Does The United States Need National Rent Control?

One of the things on the political agenda, particularly from the democratic side of the aisle, is rent control. On taming rent prices — via rent control or other means — Donald Trump hasn’t offered much in the way of specifics. 

We would love to know your position on rent control? Use the feedback link at the bottom of the page to send The Juice your thoughts. 

Before we tell you how we feel, let’s lay out some recent news and relevant facts. 

The Cost Of Renting 

• The median rent of an apartment across the 50 states is $2,115, as of mid-August. 
• Of course, that number is higher in large cities, such as New York ($3,606), Los Angeles ($2,795), Boston ($3,300), Miami ($3,200), San Francisco ($3,300), Denver ($2,300), Austin ($2,200), Nashville ($2,250) and Seattle ($2,195). 
• You’ll find median rent lower than the national median in places like Portland, OR ($1,795), Buffalo ($1,400), Sacramento ($2,000), Fresno ($1,799), Columbus, OH ($1,500) and Atlanta ($2,095). 
• To afford the national median rent of $2,115 without spending more than 30% of your income, you need to earn $7,050 a month, or $84,600 a year. 

A key thing to remember in this discussion is that the median salary of the country’s 119.9 million full-time wage and salary workers, as of Q2/2024, is $4,572 a month, or $54,864 annually.  

So, obviously, current rent prices, for many, are simply out of reach. At least at the median. We know that home ownership is but a dream for a growing number of Americans not already in solid situations. 

Political Intervention — Actual and Proposed

The Biden Administration has asked Congress to pass a law “giving corporate landlords a choice to either cap rent increases on existing units at 5% or risk losing current valuable federal tax breaks.” 

This could impact the companies in today’s Trackstar top five, particularly Equity Residential (EQR) and AvalonBay Communities (AVB). They own, operate and lease luxury rentals in some of the nation’s most expensive rental markets. Both EQR and AVB beat analyst estimates in their most recent earnings reports. 

The Biden Federal Trade Commission and Justice Department are also fighting against the use of algorithms by corporate landlords to set rent prices, calling it collusion: 

Landlords and property managers can’t collude on rental pricing. Using new technology to do it doesn’t change that antitrust fundamental. Regardless of the industry you’re in … your algorithm can’t do anything that would be illegal if done by a real person. 

… you can’t use an algorithm to evade the law banning price-fixing agreements …

Meanwhile, landlords increasingly use algorithms to determine their prices, with landlords reportedly using software like “RENTMaximizer” and similar products to determine rents for tens of millions of apartments across the country.

In August, San Francisco became the first city in the nation to ban the use of these algorithms. 

RealPage is one of the companies that offers these algorithms to landlords. Recently, two of its executives publicly noted that “the company’s software helped landlords push up rents by as much as 14.5%.” According to a local SF newspaper, “Greystar, a corporate landlord with holdings in San Francisco, (said their) buildings using RealPage software ‘outperformed their markets by 4.8%.’”

Talk about saying the quiet part out loud. 

That’s a brief survey of the rent control and related landscape. 

The Impact Of Rent Control 

Looking specifically at rent control ordinances, which tend to be in place in large or otherwise expensive cities, including New York, Los Angeles, Santa Monica and San Francisco.  

There’s a fair bit of academic research on the matter. After reviewing dozens of studies, The Juice settled on one of the most recent to sum up the findings. A literature review, published in March in the Journal of Housing Economics.  

The study concluded:

Rent controls appear to be quite effective in terms of slowing the growth of rents paid for dwellings subject to control. However, this policy also leads to a wide range of adverse effects affecting the whole society.

According to the authors who reviewed the large body of scholarly findings, these “adverse effects” including—

• Artificially low vacancy rates because rent control reduces “the incentives to move of the sitting tenants.”
• Rent control can disincentivize landlords to keep their properties up, decreasing their physical and cosmetic qualities. 
• The reduction of rental opportunities for younger renters, particularly those with families, who require space. Often, these types of units are occupied by older renters who refuse to leave because of the price benefits of rent control. 

Which leads The Juice to our thoughts on the matter in today’s bottom line. 

The Bottom Line: There’s something to be said for an “older” renter collecting Social Security who has the security of a rent-controlled apartment. Just as some older homeowners free and clear of a mortgage are left to deal with skyrocketing property tax bills, renters without controls can face large, sometimes double-digit rent increases. 

Coupled with the struggle of young people to get their adult lives off the ground thanks, in part, to the cost of housing, particularly in big cities, this just isn’t okay. 

We have to look past politics and a rigid adherence to free market dynamics and intervene with an eye towards the future. If housing — rent or own — is out of reach or a huge stretch for a large chunk of the population, we have a problem. And we should all come together to find solutions that look past individualism with an eye on doing what’s best for the long term and right for the greater good.

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