Freeze all rent and mortgages. The rent prices are insane right now- and hard to even get in to an apartment to rent. Freezing rent and mortgages will help people catch up and put themselves in a better financial position in order to budget again.
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Stacey â Take a moment to consider your idea from the perspective of the property owner renting out the apartment, duplex or house. With prices going up on maintenance, insurance, property taxes, etc. you could easily find yourself losing money while stuck making bank payments for the loan you took out to purchase the house, duplex or apartment complex. These owners arenât always big corporations. MANY of them are owned by retirees to supplement their retirement. Your âsolutionâ simply transfers the problem from one person to another. Take a moment to study economics⌠this is supply and demand. Rent is high because there are more renters than there are apartments / duplexes / houses available for rent in your area. And itâs not the same everywhere. For example, according to apartmentguide.com, I pay $700 MORE each month to live in the N. Dallas, TX area than people who live in Bayport, TX. And I pay $1,000 more than people living in McKeesport, PA.
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Stacey, if you are going to offer policy in the real estate and rental markets, at least offer a balanced solution that takes care of All Americans on both sides of the rent/mortgage equation, instead of only addressing the side you happen to be on. It appears selfish on its face and not really a policy proposal but rather, an entitlement mentality disguised as a policy suggestion. Just an observation. Thx.
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Stacey, I totally agree with you. Over the last year, I had 1 maintenance call. My rent is going up $230 a month, on top of an almost $400 increase i experienced last year (after another year of very low maintenance calls). I will soon be paying the same as those in Dallas TX but Iâm in southern MI, hardly the same economy but the same housing cost.
Itâs hysterical to be asked to put myself in the landlords shoes, how about they put themselves in the tenant shoes? There are housing shortages so they know you will have no choice but take the increase or leave, either way they have someone to move in but we r stuck trying to find something else. Landlords hold all the cards once the contract is signed. Pay what they ask for renewal or get out, hardly seems they consider their tenants when deciding to gouge us.
When you factor the number of units per building, number of buildings, etc, it comes down to greed to experience this type of uncontrolled increase each year. It doesnât seem it would be too difficult to come up with a formula with benchmarks for maintenance issues, complaints, increased costs to determine a maximum increase that should be allowed but limits/comtrols on increases being applied without justification.
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This is how third-world communist countries always start outâŚby calling for âwage and price controlsâ. And that is exactly what this policy proprosal calls for. We know how it turns out if we recall history and are aware of past policies of other countries who attempted to place caps (based on some âeasyâ formula that they came up with that sounded like a good idea at the time). There is no historical situation where price caps turned out better for the people of that country. It is the very antithesis of a free market economy and will only serve to create a shortage in the rental and mortgage space, which would then have to be subsidized by the government, which would then drive down the quality and drive up the waiting lists for living space, and eventually drive up the taxes on your ârentingâ neighbors for having to pay the government to cover the subsidizing that the regular market could have provided on its own.
The current market allows for one to move out of a high-rent apartment into a lower cost unit at the trade-off of quality and security. Manditory price controls would (over time) force everyone into lower quality and security living conditions. It has happened so often in history that it is common text book teaching in macro-economic college courses today, regarding artificial price controls placed on supply and demand curves. In the days just before the collapse of the Soviet Union, you had to get on a waiting list with the government to get your own apartment. It may have taken years for you to get notified. Once your name came up, you would go to the unit they selected for you, and 90% of the time it was covered in grafitti, drug gangs, backed up plumbing, cold concrete walls 15 stories up with a broken elevator. This all started because the government controlled the housing sector instead of a free market economy. This policy proposal stated above was how all of that started over there in the old Soviet Union â the desire to place price controls on housing in order to better serve the â*commun-ityâ (aka: Commun - ism).
What some may not realize, who are unaware of the effects of artificial controls on economies. is that, when rents and mortgage payments are capped, this hurts the market because renters get out of the business of renting and banks get out of the business of financing homes. If the demand for renters and home buyers remains strong, then something has to step in and fill that supply void â it is always the government. And when the govt steps in, it always looks to the taxpayer to cover its additional operating expensesâŚthat would be: everyone else, including yourself. It is not me who is countering your statement â it is hundreds of years of tried and true examples of your suggestion throughout history, across the entire planet. I am only revealing this fact to you in this post. I hope that helps understand the bigger picture in regards to freezing prices within any particular market, including that of real estate.
In SummaryâŚ
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Are rent payments too high? Yes, I think so. This is why I moved to a cheaper low quality apartment when I was still in college. I had a painful choice - I had options.
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Are mortgage payments high? Absolutely, in my opinion. That is why I busted my rear, ate supper out of bean cans, and quickly paid off my house, so I could own it free and clear. I had a painful choice - I had options.
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Should we price cap them? Absolutely not, since I will indirectly be paying part of everyone elseâs govt-subsidized rents and mortgages (through my increased tax payments) when the government steps in to fill the supply void. I wouldnât have a choice - there are no options to opt-out of govt taxes, even though I now own my own home.
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Note: Sometimes it is better to settle for âsecond-bestâ (via Capitalism) rather than calling for everyone else to subsidize what many cannot normally afford (via Communism).
Hope this helps. Thx. 
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You are 100% correct Rick. Price freezes never work regardless of the product. I have owned/operated rentals for the past 15 years, high rents just reflect the market/costs associated with providing the rentals. The rents I collect are my âsalaryâ for providing and maintaining the properties. I wonder if Stacey would like a freeze on her salary? Everyone likes to blame high prices on the owner of the product, in this case rental properties. Inflation is a result of the government printing trillions of new fiat currency.
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Absolutely spot on. If the government stops inventing money out of thin air, then the rents and mortgage payments mentioned in this policy suggestion would begin to drift downward through open market price competition. Renters like to blame their landlords; mortgage holders like to blame their bank â but nobody looks to the REAL culprit: Out-of-control U.S. government spending, which causes the cost of everything to climb upward via ever-depeciating dollars. The very last place you go to in order to fix the problem (via policy proposals), is to the very source of the problem (the fiscally-irresponsible government).
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I own an apartment building that hasnât shown a profit the last 4 months due to maintenance cost. In fact, it will take approximately a year to recover the costs, even after the building turns profitable again. Maybe Stacy B should do a more in depth study that includes more than just herself, and her unit!
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This is not true. The tenant actually has more rights than the Landlord. They can live tent free until the Landlord can have them evicted. Even if Landlord wins evoction it does not mean they will get the money. I have had this happen a few times after tenants did not pay rent and destroyed property. I won the suit but never got the money. One tenant caused over 25,000 in damage afger being served with evition papers. Never saw a dime.
Rental markets follow housing markets closely. If houses were cheap and rents were high, a lot of people would buy houses and start renting them. This would increase the price of houses and decrease rent. The cost of housing is the underlying issue. This is an issue which can be solved⌠but not quickly.
Housing is the #1 source of âsavingsâ in the US and the most egalitarian source of wealth holdings. Any policy which would cut the price of housing overnight would crater most of the remaining wealth held by the middle class. SoâŚ
What I would recommend:
âEncourageâ local municipalities to manage the supply of housing through the issuance of permits, urban growth boundaries and similar tools so that the increase in the price of housing in that municipality grows no faster than 50% of the rate of inflation. This would allow owners to still see their home equity increase (@ 50% * inflation rate * 1/LTV) while the relative cost of housing decreases. It isnât a quick fix, but one which only the banks would truly hate.
There are many ways to encourage local politicians to do this both on the carrot & stick side, but we should also encourage more competition between municipalities for citizens (and taxpayers).
- Heavily encouraging teleworking whenever possible.
- Use the commerce clause to eliminate artificially applied costs associated with moving (excise taxes on the sale of homes, private title insurance, recording feesâŚ)
- Piles of other things related to reducing the cost of individuals switching jobs and of employers moving to other municipalities.
Basically if we can create an environment where cities, counties, and states are competing for people rather than feeling they own their citizens, you will see a rapid increase in the quality of life of taxpaying individuals. (all of us)
Thank you so much for explaining this to her so succinctly and in such detail. Hopefully, she and others will read this and realize how a policy like this isnât actually âfor the people.â
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For me I think there need to have a whole economic reset. The top 10 wealthiest people have over 60% of US wealth and 50% of US citizens has only 2%. The 10% of those rich peoples money is not coming down to us because 2 reasons. First reason almost everything we do and buy make them money and they control the system. second reason is the rich canât and will not buy 10 thousands burger a day. Which regular people to use to trade for food and money. Amazon for example they have almost no competitor and many mom and pop shop canât make a profit competing with all these maga corporation. We are all fighting each other for 2% wealth when the rich control almost all of them. We should stick together not fight each other.
Sounds nice but I think itâs better to fix the problems that are causing the inflated prices and then let it all settle out naturally. Things will find their equilibrium once theyâre not tinkered with anymore. Once we start capping prices ⌠well, what Sue said above. Bad things happen. Like the saying âdonât mess with mother natureâ, kinda applies with letting markets find their balance.
Actually, I think BlackRock is off withholding a bunch of housing to make artificial scarcity, which is inflating housing prices and tinkering with the economy. Worse, I also suspect theyâre going to dump them on the market all at once to crash the whole thing as the housing market ties into the economy at large, a weapon waiting to get launched at us. But, what do I know. Weâll see.