Affordable Housing Activists Demand Homebuilders Build Fewer Houses

March 15, 2022

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1:30 pm

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35 comments

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Economics

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

Consumer Price Index Year-Over-Year

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.

This post originated on MishTalk.Com.

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StukiMoi

3 years ago

Ever stopped to consider why the Junta and it’s well indoctrinated and not so bright fellow travellers keep going gaga over “activists?” Anything from these illiterate clowns to Pippi Thunberg?

Well, now you now: Starts with Useful. Ends with Idiots. And with nothing whatsoever in between.

Casual_Observer2020

3 years ago

Oil down 27% from the high. Russia appears to be toast. They even found Putin’s assets. Russian MP wants to fire a nuclear missile into Nevada to send a message.

KidHorn

3 years ago

How about we don’t let immigrants pour through our southern border?

Captain Ahab

3 years ago

Reply to KidHorn

The problem with ‘economic invasion’ is it will continue until the the economy in the host country is as bad as the economy in the home country. Unfortunately, liberal/democrap politicians have another agenda–votes. Equally bad, the ILLEGAL immigrants are cheap labor.

The only way to solve the problem (no wall required)?

1. Anyone who enters the US illegally is NEVER eligible for citizenship or resident alien status.

2. Anyone who is here illegally, has one year to leave, and apply for re-entry while in another country. There is no accelerated process for reapplying. Approval will take at least one year.

3. Anyone who is here illegally, after one year, will be deported with the clothes on their backs. All property will be confiscated for unpaid taxes. (this will also solve the affordable housing problem)

Casual_Observer2020

3 years ago

Reply to KidHorn

Most of them now are Russians applying for asylum. Are those ok?

KidHorn

3 years ago

Reply to Casual_Observer2020

Most of those coming across the southern border are Russians? Where do you get your information from?

StukiMoi

3 years ago

Reply to KidHorn

“How about we don’t let immigrants pour through our southern border?”

As long as the ones pouring through are, over the course of a lifetime, unable to slap together a shack to cover them, that would help.

For the ones capable of, again over the course of a lifetime, to slap even as much as 1.1 of some of a shack together, blocking them from coming, only serves to make the problem worse.

One has to be unusually stupid; even by the almost unbelievably low standards of the current US pliant indoctrinati; to believe Americans’, by now, inability to put together even something as simple as roofs over people’s heads, is the fault of some sort of strange, scary bogeymen from afar. That, as usual, Great Dear Leader needs to tweet mean things about!!!!!!

Instead of it simply the fault of current day Americans; collectively although not in every single case individually; being useless, worthless, incompetent, wastes of biomass; unable to comprehend how to be able to do even something as simple as that.

Rbm

3 years ago

Maybe instead of rent control we should address the issues why people cant afford rent in the first place.

Casual_Observer2020

3 years ago

Reply to Rbm

That’s silly. No asset owner wants low prices.

Rbm

3 years ago

In all my travels it comes down to these things. Those who stand to benefit or make money are for more housing. Land owner Construction: home and infrastructure. Politicians who receive money from interest above, and tax revenue. Those who want to purchase a home.

Those who dont stand to benefit. If your just an average person. Your can expect more people more traffic and higher taxes. Same goes when a new corporation whats to move to town.

Of course its more complex than my simple observation. I once had a discussion with a ski bum who was complaining about how crowded jackson hole was becoming. I was like what do you do in the summer. Answer build million dollar houses.

Columbo

3 years ago

I love the Twin Cities where I live, but our current local governments “overly” do good mentality suffocates us with laws that have costs and unintended (or some believe intentional) consequences.

AWC

3 years ago

As long as the southern border remains wide open, houses in the US will be a good investment.

Dean_70

3 years ago

This is the blow-off top in housing prices. This cruise liner has started to turn and once this turn completes there will be spectacular declines. Unless they drive 30-year fixed rates back under 3% the turn will continue to accelerate since rates are spiking.

This spring will mark the top of Housing Bubble 2.0

PreCambrian

3 years ago

There is no easy answer. Neither rent control or blindly approving new housing projects without considering their effects on existing infrastructure will help. Probably the best government policy would be to invest in local infrastructure (water, sewer, and parks) in return for lower cost housing.

Tony Bennett

3 years ago

Since Summer of 2021 an almost daily drumbeat from “experts” on Beijing bailing out its residential property (developers) soon.

How’s that going?

(Bloomberg) — Chinese developer shares dropped the most since the global financial crisis on Tuesday as a rout in the nation’s equity market hit the troubled real-estate sector especially hard.

A Bloomberg Intelligence equity gauge of the nation’s builders sank 9.7%, the sharpest one-day decline since October 2008. Developer bonds also tumbled further, with high-yield dollar notes on pace for a 15th consecutive drop according to a Bloomberg index. On Monday, yields topped 27% for the first time.

https://ca.finance.yahoo.com/news/china-developer-shares-tumble-most-091941813.html

RonJ

3 years ago

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

Socialists are into one size fits all.

Eddie_T

3 years ago

Reply to RonJ

When the revolution comes, everyone will be hyphenated.

hhabana

3 years ago

Can you say favelas? Not Brazil, I mean in America.

RonJ

3 years ago

“n 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.”

I guess it seems that everyone wants to move to Florida, now. Martin Armstrong got there ahead of the rush.

Tony Bennett

3 years ago

RVs?

Plenty of shelter about to come on line.

With covid, sales off the hook past 2 years. A lot of “doing it for the kids” reasoning … without a clue on expense / maintenance. And now? With everything opening back up?

The old saying for boats here: The best days … the day bought … the day sold.

StukiMoi

3 years ago

Reply to Tony Bennett

Producing and procuring enough shelter hasn’t been a problem for a century and a half. It’s no harder than producing tennis socks.

Instead, the same gaggle of third raters who, incapable of doing anything productive themselves, keep cheering on Caudillo to prevent their betters from doing so as well wrt building houses; do the same thing wrt those same betters parking their RVs and boats anywhere near where they work or otherwise need them.

None of it is a real, fundamental problem of any sort. All, 100%, of it, is just connected, incompetent, illiterate, useless, worthless idiots cheering on Caudillo to rob and harass their in-all-ways-but-closeness-to-the-Junta betters.

Things are, by now, so bad that even if someone competent should build the shelter he needs, or should bring a prebuilt one to where he needs it, the Junta will then literally come and destroy it. That’s all they are capable of doing, with their worthless little lives. Destroying being, as always and everywhere of course, what unlimited, totalitarian governments have always existed for the sole purpose of doing.

Those who can, do. Those who can’t, destroy what those who can, do. And those who can’t even do that, can be relied on to sit there like dumb stooges, pumping their fists and cheering for the latter.

Eddie_T

3 years ago

As I’ve said before, 7of my 9 properties in and near Austin are easy to track on Zillow, and I have data to suggest their estimated values are close to the market (4 appraisals in 2021) . Last month the value of those properties went up 50K in one month and I was fairly blown way by that. This month they’re up $262K. I know this is not sustainable, but I have no idea where the top will be. I don’t want to sell out and lose my inflation hedge. I’d be happy for the market to cool off.

From what I hear this trend is even worse in Canada than here. I just saw a tweet from a Canadian realtor who said housing prices have doubled in 6 years. Up there, immigration drives the market.

thimk

3 years ago

Reply to Eddie_T

“Up there, immigration drives the market.”

Could be the same stateside also and single parent households .

TexasTim65

3 years ago

Reply to Eddie_T

Did he say where he was in Canada? Markets there vary widely by area just as they do in the US.

Eddie_T

3 years ago

Reply to TexasTim65

It’s the Toronto and Vancouver guys who are seeing the biggest jumps, but the article that talked about a double in 6 years was looking at AVERAGE price nationwide, if memory serves. Even the O&G guys I talk to in Calgary say prices there are headed way up. Anything in a city, I assume. I know it’s a big country and not all areas are participating.

Casual_Observer2020

3 years ago

Reply to Eddie_T

We don’t live in business cycles but in credit cycles. Most housing prices are still driven by foreign money from China and elsewhere laundering money through houses. I hope we don’t find out these people are part of CCP and suddenly find that government of China owns a large chunk of real estate in America. There is also a lot of Russian money in American real estate. Real estate is the largest legal money laundering operation there is. The bank and sellers never question if the transaction is because of laundered money. We will all be like Vancouver in a few years.

Lisa_Hooker

3 years ago

Reply to Eddie_T

You want a house? Just sell some Bitcoin or Alphabit or Amazon for cash, @c, @c and buy one. Or some.

Cocoa

3 years ago

Ironically, as well, high density housing advocates make per square foot price go up as well,.so prices just keep going up until you build 110 story toothpicks in NYC. It’s always pushing on a string..Rent control restricts housing density and less turnover

Sunriver

3 years ago

Bidenville’s will be the net result of the rent increases. The FED ‘bubble blowing’ rents by buying MBS helped Apartment REIT’s (i.e. APTS, BRT, UDR, etc) realize superior gains with absolutely no risk. Occupancy rates have been near 100% as some states eviction moratorium continues. However, that moratorium will disappear this year and indeed many renters will be displaced with no risk to the apartment owners. The FED won’t be dumping MBS anytime soon.

Where will renters relocate to as rent increases defy fundamentals? To your hometown’s downtown ‘Bidenville’.

BowserB46

3 years ago

Two million illegal immigrants let in by Biden; half of them given prepaid $15k debit cards and transport to wherever they want to go. Twenty nine million total illegals in the U.S. You don’t suppose that could have any effect on availability?

Captain Ahab

3 years ago

What is it about basic economics (demand and supply) that liberals do not understand?

How to create a shortage: control prices?

https://enotesworld.com/wp-content/uploads/2020/08/Screenshot-803.png

How to lower prices without creating a shortage?

Increase (shift) the supply

Karlmarx

3 years ago

Reply to Captain Ahab

These are the same lunatics that raise excise taxes on tobacco in order to deter sales. Sometimes i wonder how these people are able to successfully negotiate a vegetable aisle in a grocery store

Captain Ahab

3 years ago

Reply to Karlmarx

FYI, an excise tax operates to increase the cost of supply by the amount of the tax, effectively shifting the supply curve to the left, and up. At the margin, it works, and there is a reduction in the quantity demanded at the new higher price, That said, stupid people will always continue to do stupid things. By the way, bees love nicotine, even though it kills them.

The same is true of income taxes. Increase income taxes, people have less to spend. Fewer people will work (to pay tax). The underground economy expands. Lower taxes, spendable income increases. People spend more and save more. More people work.

My solution to the affordable housing ‘crisis’ is NOT rent control. What is needed is cheaper housing, not crappy housing. And not gov’t subsidies because they remove the incentive to innovate, and lower the cost of construction.

ColoradoAccountant

3 years ago

Reply to Karlmarx

LOL!!

KidHorn

3 years ago

Reply to Karlmarx

And at the same time, many governments are dependent on the tobacco industry because of fines placed on them. Many municipalities actually issued bonds backed by tobacco industry fines.

Affordable Housing Activists Demand Homebuilders Build Fewer Houses

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