*Updated: July 30, 2024, 3:40 PM ET
The Department of Labor recently released new Consumer Price Index data. It showed that while inflation has cooled down in many areas of the economy, rent prices continue their upward ascent across the country, with the annual increase now exceeding 5 percent.
Home prices have risen 47 percent since the pandemic, and according to a report released this year from Harvard University, over half of renters are now spending more than a third of their income on housing. Since 2020, the average rental price has risen 17% to $1,713 monthly, and in cities like New York and San Francisco, average rents now top over $3,000 a month.
As the former Chairman of the House Oversight and Government Reform Committee, I know all too well the need for balanced and properly enforced legislation and regulations to remedy this problem. But the keyword here is balance.
The fact that rent prices are now falling in the U.S. markets where business owners have developed new rental units has proven that when the economy and building conditions approve, so does America’s rental affordability.
For this reason, it is important that our nation’s regulators let small business owners who risk their capital to continue purchasing and refurbishing derelict properties, which improves our communities and creates affordable rental units. That is why it is concerning that some regulators are targeting property management software these business owners use to do so.
Using predictive data analytics, these software companies help business owners ensure they are pricing their homes and units accurately, preventing shortages (which ultimately inflate rental prices) and excessive vacancies (which decreases profit margins and disincentivizes future building) from developing. However, some regulators believe this software — by maximizing revenue potential — is to blame for the high rental costs many Americans are paying today. This is the equivalent of blaming Kelley Blue Book for “raising” car prices, and if they outlaw this technology, it will backfire by disincentivizing housing development, which will ultimately reduce supply and increase prices. As the former Chairman of the Congressional Black Caucus, I know that this supply reduction and additional inflation will hurt minority communities more than most.
While this policy prescription is not a winning one, there are fortunately no shortage of balanced solutions to make rent more competitive and affordable to working families.
Vice President Kamala Harris, the likely Democrat nominee, has a history of proposing sound affordable housing plans that resonate with voters. Given how much attention voters are paying to this issue, she should quickly make them a central part of her campaign platform.
For example, while serving in the U.S. Senate, Harris proposed the Rent Relief Act, which would have issued tax credits to all Americans who spend more than 30% of their incomes on rent. If passed, this proposal would have helped millions of Americans afford shelter. Today, over half a decade later, half of renters still shell out more than 30% of their incomes on rent and utilities, so this idea is without question one that still has legislative merit.
Vice President Harris should also continue pledging to expand the Housing Choice Voucher program.
This program, also known as Section 8, provides rental assistance
to low-income families, enabling them to afford housing in the private market. The Biden-Harris administration has proposed increasing funding for HCVs by $5 billion, which could help as many as 200,000 additional households that spend over 30% of their income on rent afford their monthly payments.
The Housing Choice Voucher plan also includes measures to incentivize local governments to relax zoning laws that are restricting affordable housing while removing other counterproductive regulations that have discouraged developers from building new units. By making it easier to construct new properties, these policy prescriptions will prove crucial to quickly getting more affordable units on the marketplace.
All of Vice President Harris diverse solutions to improving Americans’ rental conditions will provide mammoth leaps forward to fixing the status quo. With voters nationwide pressing their political leaders to address the housing crisis, she should share them on the campaign trail without delay.
Ed Towns is a former Democratic member of Congress from New York. He served as Chairman of the House Oversight and Government Reform Committee and Chair of the Congressional Black Caucus.
