The rent is damn high. But really this time.
Rents rose this year: the national median in May was 16.7% higher than the year before. Inflation was a driver: as prices of everything rose, so did the cost of your home.
COVID-19 also played a role. Landlords who had been hit financially when rents collapsed at the start of the pandemic suddenly found themselves in pole position to demand more. The pandemic has made so many people rethink their living situation. Maybe it was just moving to a bigger space after a few claustrophobic months at home or a complete uprooting as millions of Americans left major metropolitan areas for literally greener pastures.
We see an unprecedented demand with a constantly limited supply. We need to build more. But that one solution just isn’t enough, and it doesn’t help those who are in pain right now.
One idea is to stop some foreign investment in our housing market. As The Post’s Ariel Zilber reported in July, “Chinese investors were the most active buyers of US real estate among foreigners last year — with a record $6.1 billion worth of homes.” They fell even more the year before the pandemic: The National Association of Realtors found they spent $11.5 billion — more than one-sixth of the total — from April 2019 to March 2020. It’s not just individuals. Chinese companies own nearly 200,000 acres of U.S. farmland.
It’s a steep climb for an American to buy houses in China in the same way. Beijing imposes strict rules on foreigners buying real estate, and all sales require government approval. We need to be reciprocal and not just allow their citizens to park their money here.
Look, we don’t want to be China. The free market is the best way to lift people out of poverty and improve the lives of as many people as possible.
But we are not in a free market.
We are in a market for handing out cash to our political supporters before an election. Democrats continue to pursue policies that only help their voters. Republicans seem afraid to do the same, because they are not accused of not living up to free market principles. If the Republicans don’t address the very real concerns of Americans, they let the Democrats fill the gaps with their (bad) ideas.
One of those ideas is housing benefit. Rent control has definitely never worked to lower rents, but the left continues to introduce it in locations across the country. Florida’s Orange County — the seat is Orlando — commissioners voted this month to put rent controls on the November ballot. The measure would prevent landlords from raising rents at a rate that is higher than inflation.
Rent control ultimately leads to higher rents because people in the rare rent-stabilized unit tend not to move and give up on their good deal. Corruption is ripe around the process. The phrase “key money” exists because few will admit that they actually “bribe” their way into one of these blessed apartments. Nora Ephron admitted to paying $24,000 in “key money” for a rent-stabilized Manhattan unit and kept it even when she was making more than $200,000 a year. This is standard procedure in rent-controlled markets.
Controlling the rent also causes other damage. “Rent price controls discourage builders from adding supply and rob landlords of any benefit of refurbishing their properties,” notes the editors of The Wall Street Journal.
Republicans should start advocating for the average American faced with these high rents, while Democrats are easing college loans to couples making $250,000 a year. Republicans need to understand that they were elected to improve the lives of their voters, and that includes finding a way to make house prices reasonable relative to salaries in a particular region.
Two years of Joe Biden rule have brought Americans a whirlwind of financial pain. Republicans need to start talking about what they will do to alleviate it.