The Biden Rent Control Policy
Will Further Exacerbate Housing Development and the Investment Crisis By David Howard In response to President Biden’s call to implement a national rent control policy, this article articulates the viewpoint of the National Rental Home Council (NRHC), which represents the single-family rental housing industry. Not since the economic recession of the early 1970s has the federal government turned to price controls to regulate rents on a national level. However, rent control was a bad idea then, and it remains a bad idea today. There is broad-based agreement among economists and housing market experts that, in fact, America’s housing crisis is one of undersupply and disinvestment. We simply are not building enough new homes and investing enough in existing homes, a fact highlighted by Zillow in a June research report showing the American housing market faces a deficit of 4.5 million homes. This deepening housing deficit is the root cause of the housing affordability crisis. According to Orphe Divounguy, senior economist at Zillow, “The simple fact is there are not enough homes in this country, and that’s pushing homeownership out of reach for too many families. The affordability crisis extends to renters as well, with nearly half of renter households being cost burdened. Filling the housing shortage is the long-term answer to making housing more affordable. We are in a big hole, and it is going to take more than the status quo to dig ourselves out of it.” Price controls limiting rent increases will lead to an ongoing undersupply of new home development and further discourage much needed investment in housing. Under the President’s proposal, not only will the uncertainty created by an arbitrary limiting of rents — in this case 5% — negatively impact housing supply and investment, housing providers will also struggle just to cover the underlying costs associated with operating their properties. For example: » In 2023, property taxes on single-family rental homes increased 7% on average, and in some markets was considerably higher. » The average premium increase for homeownership insurance in 2023 was 11.3%. » Single-family rental housing owners participating in the National Rental Home Council’s first quarter 2024 Single-Family Rental Market Index (SFRMI) reported an annual increase in operating costs of 11%. Rather than turning to price controls and other regulatory barriers that constrain the ability of rental housing providers to do what they do best — provide more housing — NRHC encourages policymakers at all levels to work with the industry collaboratively to spur new development and housing investment. We believe this to be the most effective way to alleviate current and future housing supply challenges and to address the needs of residents, a sentiment shared by the White House’s own Domestic Policy Council Director, who stated in March of this year, “We know we need to increase housing supply to ensure that we can bring down the rents and the cost of homeownership.” NRHC members are working diligently to provide leadership in an industry whose role has never been more important than it is today. That leadership is evident in the deep commitment members have demonstrated to the neighborhoods, communities, and most importantly, the residents they serve. There is a greater need for quality, affordably priced housing in the U.S. today than there has been in decades, and single-family rental home providers are an important part of the solution. By making long-term, innovative commitments to the communities in which we invest and build, single-family rental home providers — large and small — are providing a viable source of stabilized, enduring, single-family rental housing responsive to the needs and lifestyle preferences of today’s housing consumer.
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