5% cap on rent hikes for tenants of corporate landlords and "regulatory actions to use public land for affordable housing, provide grants for deeply affordable homes, and require 30-day notice for rent increases and lease expirations."
Noting that Biden is not seeking a second term—Democratic Vice President Kamala Harris is set to face former Republican President Donald Trump in the November election—and the urgency of the housing crisis, the groups argued that "taking stronger action will resonate deeply with working and low-income people and people of color nationwide."
"Now is a critical moment for aggressive action to help end the worst housing and homelessness crisis our country has ever seen, help renters and houseless folks struggling with the cost of rent now, and set the country on a long-term path of providing safe, stable, and permanently affordable rental housing for decades to come," the letter states. "We, the undersigned, are calling on you to show leadership by using your executive authority immediately, to effect change now—during the worst housing and homelessness crisis of a generation."
"We must urgently create a more just and sustainable housing system."
Specifically, the coalition is calling for Biden to issue one executive order to establish an Office of Social Housing at the U.S. Department of Housing and Urban Development, and another for rent regulations and good cause eviction protections in federally insured properties.
Additionally, the groups want Biden to demand federal legislation supporting the right of all renters to organize and bargain collectively as tenant unions with landlords over rents and living conditions, along with appropriating $1 trillion over a decade to create 12 million permanently affordable homes, as well as $230 billion to fully repair and green existing public housing.
The letter—part of the House Every One! campaign—is led by the Center for Popular Democracy (CPD) Action and backed by groups including Stand Up Alaska, Make the Road Connecticut, Delaware Alliance for Community Advancement, Florida Rising, New Georgia Project, Step Up Louisiana, Maryland Communities United, Maine People's Alliance, Detroit Action, TakeAction Minnesota, New York Communities for Change, One Pennsylvania, Texas Organizing Project, and Our Future West Virginia.
As part of the campaign, "during the month of August, thousands of renters and community groups across the country will host local town hall meetings to call on their local and national representatives to crack down on corporate landlords, cap rents, and invest in tenant-owned, permanently affordable green social housing," CPD said in an email Monday.
The coalition wrote to Biden Tuesday that "we must protect families from the looming threat of unprecedented homelessness and displacement; halt Wall Street speculation and corporate landlords' growing influence over the housing market; create truly affordable green social housing; and redress our federal government's history of institutionalized bias, putting us on a path towards greater racial, economic, and gender equity."
"We all deserve a safe, stable, and affordable place to call home," the letter says. "We must urgently create a more just and sustainable housing system."
The letter also stresses that "with the Supreme Court decision to criminalize people who are unhoused, we need you to stand up and create more humane housing policies today, nodding to the City of Grants Pass, Oregon v. Johnsonruling. The right-wing justices ruled that local governments can enforce bans on sleeping outdoors, regardless of whether they are able to offer shelter space.
Some Democrats are under fire for welcoming the June ruling—including California Gov. Gavin Newsom, who is widely believed to have presidential ambitions. Since the decision, Newsom has issued an executive order directing officials to clear out homeless encampments, participated in clearing of a Los Angeles encampment, and threatened to withhold funding from counties that don't crack down on unhoused people.
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The Promise and Limits of Biden’s Rent Cap Plan
Tenant organizers see the proposal as both a partial measure that kicks the can down a road that could dead-end come November—and a political victory.
Jul 17, 2024
On a trip to Las Vegas, where rents climbed twice as fast as wages last year, U.S. President Joe Biden is pitching a plan for national rent stabilization—sort of. The plan wouldn’t directly cap rents—despite a growing freakout from the lobbying groups that fight tooth and nail to oppose rent controls—and it would need the approval of Congress.
But while acknowledging its limitations, tenant organizers and advocates see Biden’s announcement as a rare acknowledgement that the federal government could wield its vast power to shape the housing market on behalf of tenants.
The announcement is one of several populist economic policies Biden has recently endorsed as progressives like Sen. Bernie Sanders (I-Vt.) circle the wagons around the embattled president while making the case that his path to victory lies through pro-working-class policy. Rising rents are a key driver of inflation and a top concern for voters in battleground states like Nevada.
Since the 2008 financial crash, growing consolidation in the rental market has helped facilitate the largest transfer of wealth from tenants to landlords in U.S. history, with federal financing greasing the wheels.
Tenant organizers see the proposal as both a partial measure that kicks the can down a road that could dead-end come November—and a political victory.
“As recently as a few years ago, we were being laughed out of rooms—rent regulation was a third-rail policy idea,” says Tara Raghuveer, director of the National Tenant Union Federation. As policy messaging, “it’s hard to overstate how significant the shift is.”
Rent control is still fairly rare in most of the United States, thanks to a nationwide industry campaign, beginning in the 1980s, to preempt its adoption at the local level. Mark Paul, an economist at Rutgers University who has urged a rethinking of the conventional economic wisdom against rent control, praised Biden’s announcement as a step in the right direction. “We have policies in place that have helped build the middle class through federal support for housing,” Paul says. “However, that federal support for housing is really only applied to the segment of Americans that can afford to own a house.”
Under Biden’s proposal, landlords who own more than 50 units would face a choice: Cap rents at 5% annually, or lose access to a coveted federal tax write-off, relied on heavily by former president Donald Trump in his real-estate dealings, that allows property owners and investors to deduct the depreciating value of their assets. (“I love depreciation,” Trump said during a 2016 presidential debate.)
Such tax breaks are the lifeblood of corporate real estate speculation. Longstanding policies like the depreciation writeoff and the mortgage interest rate deduction were sweetened even further by the Trump administration’s staggering tax cuts on “pass-through” entities that typically own rental properties. In the red-hot pandemic real-estate market, those tax benefits became a prime selling point for new real-estate firms attempting to lure investment in their acquisition deals. One Massachusetts-based firm that has snapped up large apartment buildings in cities like Atlanta and Phoenix boasts in its marketing that multifamily real-estate investors can end up paying little to nothing in taxes.
Given the slim chances of passing rent caps through Congress, no matter November’s outcome, Paul thinks the Biden administration could do more now to demonstrate his commitment to combating unchecked corporate power in the housing market.
But tax breaks aren’t the only way that federal housing policy props up speculators—or the only lever that the Biden administration, if it’s serious about addressing the cost-of-living crisis, has at its disposal. Since the 2008 financial crash, growing consolidation in the rental market has helped facilitate the largest transfer of wealth from tenants to landlords in U.S. history, with federal financing greasing the wheels.
In the aftermath of the 2008 financial crisis, mortgage giants Fannie Mae and Freddie Mac, along with the Department of Housing and Urban Development, aided and abetted the rise of a new breed of Wall Street landlords by selling them pools of delinquent loans on single-family homes—despite warnings from housing advocates that the buyers weren’t interested in helping homeowners stay in their homes. Reporting by ProPublica found that after 2015, Freddie Mac helped fuel a buying spree of multi-family apartment buildings by private equity firms eager to take advantage of rock-bottom interest rates. More recently, Freddie has worked with groups like Arbor Realty Trust, a key financier for small-time speculators that’s reportedly under probe by federal prosecutors over its lending practices. When corporate landlords move into communities, they often bring with them aggressive eviction policies, lax upkeep, and considerable market power to hike rents. Raghuveer’s group has a corrective in mind: Condition federal financing for landlords on rent caps and tenant protections.
The campaign had a major win this spring when the Biden administration announced a plan to cap rent increases at 10% in housing subsidized by federal low-income tax credits. Now the campaign has set its sights on Fannie- and Freddie-financed properties.
The push to attach strings to these federal dollars has provoked blowback from industry lobbying groups like the Mortgage Bankers Association, which urged the Federal Housing Finance Agency (FHFA), which regulates Fannie and Freddie, not to violate the “sacrosanct” relationship between landlords and tenants by acting as an intermediary.
But more than 30 economists, including Paul, backed the idea in a 2023 letter to the FHFA, making the case that the debate surrounding rent regulation is undergoing a sea change similar to the minimum wage in the 1990s, when a series of empirical studies found—contrary to doomsday prophesying from big business—that wage hikes were not leading to job losses.
The economists’ letter points to evidence from New Jersey suggesting that rent controls did not drive down new construction, as opponents argue. Nor did Massachusetts’ repeal of rent control in the 1990s lead to a housing supply boom.
Given the slim chances of passing rent caps through Congress, no matter November’s outcome, Paul thinks the Biden administration could do more now to demonstrate his commitment to combating unchecked corporate power in the housing market. He points to an announcement just last week from FHFA requiring modest new tenant protections in federally financed properties. The move shows “the FHFA has the authority to regulate these types of properties,” he says. “I would like to see them go a step further and utilize that same rulemaking approach to deploy rent control.”
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