It's clear why President Joe Biden is so desperate to bring down home prices and rents. Mortgage interest rates are double what they were when President Donald Trump took office, and mortgage payments are $1.2 billion. Approximately twice as much 2020 and beyond Rents are rising Many cities saw increases of 30% or more.
So much for the dream of homeownership: It's becoming harder and harder to even find an affordable rental property that's larger than a dorm room. (Related: JD FOSTER: After Biden can't explain inflation, he turns to an old favorite Democrat trope: blaming corporations.)
Biden said:GreedflationThe governor is protesting against rising rents. Currently, two plans have been proposed to combat rising rents. First, Rent Control “I want to impose fines on landlords who increase rents by more than 5% a year in major metropolitan areas. And secondly, I want to make it illegal for landlords to increase rents by more than 5% a year.” Using computer algorithms For pricing purposes.
Rent control is Nearly 100 years Starting in major cities, new york Decades ago, when demand for apartments outstripped supply, rents went down for the lucky few who could take advantage of rent-controlled apartments, but housing costs soared for everyone else.
Many urban liberals quickly followed suit and saw the error of their ways. Surveys conducted by a range of groups, from conservative to liberal, found that: The policy backfired.
Rent control has led to lower quality housing, fewer amenities and appliances, and a drastic reduction in the supply of new housing. All of these reactions have harmed renters and worsened housing conditions.
The big impact was a reduction in the supply of available apartments, increasing homelessness as families could not find affordable units, and new construction of apartments came to a near halt in rent-regulated areas because of restrictions on the profits landlords could make.
For these reasons, starting in the 1980s, many cities began to acknowledge the failure of the policy and relaxed or eliminated price controls. But bad ideas never go away. return Making school bus transportation mandatory for children outside of local school districts, which is unpopular.
Even Democratic economists have warned that Biden's rent control would only stifle new housing development, the single most effective way to address housing affordability after tackling general price increases.
Jason Furman, who served as chairman of the Council of Economic Advisers under President Barack Obama, Said “Rent control is one of the most disgraceful economic policies of all time, and the idea of ​​reinstating and expanding it will ultimately make our housing problem worse, not better.”
He's right. When the city of Cambridge, Massachusetts, abolished rent control in the 1990s, Inflow Real estate has improved. Meanwhile, San Francisco, California, increased rent caps, saw supply fall sharply by 15%, and rents actually increased by 5%.
Price controls create shortages — that's an iron law of economics.
Equally foolish is Biden's plan, supported by a handful of radical Democrats in Congress, to ban pricing software that allows landlords to set rents based on changes in supply and demand. This is called “dynamic pricing,” and it's been around for more than 100 years. Rents adjust (up or down) as the number of people looking for property changes. Computer software allows companies to do this more efficiently.
The government employs dynamic pricing for Amtrak and tolls based on customer demand, so why wouldn't landowners do the same? (Related: JD FOSTER: The Harris Effect)
Computer algorithms can lower as well as raise home prices, especially when there are few people wanting to rent in an area. This is not price gouging.
If Biden wants to lower housing costs, he should examine the trillions of dollars of spending and borrowing his policies have done to reduce real take-home pay and drive up the cost of building new homes and apartments. Biden's environmental policies have also made urban housing more expensive.
Blaming rising prices on landlords, computer programs and “corporate greed” is like blaming rain on umbrellas.
Stephen Moore is a visiting fellow at the Heritage Foundation and co-founder of Unleash Prosperity.
The views and opinions expressed in this commentary are those of the author and do not necessarily reflect the official position of the Daily Caller News Foundation.
As an independent, nonpartisan news service, all content produced by the Daily Caller News Foundation is available free of charge to any legitimate news publisher with a large readership. All republished articles must include our logo, reporter byline, and affiliation with the DCNF. If you have any questions about our guidelines or partnering with us, please contact us at licensing@dailycallernewsfoundation.org.
