Rent control bill is misguided
Finding decent and reasonably priced rental housing in Bend can be a challenge. In 2017, the rental vacancy rate in Bend was 2.63 percent, compared with 6.18 percent for all of the United States.
For anyone familiar with the law of supply and demand, a scarcity of rental units being accompanied by a relatively high cost of rental housing shouldn’t come as a surprise. The median gross rent in Bend in 2017 was $1,176, more than the Oregon median ($1,079) and the U.S. median ($1,012).
SB 608, which would limit the maximum annual rent increase a landlord can charge to 7 percent above inflation, has been introduced in the Oregon Legislature. Although the bill might have been conceived with good intent to address what has been termed an emergency, its effects might in fact worsen the problem it aims to solve.
Introduced by the president of the state Senate and the speaker of the state House, SB 608 does not address a daunting barrier to many renters: the move-in fees involved in securing a new residence. It’s not unusual for new tenants to provide the first and last months’ rent and a security deposit before moving in. Regulating annual rent increases does nothing to lower the financial entry barrier for rentals.
What’s more, SB 608 flies in the face of generally accepted truth on the effect of rent control. As The Oregonian’s Elliott Njus writes, “A large body of academic research says strict rent control reduces the supply of rentals.”
Mike Wilkerson, a project director and partner at the Pacific Northwest consulting firm ECONorthwest, holds a Ph.D. in economics and politics. In an article on Reason.com, Wilkerson said, “You’d be hard-pressed to find any economist who comes out in favor of rent control as a means to help improve whatever failure you are experiencing.”
Rather than helping ease a rental-vacancy crisis, academics have found, rent control lowers the ceiling for what a developer or a landlord can earn from putting units on the market. A lowered ceiling results in fewer units available for rent, and – here’s that law of supply and demand again – that leads to rents that are higher, not lower.
There are other objections to this bill, and one not often put forth in media accounts is the principle of private property. A landlord or developer who follows local and state laws and codes should have the ability to run his or her business as he or she desires. I’m not in favor of no-cause evictions enacted primarily so a landlord can boost the monthly rent, but allowing the market to determine what a landlord can charge has proved to be a generally efficient means of controlling rents – without government intervention.
I have been on the Central Oregon Association of Realtors Government Affairs Committee since I was first an unlicensed assistant in 2005. I was chairman of the committee in 2010 and am again for 2019. My objective for participating is to keep a pulse on public policy that directly affects my clients, specifically related to private property rights and topics such as rent control and land use/zoning.
My activity on the Government Affairs Committee exemplifies the approach I bring to my career as a Realtor. I employ a 360-degree mindset and stay educated and informed on the local real estate market and news and trends in the industry as a whole. I bring that knowledge and awareness to bear on your behalf, whether you’re considering selling your home or a looking to buy a home. Please contact me at (541) 383-1426 or visit Bend Property Search to connect with me through my website. I’d be happy to discuss your real estate situation.