In early January, fifty Democrat members of Congress sent a letter to President Biden. The letter urged him to “to pursue all possible strategies to end corporate price gouging in the real estate Sector….” The letter recommends seven actions Biden can take. Among the most significant is directing the Federal Housing Finance Agency to establish “renter protections, including anti-price gouging mandates and just cause eviction standards. More alarming, the cabal wants the Federal Trade Commission to issue regulations that define excessive rent increases and “enforce action against unfair rent gouging practices.” In other words, they are calling for national rent control.
Rent control has been a disaster in every jurisdiction that has been economically ignorant enough to try it. Both the quantity and the quality of rental housing always deteriorates under rent control. Democrats want to double down on rent control, even though it always fails on the local level. Apparently, they believe that expanding a bad policy will somehow lead to the desired results.
The Congressmen denounce “corporate landlords and real estate companies” because such businesses increase rents for their own profit. They want us to believe that only landlords with large portfolios will be subjected to the arbitrary dictates of rent control. However, “mom and pop landlords”—i.e., the owners of the majority of the nation’s rental housing—will also be caught in the tsunami of rent control.
The letter goes on to claim that rent is a “major driver of inflation.” Such a claim ignores the fact that inflation is caused by expanding the money supply, which only the government can and does do. Indeed, the profligate spending of both Trump and Biden fueled a double digit monthly increase in the money supply from February 2020 to January 2022. Yet, Democrats (along with many Republicans) are loathe to reduce the government’s spending.
On January 25, the Biden Administration announced a series of measures in line with the letter from Congress. While rent control wasn’t explicitly mentioned in the announcement, the Federal Trade Commission was directed to “identify practices that unfairly prevent applicants and tenants from accessing or staying in housing in order to inform enforcement and policy actions….” These actions are laying the foundation for national rent control.