A new ‘holy grail’ in the housing crisis: statewide rent caps

For the past decade, Dominique Horn has worked for a community health organization in the fast-growing city of Vancouver, Washington State, helping people pressured by rising rents in an effort to prevent homelessness.

Sometimes she wonders if she will be her agency’s next client.

Because her husband sometimes struggles to find work, Mrs. Horn has maxed out her credit cards to keep up with rent. She relied on public assistance and stayed in shelters. The couple and their two children have moved so many times that she keeps sentimental items like photos and heirlooms in boxes because no place feels like home anymore.

“I’m constantly waiting for the other shoe to drop,” said Ms. Horn, 42, whose current lease expires in May. “I am one price increase away from a return to instability.”

Ms. Horn is one of thousands of Washington residents who gathered in Olympia, the state capital, in recent weeks to lobby lawmakers on one of the nation’s most closely watched housing bills: a measure that would limit rent increases for would limit housing to 7 percent. a year.

The bill is considered a priority by Democratic leaders, who control the state Legislature. The bill has passed the House of Representatives and is now in the Senate. If passed, Washington would become the third state in the country to adopt statewide rent regulations, after Oregon and California — all in the past five years.

From coast to coast, housing has proven to be perhaps the biggest state problem this year. The number of households that the federal government says are experiencing rent burdens – meaning rent consumes more than 30 percent of their income – has increased projected to hit a record high of 22.4 million in 2022 a new report from the Joint Center for Housing Studies at Harvard University.

“People are facing skyrocketing rents,” said Rep. Laurie Jinkins, a Democrat and speaker of the State House, during opening session of the legislature in January. “They are stressed, they are scared and they are asking us for help.”

Rent rules have traditionally been set by municipalities and not states. New York City’s system includes 2 million people – almost a quarter of the population. San Francisco and Los Angeles – and more recently, St. Paul, Minnesota.And Montgomery County, MD. – belong to the 200 local authorities who regulate rental prices.

When states get involved, it is often to prevent local jurisdictions from setting rental regulations. More than thirty states have done so Montana, Florida and Ohio being recent additions; West Virginia could be next, according to Jim Lapides, who drafted the legislation for the National Multifamily Housing Councila group representing the apartment industry.

Washington State blocked local rent regulations in 1981, when Republicans last controlled the governor’s office and legislature. Instead of lifting that ban, the current account would protect renters across the state, including renters in cities that may be unable or unwilling to take their own action.

The measure faces enormous challenges in the Legislature, which is set to adjourn on March 7. A similar attempt failed last year. And this time, the original proposal, which called for a 5 percent cap, subsequently failed in a Senate committee a moderate Democrat said she couldn’t support it “Adopting risky policies that could do more harm than good.”

The proposed 7 percent cap would be flat, unlike those in Oregon and California, which could vary slightly depending on how quickly consumer prices rise. The limit is 7 percent plus the rate of inflation in Oregon and 5 percent plus the rate of inflation in California; both states set a maximum of 10 percent.

Washington’s bill would only apply to lease renewals; Landlords could increase rents at their discretion when renting to a new tenant. To avoid discouraging construction, the restrictions would not apply for the first 10 years a building is occupied, state Rep. Emily Alvarado said. main sponsor of the bill.

Gregg Colburn, a real estate professor at the University of Washington and co-author of a recent book, “Homelessness is a Housing Problem,” said he wasn’t surprised that state officials across the country would adopt an ‘almost paternalistic’ approach.

“It will be the topic du jour,” he says. “If you are an elected leader at the state level, now you say, what are we going to do? What tools can we use?”

The ‘Year of Housing’

Average residential area rents in Washington rose 34 percentAccording to the Center on Budget and Policy Studies, a national research group, between 2001 and 2019, inflation-adjusted income exceeded the increase in renters’ incomes by 21 percent over the same period.

In 2023, that some state leaders the “years of housinglawmakers focused on supply, passing legislation to allow more duplexes, fourplexes and outbuildings in residential neighborhoods, while budgeting a record $400 million for a housing trust fund helping low-income residents.

These years shortened term of office is marked by accounts related to housing affordability and generating new revenue, most of it sponsored by Democrats with little or no Republican support. In addition to the rent bill, lawmakers are also weighing a tax real estate transactions over $3 million And an excise duty of up to 10 percent on short-term rentals such as Airbnb units.

“The holy grail of holy grails is rent control,” said state Rep. Andrew Barkis, a Republican who represents a district east of Olympia. “They are determined to do it,” he said of Democrats, “and they are on the verge of thinking they can do it.”

Mr. Barkis, owner of a property management company, is an ally of the Washington Multi-Family Housing Association, which represents major property management companies. The group sent 150 members to Olympia to lobby in January, its largest contingent ever.

More than the landlords during the legislative session were the tenant activists, several hundred strong, who filled the Capitol campus for an afternoon rally organized by the Washington Low Income Housing Alliance, a statewide coalition.

Also present were older residents who lived on a fixed income and were involved in the Manufactured Homeowners Association, which represents people who own homes in mobile home parks and rent the land they sit on. They have also had to deal with steep rent increases.

For Ms. Horn, the community health worker, the most heartbreaking moments came at the State Capitol during a standing-room-only meeting with lawmakers from the Vancouver area, where the highest percentage deportation applications per capita in the state in 2023. One after another, voters shared stories of evictions and homelessness.

Monica Zazueta, who brought her 9-year-old son Ram to the meeting, said Ram was growing increasingly despondent over his family’s unstable living situation.

“The mobile youth crisis team came to help because Ram said he didn’t want to live anymore,” she said, sobbing.

Another group that has a regular presence at the State Capitol is the Rental Housing Association of Washingtonwhich opposes rental regulations and represents smaller property owners like Mike Frost.

Originally from Montclair, NJ, one of approximately 100 communities in New Jersey rental regulationsMr. Frost, 67, owns two buildings in Seattle’s Capitol Hill neighborhood, with a total of 26 units, and makes his own repairs. During a tour of his garden apartment complex, built in the 1950s, Mr Frost said he was proud to offer relatively affordable units – a 40-square-metre bedroom costs $1,385 a month – in a rapidly changing block.

Across the street, new townhouses are selling for $800,000. To the left is a five-story building with 56 micro-units — studios of just 250 square feet, one of the city’s latest attempts at affordability — renting for $1,200 a month.

Mr. Frost said statewide rental regulations like those being discussed in Olympia would hurting small landlords, who are already struggling with rising costs and red tape, and pushing some of them to sell their buildings.

Referring to the likely buyers, Mr Frost said: “It brings in people who will become more bottom fishermen.”

One of Mr.’s tenants Frost, Brittaney Moses, a 37-year-old interior designer, recently suffered a seizure that limited her mobility. She owes $955 in back rent. But Mr. Frost — “such a great landlord,” she said — has helped her tap into community grants and other resources to keep her from falling further behind.

Since she moved in three years ago, Ms. Moses’ monthly rent has increased once, by $120, or 9.5 percent. The increase was discouraging.

“I’m for anything that keeps the rent low,” she said. “But I also understand the landlord’s perspective. I know how expensive it is.”

A room with charisma

Local governments are also tackling housing problems.

A proposal was made in Seattle voting initiativewhich is now in the signature-gathering phase, would impose an “excess payroll tax” on businesses for each worker receiving more than $1 million annually to fund new public housing.

Edward R. King Jr. and Kerri Burnside are tenant activists in Bellingham. In an interview at the Little Merry Cafe, which Mr. King once owned, he said that a decade ago he struggled with multiple sclerosis and a divorce, and that in 2015 he finally found a one-bedroom apartment for $750 a month in the complex where Mrs. Burnside lives.

When the property was purchased in 2021 by a Michigan-based management company, Mr. King $850, but it quickly rose: first to $1,100, then to $1,750.

His next home was his 2007 Saturn Vue.

“I really couldn’t afford to move anywhere,” says 59-year-old Mr. King.

Ultimately, he reached the top of an eight-year waiting list for public housing. And he was stunned by how many of his former neighbors had been forced to move, sometimes to other states.

“I stopped counting at 20,” Ms Burnside said.