Housing Experts Tackle Affordability Problem at Debate

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Rent control is a poor solution to the affordable housing problem because it doesn’t address underlying causes, according to housing experts who spoke at a webinar last week sponsored by Boston College and Harvard law programs.

The two experts, Jenny Schuetz of the Brookings Institute’s Metropolitan Policy Program and Lane Freeman, a professor in the urban planning program at Columbia University, spoke at an event sponsored by the Rappaport Center for Law and Public Policy at Boston College Law School and the Rappaport Institute for Greater Boston at Harvard University’s Kennedy School of Government.

As housing costs rise more rapidly than inflation or household income, an increasing number of families are spending more than 30 percent of income on housing. That’s particularly true in high-cost coastal markets such as Boston, New York and San Francisco. That has prompted some tenant advocacy groups to press city and state governments for more rent control, which limits how much landlords can raise rents.

Rent control may alleviate pressure on some renters, but it makes the problem worse to the degree that it hinders the ability to do what is needed, Freeman and Schuetz said. “The problem with rent control is that it doesn’t fix the underlying problems,” Schuetz said.

Schuetz identified three critical areas of housing affordability that are not helped by rent control. One is the lack of housing stock. The U.S. has a long-term undersupply of housing relative to growth in the number of households. Rent control suppresses development when developers can’t meet targeted returns.

Another issue with rent control is that by limiting property owners’ income, it takes away the incentive to renovate older properties, Schuetz said. That contributes to decaying and obsolete housing stock in poor neighborhoods. Plus, to the degree it disincentivizes repairs and upgrades of energy-efficient systems, it contributes to the climate change problem.

What’s more, rent control doesn’t do anything to solve the income part of the equation, the growing gap between market-rate rents and incomes of lower-wage workers, Schuetz said. Studies show that lower-income households are more likely to be burdened by rental costs.

The most efficient solutions to housing affordability would be to extend use of housing vouchers and direct subsidies to renters, and policies that increase the development of more housing. However, the panelists noted that solutions that involve spending by cash-strapped governments and unpopular development are difficult to implement.

“There is a lack of political will to implement these solutions,” Freeman said. “It’s easy to say we need to allow more housing to be built, but that tension is not easily resolvable because people want to live in communities where people feel connected and safe.”

Asked how the pandemic had impacted thinking about affordable housing, the panelists noted that it demonstrated the need to improve housing aid infrastructure. The federal government passed $46 billion of renter assistance programs in December 2020 and January 2021, but distributing the aid has

been painfully slow and cumbersome. Schuetz suggested a federal rental registry that would enable aid to be distributed through the Internal Revenue Service rather than local governments.

Freeman said that local governments that control development must consider the larger picture and advocated for federal incentives that would encourage localities to allow more housing to be built. “We need to address the supply side of housing,” he said.

About the author

Paul Fiorilla

Paul Fiorilla has more than 25 years of experience as a researcher and writer in the commercial real estate markets. He previously served as a vice president of research at Prudential Real Estate Investors in Madison, N.J., where he oversaw publishing of outlooks and thought leadership research. Before that, he covered real estate capital markets and CMBS at Commercial Mortgage Alert.

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