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Memo to Biden & Harris: Rent Controls Will Make Our Housing Crisis Worse | Opinion

Newsweek
September 6, 2024

In a misguided effort to address rising housing costs, the Biden-Harris administration announced a proposal to cap rent increases at 5 percent for “corporate” landlords. While I don’t I agree with the President or Vice President on much, I do agree that we have a housing problem in this country; the problem is rent control is just exactly the wrong way to solve it.

Millions of Americans are struggling to pay rents that in some cases are rising faster than their wages. Millions of homeowners too are struggling. With interest rates at 20-year highs, the mortgage payment on a typical single-family home has nearly doubled in just four years.

Housing costs are affecting all Americans—urban, suburban and rural alike, from coastal cities to my constituents in Nebraska.

Rent control simply doesn’t work. The research has shown time and again that rent control actually hurts tenants and low-income tenants especially. It attempts to address the symptom of high rents without tackling the underlying issue—a severe shortage of housing supply—and for that reason is always destined to fail.

In fact, the Biden-Harris administration’s rent control proposal would make a bad situation even worse. Rent control has the effect of ultimately reducing the supply of rental housing. It controls rents without controlling the cost of providing rental housing. And when housing providers can’t cover their costs, they, like any other business owner in a similar situation, decide that doing business isn’t worth the risk. Rather than continue to rent to tenants, they convert rental units into for-sale condominiums or even demolish them completely.

But on top of shrinking the rental housing supply, rent control also discourages the construction of new housing. This is especially troublesome, given that the only way out of this crisis is to grow the housing supply.

Look at what happen in St. Paul, Minnesota. After voters approved rent control, applications for new multifamily buildings plummeted by 82 percent. It shows that developers are reticent to invest in markets with rent control, especially when they have other options.

Any proposal that would decrease housing supply is going to exacerbate our housing crisis, and no amount of price caps are going to paper over the fundamental problems that come from a housing shortage.

In a misguided effort to address rising housing costs, the Biden-Harris administration announced a proposal to cap rent increases at 5 percent for “corporate” landlords. While I don’t I agree with the President or Vice President on much, I do agree that we have a housing problem in this country; the problem is rent control is just exactly the wrong way to solve it.

Millions of Americans are struggling to pay rents that in some cases are rising faster than their wages. Millions of homeowners too are struggling. With interest rates at 20-year highs, the mortgage payment on a typical single-family home has nearly doubled in just four years.

Housing costs are affecting all Americans—urban, suburban and rural alike, from coastal cities to my constituents in Nebraska.

Rent control simply doesn’t work. The research has shown time and again that rent control actually hurts tenants and low-income tenants especially. It attempts to address the symptom of high rents without tackling the underlying issue—a severe shortage of housing supply—and for that reason is always destined to fail.

In fact, the Biden-Harris administration’s rent control proposal would make a bad situation even worse. Rent control has the effect of ultimately reducing the supply of rental housing. It controls rents without controlling the cost of providing rental housing. And when housing providers can’t cover their costs, they, like any other business owner in a similar situation, decide that doing business isn’t worth the risk. Rather than continue to rent to tenants, they convert rental units into for-sale condominiums or even demolish them completely.

But on top of shrinking the rental housing supply, rent control also discourages the construction of new housing. This is especially troublesome, given that the only way out of this crisis is to grow the housing supply.

Look at what happen in St. Paul, Minnesota. After voters approved rent control, applications for new multifamily buildings plummeted by 82 percent. It shows that developers are reticent to invest in markets with rent control, especially when they have other options.

Any proposal that would decrease housing supply is going to exacerbate our housing crisis, and no amount of price caps are going to paper over the fundamental problems that come from a housing shortage.

The Biden-Harris administration needs to get to work addressing the housing supply shortage, not dreaming up proposals that will make a bad problem worse.

Former President Trump gets it. He recently addressed this precise problem in an interview with Bloomberg on the cost drivers for development. The culprits are permitting, material costs and runaway red tape at the federal, state and local levels.

If the Biden-Harris administration wanted to fix the problem, they would spend less time on rent caps and more time working to address those cost drivers.

Source: https://www.newsweek.com/memo-biden-harris-rent-controls-will-make-our-housing-crisis-worse-opinion-1932332