In a trip to Las Vegas, where rents climbed twice as fast as wages last year, President Biden is pitching a plan for national rent stabilization — sort of. The plan wouldn’t directly cap rents — despite a growing freakout from the lobbying groups that fight tooth and nail to oppose rent controls — and it would need the approval of Congress.
But while acknowledging its limitations, tenant organizers and advocates see Biden’s announcement as a rare acknowledgment that the federal government could wield its vast power to shape the housing market on behalf of tenants…
Rent control is still fairly rare in most of the United States, thanks to a nationwide industry campaign, beginning in the 1980s, to preempt its adoption at the local level. Mark Paul, an economist at Rutgers University who has urged a rethinking of the conventional economic wisdom against rent control, praised Biden’s announcement as a step in the right direction. “We have policies in place that have helped build the middle class through federal support for housing,” Paul says. “However, that federal support for housing is really only applied to the segment of Americans that can afford to own a house.”
The push to attach strings to these federal dollars has provoked blowback from industry lobbying groups like the Mortgage Bankers Association, which urged the Federal Housing Finance Agency (FHFA), which regulates Fannie and Freddie, not to violate the “sacrosanct” relationship between landlords and tenants by acting as an intermediary.
But more than 30 economists, including Paul, backed the idea in a 2023 letter to the FHFA, making the case that the debate surrounding rent regulation is undergoing a sea change similar to the minimum wage in the 1990s, when a series of empirical studies found — contrary to doomsday prophesying from big business — that wage hikes were not leading to job losses.
The economists’ letter points to evidence from New Jersey suggesting that rent controls did not drive down new construction, as opponents argue. Nor did Massachusetts’ repeal of rent control in the 1990s lead to a housing supply boom.
Given the slim chances of passing rent caps through Congress, no matter November’s outcome, Paul thinks the Biden administration could do more now to demonstrate his commitment to combating unchecked corporate power in the housing market. He points to an announcement just last week from FHFA requiring modest new tenant protections in federally financed properties. The move shows “the FHFA has the authority to regulate these types of properties,” he says. “I would like to see them go a step further and utilize that same rulemaking approach to deploy rent control.”