Street Roots • April 21-27, 2017
Commentary
Page 11
Rent stabilization: It’s time
200 US. cities have successful programs
that could serve as models for Portland
BY M A R Y C. KING
C O N T R IB U T IN G C O L U M N IS T
n the face of the housing crisis confronting
Portland and much of the state, the
I
Mary C. K ing is a
Professor of
economics emerita
at Portland State
University. Street
Smart Economics
is a periodic series
written by
professors emeriti
in economics for
Street Roots.
Legislature should lift the 35-year ban on
Oregon localities hoping to enact rent
stabilization policies to put the brakes on
astronomical rent increases.
Rent stabilization laws in over 200 U.S.
cities have slowed the
displacement of families
with children, seniors,
people of color and lower-
income households,
preserving the “right to the city” for a
diverse community.
Portland and other cities are pursuing
other useful strategies to increase the
supply of affordable housing, but these
can’t work quickly enough, or create
enough units, to slow rent increases nearly as
effectively as rent stabilization policies, at
least well into the next decade.
And no housing initiative, including rent
control, can take the place of the big,
federal investments in public housing for
low- and moderate-income families that
were slashed by the Reagan administration in
the 1980s. Growth in homelessness has
tracked the precipitous national decline in
public housing funding.
Portland’s soaring prices
Nearly half - 45 percent - of Portland
households are renters, facing impossible
rent increases. Over the last six years,
Portland rents for one-bedroom apartments
rose 82 percent - nearly doubling - and 63
percent for two bedrooms, even after adjusting
for inflation. The Portland Housing Bureau
reports that average monthly rents for one-,
two- and three-bedroom apartments rose
between 12 percent and 18 percent just from
2015 to 2016.
Median house prices hit $412,000 in
February, up 11 percent in one year alone. The
State Economist’s Office estimated that price
was affordable for less than one-third of
Portland households. They also showed that
younger Oregonians are paying more of their
income for housing than those born 10 years
earlier, who are themselves paying more than
those born another 10 years earlier, and so on,
as far back as the analysis reached.
At the same time, incomes are rising far
more slowly than housing prices. Median
household income in Oregon has yet to recover
from the financial crisis of 2008. The
purchasing power of wages has averaged only
1.2 percent growth a year since 2007 in
Oregon.
The result is that more than half of Portland
renters are “cost-burdened, paying more than
30 percent of their incomes on rent. More than
one-quarter of renters statewide pay more than
half of their incomes in rent, which is
untenable. Child hunger is on the rise, not
because food is expensive by historical
standards, but because rent is so high.
economics
at University
of California-
Riverside,
reports that “many
of the claimed
(negative) effects of
second-generation controls
are imperceptible.”
Contemporary rent stabilization
policies allow for annual rent
increases in line with inflation and
landlords’ expenses for major
improvements or repairs.
Landlords must maintain their
properties in order to raise rents, and
tenants can report negligent landlords.
Tenants’ complaints are investigated,
and landlords are prevented from
implementing annual rent hikes until
units are brought up to code.
Between tenants, when units are
empty, some cities allow rent
increases higher than the regular
annual rent hikes only if landlords
demonstrate that they are not
making a fair rate of return. Other
policies allow unlimited rent
increases between tenants.
Maintaining controls
during vacancies
keeps rents lower,
and both strategies
provide peace of
mind for current
tenants, who need not fear
sudden big rent increases.
To encourage ongoing
construction of new housing, many
cities exempt new construction
from rent stabilization policies for a
period of time, such as five years.
Other housing initiatives
People are being pushed out of the city by
gentrification, losing access to good schools,
libraries, parks, public transportation,
sidewalks, bike paths and cultural activities.
Segregation is on the rise, by income, race and
ethnicity, and household type.
Don’t believe the hype
Over 200 cities in the U.S. are successfully
relying on newer forms of rent stabilization to
slow skyrocketing rental prices. Most of these
programs were created in the 1970s but
continue to emerge in communities like ours,
struggling with housing affordability. Just last
November, two-thirds of voters in Richmond,
Calif., voted to approve the Richmond Fair
Rent, Just Cause for Eviction and Homeowner
Protection Ordinance, after a major community
organizing campaign.
Termed “second generation” rent control
programs, rent stabilization policies are not the
bogeymen of frozen rent ceilings that
opponents conjure, relating exaggerated tales
from the worst outcomes of World War II rent
controls designed to shift resources from
housing to war production.
Richard Arnott, distinguished professor of
Local bonding for housing construction,
inclusionary zoning, community land trusts and
other efforts are well worth pursuing, but even
combined won’t result in enough new
affordable housing to slow rising rents. Public
banking might provide financing for public
housing on a larger scale but will take some
time to develop.
Meanwhile, our biggest housing subsidies by
far benefit the highest-earning households
most, through the federal and state mortgage
interest tax deductions. Oregon’s state
deduction is effectively one of the highest in
the country, estimated to cost $1.1 billion in
tax revenues next biennium. Paring back the
deductions available to the wealthiest 5
percent of Oregonians could make a real
difference for underfunded but successful
programs to provide shelter to the houseless,
rental assistance to struggling families, and
help with down payments for moderate-income
households.
But the single best, quickest-acting
intervention we could make in Portland’s
overheated housing market would to implement
a rent stabilization policy, ensuring the “right
to the city” for as much of our community as
possible.