To observe an inflation crisis “on steroids,” look no further than America’s rental housing market, famed sociology professor Matthew Desmond told a panel of senators Tuesday.
Rental prices have exceeded income gains by 325% since 1985, with costs growing at their fastest-ever pace last year, Desmond said. And low-income families already living in the cheapest homes available to them — who often spend an unsustainable portion of their paychecks on rent — are left with few options but to cut back on other necessities like food and healthcare.
Meanwhile, some property owners, seeing an opportunity in the scarcity of affordable, available homes, are working to facilitate price hikes to make a profit, “knowing they have a captive tenant base,” Desmond said during a Senate Committee on Banking, Housing and Urban Affairs hearing Thursday.
“What we can no longer do is — looking renting families in the face, families now living in cars, in garages, in attics, in storage sheds in the richest country on the planet — and tell those families, ‘You know, we’d love to help you, but we just can’t afford it,’” Desmond, the author of “Evicted: Poverty and Profit in the American City” and the director of the Eviction Lab at Princeton University, said. “Because that is a lie.”
Tuesday’s congressional hearing was one of multiple held on soaring housing costs in recent weeks, zeroing in on the consequences faced by the nation’s 44 million renter households — 36% of whom make less than $30,000 annually, with that rate going up to nearly half of Black renters, according to Harvard’s Joint Center for Housing Studies.
“Tuesday’s congressional hearing was one of multiple held on soaring housing costs in recent weeks, and the nation’s 44 million renter households — 36% of whom make less than $30,000 annually.”
In June, the national median asking rent was up 14.1% from a year earlier, according to Redfin, and the median asking rent surpassed $2,000 for the first time in May. In some ultra-hot markets like Cincinnati, Seattle, Austin, and Nashville, asking rents have increased more than 30% in the past year, according to Redfin.
Rising costs may be weighing on President Joe Biden’s approval rating among young voters, who have been particularly burdened by high rents, Politico reported Tuesday.
“When rents rise, it makes everything in someone’s life just a little bit more precarious,” Sen. Sherrod Brown, an Ohio Democrat and chairman of the Senate Committee on Banking, Housing, and Urban Affairs, said during Tuesday’s hearing. “More and more families are one emergency away from losing their home.”
But Ranking Member Sen. Pat Toomey, a Republican from Pennsylvania, said Democrats were to blame for that precarity. And Democratic senators’ current healthcare, climate and tax bill — dubbed the Inflation Reduction Act — will worsen the problem, Toomey said.
“Instead of pushing a reckless tax-and-spending bill, the administration should look to opportunities for bipartisan legislation — like the housing finance reform—that relies on free enterprise — not government—to make housing more affordable for more Americans, whether they own or rent,” Toomey said.
Toomey also railed against government regulations that he saw as contributing to higher housing costs, and dinged the Biden administration for extending “the illegal eviction moratorium,” which was first announced by then-President Donald Trump’s administration in September 2020 before it was ended by the Supreme Court last year.
One of the speakers in Tuesday’s hearing, Rosanna Morey, said she is a small landlord of an owner-occupied home with a rental unit in Long Island, and previously rented out an apartment in her home on a month-to-month basis to help cover her bills.
At one point, though, Morey tried to remove the tenant living in the unit so her sister could move in to help both her and her son, since she has incurable cancer and he has a learning disability. The tenant refused to leave, however, and was ultimately able to stay in the property rent-free for two years due to state and federal eviction moratoriums during the pandemic, Morey said.
“‘The bottom line is this: The country’s lowest-income seniors, people with disabilities, and working families are struggling to stay housed in this housing market.’”
“With too many restrictions, affordable housing providers like myself will reconsider renting going forward,” Morey said. “Some will just sell and leave, some will put more stringent requirements and tenant screening criteria in place, and some will just raise the rents to cover themselves ‘just in case.’”
Other speakers, however, pressed for urgent legislative solutions to the housing affordability crisis. Desmond advocated for bipartisan bills including the Eviction Crisis Act and the Family Stability and Opportunity Vouchers Act, which would establish a new, permanent emergency rental assistance fund and create more housing vouchers, respectively.
Diane Yentel, the president and CEO of the National Low Income Housing Coalition, an advocacy group, also noted during Tuesday’s hearing that rents have been driven up by several factors, including high demand, a severe housing shortage, inflation, and real-estate investors purchasing cheaper homes.
“To address a decades-long housing crisis that has only worsened during COVID-19, Congress must enact long-term solutions such as expanding rental assistance for all eligible households in need, preserving and expanding the supply of deeply affordable homes, providing short-term assistance to prevent evictions and homelessness, strengthening and enforcing renter protections, and incentivizing or requiring local governments to eliminate restrictive local zoning,” Yentel said.
It seems unlikely the Senate reconciliation will “address the housing crisis in any meaningful way,” though it’s currently the best opportunity to advance solutions, Yentel said. Renters and people experiencing homelessness will suffer as a result.
“The bottom line is this: The country’s lowest-income seniors, people with disabilities, and working families are struggling to stay housed in this housing market,” Yentel said. “Without decisive and quick action by the Biden administration and Congress, too many more renters will fall into homelessness with all its associated costs to children, families, communities, and the country.”
Learn how to shake up your financial routine at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. Join Carrie Schwab, president of the Charles Schwab Foundation.