Rent hikes fuel inflation — and pessimism about the economy under Biden

We say the US economy is doing well, at least by the usual measures: inflation Coldness And Unemployment is less. Pundits justify consumers feel Economies are struggling as they continue to adjust to higher prices after the global pandemic, and that helps explain President Joe Biden's poor poll numbers.

However, traditional economic indicators often fail to capture this Extreme wealth inequality In America. The rich have been getting richer for decades Stagnant wages For workers. By 2023, approx 80 percent About 4 in 10 people earning less than $50,000 a year live paycheck to paycheck with those earning more than $100,000 a year.

The nation faces a A deep crisis of Housing and homelessness This gifted landlords with enormous power, and it's hard to create a positive spin on the economy when you're struggling to pay the rent. Nationally, rents remain A major driver of inflationwith Costs will rise by 0.5 percent 5.8 percent since January and last year.

„Tenants are paying more rent than ever for the worst conditions they've ever lived in,” Grace White, an organizer of the Housing Guarantee Campaign, said in an interview.

The pandemic caused major disruptions to the housing market. People lost jobs or moved in search of more living space, and construction of new homes stopped. Inflation is slowing in other areas of the economy The Federal Reserve is interested Post-pandemic housing prices are cooling, so interest rates should be cut In some major cities After a period of time Significant overheating In 2021 and 2022.

However, the country is still dealing with one Lack of affordable housing Despite new construction efforts, there are few incentives for landlords to evict their tenants (or fix the plumbing immediately).

A Registration number People in the U.S. are homeless after policymakers let them Safety net during pandemic Despite rising housing costs, workers and renters will be out of date. About 653,100 people reported living without a home in January 2023, an increase of approximately 12 percent from the same period last year. According to to Harvard's Collaborative Center for Home Studies. Overall homelessness has increased by 48 percent since 2015.

37 percent of tenants say they are more likely to be evicted in the next two months. According to The Census Bureau's most recent Pulse Household Survey tracks real-time data on the pandemic's impacts on everyday life. Although the survey's sample size is small and the results are a national estimate, the majority of households surveyed reported rent increases in the past year, and the data clearly suggest that millions of people are worried about losing their homes due to rent increases.

„As long as landlords have the power to raise prices or raise rents at whatever rate they choose, they will,” White said.

White is organizing with a national network of tenants' unions, he said Unreal It is about power. Landlords use access to basic human needs, which cost many people a significant portion of their income. When housing markets are tight and low-income tenants have few or no options, landlords can continue to raise rents and evict tenants who can't pay, even as inflation eases.

If a low-income family's choice is not a condo or apartment they can't afford with a budget for groceries, what is their real choice? That's an important question for policymakers, White said.

„Time and time again, the inflation numbers show that landlords are raising rents well beyond the rate of inflation, and they're going to continue to do so until the Biden administration deregulates rents and rental fees,” White said.

President Biden knows that the lack of affordable housing and rising rental prices are problems for millions of voters — and for him politically. Administration officials met with housing guarantee campaigners and housing justice activists from around the country last summer, and Biden promised to crack down on price-gouging „big landlords” in his State of the Union address last week.

Biden is referring to the Justice Department throwing his support behind him Major antitrust case A lawsuit filed by tenants against real estate website RealPage alleges the real estate website colluded with landlords to inflate rents. Biden also called on Congress to pass His house planIt would expand tax credits for affordable housing construction and encourage the construction of 2 million housing units, along with $20 billion in federal grants for cities and tribes.

Creating more affordable housing is a necessary but long-term strategy. White said tenants need interim relief and that the most effective way to help tenants is to limit rent increases for landlords who finance their properties with federally backed mortgages.

„Right now the federal government, through Fannie Mae and Freddie Mac, is doing business with landlords and sometimes very poor renters,” White said, adding that about 12 million units are backed by federal mortgages. „This business should be subject to limits on rent increases and tenant protections.”

After two years of organizing by the Housing Guarantee Campaign and its partners, the Federal Housing Finance Agency (FHFA) has agreed to receive public comments on proposals to improve protections for landlords who rent with a federally backed mortgage. White said any new regulations would apply to about 12 million homes nationwide, and the goal is to restore some balance of power between tenants and landlords.

„Tenants have repeatedly called on the administration to regulate rents, and the president's most effective way to address rent inflation and rent increases is to limit landlords' power to raise rents, and the administration has the authority to do that. Regulate institutional-backed mortgages for multifamily housing,” White said. .

Comments poured in at FHFA Tenants' unions, the real estate lobby and experienced renters across the country. Unsurprisingly, landlords and real estate lobbyists submitted comments to the FHFA against the rent controls, which they say will discourage investment in new units.

Last summer, a group of 32 economists signed a letter to the Biden administration, pushing back on the industry's economic arguments and supporting national rent controls for multifamily housing with federally backed mortgages. In order to finance their properties with federal loans, landlords agree to meet certain housing standards and avoid predatory rent increases.

„Making rent regulations a condition of federally backed mortgages will protect tenants, stabilize neighborhoods, improve income diversity in regional economies, and improve the long-term outlook for housing affordability.” Economists wrote.

The Biden administration says it is currently reviewing the comments to FHFA, and activists and tenants are eagerly awaiting a proposal from federal regulators, White said.