As economic forces converge on the housing market amid the highest inflation in 40 years, a tenants’ rights activist is seizing a moment of opportunity to pursue fundamental changes in the way the U.S. approaches affordable housing. .
Tara Raghuveer, founder of an influential tenants union in Kansas City and organizer of a national federation of tenants unions, is working to capitalize on the social and financial pressures now pressing the real estate industry to produce what she sees as potential policy diamonds. public – effective rent limits for landlords claiming tax credits for building low-income housing units.
In April, the Department of Housing and Urban Development enacted 10% rent increase limitations for the federal program known as the low-income housing tax credit (LIHTC), in part the result of aggressive organizing by Raghuveer and his colleagues as well as from other tenant-focused advocacy organizations.
Although the 10 percent threshold is considerably higher than the 3 percent threshold that advocates have sought, Raghuveer considers the framework it establishes a landmark in recent U.S. housing policy.
“It’s a precedent, because it’s the first time that we know of in recent history that the administration has taken seriously the potential to condition federal funding on this type of protection,” she told The Hill in an interview.
Low-income housing advocatesapplauded effective rent capswhile the organizations representingcommercial construction companies and the real estate sectorgritted their teeth at the change, saying it amounts to “[picking] winners and losers,” while acknowledging that this would likely “result in potentially lower rent increases for some tenants.”
As trade groups recognize, the design of the cap is not traditional rent regulation, but rather thelinked to changesat national average income levels for a subset of LIHTC properties, conditions that make the threshold “a little shaky,” in Raghuveer’s estimation, and difficult for tenants to identify.
But it’s just the beginning, says Raghuveer. She and her group, the National Federation of Tenants Unions, are looking beyond the $13 billion-a-year LIHTC program and toward the much larger government-sponsored mortgage lenders Fannie Mae and Freddie Mac as places to expand. tenant protections at housing finance providers that are already supported by the public.
Fannie Mae and Freddie Mac, which were nationalized under public trusts following the 2008 financial crisis, have issued more than $100 billion in mortgages in 2023 and more than $142 billion in 2022.
Accounting methods for these government-sponsored enterprises, which have been public and private at various times in their history, vary among government agencies, and theCongressional Research Serviceit even describes the ultimate cost to U.S. taxpayers of supporting them as “unknown.”
However, theCongressional Budget Officeputs the annual cost of the programs, which reflects the global cost of subsidies adjusted for market risks, at $6 billion, or about $64 billion over the next decade. This is public money that should come with strings attached, Raghuveer believes.
“The government is really negotiating with our owners. Fannie and Freddie, even more than LIHTC, do $150 billion worth of business annually with our homeowners. That’s $150 billion in financing that must come with conditions that protect tenants,” she said.
Housing issues are now at the forefront of many U.S. households as housing costs, which are particularly responsive to changing monetary policy conditions, have soared following a rapid series of interest rate hikes by the Reserve Bank. Federal.
After demonstrating surprising strength throughout 2023, the US economy is finally showing some signs of stress, with the first quarter gross domestic product and April employment report falling short of expectations.
Housing inflation, which tracks the rise and fall of the main consumer price index (CPI) number, has been falling since last year, but still remains high, with an annual increase of 5.7%. Mortgage rates are above 7%, near the highest levels in more than 20 years.
Meanwhile, rental prices have risen 29.4% over the past four years, marking an average annual increase of 7%, according to a February report from real estate agency Zillow.
“Right now, the biggest driver of consumer price inflation is housing costs,” Claudia Sahm, a former Federal Reserve economist, told The Hill in a recent interview. “Housing is [about] 60 percent of CPI now.”
Sensitive to housing pressures, Democratic lawmakers founded the Congressional Renters Caucus in 2023 and recently called for an expansion of the federal housing voucher program, along with increased tenant protections that include subsidies to help prevent evictions.
“Across the country, our voters are struggling to find and keep a home in an increasingly unaffordable rental market,” they wrote in a May letter to House appropriators.
In addition to the housing sector in particular, high prices in the economy and the consequent reduction in the cost of living have had political consequences, especially as the social safety net created by the federal government to face the pandemic was dismantled and allowed to expire.
Concerted labor organizing in key sectors of the economy has led to some important contract victories for major unions, including the United Auto Workers, which secured the reinstatement of cost-of-living adjustments following its latest strike in Detroit.
For Raghuveer, who thinks equally in terms of the individual lives of his voters and the political dynamics of the various groups that represent them, the opportunities offered to organizers by this high-pressure economic moment center on the consolidation and concentration of disparate political interests.
“[When I started doing this], some people were organizing around public housing, some around repealing state rent control bans, others around rights and protections at the local level, but it wasn’t getting much results,” she said. “Eventually, what became clear to me – and the clarity was quite uncomfortable – was that the main thing missing was power, specifically power among the people who are most affected by the problem.”
“The status quo cannot continue,” she added. “Something has to happen.”
This story originally appeared on thehill.com read the full story
