Much is said and written about inflation. We are super sensitive to the rise and fall of gasoline prices. It is a shock when egg prices double. It is hard not to notice how expensive it is to eat out — even at a fast-food joint.
However, all of these shocks are much smaller than the seismic increases in rent. The majority of the rise in inflation comes down to housing costs.
A recent Harvard University’s Joint Center for Housing Studies report states, “While rents have been rising faster than incomes for decades, the pandemic-era rent surge produced an unprecedented affordability crisis.” The Joint Center reported that renters who spend more than half of their household income on housing and utilities rose in 2022 to a record high of 12.1 million — up from 1.5 million and levels seen before the COVID-19 pandemic.
For a family paying half their income in rent, it is catastrophic. At 50 percent, a family of four paying $2,500 a month in rent will have only $2,500 for food, transportation, childcare and everything else. Such families cannot make ends meet.
With the increasing penetration of mega-corporate landlords buying homes and apartments, this disparity represents an enormous transfer of wealth from working families to billionaires. Beyond the economic fallout on the people who can least afford it, there is a vast negative societal effect. Many of the assumptions of the past are now far beyond the reach of so many families.
Will the children be able to move out when they become adults? Can a family scrape together the funds for childcare? Will these families be able to pay for other necessities? When inevitable emergencies arise, will it push more people onto the streets?
These are not hypothetical questions. We are already there. The traditional rite of passage of adult children marrying and venturing out independently is being long delayed. Parents working multiple jobs to keep a roof over their family’s heads is commonplace. The golden years of retirement are being turned into a hellscape of having to work indefinitely or even being forced into homelessness.
The Statewide Study of People Experiencing Homelessness from the University of California San Francisco found that 48 percent of single homeless people in the state were 50 or older, and that’s just one state. Forty-one percent of them first became homeless after the age of 50. Most are unsheltered, and many are frail. If rents increase more than Social Security payments or wages, more seniors will inevitably call the sidewalk their home.
It is a sign of a sickness in our economy and society that children and seniors make up a greater share of the homeless. But that is only the tip of the iceberg since so many more people have to find a way to pay their rent and survive on what little is left.
We are beyond the breaking point. Everyone agrees that increasing the supply of low-income housing is critical, but new construction is slow and costly. Repurposing older buildings is cheaper and takes less time.
However, nothing is more important than keeping people in their homes. And the only way to do that in the short term is to limit rent increases via rent control. In California, the Justice for Renters Act would expand rent control and ensure affordable housing for all.
Corporate real estate interests will fight rent control tooth and nail, making false claims that it hurts tenants. But we have to believe what we see with our own eyes — a housing affordability crisis that is ripping at the fabric of our society.
Rent control has been an American tradition for more than 100 years, and we need it now more than ever.
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3 thoughts on “No. 1 Economic Issue — Rising Rents – Inside Sources”
Rent control is just another Socialist idea that desecrates Capitalism. Rent Control makes for a lower demand to buy rentals, thus lowering the amount of rentals on the market. Fewer rentals available makes for higher rental prices. More rentals creates more competition, thus helping to reduce the rental prices from rental owners. Simple law of supply and demand that works well when left alone by government laws and regulations, and is part of basic economics courses that used to be taught in colleges and universities.
Neil, you are absolutely right. Government meddling in the free market has “unintended consequences” or “unforeseen consequences”. Actually, the correct term is “should have been foreseen consequences”. Unfortunately, most politicians and voters have never studied economics, or, if the politicians do understand basic economics, are pandering to the gullible masses.
Another example of government meddling is the home mortgage interest deduction. On the surface this seems like an innocuous way to help home buyers but the reality is that this creates a situation where more money is chasing a limited resource and home sellers respond by raising the selling price. For those who take out a mortgage to buy a home the increased home price is at least partially offset by the mortgage interest tax deduction. However, for buyers who are paying cash, they suffer the full consequences of this misguided government policy.
The author of this article is typical of the socialists who have simplistic and ultimately impractical ideas to save the world. They look to increased government control of the economy as the solution to all problems. This has not worked in the past yet they continue to walk down this path.
Home owners insurance has doubled. Do you expect the landlord to absorb those costs? Regulations limiting building are squeezing supply. What do you expect?
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