Rents for the rich are plummeting. Rents for the poor are rising. Why?

  

Category:  Op/Ed

Via:  john-russell  •  3 weeks ago  •  16 comments

Rents for the rich are plummeting. Rents for the poor are rising. Why?
Porter could be the poster child of the rental housing market over the past year: rent hikes on lower-quality housing, generally occupied by the most financially insecure tenants, and steep discounts on luxury apartments catering to the rich.

S E E D E D   C O N T E N T



www.washingtonpost.com   /opinions/2021/03/22/rents-rich-are-plummeting-rents-poor-are-rising-why/

Opinion | Rents for the rich are plummeting. Rents for the poor are rising. Why?


Catherine Rampell

9-12 minutes




Faye Porter’s heat frequently doesn’t work, leaving icicles inside her windows during Chicago’s brutal winters. Her building’s stairwells and hallways weren’t cleaned sometimes for months over the past year, she said. Faulty wiring nearly started a fire in her kitchen not long ago. Yet, despite all this, her landlord recently raised her rent by $70.

“They say that the cost of living continues to rise, but then never provide additional amenities ,”   said Porter, who lives in   Hyde Park , a diverse neighborhood on the city’s South Side.   They remain the same or are less.

Porter could be the poster child of the rental housing market over the past year: rent hikes on lower-quality housing, generally occupied by the most financially insecure tenants, and steep discounts on luxury apartments catering to the rich.


3IEKCZEIJQI6XPSKES4J6YLPFQ.jpg

The exterior of Faye Porter’s apartment building in Chicago.

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A missing baseboard and exposed wiring in Porter’s apartment.

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Dirt and scuff marks cover a ground-floor hallway of the apartment building. (Photos by Taylor Glascock for The Washington Post)


TOP: The exterior of Faye Porter’s apartment building in Chicago. BOTTOM LEFT: A missing baseboard and exposed wiring in Porter’s apartment. BOTTOM RIGHT: Dirt and scuff marks cover a ground-floor hallway of the apartment building. (Photos by Taylor Glascock for The Washington Post)

Much has been written about the two-track, or “ K-shaped ,” economic recovery, in which higher-income households have generally been doing well financially, while lower- and moderate-income ones are foundering. High-wage employment has recovered to roughly where it was pre-pandemic; the number of low-wage jobs, on the other hand, is still deeply   in the hole . But that’s not the only way that the poor have gotten a raw deal. Low-income households are getting squeezed from both directions — less income   and   higher prices for what is usually their biggest single monthly expense: rent.

For well-off tenants, bargains abound. In most major metro areas, rents for high-end residential housing have plummeted, according to data from   CoStar , a real-estate analytics company.

The amount varies by city. In Dallas-Fort Worth, rents for apartments at the top end of CoStar’s quality scale were 1 percent cheaper in the last quarter of 2020 compared with a year earlier; in Chicago, they were down 7.6 percent. Meanwhile, rents for lower-end apartments — older or lower-quality structures, with fewer amenities — have held steady or increased, depending on the area. In Dallas-Forth Worth and Chicago, they’re up about 2 and 1 percent, respectively.

And some unlucky tenants have endured much bigger hikes. Porter, whose contract job at a nonprofit recently ended, is paying a nearly 5 percent increase, bringing the monthly price of her two-bedroom apartment to $1,500. (Porter, who has epilepsy, receives disability payments and vouchers that help cover the bills.) Andrea Ospina, who lives on the outskirts of Dallas-Fort Worth, said her rent rose last summer from $900 to $1,250 — or nearly 40 percent. This was shortly after her husband was laid off from his truck-driving job.

So what’s going on? Why are higher-income people getting a break they don’t need, and lower-income people facing rent hikes when they’re more at risk of losing their jobs?

The dynamics at the high end of the market are clearer. With covid-19 largely shutting down the perks of city life, many tenants who had the means to leave did so. Higher-wage workers who were juggling remote work and virtual school sought out more space, often purchasing a house in the ’burbs.

“A lot of renters who were already the marginal home buyer — who have stronger credit, have assets, higher income — decided to make the transition to homeownership,” said   Jenny Schuetz , a senior fellow at the Brookings Institution. Sales prices for houses in the suburbs of   New York ,   Washington ,   Chicago   and other cities spiked last year, as high-income city residents fled.

That placed downward pressure on rents in the luxe, urban buildings these new homeowners had vacated. Rents were also kept down by a surge in supply, because a lot of newly built, luxury housing happened to come on the market last year. “This inventory hit at the same time as weak demand,” said Andrew Rybczynski, managing consultant at CoStar Advisory Services.

The story at the low end of the rental market is more complicated.

One likely explanation, Schuetz and others say, is that when the economic crisis hit, more people decided to move down the housing ladder to save money. There was   already   a shortage of affordable units, though. So, this surge in demand for lower-price-point homes ended up bidding those rents higher.

Take the case of Robin J. Schwartz, a health and lifestyle coach who had been living in a high-rise in Chicago’s tony South Loop neighborhood. She caught the   coronavirus   last spring, and her body took a beating she still hasn’t recovered from. Same goes for her work: Thanks to the recession, her paying clients dried up. “It was a bloody nightmare,” she said.

MHAW76EFTUI6XPSKES4J6YLPFQ.jpg   Robin Schwartz in the studio apartment she rented after being out-priced in her old one-bedroom unit. (Taylor Glascock/For the Washington Post)

A few months later, her landlord requested a 10 percent rent increase. Schwartz balked. She scrambled to find someplace cheaper but had difficulty locating anywhere that would accept a new tenant in her financial circumstances. She negotiated a short extension of her existing lease.

Eventually she found an apartment in Hyde Park. The apartment is a 450-square-foot studio, much smaller than her previous 780-square-foot one-bedroom. It lacks the dishwasher, in-unit washer/dryer, balcony and other amenities she’d become accustomed to. But she now pays about half of her previous rent, a tremendous relief. “There was a point there where I thought I’d end up without a home,” she said.

Schwartz recently looked up the rent at the South Loop apartment she moved out of last November; it is still vacant, listed at a steep discount from her previous lease.

This pattern is evident across the Chicago metro area. Neighborhoods that began last year with high rents are offering sharp discounts; those that started out at lower price points — and are often home to majority-non-White populations — have generally had increases. The relationship is almost linear, as the chart below shows.

Housing experts say other factors may be at play, too. Some lower-income areas were gentrifying even before the pandemic, leading to higher rents.

Rent increases at the bottom of the market might also be an unintended consequence of the federal eviction moratorium imposed last year. The moratorium, scheduled to expire this month, shields struggling tenants from displacement and possible homelessness. As of late February, about a quarter of adults in low-income tenant households were behind on their rent, according to the Census Bureau’s   Household Pulse Survey . Landlords stuck with tenants who can’t pay may try to offset these losses by raising rents on everyone else. Rents in lower-end units tend to already be close to operating costs, Schuetz noted, so landlords may have slim profit margins.

Poorer tenants are also often reluctant to push back on rent hikes, given the complication and expenses of moving — particularly mid-pandemic.

“They don’t have money to move elsewhere, and landlords know they have them over a barrel,” said Sandy Rollins, executive director of the Texas Tenants’ Union. “They can say, ‘Here this is the price, this is what you have to pay, you can go to the food bank if you need to save money.’ ”

For many lower- and even moderate-income tenants, this dynamic predates the pandemic. Thanks to chronic shortages of affordable housing, most of these renters   spent   at least a third of their incomes on housing well before covid. The pandemic simply made things worse. President Biden’s American Rescue Plan appropriates more money for   emergency rental assistance   and vouchers, which will help some tenants. But alleviating rent pressure, both during the current crisis and after, will ultimately require expanding the supply of affordable housing.

That’s challenging for many reasons. Developers usually expect more limited returns for lower-end units. Subsidies to entice developers can be politically volatile or poorly targeted. Even when developers and municipalities are on board, other red tape or NIMBYism can stall projects.

But popular support for pandemic-related government assistance, coupled with covid-driven shifts in prices and migration patterns, may present an unusual opportunity to overcome these challenges. Some areas have begun   converting motels   or other buildings into additional housing; engaging in   zoning   and permitting   reform ; and debating changes to their   development subsidies and requirements .

Without a greater supply of affordable housing, the two-track pattern is likely to continue. And without more housing options, Porter and her fellow tenants have little leverage to push back on rising rents and deteriorating living conditions. Though, as a volunteer tenant organizer, she still tries.

“The one thing that I do know is that I deserve to be warm and I deserve to be safe and I deserve to be clean,” she said. “Those things, they’re not negotiable.”




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JohnRussell
Professor Principal
1  seeder  JohnRussell    3 weeks ago

Should the government facilitate affordable housing for everyone who needs it ? 

 
 
 
Greg Jones
Masters Participates
1.1  Greg Jones  replied to  JohnRussell @1    3 weeks ago

That's not a function of government.

 
 
 
JohnRussell
Professor Principal
1.1.1  seeder  JohnRussell  replied to  Greg Jones @1.1    3 weeks ago

We need the government to correct the inevitable and sometimes devastating inequities of capitalism. 

There is more money to be made with higher end housing units. So developers and building owners would like there to be more high end units.  They displace lower end housing. Lower end housing becomes more scarce, so following the principles of capitalism, the rent is raised on the lower end units. Do the lower end renters suddenly have more money? Of course not, so the government has to step in and provide housing subsidies. 

We should just have the government control most lower end housing to begin with. 

 
 
 
expatingb
Freshman Quiet
1.1.2  expatingb  replied to  JohnRussell @1.1.1    3 weeks ago
We should just have the government control most lower end housing to begin with. 

Yeah.  That worked real well for the rent controlled units in NYC.  When the owner is denied the funds necessary to pay for repairs or improvements, the units decay and ultimately become virtually uninhabitable.   By the way, that also applies to public housing.  Free housing equals continually deteriorating housing.

 
 
 
Snuffy
Sophomore Participates
2  Snuffy    3 weeks ago

While there is a huge shortage of affordable housing in this country  (and worse in some areas than others),  any fix to housing is just a short-term solution. 

As the article states, those at the top with good incomes and a good credit score in this age of very low interest rates are more likely to purchase housing rather than rent.  Additionally due the financial problems caused by the pandemic we see a lot of people who lost jobs or were downsized and need to cut costs so are moving to more affordable  housing. At the bottom you have the poor who are already maxing out the available rentals that are affordable and are being squeezed by the people who are downsizing and looking for more affordable housing. 

So yes,  a short-term fix for affordable housing needs to be addressed as that is an urgent need. But it doesn't solve the long-term issue because there will always be poor people when compared to the rich. A better solution IMO is a multi-generational solution that changes the educational system to better address the needs of actually teaching children rather than teaching to a test, of having schools so overloaded with poorly functioning students that all students lose out. By fixing the educational system,  over time we hope there are more people who are affluent and can afford better housing on their own. If we don't change the system to help the up and coming generations to have a better life the problem will only get worse. 

 
 
 
expatingb
Freshman Quiet
2.1  expatingb  replied to  Snuffy @2    3 weeks ago

Congratulations on a well thought out and written post.   

Too many are incapable of using logic and reason to address a situation when emotional diatribes and rants are so much more popular.

 
 
 
JohnRussell
Professor Principal
2.2  seeder  JohnRussell  replied to  Snuffy @2    3 weeks ago
By fixing the educational system,  over time we hope there are more people who are affluent and can afford better housing on their own. If we don't change the system to help the up and coming generations to have a better life the problem will only get worse. 

A better educational system will not end poverty. As I have said many times, if everyone in America had a college degree, we would have millions of poor people with college degrees.  Capitalism requires that a percentage of the population be poor, because it is based on a wage structure that is a race to the bottom. . 

 
 
 
expatingb
Freshman Quiet
2.2.1  expatingb  replied to  JohnRussell @2.2    3 weeks ago
Capitalism requires that a percentage of the population be poor,

Exactly what system does not have a varying level of income and, for lack of a better word, 'status'?   Differences are seen in all political systems.   Hell, does the average Chinese citizen enjoy the perks, privilege, status and standard of living as President Xi?   The average Russian the same as Putin?   How about the average French citizen, the same as Marcon?

While communism might be in theory be the perfect system with everyone equal and no one better off than another, it is a fantasy non-existent world.  

At least capitalism gives the individual the incentive to do better and be better.

 
 
 
JohnRussell
Professor Principal
2.2.2  seeder  JohnRussell  replied to  expatingb @2.2.1    3 weeks ago

Who's promoting communism?  Conservatives often say get the government out of our lives. That is not possible when there is a shortage of affordable housing for poor and working class people. 

If we have capitalism we also need to have a government that can correct the inequities that inevitably arise from capitalism.  Or should the lower class live in shanty towns ? 

Rd891401844cfad29fd937c224a9e941b?rik=MjwlWGI9DDgKDA&riu=http%3a%2f%2fbillwinters.net%2fwp-content%2fuploads%2f2015%2f01%2fShanty-Town-Lagos-Nigeria.jpg&ehk=mN%2b1RkyyJqcMZl9H8XsWABpU4QEdW2jhhIU6kPFDl8c%3d&risl=&pid=ImgRaw

 
 
 
Snuffy
Sophomore Participates
2.2.3  Snuffy  replied to  JohnRussell @2.2    3 weeks ago

And I never claimed that fixing the educational system would eliminate poverty.  There will always be the poor,  as they compare against the wealth so you always have the haves and the have-nots. But a better educational system can help the next generations to maybe have a better life. If your guideline for a solution is only something that eliminates poverty then you are giving up because you don't have a perfect solution. 

 
 
 
JohnRussell
Professor Principal
2.2.4  seeder  JohnRussell  replied to  Snuffy @2.2.3    3 weeks ago

Oh I know there will always be poor.  That is why we need an active government in that area. It is conservatives who believe the poor can be cared for entirely by private charity.  

 
 
 
expatingb
Freshman Quiet
2.2.5  expatingb  replied to  JohnRussell @2.2.2    3 weeks ago
If we have capitalism we also need to have a government that can correct the inequities that inevitably arise from capitalism.

In other words you promote income or wealth redistribution.  

You are aware are you not that the "government" has no financial resources of it's own and requires taking the income and or wealth of individuals to function.

Those inequities that you speak of are the very impetus for people to work to improve their own situation.  Government can provide a hand up, but the continual hand out has to cease.  Those hand outs perpetuate dependence on government.

And when government does provide housing, look no further than public housing for the results of that action.  The facilities are more often than not abused and repairs cannot keep up with the mindless destruction of the buildings.   

 
 
 
JohnRussell
Professor Principal
2.2.6  seeder  JohnRussell  replied to  expatingb @2.2.5    3 weeks ago
Those inequities that you speak of are the very impetus for people to work to improve their own situation.  Government can provide a hand up, but the continual hand out has to cease.  Those hand outs perpetuate dependence on government.

It is not possible to eliminate poverty in a capitalist system . Think of taxes to help the poor as your contribution toward the smooth functioning of the capitalist system. 

 
 
 
expatingb
Freshman Quiet
2.2.7  expatingb  replied to  JohnRussell @2.2.6    3 weeks ago
Think of taxes to help the poor as your contribution toward the smooth functioning of the capitalist system. 

Taxes are already being paid.  What you desire is income redistribution.  

The poor already qualify for many subsidy programs which are if not directly government run, government funded and run by NGO's.

In reality, it is not possible in any system to eliminate poverty.  To believe otherwise is being disingenuous at best and delusional at worst.

 
 
 
Transyferous Rex
Freshman Participates
2.2.8  Transyferous Rex  replied to  JohnRussell @2.2.2    3 weeks ago

Out of curiosity. Do you own affordable rental property? I used to. Gave it up, because, too often, the current renter was actually costing me money. Not paying rent, tearing the house up, forcing me to force them out, then forcing me to make repairs. Shouldn't have to replace carpet, trim, and paint a house on a yearly basis. These stories portray property owners as greedy slum lords. Not saying there aren't people like that. But, I used to be a landlord, and I know from experience the rate isn't set to gouge people. The rate is set to first pay the mortgage, and most likely to cover the costs associated with owning the property, including repairs. 

How would the government regulate the market? Most states already have landlord/tenant laws that are increasingly becoming more favorable to tenants. You want the government to subsidize rent? We have multiple examples of subsidies around us, take college tuition. College tuition sees a spike, now we are paying taxes to cover studies in extra curricular activities, and forgiving thousands of dollars per student. Who profits? The college. I don't. The kid that took my money to get an essentially worthless degree didn't. That kid can't find gainful employment, sufficient enough to pay the loans. But hey, chicken in every pot, right? 

Poverty will be here, regardless of what market or economy we have. My brother is worthless. He lives in poverty. He sings a sad story every time I talk to him. For over twenty years I have done what I could to help him. He doesn't want help. He wants someone to fund his ass-sitting, x-box playing days. I understand that everyone is not like my brother. I also understand that there are a huge number of people like my brother. (He's currently living in a shack with around a dozen of them, when he could have been living rent free in a nice home, in exchange for probably less than 20 hours a week of odd job labor for the landlord...note, he doesn't have a job, so he had the time...x-box is too hard to pull away from) It is his choice. I should not be forced to fund his choice. I funded it out of the kindness of my heart, to the detriment of my family, for too long. My help...the government's help...its all the same to a person like that. It's a wasted effort. Sounds cold, but a government help is a one size fits all measure, and results in gross waste on one side, and increased cost to the other. That's not what we need. We need accountability, the demand for which is trending down. 

 
 
 
Transyferous Rex
Freshman Participates
2.3  Transyferous Rex  replied to  Snuffy @2    3 weeks ago
A better solution IMO is a multi-generational solution that changes the educational system to better address the needs of actually teaching children rather than teaching to a test, of having schools so overloaded with poorly functioning students that all students lose out.

Yes. I could go on and on with my recent experiences and complaints. Suffice it to say, the experience with my now senior was vastly different than my experience with my now 2nd grader. (yes, surprise, you're a father)  Now, it's a joke. Was a time when people sought out a tutor because their kid was having trouble grasping the subject. Now, and we are not the only ones I know of, are purchasing materials to supplement the education for 1-2 hours a night, because they are literally doing nothing in class. That goes all the way through high school. Local math tutor is killing it. But he is not helping kids that are struggling to grasp math, he is teaching an actual math course, because what they are getting at the school isn't preparing them.

 
 
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