The rent is still too damn high, Joe

Looking at the White House's plans to protect tenants, among other things

Welcome to a Sunday evening edition of Progress Report.

This past Friday, I had a procedure done on my shoulder that I’m hoping will finally put 36 months of ongoing pain in my rearview mirror. It was the second shoulder procedure that I’ve undergone this year, and when I arrived at the hospital, the billing department informed me that I still owed nearly $700 for the first one.

Annual deductibles are the product of a system designed by people who can pay $700 in one go at the beginning of every year and assume everybody else can as well. I’m lucky that the surprise hospital bill didn’t leave me in a lurch, but many Americans would not be as fortunate, especially during this moment in time, when credit card debt is soaring alongside the price of rent.

It’s that last part, the skyrocketing cost of rent, that we’ll be discussing tonight. There are clear solutions to this ongoing crisis, and for the first time, the White House is taking concrete action to alleviate the issue — or so it says.

Mysterious, right? Let’s get to it!

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After 18 months spent urging the federal government to address a burgeoning national housing crisis, Tara Raghuveer gave a blunt assessment of the White House’s new plan to “protect renters and promote rental affordability.”

“It's a bad day when there's an announcement about tenant protections and the National Apartment Association is celebrating,” Raghuveer, director of the National Homes Guarantee campaign, tells Progress Report. “This is an institution that fought hard against pandemic eviction moratoriums and every potential proposed regulation. These are people who are very naked about their profit-making incentives.”

The National Apartment Association indeed took a victory lap around Twitter on Wednesday, with the landlord lobby bragging that it was able to prevent Biden from issuing any binding executive order that might materially help renters. The social media flex was a bit like Goliath putting out a press release crowing about defeating David, as the NAA has spent millions of dollars over the past few years on lobbying lawmakers and federal officials to maintain an increasingly untenable status quo in the housing sector.

For activists, the fact that the White House’s release actually praised the NAA in its release Wednesday just added insult to injury — Raghuveer, who also heads the KC Tenants union, was part of a coalition that began engaging with the White House on tenant protections in September 2021 and often found itself stymied by the landlord lobby.

As landlords continued to jack up rents all across the country — the national average jumped 17.6% in 2021 alone — tenants began to organize and demand change on both the local and federal level. The push defied normal partisan lines. In Florida, where rent rose faster than anywhere else last year, tenants unions sprung up in every major city, while activists were able to pass a rent control measure in Orange County even as state law seemed to doom it. In Minnesota, both St. Paul and Minneapolis voted in 2021 to enact rent control (policies that were also defanged, this time by local government).

After a tense summer focused on every other kind of inflation, the White House began to examine what it could do about the housing conundrum facing one-third of Americans. As we’ve been covering for the past few years, the massive spike in rent costs has become a serious crisis, and one that holds serious potential for political realignment.

Raghuveer and fellow activists fought to reimagine the federal rental assistance program, which had been blown (or sabotaged) by many state governments and used as a no-strings piggybank by landlords, and see Biden’s announcement as a starting point, not a finish line.

The plan put out by the White House is more of a plan to make a plan, and in some parts, a promise to study the impact of a potential plan. Here are the main points:

• The FTC and Consumer Financial Protection Bureau will begin studying the many shady ways that real estate agents and landlords make it difficult for people to access housing or avoid unfair evictions.

• HUD will issue a rule that requires public housing to give tenants 30 days notice before canceling their lease due to an inability to pay rent.

• The Department of Justice will remind landlords not to collude in setting the market.

• The administration will launch the Resident-Centered Housing Challenge, which incentivizes states and municipalities to find new ways to improve quality of life for renters.

• The Federal Housing Finance Agency will look at existing proposals for preventing outrageous rent hikes on homes backed by federal money, and consider how those rules might be applied.

It’s the last item that holds the most promise, Raghuveer says, because it leaves the door open to a federal intervention in the actual housing market. There are powerful interests lined up against anything that goes beyond further government subsidies, but the rising number of evictions, growing influence of private equity in the rental market, and scourge of corporate landlords are powerful motivators for exhausted tenants.

Below, find more of my conversation with Raghuveer, which touched on the White House’s order, the return of tenant activism, the politics of affordable housing, and what could fundamentally reorder the housing market.

Progress Report: When you first started talking with the White House, what did you want to see happen?

Raghuveer: It wasn’t rental assistance, it was rent and mortgage cancellation for people that couldn’t pay. The government should make available a pot of money that landlords could apply to if they want some sort of relief, but that pot of money should come with strings attached. The whole idea was how do we put the burden on the appropriate party? We should put the burden on the landlord, since they’re the ones interested in protecting their bottom line. We wanted to avoid putting the burden on the tenant, who's the most vulnerable party in this situation.

We did not have the political will, obviously, to win the cancel rent fight. Then our position began to be if we're going to give hundreds of billions of dollars in rental assistance to private industry, let's attach some strings to that rental assistance, because that's effectively a bailout for the industry that comes with no strings attached currently. We were pushing the conditional relief to set up for some kind of structural shift of power towards tenants during that time.

Landlords got their bailout. They're raking in more profits than ever. They've had some of their biggest quarters in the last year or so, and meanwhile, evictions are back up to pre-pandemic levels and tenants are getting priced out.

So you don’t think people were applying for the assistance, so the onus should have been on the landlord?

People did apply. People were desperate. But in a lot of states, there either wasn't a local or statewide eviction moratorium or their state courts didn't respect the federal ones, and landlords exploited the many loopholes in the federal version.

And then some landlords rejected the assistance. They preferred to evict the tenant rather than get paid because there wasn't a universal requirement for them to accept these subsidies. And then some landlords accepted the rental assistance, meaning they got paid, but then because there weren't any regulations tied to it, then what ended up happening was that landlords could just get their money and do whatever they were always going to do.

So when you began the engagement, was the White House not responsive at all?

They were responsive, although I would argue that the the response was mostly one of defensiveness about the assistance program. Obviously, the White House didn't design the rental assistance program, that was a Congressional act. But they were in many ways responsible for implementing that vision as part of the President's Recovery Act.

I think more interesting is where they landed on the whole thing. It seems like the White House’s formal position is that we have changed this system structurally through this rental assistance program. I would argue that there have been structural changes, but not in the direction that they're suggesting. I actually think a lot of what's occurred in the last couple of years is a kind of double down on the almost total power that landlords have both over their tenants, but also the price setting power that they have in the market.

The announcement Wednesday was historic on some level, because it's affirming the federal government's role in relationship to the power dynamics between landlords and their tenants, but if I apply the filter of does this materially improve the lives of the tenants and my base? My answer is no.

You mentioned the FHFA’s study of proposals for preventing huge rent hikes on federally-backed housing as a positive step. Why is that?

What we would have liked to see is a directive from the President telling the FHFA to regulate the government-sponsored enterprises, to have Fannie and Freddie Mac, to enforce these loan terms on government borrowers. Instead, they will investigate, starting in the next six months, what it would look like to apply some of these conditions to government backed properties, which is good. It give us some room to continue organizing on this front, which we think is one of the more significant places where we can intervene in this market.

There's not a lot of accountability or hooks to ensure that anything actually gets done. A lot of that now rests on our shoulders as organizers on the outside.

I’ve seen some municipalities debate and tentatively adopt some sort of rent control, but for the most part, states and cities are blaming the affordable housing crisis on a lack of supply, and pledging to build more homes — whether they’re going affordable is often unclear. How do you view that approach, investing in building much more housing?

The supply stuff is interesting because that's a lot of what the the administration rests their hat on. The President put out this supply action plan last fall, and they keep touting that as their primary intervention on housing issues.

Obviously, there is a shortage of affordable housing in this country. There's no doubt about that. But supply without defined terms doesn't really address any of the problems that I'm talking about. If we're building market rate homes, there's really no evidence that that trickles down into truly affordable housing. Trickle down housing policy is a farce. There's a supply side intervention that's necessary that could for example support community controlled social housing that's off the speculative market, but that's not what The White House is talking about when they talk about supply.

The other issue with the supply side conversation is that it does not address the urgent needs that tenants have today. The soonest a supply intervention changes the nature of this market, if we even assume that it does, is in like three to five years, and people where I live can’t afford the rent today. They're forced to live in worse and worse conditions as a product of that.

I often think about how politicians address issues that they can see or those that impact them. Because most lawmakers are generally rich, or at least own homes, I think that shortchanges problems like skyrocketing rent. Do you think that makes a big difference?

I think it's a massive problem that most of them don't rent — or, maybe they rent their DC home, but they certainly don't rent their home back wherever they're from. And it’s not just that they don’t rent, it’s that they're not in the community with a massive and growing class of people who just can't afford the rent.

We saw it really starkly I think over last summer, when the President and his team were obsessing over gas prices. He was famously going to eight gas stations every day to check the price of gas. And gas was a major part of inflation, but rent has been a core driver of inflation too. But I don't think the I don't think the President has said the word rent during the entire inflation crisis over the past like eight months.

So now where do you go? Do you think the tenants union movement will have a material impact?

I think the only answer to any of the structural issues with the rental market is organizing. I mean, I’m biased, I'm a tenant organizer, and I'm extremely bought into that as the solution. But I think the power of the tenant union is really the only power that is available to everyday people to combat this level of power imbalance between us as tenants and our landlords.

This idea is that there are more tenants than there are landlords, but that only matters in a world where tenants are organized into powerful unions. I've seen the effect of tenant unions, completely changing the political landscape in Kansas City and doing everything from changing city policy to winning really material victories for themselves and ourselves.

Just this past weekend, there were buildings in Kansas City that had the heat go out. And the tenants, with the support of the city-wide union, got organized very quickly. Within 72 hours, they’d held their landlord accountable and got the heat and electric back on. That's that sort of stuff is not enough to combat, the scope of the real estate industry, but it is a really important intervention that really only tenants acting together can take to materially improve their own conditions.

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