- [Reporter] If you live in New York your city
became unaffordable to rent in in 2004.
See this line?
That line is 30% of what you make.
Generally for rent it's advised
you don't spend past that line, but if you live in Miami
you probably passed that line in 2001
and in Chicago in 2012.
Los Angeles has been plain unaffordable since before 1979.
Rent is growing faster than the money
most people make to pay it.
Either wages have been relatively stagnant like in Atlanta
so it's hard to keep up
or supply doesn't keep up with demand like in Houston.
Until the last few years solutions
have remained pretty local.
San Francisco had its own rent stabilization laws.
New york did, too, but now to protect millions
from financial renter's ruin California upped the stakes
and passed a state-wide cap
of 5% a year on rent increases
making it the second state behind Oregon
to tackle the problem on such a high scale
which begs the question, if California could do it
and it actually works out does that mean laws like it
could start popping up all over the country?
- You can understand why it would be an appealing solution
to that problem, and it's essentially a costless solution
to policymakers 'cause it doesn't cost the taxpayer
any direct money unlike subsidies
or other types of interventions.
Rent control is simply a policy, right?
While I think it's understandable that policymakers
are increasingly looking for creative solutions
and rent control is in some ways an out of the box solution
we need to think more expansively.
- [Reporter] Across the country
that might mean protecting tenants
from eviction without just cause,
giving tenants the right to legal counsel,
or creating non-discrimination policies
against tenants using housing vouchers.
- Typically we don't actually have
what people think of as rent control anymore
which is a strict price ceiling that's inflexible.
Those started in the 1920s and grew in popularity
after World War Two to address the housing needs
of people coming back from the war,
but we learned very quickly that flexibility
was important to succeed and make sure
that rent regulations weren't actually making it harder
to build more housing and find housing.
Since the 1970s most rent regulations
are what we call rent stabilization.
The standard features would be
to have some sort of limit on how much you can raise rent
while a tenant is living in the unit.
- [Reporter] Which is exactly what we're seeing
in California's bill capping rent increases
to 5% plus inflation.
The law also provides other kinds of tenant protections
like requiring landlords to provide
a just cause when evicting tenants.
- Where we see growth is in rent stabilization.
We don't see a lot of the extreme cases of rent control
anymore, where they do exist they're fading out.
So you can think of the California and Oregon laws
as more anti-gouging laws than they are
traditional rent stabilization laws.
You can think of an anti-gouging law
as trying to curb the worst excesses, right.
It is not intended to limit normal rent increases,
but extraordinary rent increases which may be driven by,
for example, gentrification pressures.
- [Reporter] That 5% cap in California is meant to cover
those extraordinary rent hikes.
Nearly 30% of rentals in the Sacramento
and Riverside areas saw rent hikes more than 5% in 2018.
And 12% of rentals in the Bay Area
saw rate increases larger than allowed under the bill.
But rent stabilization has more than a few critiques.
- With rent regulation in general the debate
tends to devolve to one side arguing
that limiting price sends the wrong signal to the markets.
It reduces incentives for landlords to invest.
That I think was the dominant view of economists
for many years although I think the debate
has moved beyond that simple perspective.
On the other side people emphasize the imbalance
between landlords and tenants in terms
of when tenants can be evicted, under what circumstances,
on what reasons, can have all sorts
of collateral consequences for people's lives.
- [Reporter] Proponents of the bill argue
that those critiques get addressed
through exceptions in the bill like exceptions
for small mom and pop land owners
or the bill expiring after 10 years
or exceptions for new buildings to inspire new construction.
But experts are still skeptical
if something like this could blanket apply to the country.
- But I don't think that one size fits all solutions,
particularly a national rent control
is going to work across all markets.
We have essentially a mixed bag
and a lot of disagreement in the field.
And it's fairly novel to have a state do this.
Before we move from state to federal protections
we really need to see how it works
in places like California and Oregon.
It's hard enough to do that at a city level.
We'll see how they can accomplish it at the state level.
It seems next to impossible at this point
to do it at the national level.
- So if the question is, what's the trajectory
of this policy, I don't think we've seen it play out fully.
I think there's a lot of energy
from local government officials and tenants themselves,
and I think that energy is actually going to increase.
We're in a housing crisis across the country.
Although rent regulation and tenant protection
isn't the only solution to that crisis
I think there's a growing recognition that this
is a policy area that's garnering increasing support,
and the fact that you now have statewide approaches,
and I think we're likely to see more
and we're now beginning to see national proposals
I think means we're at the beginning rather than the end
of the policy conversation.