Rising Rents Spur Cities to Consider Rent-Control Laws
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Here's your Money Briefing for Tuesday, March 15th. I'm J.R. Whelan for The Wall Street Journal. Renters who struggled to make their monthly payments during the pandemic got a reprieve when governments imposed eviction bans. But as tenants are finding their financial footing, they're now facing rents that are climbing, often at double-digit percentage rates. And that has some cities and states weighing rent control laws.
housing prices are rising so quickly at such a rate, this becomes a big part of general inflation and has broader consequences for the economy. And that's the case in many cities.
WSJ reporter Will Parker has been our go-to resource about the rental market. Coming up, we'll talk with him about how rent control laws work and the hurdles they face being put into practice. That's after the break.
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A big part of the overall jump in inflation is the sharp increase in the cost of rent. It's up an average of 18% over the past two years, according to Redfin. To ease the financial burden on tenants, more U.S. cities and states are considering rent control laws. So how do they work? WSJ's Will Parker has covered the rental market for us throughout the pandemic, and he joins me now. Will, thanks so much for being with us.
Thanks for having me.
So, Will, why have rents risen so much in a relatively short amount of time?
Well, there's not any one reason, but there are a lot of things that have been happening kind of all at the same time. You know, one is after the pandemic broke out, there were a large number of people that decided they wanted to buy homes and they went out in the market and found that there was very little to buy. And that, of course, drove up the price of homes for sale a lot, excluded a lot of people from the for sale housing market and meant they'd be renting homes. apartments for longer so that you know had an effect on the price of rentals because of the demand and then a little later into the pandemic as business restrictions decreased and university campuses began opening and things like that you had a whole generation of younger renters who had been living with family or living at home perhaps that all flooded rental markets around the same time and added a bunch of new demand to the rental market and
And that gave landlords a green light to raise prices again. And the fact has been that building owners are finding that people are paying the higher rents. Seeing how housing prices are rising all around them, there aren't a lot of choices to move and find more affordable housing right now for many renters all over the country.
Now, why are economists concerned about the rate that rents have been rising?
Because they see that the rate at which rents are rising, the inflation that's happening in the housing market, that's a big part of the general inflation that we talk about in the economy. And so if you have a situation in which housing prices are rising so quickly at such a rate, this becomes a big part of general inflation and has broader consequences for the economy.
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