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Affordable Housing Activists Demand Homebuilders Build Fewer Houses

Tyler Durden's Photo
by Tyler Durden
Tuesday, Mar 15, 2022 - 05:50 PM

Authored by Mike Shedlock via MishTalk.com,

Actually, activists seek rent control. However, if "successful" the result will be less new home construction.

Various rent control articles from internet search.

The Wall Street Journal notes more than a dozen states are investigating rent controls as rent spiral higher.

“Rents are exploding at a pace far faster than income,” said Stijn Van Nieuwerburgh, an economist and professor at Columbia Business School who researches rent control. “The problem is now as bad as it has ever been. And probably much worse.”

Rent Control Seekers

  • In 2019, New York Congresswoman Alexandria Ocasio-Cortez proposed a national rent-control law

  • California and Oregon advanced rent-control bills the same year, now laws in both states.

  • St. Paul, Minn., enacted last fall the only rent control in the Midwest, and now has one of the most stringent policies in the country. While many rent-control measures make exceptions for new buildings or vacant units, St. Paul’s law doesn’t.

  • In Santa Ana, Calif., local officials have gone beyond the state’s rent-control measure, which caps annual rent increases at 5% plus local inflation, to limit local rent increases to 3% at apartments built before 1995.

  • Massachusetts Democrats are advancing a bill that would repeal that state ban on rent control.

  • In Florida, another state that pre-empts local rent controls, lawmakers in Miami and Tampa—where asking rents are up more than 30% over the past year—have discussed declaring housing emergencies to pass rent control.

  • Florida state Sen. Victor Torres, a Democrat representing parts of Greater Orlando, is proposing to overturn Florida’s rent-control ban. 

  • In Colorado, State House Rep. Andrew Boesenecker aims to cap mobile-home lot rents by the greater of either 3% or the local inflation rate in any year. “We’ve seen rent increases anywhere up to 50%,” Mr. Boesenecker said. “We have to do something to protect this affordable housing source.”

Radical Rent Control Measure Blows Up in St. Paul in Less Than a Week

I commented on St. Paul lunacy on November 12, 2021 in Radical Rent Control Measure Blows Up in Less Than a Week

A radical rent control measures capping increases at 3% passed in St. Paul Minnesota. The payback was immediate.

Reason reports Developers Halt Projects, Mayor Demands Reform After St. Paul Voters Approve Radical Rent Control Ballot Initiative.

Shortages Loom

Judging from rent prices, there is already a severe shortage of housing in St. Paul. Of course landlords also hiked rents in advance and will do so again before May 2022 when the act takes effect.

And now that the bill has passed many new development projects, some for thousands of units, were cancelled.

Small landlords will sell to live-in owners further reducing supply.

Finally, with 3% caps regardless of tax hikes, insurance, maintenance or any other issues, landlords will not make capital improvements to their property.

The overall quality of remaining rental units is sure to decline.

Economically illiterate activists follow the AOC socialist handbook, sure to wreak havoc in more cities. 

Then Again, Inflation Is Putin's Fault

CPI data from BLS, chart by Mish

Consumer Price Index Year-Over-Year

 

CPI data from BLS, chart by Mish

 

Whatever reason rents are rising, Putin sure isn't the cause. 

By the way, how many landlords needed to raise rent significantly just to recover not getting paid rent for 18 months thanks to eviction moratoriums?

Why People Are Angry

Hourly Earnings and Real Hourly Earnings data from BLS chart and calculations by Mish

Workers are essentially no better off than they were in 1973. 

Recently, Real Wages Decline 12 Times in the Last 14 Months

Huge Wave of Housing Supply Coming

New homes for sale, data from commerce department, chart by Mish.

Fortunately, some good news is on the horizon. A look at housing starts and homes under construction shows a welcome wave of supply is on the way.

Fresh supply could put a damper on prices, cooling off overheated housing and rental markets.

For more details, please see A Huge Wave of Housing Supply Will Soon Hit the Market

Want to stifle supply growth? Just pass more rent control measures.

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