In a recent visit to Las Vegas, where rents have surged at double the rate of wages over the past year, President Biden introduced a proposal for national rent stabilization. This plan, however, does not entail direct rent caps and would require Congressional approval.
Despite its limitations, tenant organizers and advocates view Biden's announcement as an important acknowledgment of the federal government's potential role in shaping the housing market in favor of tenants.
Rent control remains relatively uncommon across much of the United States due to a nationwide industry campaign that began in the 1980s to prevent its local adoption. Mark Paul, an economist at Rutgers University who has advocated for rethinking traditional economic views against rent control, commended Biden’s proposal as a positive step. “We have policies in place that have helped build the middle class through federal support for housing,” Paul stated. “However, that federal support for housing is really only applied to the segment of Americans that can afford to own a house.”
The effort to impose conditions on federal housing funds has faced resistance from industry groups such as the Mortgage Bankers Association. The association urged the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, not to disrupt what it termed as the "sacrosanct" relationship between landlords and tenants by intervening.
Nevertheless, more than 30 economists supported this idea in a 2023 letter to the FHFA. They argued that debates over rent regulation are evolving similarly to those about minimum wage increases in the 1990s when empirical studies found that wage hikes did not result in job losses contrary to business predictions.
The economists’ letter highlighted evidence from New Jersey indicating that rent controls did not hinder new construction. Additionally, Massachusetts' repeal of rent control in the 1990s did not lead to a significant increase in housing supply.
Given Congress's slim chances of passing rent caps regardless of November's election results, Paul believes the Biden administration could take further steps now to show its commitment against unchecked corporate power in housing. He cited FHFA’s recent announcement requiring modest new tenant protections in federally financed properties as evidence of FHFA’s regulatory authority over these properties. “I would like to see them go a step further and utilize that same rulemaking approach to deploy rent control,” Paul added.
