Donate now. Young Renters: We hear you! Vanessa Song, a young renter in our roundtable discussions, wrote, "A lack of respect underpins a lot of the problems we see in the rental market, as rental situations are seen as largely transactional.
Side menu Latest news Blog. For instance, if long-term tenants have developed neighborhood-specific capital, such as a network of friends and family, proximity to a job, or children enrolled in local schools, then tenants face large risks from rent appreciation.
In contrast, individuals who have little connection to any specific area can easily insure themselves against local rental price appreciation by moving to a cheaper location. Rent control can provide these tenants with this type of insurance.
Until recently, there was little data or natural experiments with which to assess the importance of these competing arguments, and to assess how rent controls affects tenants, landlords, or the broader housing market. But newly-available housing-market data spanning periods of dramatic change in rent control laws in Cambridge, MA and in San Francisco, CA have allowed economists to examine these questions empirically.
While these studies do find support for the idea that existing tenants benefit from the insurance provided by rent control, they also find the overall cost of providing that insurance is very large. From December through , all rental units in Cambridge built prior to were regulated by a rent control ordinance that placed strict caps on rent increases and tightly restricted the removal of units from the rental stock.
In November , the Massachusetts electorate passed a referendum to eliminate rent control by a narrow 51—49 percent margin, with nearly 60 percent of Cambridge residents voting to retain the rent control ordinance.
This law change directly impacted properties previously subject to rent control, enabling landlords to begin to charge market rents. In addition to these direct effects of rent decontrol, APP find removing rent control has substantial indirect effects on neighboring properties, boosting their values too. Post-decontrol price appreciation was significantly greater at properties that had a larger fraction of formerly controlled neighbors: residential properties at the 75th percentile of rent control exposure gained approximately 13 percent more in property value following decontrol than did properties at the 25th percentile of exposure.
These estimates imply that more than half of the capitalized cost of rent control was borne by owners of never-controlled properties. Rent controlled properties create substantial negative externalities on the nearby housing market, lowering the amenity value of these neighborhoods and making them less desirable places to live.
Diamond, McQuade, and Qian DMQ examine the consequences of an expansion of rent control on renters, landlords, and the housing market that resulted from a unique local San Francisco ballot initiative. In , San Francisco imposed rent control on all standing buildings with five or more apartments. Rent control in San Francisco consists of regulated rent increases, linked to the CPI, within a tenancy, but no price regulation between tenants. New construction was exempt from rent control, since legislators did not want to discourage new development.
Read: Why housing policy feels like generational warfare. The housing situation is only getting worse—more expensive, more inequitable, more precarious. Instead, younger and lower-income residents are being pushed out to places where jobs are less plentiful and lucrative, but where housing, at least, is relatively affordable.
Largely as a consequence of housing prices, Generation X held less than half as much wealth in as Baby Boomers of the same age did two decades earlier, and Millennials are on course to hold even less. We need a housing option that combines the accessibility, flexibility, and limited risk of renting with some of the stability and wealth-generating potential of homeownership.
R enting carries certain intrinsic advantages over ownership, for individuals as well as society. One is flexibility, and the access to opportunity that accompanies it. Now multiply that by millions of households across the country. Homeownership locks people in place, in large part because of the high transaction costs of buying and selling property. Renting offers diversification of risk.
The investments renters might make, moreover—stocks, bonds, mutual funds, etc. We need to build more homes in order to stabilize home prices , yet stabilizing home prices runs counter to the financial interests of most homeowners.
Indeed, around half of renters in the U. Financial struggles were more common among renters than homeowners before Covid, the CFPB's report shows. Renters had an average credit score between 87 points and points lower than homeowners. People who own homes are also less likely to have student loans and auto loans than renters. Yet many renters won't be able to clear up their arrears until they receive the federal rental assistance, Yentel said.
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