Yves here. The fact that Biden only now has announced a headline-garnering proposal, certain not to be passed this term, targeting the young and lower-income workers, is yet another proof of his Administration’s cynicism and desperation. Yours truly is far from alone in this view:
If Biden had embraced eliminating medical debt, capping rent increases, and expanding social security months or years ago, Tr*mp would probably not be leading among 18-29 year old voters. https://t.co/7Ph1Vi1sds
— Sam Haselby (@samhaselby) July 13, 2024
On top of that, there is a good bit of controversy as to whether rent controls work. While conventional views are decidedly negative, the studies are not of this particular implementation, which is barring the use of accelerated depreciation for landlords who own more than 50 units. So this is not a simple across the board limit. Second, it isn’t clear how many landlords are early enough in their depreciation schedules for the loss of accelerated depreciation to bit. Third is that rent increases have been substantial in many markets, well in excess of cost rises. Our Conor Gallagher, along with many others, wrote about how major landlords had been colluding to increase prices:
After becoming the target of multiple state attorney general lawsuits and investigations, nationwide class action lawsuits, a Department of Justice criminal probe, and the likely target of a recent FBI raid in Atlanta, RealPage – a private equity-owned corporation that creates software programs for property management – is finally responding to allegations it orchestrated a national rent price-fixing cartel that has sent rent prices through the roof.
Texas-based RealPage is accused of acting as an information-sharing middleman for real estate rental giants. The lawsuits against it and large property managers [1] contend that the latter agreed to set prices through RealPage’s software, which also allowed the companies to share data on vacancy rates and prices in many of the US’ most expensive markets.
Many of the rental markets dominated by large landlords have seen astronomical growth in rental prices in recent years (even before the pandemic), as well as a rising number of evictions and spikes in homelessness. The lawsuits against RealPage and the rental management companies contend that its software covers at least 16 million units across the US, and private equity-owned property management companies are the most enthusiastic adopters of the RealPage technology. A separate lawsuit filed last year targets Yardi Systems and property management companies [2] using its price-setting software to collude on at least another eight million units….
Again, the lawsuits against RealPage and statements by the company’s founder indicate that RealPage played a role in undersupply by advising property companies to leave units vacant in order to create an artificial scarcity of rentals. This anti-competitive behavior is made possible because property managers know that their “competitors” are also using RealPage’s system and will not undercut them
So this cap is not at all comparable to the rent control regimes implemented (mainly) during World War II and continued in some cities in a reduced form even to today. There was no persistent and wide-spread regime of collusion that resulted in price increases well beyond those warranted by supply and demand. This is a legal intervention to compensate for a widespread abuse.
It is therefore not clear that a cap after a period of profiteering would curb new development, as in it might take several years (or more!) of curbs to bring big landlord profits back to old normal levels.
But again, this discussion is moot since this measure is sure not to get through Congress. It’s not only mere virtue signaling, but also of the “too little, too late” variety.
By Jessica Corbett. Originally published at Common Dreams
As former U.S. President Donald Trump secured the Republican nomination and announced his running mate on Monday, Democratic President Joe Biden prepared to unveil a proposal that would cap annual rent increases at 5% for tenants of major landlords.
After Biden briefly previewed the proposal during a press conference last week, The Washington Postreported on the planned announcement Monday, citing three people familiar with the matter. The Associated Press separately confirmedthe plan.
Biden is set to formally introduce the proposal on Tuesday in Nevada, which “has seen among the biggest explosions of housing costs in the country,” the Post noted. “Democrats have grown increasingly concerned that Trump could win the state in November.”
The president, who is seeking reelection, will propose taking a tax benefit away from landlords who hike rents by more than 5% annually, according to the reporting. The plan would only apply to the existing housing stock of landlords who own more than 50 units and would require congressional approval—so it is not expected to go anywhere unless Biden wins in November and Democrats secure majorities in both chambers of Congress.
As the newspaper detailed:
The Biden administration is also pushing numerous policies to increase housing construction, through incentives to local governments to change their zoning codes and new federal financial incentives for builders.If implemented, they could bring 2 million new units to the market in addition to the 1.6 million already in the pipeline.
“It would make little sense to make this move by itself. But you have to look at it in the context of the moves they propose to make to expand supply,” said Jim Parrott, nonresident fellow at the Urban Institute and co-owner of Parrott Ryan Advisors. “The question is: Even if we get all these new units built, what do we do about rising rents in the meantime? Coming up with a relatively targeted bridge to help renters while new supply is coming online makes a fair amount of sense.”
While housing industry representatives criticized the reported proposal, Diane Yentel, president and CEO of the National Low Income Housing Coalition, told The Associated Press that having it in effect in recent years could have helped renters.
“The recent unprecedented increases in homelessness in communities across the country are the result of those equally unprecedented—and unjustified—rent hikes of a couple years ago,” she said. “Had such protections against rent gouging been in place then, many families could have avoided homelessness and stayed stably housed.”
Other rent control advocates and progressive officials also welcomed the plan, with Kendra Brooks—the first Working Families Party member ever elected to Philadelphia City Council—declaring that “this is exactly the kind of leadership that working families need!”
Jacobin‘s Branko Marcetic said that “this is huge,” particularly considering that “housing has rapidly climbed as a cost-of-living concern (and is also under 30s’ most important issue).”
Multiple campaigners and organizations credited housing advocates for pushing rent control at the national level.
“It’s amazing how rapidly the conversation around rent caps has changed,” noted Shamus Roller, executive director of the National Housing Law Project. “Tenant organizing has created this change. It’s a proposal for Congress which will face serious headwinds but the president just called for rent caps (even if only temporarily).”
The Debt Collective said, “We will say it over and over again: The rent is too damn high—and rent control is a real fix.”
“Rent caps wouldn’t be a national policy proposal without tenants unions across the country making it possible through organizing,” the group added. “On our way to land without landlords, remember that rent control works. The 99%’s need for a roof over our head should not be 1% profits.”
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Yes. For 3 and a half years, it’s been fine to let big money suck up more and more of our real estate, at the expense of real people who need homes, collude on pricing, and raise rents to whatever anyone can possibly endure, even when it means leaving units vacant. Now good ol’ Joe is going to promise to help sometime in the future. Pffft.
We need real changes in our tax codes that would slam the brakes on excessive housing units owned by individuals or corporations. Both have been gaming our system aimed to help individual homeownership into some sick game of Monopoly, where most of us are expected to live on Baltic Avenue and pay dearly for it. But real changes in tax code would upset our real owners.
The party and their media suck-ups have spent the last years telling people: it’s just “vibes”…the economic nightmares faced by people daily.
“Vibes?” Last I checked (looking at the rent check) it’s been serious for over thirty years here in the Bay Area and now there is the whole of California.
President Biden owes me six hundred dollars, which he conveniently forgot about and with the expiration of the child tax credits and the reduction in SNAP he hit low income families hard.
The whole Democratic Party has lying and betraying non-wealthy Americans for decades. Let the party burn and go the way of the American Whigs. It is just too bad cannot send most of them into Club Fed to join the million or so incarcerated people. Most likely most of them have committed crimes that would send the average American to prison.
I left Sunnyvale for San Diego as a rent refugee in 1998. Our landlord had increased the rent for our 650 SqFt 1 BR from $1095 to $1300. America has and will ALWAYS be the home of the Capitalist Leaches.
The big money suck up the real estate because they are provided with the free “big money” by our Fed.
Had we had interest rates so as to incentivize savings rather than borrowing, we wont have this affordability crisis. Contrary to the Wall St screaming that Fed should lower rates to provide cheap financing to “the people”, I would say that 10% mortgage rates will do wonders for the affordability in this country.
That would be an interesting experiment. I think we’d see a huge net transfer of wealth and property from the old to younger generations. Or else we’d see all existing mortgages and sales of currently owned properties dry up completely. Even more so than we are now.
Present monetary policies punish savers, and reward those who speculate on property values. Loosening of credit, hurts the poor as it drives prices out of reach, while benefiting those who already own property.
There is no easy fix, as in our existing system one persons debt is another persons savings. If there was a downward adjustment of prices it would devastate the middle class as their houses would be under water, while the extremely wealthy who own things outright would not care as they would still own what they have.
It seems to me a large part of the problem is that people who bought their homes when mortgage rates were low are reluctant to sell and buy
a new home at higher rates. Who can blame them?
….As an aside, I grew up back in the day when savings accounts paid
four and a percent- replaced by overdraft fees from the banks.
The guy who bait and switched on student debt relief is making promises before an election…
Sure, this seems legit.
yeah, a nothingburger that you can’t eat until biden is re elected…
and people say trump is a charlatan, well he’s not the only, or even the biggest, one in the race
It’s even worse than that: all three branches of gov. and our legal/political/financial/economic institutions are all corrupt. Few want to admit the obvious, remaining in blissful denial is less painful than admitting the ugly truth. Meanwhile, the plebs can fight among themselves over the senile genocidal freaks while the oligarchy collect the profits from Elections Inc.
We just recently took home equity loan for $80000 to pay off various student loans for my children and myself. The Dems truly HATE everyone who makes over $100,000 and < $500,000 per year.
Almost as much as they hate people who make less than that.
LOL. Rent increases limited to 5% annually, itself a punitive rate.
Posted and only *then* saw this was on Common Dreams. Of course it was.
So rent doubles every 3.5 presidential terms.
Sounds like a winner to me. /s
I can’t follow the math? Anyway, Biden still owes us $200.
Would that mean your rent would double in 14 years?
Yes. For a back of the envelope calculation of doubling time learn the Rule of 70. Divide 70 by annual growth rate (or interest rate) to estimate the number of years required for doubling (e.g. 70/5 = 14 years or 3.5 presidential terms).
https://en.m.wikipedia.org/wiki/Rule_of_72
Or 70, or 69.3 for those who really have logarhythm in their souls.
Without having this number linked to inflation it’s really hard to guage when or which side it benefits. Inflation was 8 percent a year ago
If you put a ceiling on it, that pretty much guarantees what it will be.
When Biden does something that may appeal to young voters, like Swifties, Matt Stoller observes: “Why Does the Biden White House Hate Its Own Agenda?”
I would be more impressed if the rent increase was limited to the percentage increase in minimum wage.
Of course linking the cost of housing increases to wage increases would be even less popular than this is going to be. (And I say that with a certainty that everything suggested as part of his agenda has been vetted past the donors they still have with the caveat that it is all for show ‘and nothing will change’.)
Speaking of a bit too far, I notice they also aren’t running an excess profits tax past the public.
Yes indeed, just another cynical election year stunt to try and rehabilitate Genocide Joe’s popularity with the D “base”. I have noticed the “liberal” media, as ususal, focuses on a raft of intelligece-insulting excuses and we have to “vote” for JB because DT. The Ds NEED the DT to scare people into “voting” for tyranny, surveillance, genocide and kleptocracy. And it also helps to create the thin illusion of choice.
Meanwhile, the Bipartisan Consensus will continue funding genocide, proxy wars, and bringing us to the brink of nuclear confrontation with Russia and China. And they wonder why half the electorate couldn’t be bothered to participate in the Freak Show.
What is really needed is an across-the-board pause in rent increases for all housing rentals for one year. This would give renters an opportunity to catch their breath after the vulture capitalist rampage over the last few years. After the year is up, no rent increase unless it can be justified as needed to avoid bankruptcy of the landlord. Also, may as well cap corporate profits on rental properties audited every 6 months by HHS and charged to the corporation.
They should just limit property purchases especially by the Fat Cats.
Waiting to hear from the Senate Parliamentarian, the Judiciary Gavel Cleaner, and House Undersecretary for Janitorial Duties, how any proposal for a rent cap doesn’t work with the currently approved rules and decorum. So sorry.
And if he pulls off a win in the election, based on past performance nothing will come of this. The Dems have maxed out their political credit card as far as I am concerned. They only get credit for what they do, not their promises which all sound like “the check is in the mail” these days.
Biden descending that slippery slope at the bottom of the greasy pole, passing through Craven on the way to a lower circle of Political Ostracism, or Hell, if you prefer.
And worse, people soon won’t return his phone calls. Bwahahaha
I think Biden is going to a much lower circle of hell than the one where nobody returns your phone calls.
What we could use is a contemporary Malthus vs. Ricardo on rent as unearned income. A knock-down, drag-out. Jeffery Sachs and Paul Krugman delivering haymakers. Just like The Friday Night Fights. Toe-to-toe…Sachs on rent as unearned income, exploitation and class-based tax avoidance. Krugman on maintaining the PMC equilibrium, improving access to housing and subsidizing minorities and LGBTQ. Arthur Mercante Sr. is the referee.
The NYT columnist floors the Columbia Prof. with a wicked right hand in the third…his famous “Juneteenth” punch (a straight plagiarism of Ali’s Anchor punch). Mercante, who is actually a secret Henry George follower, delays the ten-count and Sachs staggers back to his corner at the bell. The Prof. comes out for the fourth, takes the high moral ground, pounds the sorry scribe into submission and the fans go wild.
Lol!
To be crude, what an utter bastard. ‘Here’s stuff we could have done the last four years and just didn’t, but if you vote for me again we’ll do it next time, honest’.
Also they do rent control in the most convoluted way that pencil pushing technocrats love. If you need calculations and a spreadsheet to work it out, it must be good! Just cap rent. No more than a thousand a month for a single room apartment (and even that is a ridiculous price). Done.
He pulled raising the federal minimum wage out of his build back better bills, so it sit at $7.25 an hour.
Watching the video of Biden made me lol. If he had done in his first term half of what he is promising to do in the first 100 days of his second, he would be winning this race in a landslide.
Truth
I have an ocean-front public healthcare option in Arizona to sell you if you don’t fancy rent-control.
Solved: limit corporate landlords to IRS Schedule E (ma & pa) rules. Most of them will then exit.
Federal policy repeatedly inflated house prices and went so far as to economically crush millions of home buyers caught in the 2008 Financial Crisis and its aftermath. Federal, State, and Local ‘renewal projects’, taxes, zoning, and permitting contrived the shortage of lower cost housing to the profit of many, and the impoverishment of far more. Now Joe Bidden comes out with pre-election promises of a meaningless rent control program offering far too little, far too late, and of doubtful effectiveness were it implemented through some miracle. And did I mention how much of the existing housing in the u.s. is not up to stuff in location or design and construction given the violent Climate Chaos of the near future. [I suppose that is not a problem since most housing that might fit future purpose seems to have great difficulty passing deeply entrenched zoning and permitting laws and ordinances.]
Hey Joe! Where’s my $600?
https://fred.stlouisfed.org/graph/?g=MO8n
January 15, 2018
Consumer Price Index for Rent and Owners’ Equivalent Rent, 2017-2024
(Indexed to 2017)
https://fred.stlouisfed.org/graph/?g=RH0X
January 15, 2018
Consumer Price Index for Rent and Owners’ Equivalent Rent, 1992-2024
(Indexed to 1992)
I have heard in the 30’s, 40’s and 50’s Democrats has a huge majority of Congress in both parties. Because they served the People. It’s only when they stopped serving the people that they started winning by only bare majorities or sometimes losing, and whining and shaming people about it.
The moral of the story is you can either have political power and serve the people, or not have political power and make money by being corrupt.
Beyond that, the Democrats have absolutely no intention of making any of that happen, even IF they had 90% control of Congress and the White House. They’re a party of oathbreakers and liars. They have used up any credibility or reason to believe their hollow promises.
We’ve seen what happened with the facile manipulations they did to make student debt relief not happen.
There are still fools waiting on the Dems to “fix” all the holes in the ACA.
Joe Biden still owes me $600.
The incentives for developers and contractors to build are the much more important portion of the legislation, in my opinion. This will almost certainly never pass, but if it did I can tell you what the one of the most likely immediate effects would be: developers shift to condos and townhomes instead of apartments and get out of the rental business altogether. Maybe you could call that progress, but I don’t think that’s what the people pushing for this have in mind. As someone who has spent many years in construction, it’s a business and they will build where they think the most money can be made. I see a lot of talk about housing from people who don’t know the first thing about how any of it works and it’s frustrating.
All this will do is punish the good tenants, as landlords will raise the rents across the board by the mandated 5% not to be left behind.
Rent control is un absurd idea and has failed every single time its tried, price controls are the last stages of an economic system on the brink of collapse.
Landlords raise rents because the government has devalued the money and their costs have increased in proportion to that devaluation, it is as simple as that. That Covid orgy of money printing has to be attonned for somewhat.
Landlords raise rents because they can. The only thing limiting them is competition. Where there is not competition (as has been the case for many years now) your dogmas fall apart. Did you not read the article? It’s saying there already are price controls, only they are working in favor of the landlords.
If they wanted to atone for COVID money printing they would tax the living *family blog* out of corporations who are producing less, yet making record profits during a recession!
It’s not going to make a big difference. 5% on a $2,000 apartment is still a $1,200 a year increase. Over five years it will rise more than $6,000. It’s still a sizeable increase that most won’t be able to keep up with.
The problem is not the level of price control by the suppliers – it is demand from the artificially created 10 million illegal aliens by the same party that wants to mask the issue with the sop of rent control. 10 million is unpresidented in a 4 year period for a specific demographic.
Lol this seems like a smack right at famous slumlord Trump. I’m sure it will help Biden win New York City. Oh wait…
Very few who rent from corporate landlords stay in the same place for more than a few years. Pricing on each unit changes daily. I don’t see a 5% cap on rent increases addressing unaffordable initial rents.
Eliminating 3rd party “rent maximizer” price-fixing software would be a better start. Severely limiting the number of units that can be passively owned (private equity) would also help.
Like when Biden came to Georgia and said “elect Warnock and Ossoff to the senate and every family in the country will get $2000.00. Georgia elected both democrats to the senate but nothing happened after that. I thought this is something I could do to help everyone in the country but…just lyin Biden
If the Biden campaign is going to tell whoppers in the hope of winning back some voters, why don’t they at least tell whoppers which look attractive?