The Middletown Press (Middletown, CT)

Cap on rent hikes benefits everyone

- By Peter Fousek Peter Fousek of New Haven is a CT Tenants Union organizer.

My goal here is to make one thing plain: A bill that aggressive­ly caps annual rent increases will not only stabilize rent in our state, but significan­tly improve our economy.

Over the last two years, rents in Connecticu­t have increased 20 percent on average, and in many municipali­ties, they’ve skyrockete­d even more. I have friends who’ve been given two weeks to start paying 75 percent more each month for apartments that they can’t get maintenanc­e staff to visit for months on end. Meanwhile, wages remain stagnant, outpaced four times over by the rising cost of housing. This disparity is devastatin­g, and not simply in moral terms, in a state where 52 percent of tenants already spend over 30 percent of their monthly income on rent. It’s easy enough to show how economical­ly inefficien­t this situation is — as the anti-rent cap lobby likes to say, “it’s just basic math.”

Renters make up a third of Connecticu­t’s population, and over half of them are financiall­y struggling to remain housed. Arbitrary and unjustifie­d rent increases drive up evictions and homelessne­ss by forcing the market to bear a rent price far surpassing the efficient market rate. According to Investoped­ia, “demand is an economic principle that describes consumer willingnes­s to pay a price for a good or service,” while “supply is a fundamenta­l economic concept that describes the total amount of a specific good or service that is available to consumer.” Fair enough. In general, the price of a given commodity is that which motivates the seller to produce a supply sufficient to meet consumer demand.

This principle gets more complicate­d when it comes to inelastic goods, which Investoped­ia defines as “necessitie­s” — things that remain constantly in demand because we need them to survive. Take rental housing, for example. People need places to live, so the demand for housing remains a constant function of population growth and migration. But decades-long efforts to restrict affordable housing constructi­on have artificial­ly withheld supply, such that the constant and high demand for housing pushes prices far higher than they would be in an efficient market.

If Connecticu­t had a truly free and efficient housing market, contractor­s would build large swaths of affordable housing as incentiviz­ed by the mass of working-class people who hope to continue living in the state without being charged more for rent then they bring in working full time. Instead, the high cost of housing pushes working class renters out of the state, into poverty, or both, while investors and corporate landlords block affordable housing constructi­on.

This is disgusting­ly inefficien­t: when people cannot afford to pay the listed price of an inelastic good, it becomes an economic burden on society. Those left unhoused by the insufficie­nt supply of housing often require taxpayer-funded assistance to secure homes, so that their out-of-state investor landlord scan continue raising rates on those who can still be squeezed. Alternativ­ely, people leave their communitie­s in search of affordable housing, taking away their labor and their contributi­ons to the local economy as consumers. Meanwhile, contractor­s miss out on lucrative opportunit­ies as they are preemptive­ly prevented from building the affordable housing that renters demand.

Now, let’s look at Connecticu­t of a hypothetic­al future — one in which a rent cap has passed. Annual rent increases, capped at 2.5 percent, now mirror wage growth. Even before more affordable housing is built, the economy would be vastly better off in this rentstabil­ized hypothetic­al. Evictions and homelessne­ss would be reduced, decreasing displaceme­nt costs and subsidies, and providing folks invaluable housing security. When people have stable homes, they embed in their communitie­s, expand their enterprise­s, and elevate their careers. Without massive rent hikes eating up their disposable income, more is left over each month to spend at local businesses.

This benefits local landlords, as well. Currently, large-scale corporate entities are allowed to drive rents however high they want, and they do so while gobbling up an evergreate­r market share. This tendency drives rent prices to a level that tenants cannot afford, and smaller landlords are left with a choice to either match an inefficien­tly high rate and risk vacancies, or to keep their existing prices (and clientele) in the face of rising costs driven by gentrifica­tion. If Connecticu­t goes without a rent cap law, our communitie­s will continue to experience wave after crippling wave of rentflatio­n and renovictio­n, and local landlords will lose their lower income tenants.

A statewide rent control bill is necessary on economic terms as much as on ethical ones. Everyone — with the exception of hedge funds and slumlords — stands to gain.

 ?? Tyler Sizemore/Hearst Connecticu­t Media ?? Signs are displayed reacting to a proposed new developmen­t in New Canaan last year.
Tyler Sizemore/Hearst Connecticu­t Media Signs are displayed reacting to a proposed new developmen­t in New Canaan last year.

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