National rent control

September 05, 2023

THE BIG SPLASH

National rent control

The Biden administration is making a not-so-subtle push for national rent control as rents approach record highs, leaving many Americans struggling to make ends meet. While the federal government is pondering the idea, critics argue it might actually make matters worse.

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  • In January, the Biden administration unveiled a blueprint for a renters bill of rights, emphasizing the need for protections against egregious rent increases and unjust evictions. One notable player in this discussion is the Federal Housing Finance Agency (FHFA), which is exploring ways to curb extreme rent hikes. The FHFA received thousands of comments, with some Democratic lawmakers urging the agency to link Fannie Mae and Freddie Mac-backed mortgages to tenant protections.

  • Renters are feeling the squeeze, with a 25% increase in rents since 2019, making housing unaffordable for many. Advocates of rent control argue that limiting annual rent increases backed by government agencies could benefit a significant portion of renting households. However, critics worry about the impact on small landlords and the potential for unintended consequences.

  • While proponents believe rent control can offer stability and affordability, opponents point to research suggesting it can decrease housing supply and lead to higher prices for unregulated units. Some economists argue that closing loopholes and implementing smart regulations can mitigate these downsides.

  • The Biden administration's proposed renters bill of rights also includes efforts to examine unfair practices in the rental market, workshops on anti-competitive information sharing, and rules requiring advanced notice before terminating leases for nonpayment.

  • In the midst of rising rents and a housing shortage, the debate over national rent control continues. Advocates argue it's a quick fix, while critics stress the need for a more comprehensive approach, such as increasing housing supply and improving transit infrastructure, to address the underlying issues.

A SCOOP OF MORTGAGE RATE

The mortgage rate hike is hitting homeowners hard, with the average 30-year fixed-rate mortgage soaring above 7%. This surge is making many homeowners hesitant to sell, as they'd likely have to finance a new home at a much higher rate, resulting in significantly higher monthly mortgage payments.

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  • Nicole Bachaud, a senior economist at Zillow, explains that even if they bought a more affordable house, their payments would still increase, making staying put more appealing.

  • However, there seems to be a tipping point at around 5% for homeowners. Recent reports indicate that homeowners are almost twice as willing to sell their homes if their mortgage rate reaches or exceeds 5%. A survey by John Burns Research and Consulting even identifies 5.5% as the "magic mortgage rate" for prospective homebuyers.

  • This situation has created what some call a "golden handcuff effect." Homeowners who locked in low mortgage rates during the COVID pandemic are now reluctant to let them go. The majority of today's homeowners have mortgages with interest rates below 4% or even 3%.

  • Despite the challenges, experts suggest that while mortgage rates may not return to historically low levels anytime soon, they might not remain as high as they are now indefinitely.

  • The housing market could eventually regain momentum, but it's currently facing critical shortages of homes for sale and rising prices due to the mortgage rate dilemma. As the Federal Reserve determines its next steps regarding interest rate hikes in September, the housing market's fate may become clearer.

A SCOOP OF BILLIONAIRES

Silicon Valley billionaires have unveiled their plans for a secretive $800 million land acquisition in Northern California, which includes the creation of a new green city named "California Forever."

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  • This project, backed by tech luminaries like Laurene Powell Jobs, Reid Hoffman, and Marc Andreessen, aims to transform rural Solano County, located between San Francisco and Sacramento. The initiative has bought over 78 square miles of farmland since 2018, but its secrecy had raised concerns among locals and officials.

  • The project's success hinges on convincing Solano County voters to allow urban development on currently protected farmland. While California desperately needs more housing, some worry that the project could cater exclusively to the elite, while others are concerned about increased congestion and noise in the area.

  • Despite this skepticism, California Forever sees itself as an opportunity to create a thriving community with new jobs, affordable housing, solar energy farms, and parks funded by the private sector.

  • The project's backers argue that it could help address California's housing crisis and generate economic benefits for the county. However, many questions remain, and local leaders and residents are demanding more clarity and transparency before endorsing the ambitious plan.

A SCOOP OF CELEBRITIES

Travis Barker, the drummer of Blink-182 fame, is putting his stunning Calabasas mansion up for rent at a cool $25,000 per month.

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  • This impressive estate boasts over 7,000 square feet of space, six bedrooms, and 6.5 bathrooms, all within a gated community on a corner lot.

  • Built in 2006, the mansion features a grand foyer leading to a spacious living room with a striking sweeping staircase, modern chandeliers, vaulted ceilings, and stylish earth-toned tile flooring. The dining room seamlessly flows from this open living space.

  • The kitchen is a chef's dream with a gourmet center island, deep-blue cabinets, and a generous walk-in pantry. An adjacent sitting room offers a cozy spot with a custom fireplace and French doors that open onto the expansive backyard.

  • Throughout the main level, you'll find eye-catching Italian finishes that add to the luxury and charm of the home. If you prefer dining outdoors, the backyard and interior courtyard are perfect for enjoying alfresco meals and drinks.

  • It's worth noting that this isn't the only real estate move Barker has made recently. He and his wife, reality star Kourtney Kardashian, also acquired Conan O'Brien's beach house for $14.5 million in October 2022. So, if you're in the market for a temporary slice of rock 'n' roll luxury, Barker's Calabasas mansion could be your next home sweet home.

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