In the 2022 midterm elections, voters said inflation was the most important issue for them, but no politician can expect to make progress against inflation without addressing the cost of a basic human need: housing. Since rising housing costs are the biggest driver of inflation and a third of Americans rent out their homes, we can’t meaningfully combat inflation without accepting rising rents, which economic historian Adam Tooze has described as “the core of US core inflation figures.”
For the first time in the country’s history, the national average rent exceeded $2,000 this year. In the last 12 months, rents rose by just over 7 percent, the biggest increase in 40 years. In many cities, there were double-digit rent increases over the same period. In a survey, half of tenants under 35 years of age stated that their rents rose in the past year. Although home ownership is still a goal for many young people, it is becoming increasingly unattainable when high rents impair their ability to save for a down payment.
President Biden has ways to influence excessively high rents. He can use his executive authority to relieve tenants by linking federal funding to lowering rents, and he can order the Federal Trade Commission (FTC) to investigate and take action against landlords’ price-fixing. He must work with Congress to counter increasing control of apartments by private equity firms, create transparency about who owns which properties, and significantly increase federal funding for affordable housing.
The rent crisis is bad for democracy; it has been shown that evictions reduce voter turnout in areas with high eviction rates. Taking action against rents would be wise policy: Young people who voted for the Democrats in November and many black and Latin American voters are disproportionately tenants.
Our rent affordability crisis has hit people of color particularly hard. Nationwide, more than half of black and Latin American households rent out their homes, compared with just 28 percent of white households. Forty percent of homeless Americans are black, compared to 13 percent of the US population. Research in Washington state found that eviction rates among black and Latino adults were nearly seven times higher than the rate of white adults in the state’s largest population centers.
Predictable, the combination of rapidly rising rents and the gradual abolition of COVID eviction moratoriums and emergency rental assistance has led to an increasing eviction crisis. Yet many corporate landlords report their biggest gains of all time.
The Homes Guarantee Campaign has just released a draft executive order outlining how Biden can borrow high rents without Congress. A key proposal is to make affordable rents a condition for federal housing subsidies, loans, and subsidies. The Federal Housing Finance Agency currently finances state-sponsored loans to private equity firms that purchase real estate, raise rents, and evict long-term tenants.
The campaign also calls on Biden to establish an interagency federal council on tenant rights to coordinate government action to combat rent prices and push the FTC to investigate price cuts and unfair charges for tenants.
The rise of private equity landlords and major investors on the housing market over the last ten years represents another major challenge for affordable rents. These companies have increasingly consolidated their presence in the housing market, from single-family homes to rental apartments to prefabricated homes. Our research found that private equity landlords tend to raise rents and fees, save on property maintenance, and aggressively evict tenants.
Ultimately, Biden must work with Congress to pass legislation that prohibits tax draws for large investors and changes tax legislation to create incentives for affordable, stable housing for all Americans. We need a national landlord registry that includes the names of the faceless LLCs that own much of the country’s rental buildings so tenants know who owns their house and what government subsidies they may have received.
Biden must also work with Congress to significantly increase funding for permanently affordable housing. In the 2022 elections, voters overwhelmingly supported state and local initiatives to build more affordable housing. Biden’s biggest bill, however — the Inflation Reduction Act — did not provide any new funding to build affordable housing. It is time to correct this missed opportunity by passing legislation to increase federal funding to build and maintain affordable housing across the country.
For too long, federal policy has neglected the third of the US population that rents, raising costs to unaffordable levels and driving up inflation. It will take concerted efforts by the President and Congress to lower sky-high rents.
Caroline Nagy is a senior policy adviser on housing, corporate power, and climate justice at Americans for Financial Reform. Follow her on twitter @carolinenudge.