GOP must deal with soaring rents by getting Chinese investors to play fair
The rent is too expensive. But really this time.
Rents have soared this year: the national median was 16.7% higher in May than a year earlier. Inflation was a big factor: as the prices of everything rose, so did the cost of your accommodation.
COVID-19 also played a role. Landlords who had suffered financial losses when rent prices crashed at the start of the pandemic suddenly found themselves in pole position to charge more. The pandemic has caused so many people to rethink their living situation. Maybe it was just moving to a bigger space after a few months of being claustrophobic at home or being completely uprooted like millions of americans left large metropolitan areas for literally greener pastures.
We are seeing unprecedented demand with continuously limited supply. We need to build more. But this solution is simply not enough, and it does not help those who are suffering right now.
One idea is to stop some foreign investment in our housing market. As Ariel Zilber of the Post reported in July, “Chinese investors were the most active buyers of American real estate last year among foreigners – spending a record $6.1 billion on homes.” They fell even more in the year before the pandemic: the National Association of Realtors found that they spent $11.5 billion – more than a sixth of the total – from April 2019 to March 2020. These are not not just individuals. Chinese companies own nearly 200,000 acres of US farmland.
It’s a steep climb for an American to buy homes in China the same way. Beijing imposes strict rules on foreigners buying property, and all sales must be approved by the government. We should be reciprocal and not just allow their citizens to park their money here.
Listen, 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 the many.
But we are not in a free market.
We are in a market of distributing money to our political supporters before an election. Democrats continue to promote policies that only help their constituents. Republicans seem afraid to do the same for fear of being accused of disregarding free market principles. When Republicans fail to address the very real concerns of Americans, they let Democrats fill in the gaps with their (bad) ideas.
One such idea is rent control. Rent control has absolutely never worked to bring down rent prices, but the left continues to introduce it in places across the country. Florida’s Orange County commissioners, headquartered in Orlando, voted this month to impose rent control in the November ballot. The measure would prevent landlords from raising rents at a rate above inflation.
Rent control ends up raising rents because people in the few rent-stabilized units tend not to move and forfeit their bargain. Corruption is ripe around the process. The term “purse” exists because few people want to acknowledge that they are “corrupting” their entry into one of these blessed apartments. Nora Ephron admitted she paid $24,000 in “key money” for rent-stabilized housing in Manhattan and kept it even when she was earning more than $200,000 a year. This is standard operating procedure in rent-controlled markets.
Rent control also causes other damage. “Price Controls on Rents Discourage Builders from Adding Supply and Deprive Landlords of Any Benefit in Renovating their Properties”, The Wall Street Journal editorial board notes.
Republicans should start defending the average American who faces these high rental prices while Democrats offer college loan relief to couples earning $250,000 a year. Republicans need to understand that they are elected to improve the lives of their constituents, and that means finding a way to make house prices reasonable in relation to wages in a given area.
Two years of the Joe Biden administration have brought Americans a whirlwind of financial pain. Republicans need to start talking about what they will do to mitigate it.