Who’s afraid of rent control?
The history and politics of making rent less damn high, in Seattle and beyond.
In 1979, Nick Licata was 31 years old and running for a seat on the Seattle City Council — his first run, which he would lose. He held a press conference at the home of Viola Crawford, an elderly West Seattle woman living on a fixed monthly income of $250. Her rent had recently jumped to $195 from $105. “We’re under almost a housing crisis where people who are faced with an astronomical rent increase have no place to go,” Licata said. He was arguing for some form of rent control.
Forty years later, no one would use the word “almost” to qualify our housing crisis, and rent control has surged back into the news. In 2019, Oregon and California approved statewide caps on rent increases, and New York strengthened its existing rent regulations. U.S. Rep. Alexandria Ocasio-Cortez of New York and Sen. Bernie Sanders of Vermont have proposed national rent control policies, and Seattle City Councilmember Kshama Sawant made rent control the centerpiece of her successful re-election campaign. So, what’s it all about? Is rent control a good idea? Could it happen here?
Let’s start with the moment it almost did.
Initiative 24: Seattle’s ill-fated rent control vote
Seattle’s housing crunch in the late 1970s was bad. The Boeing bust more or less halted construction of new housing early in the decade and rental stock began shrinking: Many apartments were converted to condominiums, and regulations adopted in the wake of a couple of deadly fires condemned thousands of single room occupancy (SRO) units in the downtown area to demolition or abandonment. As the economy picked up, vacancy rates plummeted and rents shot skyward, further propelled by oil crisis-fueled inflation.
Tenants organized, and in 1980, a grassroots campaign called Renters and Owners Organized for Fairness filed Initiative 24, which proposed to limit annual rent increases to half the rate of inflation.
To poor Blacks in Seattle’s Central Area, struggling with housing costs was nothing new. In 1980, future King County Councilmember Larry Gossett was the new executive director of the Central Area Motivation Project, the first anti-poverty program west of the Mississippi to be funded through President Lyndon Johnson’s War on Poverty. Gossett remembers holding neighborhood meetings about rent control as early as the late 1960s. When the Initiative 24 campaign launched, he says, “our community organizers and particularly our constituents got excited for the second time with the concept of rent control.” Gathering signatures was easy. The Black clergy supported it, homeowners supported it, renters supported it. “We had apartment owners that were for rent control in the Central Area,” Gossett recalls. “People had no qualms about signing that. People weren’t scared of rent control like they are today.”
Maybe the people weren’t scared, but the landlord lobby definitely was. Having already defeated a petition to the city council to enact rent control several years earlier, they were primed to fight. Initiative 24 became what was then the most expensive ballot measure in Seattle’s history. Opponents, calling themselves the Washington Coalition for Affordable Housing, spent hundreds of thousands of dollars — by some accounts, almost $1 million — to the campaign’s meager $50,000. Seattle Mayor Charles Royer and the whole city council opposed the measure, too. But things were bad for the poor, and many thought Seattle was ready for change. Future homeless community organizer Scott Morrow had recently arrived in town and was working on the campaign in association with the Seattle Tenants Union, which later became the Tenants Union of Washington State. “Some of us thought the revolution was just around the corner,” Morrow remembers. “Actually it was Reagan.”
The Reagan revolution swept down-ballot Republicans into office around the country, and Initiative 24 went down hard. The next year, the newly conservative Washington state Legislature passed a law prohibiting cities and towns from regulating or controlling rents. Similar dramas were playing out elsewhere in the country, with the result that today at least 30 states have laws explicitly preempting local rent control, and only five (plus the District of Columbia) practice state or local rent control in any form.
The beginnings of rent control in the U.S.
That rent control is contentious should not surprise us. More than other basic human necessities obtained through the market, housing is subject to the vagaries of local supply and demand and the excesses of profiteering and speculation. Although the renter is the one making the purchase — the customer, as it were — the transaction bears less resemblance to buying soap or socks than it does to the relation between worker and boss. There’s the same fundamental imbalance of power, at least at the lower end of the income scale: the sense that one party has at stake their stability, personal dignity, in extreme cases even their survival, while the other commands a chunk of capital, petty or large, and is in the profit-making game.
In the case of work, the conflicts and vulnerabilities arising from this imbalance are subject to an extensive (if now weakened and inadequate) body of federal law — from workplace safety standards and minimum wages to unemployment compensation and collective bargaining — passed under the pressure of progressive and labor movements in the 20th century. By comparison, housing markets are like the Wild West. The regulation of housing has for the most part been left to the wisdom or otherwise of state and local lawmakers, which means landlords and tenants must duke it out state by state and city by city. Landlords usually have the upper hand.
If tenants anywhere in the U.S. can be said to have gained a foothold in this struggle, that place is New York City, where two out of three households are renters and nearly half the city’s rental units are still under some form of rent regulation.
New York’s first rent control laws were a response to tenant organizing and rent strikes after the First World War, when a severe housing shortage led to rampant rent-gouging and evictions. Rents were frozen again during World War II, as the federal government struggled to rein in runaway inflation. These early regimes were strict, requiring that landlords actually apply for and justify any rent increase. In the 1960s, New York introduced a milder policy called “rent stabilization,” which became the model for municipalities in New Jersey, Maryland and California. Rather than tracking and limiting what landlords charge, rent stabilization laws simply set a percentage cap on rent increases. In New York City, a Rent Guidelines Board appointed by the mayor determines this percentage yearly.
Is rent control a good idea?
The basic argument for rent regulation is simple: It helps tenants stay in place by preventing large rent increases and keeping their homes affordable. This promotes neighborhood stability, which is good for families and communities, and especially for children and the elderly. It’s pretty incontrovertible that rent control and stabilization laws, unless very poorly designed, succeed at this in some measure. The question is whether the benefits are outweighed by unintended harm.
The basic counterargument is also simple, and indeed rent control is often used in introductory economics courses as a cautionary tale on the foolishness of meddling with markets. If you impair the profitability of building and maintaining rental units, developers and landlords will stop doing it. They’ll take their capital elsewhere. New construction will slow, apartments will be converted to condominiums or demolished altogether, landlords will stop investing in repairs and housing quality will deteriorate. By this logic, the correct response to rising housing costs is to increase supply: build, baby, build.
In practice, rent regulations have usually been designed to mitigate these ill effects. New construction is exempted, at least for a period of some years, and landlords are allowed to factor improvement and repair costs into rent increases. Cities can also enforce penalties for substandard housing quality.
More to the point, any supply-side solution is wholly inadequate to the time frame of a housing crisis, especially when housing doubles as a vehicle for speculative investment. Last year over one in four apartments in Seattle’s downtown core stood empty, yet renters saw little relief beyond a temporary pause in rising rents. It’s unclear what better idea opponents of rent regulation have to offer than “wait it out.” With tenants at imminent risk of homelessness or displacement, the only other obvious short-term fix is to subsidize their rents, through vouchers, for example. Considering the substantial expense of such a program, and the questionable wisdom of signaling to private landlords that the public will absorb their price increases, limiting rent hikes starts to look like the fiscally responsible choice.
What does the research say? For decades economists have dismissed rent control out of hand. But this near consensus may finally be cracking under the weight of the evidence, which on balance supports rent regulation as an imperfect but important tool.
In the mid-1990s, rent control in three Massachusetts cities was repealed by a statewide ban; landlords began making more improvements but also evicted thousands of tenants, and rents shot up across the board. A widely reported 2018 study concluded that San Francisco’s policies have protected tenants from displacement — “absent rent control essentially all of those incentivized to stay in their apartments would have otherwise moved out of San Francisco” — but also contributed to rising rents citywide, largely because condo conversions reduced the supply of rental housing. However, this effect arguably resulted from the law being too lax and loophole-ridden, rather than too strong: cities can ban or limit condo conversions, as Seattle once did; and if it weren’t for a 1995 California state law prohibiting “vacancy control,” landlords could be prevented from raising rents exorbitantly between tenancies. Rent regulation is also far from the only culprit when it comes to insufficient housing stock in San Francisco, a city notorious for strict zoning laws and other measures limiting the development of new housing.
Some benefits of rent control may be difficult to quantify. New York’s longstanding policies seem, in a way, to have domesticated that city’s landlord class. Edmund Witter, now at the Housing Justice Project in Seattle, was once a supervising attorney at the Legal Aid Society in New York City. “Landlords just wanted their money at some point — they weren’t in the game of throwing people out for the sake of it,” he recalls. “They treated renters as more of an equal class, whereas in Washington sometimes it seems like renters get treated as second-class citizens.” In New York, rents were predictable, and everyone was more relaxed — tenants, landlords, even the courts, which were loath to evict people if they were making any effort at all. Moving to Seattle, Witter was “shocked to see people get evicted for $100, and landlords hyperventilating about a late fee not paid on time.”
Market-level analyses can easily miss the on-the-ground reality that landlords aren’t all rational or responsible actors. When a tenant requests that a leak or a mold problem be addressed, their landlord might respond with an astronomical rent increase — currently one of the easiest ways to get rid of tenants who assert their rights. Xochitl Maykovich, political director of the Washington Community Action Network, has heard plenty of horror stories while organizing renters to win major improvements to local and state tenant protections. She sees rent control as a vital guard against retaliation, not a panacea but a kind of first aid.
“You’re on the battlefield, you have someone bleeding out, you need to stabilize that person before you can do surgery,” she says. “You have to keep people housed. Then we can start thinking about how we’re going to invest in housing as a public good.”
The rent control resurgence
The year 2019 marked a turning point for rent control in the United States. In New York, a powerful coalition of housing justice organizations pushed through sweeping legislation strengthening rent regulations and other tenant protections, which had steadily eroded since the 1970s. New laws passed in Oregon and California broke new ground by being statewide, although the caps they established on annual rent increases are rather mild — 7% plus inflation in Oregon, 5% plus inflation in California. Buildings less than 15 years old are exempt, and landlords can generally do what they like between tenancies. As such, these laws may be more accurately thought of as preventing gouging than stabilizing rents per se.
The Oregon and California measures come with new restrictions on allowable reasons for eviction — an important point, because without vacancy control, the easiest way to jack up rents is to give your current tenants the boot. Another concern: Capping increases could spur skittish landlords to raise rents to the max every year “just in case.” These measures may have avoided this danger by allowing quite a lot of latitude; figuring inflation at 3%, a California landlord can still raise the rent on a $1,600 unit by $128, and an Oregon landlord can go up $160.
The fact that rent regulations can create perverse incentives for landlords and developers spins two ways. All of these problems could also be solved by taking housing off the market altogether, so one person’s argument for deregulation is another’s argument for socialism. Ultimately, rent regulation makes the most sense as part of a trifecta of policies, combined with zoning changes to encourage greater density and variety of housing types, and a major push to expand public and community-owned housing. (In fact, Oregon’s Legislature also passed a law that more or less eliminates single-family zoning.)
If landlords in New York, Oregon and California are feeling battered and besieged after last year’s defeats, maybe they can find comfort in the worse fortunes of some of their European counterparts. Berlin, a rapidly gentrifying city where 85% of residents are renters, recently approved a five-year rent freeze and established maximum rents based on square footage and building age — an especially strict form of rent control that may have become more tolerable for some when viewed as a strategy to forestall more radical action.
A looming rent control fight in Washington state
But could rent control really happen here? In 2015, Councilmember Kshama Sawant teamed up with then-Councilmember Nick Licata to champion a resolution calling on the state to repeal its ban on local rent control. The Legislature has so far declined this invitation, despite efforts in 2018 by state Rep. Nicole Macri and Sen. Rebecca Saldaña, both Democrats from Seattle.
This past September, Sawant proposed a full-fledged and quite strong rent control ordinance, passage of which, she argues, “will put immense pressure on Olympia to repeal the ban.” Given the widespread antipathy in Olympia to our “socialist hellhole,” this strategy could easily backfire; at least, it’s doubtful whether most legislators will feel this pressure unless the rent control movement expands beyond Seattle to their own backyards. (This doesn’t mean the effort is necessarily futile: the 1980 rent control initiative may have lost at the ballot, but Licata, Gossett and Morrow concur that the pressure it placed on local lawmakers to address the housing crisis helped win the first iteration of Seattle’s Just Cause Eviction Ordinance that same year.)
At the same time, with Democratic majorities in both houses, communities around the state feeling the housing crisis, and our neighbors to the south setting a precedent, prospects for some kind of action in Olympia are brighter now than they have been for many years. Following in Oregon’s footsteps — placing a mild cap on rent hikes, without removing the ban on local regulation — is the easiest scenario to imagine, but we shouldn’t discount the potential for more ambitious measures. The early reactions of some state lawmakers make action in the upcoming short legislative session seem doubtful, but at least a serious conversation will begin.
Whatever is proposed, landlord and developer interests can be expected to fight back. In fact, a new group has already formed to oppose rent control, with members including the Rental Housing Association, Washington Realtors and other industry groups that have long opposed efforts to protect low-income renters.
A strong coalition of housing justice advocates and organized tenants will need to come together if any version of rent control is to pass in Washington; but California’s experience suggests that other factors could come into play, too. That state’s recent measure was supported, surprisingly, by the California Business Roundtable. Perhaps, given a choice as to who should be held responsible for the housing crisis and whose pocketbook should take the hit, the business lobby is pleased to throw the landlord lobby under the bus. A similar dynamic may have played out here in Washington last year as the Legislature debated eviction protections, and Amazon and other “head tax” opponents weighed in with public support. Significantly, the California negotiations also played out against the background of one failed rent control initiative and the threat of another, stronger one in 2020.
Rep. Macri says she’s been inspired by the recent progress in Oregon, California and New York, but also here in Washington. Tacoma expanded tenant protections in late 2018, and the Burien City Council unanimously passed a good-cause eviction ordinance in October 2019. “There is a lot of momentum building,” says Macri. “There’s a tenants union established in Bellingham, and the renters’ rights movement is really growing in Spokane and other cities.”
On the recent November’s ballot, a strong eviction protection initiative passed with flying colors in Federal Way. This should send a clear message to lawmakers that tenants’ rights are not merely a pet obsession of ultraliberal Seattle. Macri has been working with advocates around the state to plan a big push on tenant protections in 2020, including a rent-cap strategy. She acknowledges that “rent stabilization policies remain one of the more politically challenging issues to work on,” but she’s feeling hopeful. So is the Washington Community Action Network’s Maykovich, though she doesn’t have any illusions about achieving victory without a powerful grassroots movement prepared to use every tool in its belt, including a statewide initiative: “The Legislature doesn’t do things unless they’re forced to.”