Housing Researcher Fact Checks White House on National Rent Control
July 30 2024 - 3:40PM
Business Wire
Fact Check: Experts Pan President Biden's
National Rent Control Proposal
A fact check of President Biden's rent cap
proposal reveals significant flaws in both the core claims and the
analysis underpinning the proposal.
The following is an analysis authored by Caitlin Sugrue Walter,
Ph.D.:
A new survey of 45 economists from elite institutions found near
universal agreement that national rent control (framed in the
proposal as a “rent cap”) would do little to help Americans and
would ultimately exacerbate the shortage of available housing.
According to the University of Chicago survey:
- No economist agreed rent control would substantially reduce
income inequality.
- Just 2% of economists surveyed agreed that a national rent cap
would make middle-income Americans substantially better off over
the next 10 years.
- 62% of the economists agreed or strongly agreed that the
Administration’s rent cap proposal would substantially reduce the
amount of available apartments over the next 10 years, compared to
just 7% who disagreed.
Rent control is one of the most researched economic policies in
the world with decades of research confirming its negative
consequences. In fact, a 2024 independent literature review
found:
“[Rent control] results in a number of undesired effects,
including, among others, higher rents for uncontrolled units, lower
mobility and reduced residential construction.”
“It has been proven time and time again that rent control hurts
renters. Regardless, in this political season, we continue to see
politicians offer rent control proposals that give false hope to
struggling Americans in an effort to gain votes,” said NMHC
President Sharon Wilso Geno. “The facts are that rent control does
not build a single new home, disproportionally benefits wealthy,
non-minority residents, exacerbates the housing shortage and
ultimately makes housing more expensive. We know that there is
really only one thing that works – building more housing.”
Fact-Checking the "Facts": The Administration’s recent
rent cap announcement included a “Fact Sheet” which makes a number
of claims about the rent cap proposal which are mischaracterized or
not supported. The sole justification for the policy cited is
“research” produced by Accountable.us, a dark money organization of
Democratic campaign operatives whose mission is to further an
extreme progressive agenda. The analysis falsely claims that recent
earnings from six publicly traded apartment firms show significant
increases in rental income. In fact, the average annual rent
increases for apartment companies mentioned were actually between
-0.9% and 2.2% in the first quarter of 2024, compared to 3.2%
overall inflation (measured by the consumer price index).
Conversely, their expenses increased between 1.3% and 7.5%.
The “Fact Sheet” also claims as a basis for the two-year rent
cap that it will serve as a “bridge” to new supply coming online in
the next two years. Construction has already begun to decline
substantially from average historical levels; data from the U.S.
Census Bureau show multifamily starts decreasing 35.1% from 2Q 2023
to 2Q 2024. This means that the recent declines in rent growth due
to the new supply currently coming online are at risk of being lost
without continued significant additional new supply, which we
already know will not be realized in two years due to the
substantial decline in new construction starts.
In contrast to the rent cap initiative, which would require
Congressional action, the White House announcement also included
several supply-side actions. These actions are based on
well-established principles that will improve housing
affordability, including donating public land for affordable
housing development and repurposing existing buildings, in this
case the repurposing of U.S. Postal Service facilities. Additional
resources through HUD and the Department of Transportation for the
development of affordable housing were also part of the
announcement.
Looking Forward - Staying Focused on Solutions: Given the
tremendous shortage of available homes, policymakers should also
support initiatives like the Administration’s Housing Supply Action
Plan, which includes a multi-pronged approach to addressing the
challenges to developing the new housing America needs. In addition
to increasing supply, policymakers must also ensure assistance is
available for those who simply cannot afford housing. Multifamily
housing providers continue to advocate for the funding of critical
programs that focus on housing affordability, such as the Section 8
Housing Choice Voucher Program, Project Based Rental Assistance,
Rental Assistance Demonstration, HOME, CDBG and Rural Housing
programs.
View the web version of this analysis online:
https://www.nmhc.org/news/nmhc-news/2024/fact-check-experts-pan-president-bidens-national-rent-control-proposal/
Based in Washington, D.C., the National Multifamily Housing
Council (NMHC) is where rental housers and suppliers come together
to help meet America’s housing needs by creating inclusive and
resilient communities where people build their lives. We bring
together the owners, managers, developers and suppliers who provide
rental homes for 40 million Americans from every walk of
life—including seniors, teachers, firefighters, healthcare workers,
families with children and many others. NMHC provides a forum for
leadership and advocacy that promotes thriving rental housing
communities for all. For more information, contact NMHC at
202/974-2300, email the Council at info@nmhc.org, or visit NMHC's
website at nmhc.org.
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version on businesswire.com: https://www.businesswire.com/news/home/20240730390023/en/
Jim Lapides 202/974-2360 jlapides@nmhc.org