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Missing From Biden’s State Of The Union: A Plan For The Rent Crisis

Above photo: President Joe Biden delivers the State of the Union address in the House Chamber of the US Capitol in Washington, DC, on March 7, 2024. Saul Loeb / AFP.

The Biden administration can take immediate steps to protect tenants and lower the rent.

Here’s how.

Demetrius Mosley works on trucks all day, assessing crash damage and fixing brakes on 18 wheelers. He earns $29 an hour. On the first of every month, he purchases a money order from a local Kroger store to pay his rent, the biggest bill in his budget.

Mosley moved to Louisville, Kentucky three years ago with his four kids and their mom. The family rented a trailer in Pioneer Acres, a mobile home park. Rent was $885 per month. Since then, the owner has added fees and fines and hiked the rent to $1,100. He couldn’t afford to feed his kids, so he sent them to live with family in Florida.

“I gotta live somewhere. I got nowhere else to go,” he says. ​“I am at my landlord’s mercy.”

This is a story about power: who has power, who does not, and the cost to all of us if the imbalance remains unchecked.

Mosley and the 110 million people in the United States who rent their homes — trapped by limited options and squeezed for every last dollar — need policymakers to step in and offer relief.

The federal government can take an immediate step: every dollar of government-backed financing should come with conditions that protect tenants and stabilize the economy.

The housing market as we know it today is the handiwork of the industry that profits from it. Rents are higher than they’ve ever been before: in January, the median rent was $1,964, up more than 29% since the start of the pandemic, while evictions are soaring and homeless is at its highest rate on record.

When it comes to rent, we haven’t just reached the cliff — we’ve fallen off. Half of all tenants are rent-burdened and rent is the biggest monthly expense for most poor and working class households.

Private equity is the dominant form of financial backing for the 35 largest owners of multifamily properties. This flood of capital has led to big and small acquisitions, consolidating the market and manufacturing the conditions to maximize landlords’ profits.

In Thursday night’s State of the Union address, President Joe Biden talked about the rent crisis facing working Americans. ​“We’re cracking down on big landlords who break antitrust laws by price fixing and driving up rents,” he said.

This is a first. Biden’s focus on rent — and his administration’s focus on tenants — is a direct result of years of focused organizing, led by tenant unions across the country, organized through the Homes Guarantee campaign. Since September 2021, tenants have met with officials in the White House, the Federal Housing Finance Agency (FHFA), the Federal Trade Commission, the Consumer Financial Protection Bureau, the Department of Treasury, and the Department of Housing and Urban Development.

Alongside Biden’s remarks, on Thursday the White House released a fact sheet on housing, calling on federal agencies to root out anti-competitive and deceptive practices, like algorithm rent-setting and ​“junk fees.” These are positive steps, but they are marginal to the issue of rent itself.

Biden’s moves come after a ProPublica investigation revealed last year that RealPage, a corporation that sells software to the nation’s largest property managers, colluded to artificially increase rents by way of a price-setting algorithm. Many landlords have raised rents beyond the rate of inflation: that’s rent gouging. Starwood Capital Group manages more than $105 billion in assets and spent the pandemic buying up thousands of residential units and continued filing evictions, despite a national moratorium. Over the same period of time, Starwood hiked rent, raising costs by 52% at their property Wellington Green in Palm Beach County. In the Starwood Property Trust’s 2022 annual report, executives noted, ​“we recognized a $555 million increase in the fair value of these assets driven by rental growth.” The firm’s CEO even called inflation ​“an extraordinary gift that keeps on giving.”

To protect their market position and fend off regulation, the housing industry lobby has made itself a fixture in Washington. The National Association of Realtors regularly spends more than any other lobby group, dropping nearly $82 million in 2022 alone and more than $52 million in 2023, mostly to oppose regulation.

The federal government is in business with our landlords. Fannie Mae and Freddie Mac, known as the government-sponsored enterprises (GSEs), provide $150 billion in annual financing, guaranteeing landlords’ loans on lucrative terms and relieving their lenders (many of the villains of the 2008 financial crisis) of default risk. The GSEs provide a major benefit to the industry — a benefit which comes with almost no strings attached. In fact, Fannie and Freddie have created incentives for the most predatory landlord behaviors. They have a track record of providing guarantees to overvalued loans that could only be paid down if the landlord planned to raise rents and fees, neglect building maintenance and evict tenants.

FHFA is the regulator and conservator of Fannie Mae and Freddie Mac. In this role, FHFA has the authority to put in place regulations that would shape the market for the better, at no cost to the American people. FHFA should immediately institute a 3% cap on annual rent increases in the more than 12 million units with government-backed loans.

Patchwork regulation won’t suffice to regulate businesses that exist across state lines, and many states preempt the most effective tenant protections measures, like rent control, based on laws passed by industry lobby groups in the 1990s. More to the point, it is the feds who are in business with our landlords, and the feds who have the leverage to change their business.

For people like Mosley and the millions of other tenants struggling to stay in their homes, rent regulations can’t come soon enough, and Biden is in a position to make these changes a reality. The rent is too damn high, and it is high time for federal intervention to protect tenants.

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