We are told that the U.S. economy is doing well, at least by conventional standards: inflation is cooling and unemployment remains low. Experts say consumers simply feel the economy is in trouble because they are still adjusting to higher prices in the wake of a global pandemic, and that helps explain the dismal poll numbers of President Joe Biden, who is seeking re-election in November strives for.
However, traditional economic indicators often fail to capture the extreme wealth inequality in the United States. The rich have been getting richer for decades while workers' wages have stagnated. In 2023, nearly 80 percent of people earning less than $50,000 per year lived paycheck to paycheck, and four in 10 workers earned more than $100,000 per year.
The country is facing a deep housing and homelessness crisis that has given excessive power to landlords, and it's difficult to positively impact the economy when you're struggling to pay rent and your landlord is refusing your requests to repair your water pipes ignored. Nationally, rent remains a key driver of inflation, with costs rising 0.5 percent since January and 5.8 percent over the past year.
“Tenants are paying more rent than ever before, for the worst conditions they have ever lived in,” Grace White, organizer of the Homes Guarantee campaign, said in an interview.
The pandemic caused significant disruption to the housing market. People lost their jobs or moved in search of more housing, and new housing construction came to a halt. Inflation is easing elsewhere in the economy and the Federal Reserve is seeking to cut interest rates as post-pandemic real estate prices cool in some major cities after a period of significant overheating in 2021 and 2022.
Related story
As affordable housing becomes increasingly scarce, tenants are demanding federal protections against price-gouging landlords.
However, despite new construction efforts, the country still faces a shortage of affordable housing, and landlords have few incentives not to penalize their tenants (or promptly repair plumbing).
A record number of people in the U.S. are homeless after policymakers allowed the pandemic-era safety net for workers and renters to expire despite rising housing costs. According to Harvard University's Joint Center for Housing Studies, about 653,100 people reported living without a home in January 2023, an increase of about 12 percent from the same period last year and the largest increase on record. Overall, homelessness has increased by 48 percent since 2015.
An estimated 37 percent of renters say they are very or somewhat likely to be evicted in the next two months, according to the Census Bureau's latest Pulse Household survey, which collects real-time data on the impact of the pandemic on everyday life. Although the survey's sample size is small and the results are a national estimate, the majority of households surveyed reported an increase in rents over the past year, and the data clearly suggests that millions of people are fearful of leaving their homes due to Losing rent increases.
“As long as landlords have the power to raise or increase rents at will, they will,” White said.
White is organizing with a nationwide network of tenant unions and told Truthout it's all about power. Landlords take advantage of access to a basic human need that costs many people a significant portion of their income. When housing markets are tight and lower-income tenants have few or no options, landlords can continue to raise rent even as inflation cools, simply evicting tenants who can't afford the rent.
If a low-income family has the choice between owning a home they can't afford on their grocery budget or not owning a home at all, what choice do they really have? White said this is a crucial question for policymakers.
“The inflation numbers consistently show that landlords are raising rents well above the rate of inflation, and they will continue to do so until the Biden administration steps in and regulates rents and rent gouging,” White said.
President Biden knows that the lack of affordable housing and rental prices are a problem for millions of voters – and for him politically. Last summer, administration officials met with the Homes Guarantee Campaign and housing justice activists from across the country, and Biden promised to crack down on price-gouging “big landlords” in his State of the Union address last week.
Biden was referring to the Justice Department supporting a landmark antitrust lawsuit by tenants against RealPage, a real estate website accused of colluding with landlords to inflate rental prices. Biden is also calling on Congress to pass his housing plan, which would expand tax credits for building affordable housing and incentivize the construction of 2 million housing units with $20 billion in federal grants for cities and tribes.
Building more affordable housing units is a necessary but long-term strategy. White said renters need relief in the meantime, and the most efficient way to help renters is to limit rent increases by landlords who finance their properties with government-backed mortgages.
“Right now the federal government, through Fannie Mae and Freddie Mac, is in business with landlords and sometimes with the worst rent drivers,” White said, adding that about 12 million units are backed by federal mortgages. “This deal should be tied to limits on rent increases and tenant protections.”
After two years of organizing by the Housing Guarantee Campaign and its allies, the Federal Housing Finance Agency (FHFA) agreed to accept public comments on proposals to improve protections for renters who rent from landlords with federally backed mortgages. White said any new rules would apply to about 12 million households nationwide and the goal is to restore some balance of power between renters and landlords.
“Time and time again, tenants have called on the administration to regulate rents, and the most efficient way for the president to combat rent increases and rent gouging is to limit the power of landlords to raise rents, and the administration has the power to “Doing this by conditioning corporate-backed multifamily mortgages,” White said.
The FHFA received comments from tenant unions, the real estate lobby and tenants with experience across the country. Not surprisingly, landlords and real estate lobbyists filed briefs with the FHFA opposing rent controls, which they said would discourage investment in new units.
Last summer, a group of 32 economists signed a letter to the Biden administration rejecting the industry's economic arguments and supporting national rent controls for multifamily properties with government-backed mortgages. In order to finance their properties with federal loans, landlords would agree to meet certain housing standards and avoid unreasonable rent increases.
“Introducing rent controls as a condition of government-backed mortgages will protect renters, stabilize neighborhoods, promote income diversity in the regional economy, and improve the long-term outlook for housing affordability,” the economists wrote.
The Biden administration says it is currently reviewing comments to the FHFA, and White said activists and tenants are eager to see a proposal from federal regulators.
Are you tired of reading the same old news from the same old sources?
Us too! That's why we're on a mission to shake things up and bring you the stories and perspectives that often go untold in mainstream media. But being a radically and uncompromisingly independent news site isn't easy (or cheap), and we rely on reader support to keep us running.
If you like what you read, please consider making a tax-deductible donation today. We're not asking for a handout, we're asking for an investment: Invest in a nonprofit news site that's not afraid to make a few noises, isn't afraid to stand up for what's right, and isn't afraid to do it that way to tell it like it is.
Copyright © Truthout. May not be reprinted without permission.
Comments are closed.