Rents across the United States are skyrocketing at their fastest rate since 1986, surpassing a median monthly rate of $2,000 for the first time ever in May, 2022.
The consequences of this rental crisis are already visible in cities across the country. Apartment hunters are lining up around the block to view available rentals and placing offers over asking price, a tactic usually reserved for home buying. Many renters have been hit with massive and unexpected rent increases — as high as 48% on average in some cities — between lease renewals. And more people than ever are turning to borrowed money to make it through the month, with credit card balances jumping $46 billion last quarter, their largest spike in 20 years.
The sharp increase in housing prices is happening at a time of widespread inflation, when families are already spending significantly more on gas, groceries, and other basics. With so many people stretched thin and unable to afford rent, people are at greater risk of housing instability, eviction, and homelessness.
To help the people in their communities avoid these dire consequences, local leaders are looking for solutions to the rental crisis. Here are a few strategies to consider:
Convert Vacant Office Space Into Housing
As residents struggle with a housing shortage, many downtown office districts are experiencing a shortage of something else: workers.
The pandemic led to a rise in remote work, and many of those jobs are never going to be full-time, in-office positions again. Offering remote or hybrid models is now the price companies must pay to attract top talent — and that means that many large companies no longer need their pre-2020 commercial real estate footprint.
So what to do with these massive, largely-empty office buildings sitting idle in the hearts of our cities? Smart local leaders will seize the opportunity and allow them to be converted into the housing their cities so badly need, which could not only help relieve the rental crisis, but could also help resuscitate many downtown districts going broke due to a lack of foot traffic in the aftermath of the pandemic.
Of course, converting large office buildings to residential use is not something that can be accomplished with the stroke of a pen. In most places, zoning laws must be changed. Major renovations would be needed to turn office units into apartments that are up to code. These conversions aren’t cheap — but neither is purchasing land and building housing from scratch, especially in high-cost metropolitan areas. Offering property tax forgiveness for a set number of years on converted properties is one tool cities have at their disposal to offset costs.
Cities like New York, San Francisco, and Washington, D.C., are exploring public-private partnerships to incentivize developers and property owners to convert disused commercial real estate to housing. In any city that’s struggling with high rental costs and empty downtowns, this is a strategy to consider.
The Importance of Strong Eviction Protections in a Rental Crisis
It’s always important for renters to have strong protections against unwarranted evictions, but never is it more important than in the middle of a rental crisis.
In a hot housing market, renters are simply more vulnerable to eviction. When there is a shortage of rental units and an oversupply of potential tenants, property owners have less incentive to offer any flexibility to a renter who falls behind. In locations without a “Just Cause” or “Good Cause” eviction law, property owners may even evict tenants who haven’t fallen behind or otherwise broken the terms of their lease, if they believe they can charge someone else more (and in this market, they probably can).
Using Just Cause Eviction laws to define what constitutes an evictable offense gives renters a buffer against the fluctuations of the housing market. Once those parameters are clearly defined, cities must have an organized system for overseeing evictions, to ensure that both the renter’s and the property owner’s rights are protected every time an eviction case is filed.
It’s also important to ensure that renters are aware of their rights. Tenants, especially undocumented tenants or renters from other vulnerable groups, are likely to “self-evict” to avoid dealing with a legal eviction case, and the black mark it would leave on their records.
How Rent Protections Prevent a Rental Crisis
If there was a looming hurricane off the coast, it would be illegal to raise the price of gasoline as high as the market would bear and then take advantage of the people desperate to get out of harm’s way. When there’s a rental crisis, it shouldn’t be so easy to raise rents dramatically, and then evict renters who can’t keep up.
In cities and states that do not have an existing law pre-empting rent regulation, it’s time to consider putting a rent control or rent stabilization measure in place. Even capping rent increases during a single tenancy at 5 percent per year would give property owners wide latitude to increase profits over time, while giving renters protection against the sudden shock of a 30, 40, or 50 percent increase in their rent.
Of course, enforcing a rent control or rent stabilization law requires having accurate data on the rental units in a community, and their going rents. Cities need an effective rental registry system to manage this data, and to draw insights from it about their local rental market. Even if rent stabilization regulations aren’t politically feasible in your area, rental registries can provide much-needed real-time visibility into your community’s rental stock.
What Cities Can Do About the Rental Crisis
As rents continue to rise along with the cost of everyday necessities, it’s more important than ever for local leaders to respond to the needs of the moment and put measures in place to protect the renters in their communities from eviction and homelessness.
Mitigating the impacts of the rental crisis isn’t easy, but managing a tenant protection program can be. Learn more about the tools that make implementing effective tenant protections simple for any city.