PAH Shares Economic Report - Rent Growth Cap Will be Detrimental to Washington State
The Partnership for Affordable Housing Shares Economic Report -
Rent Growth Cap Will be Detrimental to Washington
Seattle, WASH. -- (February 7, 2024) – The Partnership for Affordable Housing (PAH), a 501c (4) non-profit coalition of housing providers and business groups in Washington, today released an economic report demonstrating the harmful effects of a 7% rent growth cap on Washington state’s apartment industry – “Modeling the Impact of Rent Growth Caps on Washington State’s Apartment Market” (2024). This report can be found, published, on the Social Science Research Network.
Using data from the American Community Survey (ACS) and the Zillow Observed Rent Index to model the change in expected rents for housing providers via historical rent increases, Capital Policy Analytics (CPA), a leading Washington DC based economic consulting firm, developed the economic impact report to reflect the adverse effects a 7% rent stabilization policy would have on the region, if passed in 2024.
The findings include a property value loss as high as $1.12 billion and an estimated reduction of 7,380 units over a decade; staggering losses for the state of Washington. More problematic for government budgets statewide, rent control could lead to a loss of $11 million in property taxes annually.
“Tenant advocate groups have continued to make specious arguments about past rent control studies - with this report we are able to directly address the proven catastrophic effects a statewide rent cap would have in Washington.” William Shadbolt, Board Chair of PAH, noted. “Housing providers want to be part of the solution - a rent cap will only make our housing crisis more severe.”
Housing has been and continues to be a top issue in states around the country- Washington is no exception. It is yet again top of mind for the legislature this session, and in turn, rent stabilization has made its way back to the debate stage by legislators.
According to CPA’s report, not only would a rent growth cap have detrimental effects on property values and tax revenue, but Washington would also experience an estimated $16 million decline in maintenance spending, an overlooked consequence of this policy that would have alarming effects on the workforce in the state, as well as on existing housing stock.
In addition to the CPA report, PAH has also distributed a recently updated meta-analysis of past rent control studies produced by ECOnorthwest - “Rent Control in Washington State: The Impact on Housing and Affordability” (2023) - which shares almost identical conclusions to those presented in CPA’s report.
The state’s Department of Commerce estimates that Washington needs to build 1.1 million new housing units in the next 20 years to keep up with the population growth. Washington State cannot afford to hinder development in the state if it is to meet these needs.
About the Partnership for Affordable Housing (PAH)
For additional research and information, visit our website at www.partnershipforaffordablehousing.com