Who Wants Affordable Housing?
As published in Rental Housing Journal's May 2019 On-Site
Who Wants Affordable Housing?
Apparently, not Oregon.
Oregon’s horrendous newly adopted statewide rent control law has opened Pandora’s box. It threatens real solutions that would have a positive change for renters.
Like Washington, Oregon had a long-standing law meant to prevent detrimental local laws limiting rental rates:
"The Legislative Assembly finds that there is a social and economic need to ensure an adequate supply of affordable housing for Oregonians. The imposition of general restrictions on housing rents will disrupt an orderly housing market, increase deferred maintenance of existing housing stock, lead to the abandonment of existing rental units and create a property tax shift from rental-owned to owner-occupied housing. Therefore, the Legislative Assembly declares that the imposition of rent control on housing in the State of Oregon is a matter of statewide concern.”
Why now would Oregon completely deviate from their then-existing law protecting Oregonians? The answer – politics.
Unfortunately, some policymakers are unconcerned with investing in housing affordability over the long-term. They are seeking a quick fix to an emotionally charged issue affecting their constituents’, in their words, basic rights to housing.
There Should Be No Debate
These characteristics tend to override the glut of economic evidence showing its detrimental effects on the long-term health of a city or state’s housing supply, making rent control an enticing policy choice for legislators to pursue.
Additionally, rent control is seemingly becoming more palatable as advocates and their supporters in government reframe this solution as an “anti-rent gouging” campaign to determine reasonable rent increase amounts. This one-sided view completely disregards the cost and expense of owning and managing housing, which continues to increase at alarming rates.
The Oregon case represents a successful implementation of this reframing. Activists have begun using it as a template in rent control campaigns in other areas, regardless of the existence of state pre-emption laws.
We cannot allow such a divisive and destructive policy to be proposed in Washington.
Rent control laws and regulations mandate an artificial cap on rent, without monetary investment or compensation by the governing jurisdiction.
With little to no ability to earn a profit, investors will shift their investments to other non-rent regulated jurisdictions. In practice, these policies have the effect of increasing the cost of all housing by forcing a growing community to compete for fewer housing units and reducing the quality of rental housing.
According to a joint statement from National Apartment Association (NAA) and National Multifamily Housing Council (NMHC), rather than improving the availability of affordable housing, rent control laws exacerbate shortages, cause existing buildings to deteriorate and disproportionately benefit higher-income households.
Rent control has become the policy of choice for renters’ rights groups and policymakers because of its perception as an off-the-rack solution to housing affordability.
While done under the guise of preserving affordable housing, the policy hurts the very community it purports to help by limiting accessibility, as well as affordability.
Simply said, a rent control law in Washington will disincentivize new development or property sales in favor of areas across the country without rent control. It will perpetuate the current problem of a lack of housing supply in Washington which has resulted in the current high cost of living. Property values will decrease, as will property tax revenue and taxes from sales and transactions.
While rent control regimes benefit a section of current residents, in the long run, it greatly inhibits the housing market’s ability to supply housing to people across the income spectrum.
Building More Housing to Meet Demand
As shown at the website www.weareapartments.org, between now and 2030, Washington will need to build 9,787 new apartment homes each year to accommodate population in-migration, household growth and losses to the housing stock. However, producing enough new apartments to meet demand will require new development approaches with public-private partnerships, more incentives, and fewer restrictions.
Washington apartments and their residents contribute more than $56.7 million to the state economy every day. Many people in Washington call apartments home. They appreciate mortgage-free living and the ability to follow new work opportunities and amenities that fit their lifestyles. Multifamily housing benefits the fabric of our communities, serving renters of all means.
As our population grows, this puts a strain on the existing housing supply. A variety of housing options will be needed to meet diverse needs. Based on specific factors like local regulations and available land to develop, NAA’s new research “Barriers to Apartment Construction Index” ranks 50 metro areas on how hard it is to build new apartments.
Seattle ranks as the 7th most difficult metro area in multifamily construction.
Universal Consensus – Rent Control Does Not Work
Most economists agree that rent control does not work. Instead, economists turn to the age-old principles of supply versus demand. Creating a balance between housing availability and housing needs is the simplest and most effective way to drive down costs for Washingtonians. Rent controls have the opposite impact - they increase the cost of housing.
Economist Mark Levine writes, “While the concept of rent control may sound appealing, countless economic analyses over the years have demonstrated that it has not worked.” Such controls have often had an effect counter to its stated intentions of aiding those in need of affordable housing.
Finding Real Solutions
As stated on the website www.growinghomestogether.org, the flaws of rent control and political discourse distract from the conversation that there are real, workable solutions instead. For instance:
- We must address the tremendous shortage of homes and remove barriers to adding more supply.
- Local governments must take the lead and find creative, public-private partnership opportunities to bring the price point down and create more affordable housing.
- We must then use targeted subsidies to help the families that are in the most need right now.
NMHC and NAA encourage lawmakers to promote proven alternatives to rent control that address the critical affordable housing shortage, making rents more affordable to lower-income residents and encouraging the development of new housing at a variety of rental levels.
Voucher-based rental assistance programs, for example, are a more effective way to promote affordable housing in a manner that benefits both the renter and the housing provider.
Lawmakers should reject price controls and, instead, pursue alternatives such as voucher-based rental assistance for those in greatest need to better address housing affordability.
It’s not a mystery. We need new construction of all types of housing at a variety of price points. New single‐family homes, townhouses, and apartments are part of the equation, as is the construction of affordable housing.
To reach this goal for housing, state lawmakers should instead consider other measures, e.g.: ease onerous or outdated zoning laws, increase permitting efficiency and incentivize construction near transit and job centers. These are just a few, sensible solutions to encourage the right kind of housing construction.
We need to create vibrant housing communities that are accessible and affordable for all by promoting policies that enable more housing close to jobs, efficient transportation, and high-opportunity neighborhoods – places near transit, jobs, and amenities.