There is something worse than growing housing rents: a permanent housing shortage. That’s what rent control gives a city.
Rental prices go up as demand growth begins to outpace supply growth, but markets adjust when those higher prices signal profits to would-be landlords. If prices are allowed to grow, supply will ultimately keep up with demand.
Destroy this market with command-and-control regulation, and a city will have slightly lower-priced housing that’s in a permanent state of severe shortage. That’s a recipe for far worse forms of exploitation, the kind that has inspired Law and Order screenplays in New York.
The newly amended version of the Oregon House’s flirtation with rent control by the Senate Committee on Human Services on Wednesday seems to have allowed Portland to dodge a self-inflicted regulatory bullet. There is no longer a cap on how high prices can rise, only a provision that rents can be adjusted but once a year.
Portland’s new city ordinance that forces landlords to pay all of a tenant’s broadly defined relocation costs will remain banned by state law. HB 2004 will only allow Oregon municipalities to require payment of the first month’s rent. When the no-cause eviction is the result of the non-renewal of a lease, landlords will not even have to pay that if they give 90 days notice of an intent not to renew.
That’s not to say there’s anything in this bill that will make Oregon’s housing markets better. For that reason, Senator Tim Knopp, who sits on this committee, was the one vote against it, because he said HB 2004 fails to address land use laws that impair developers’ ability to build more affordable units and ease the housing shortage.
Remarkably there is a bill making its way through the House that does actually address the problem, if only a little. HB 2007 offers a slight deregulation of the permitting process for multi-family homes in the red tape latticework of designated “historic” neighborhoods.
Co-sponsored by Tina Kotek and supported by 1000 Friends of Oregon, this bill could seemingly pass with full Republican support if allowed a floor vote. Of course, it’s quite rich to see the defenders of the urban growth boundary, one of the most significant causes of higher rents, stick their necks out for lower housing prices.
But stick their necks out they are. Both Kotek and her white-shoed environmentalist ally are basically on the opposite side of their donors, a point Peggy Moretti, executive director of Restore Oregon and leader of the NIMBY preservation lobby probably meant to make when she said: “1000 Friends have forgotten who their friends are.”
Break out the popcorn folks. This will be fun to watch. And if neither of these bills pass, the good news is that markets are already adjusting.
Eric Shierman lives in Salem and is the author of A Brief History of Political Cultural Change.