rhino!UP November 2021

Low Mortgage Rates Fuel Higher Rents rhino!UP November 7, 2021

This week's news that the Federal Reserve will taper off "quantitative easing" is the first official recognition that the post pandemic inflation is not a temporary problem. For almost a year, the Fed and the Treasury Department assured us that modest inflation would appear as the pandemic eased, but that price increases would be temporary. Later, they said they didn't anticipate the impact of the Delta variant, but not to worry, the effect on prices would be temporary. Where the Fed goofed is that home price inflation was already well established when home prices and rent exploded in early in 2021.

When you go to the grocery store and the price of salsa is up a buck a jar, you blame "inflation." In response, the economists tell you that it's just temporary. When gas prices go back down and the cargo ships are unloaded, everything will go back to normal.

But when the landlord tells you the rent is going up by $80/month, there's no expectation that your rent will be reduced when the cargo ships are unloaded and gas prices go down at the pump.

Two weeks ago, Politico reported that the Fed's effort to scale back quantitative easing (buying US treasury bonds to keep interest rates low) could be a prelude for an interest rate hike. "Though the central bank continues to refer to the current bout of inflation as transitory, it’s also still positioning itself to have the option of increasing interest rates in the second half of next year."

Here's another reason why housing inflation is hard to fight. If gas prices get too high, you can reduce your driving. If meat goes above a certain level, you buy a cheaper cut or substitute a meatless meal. You can't do that with housing when you are in a lease or mortgage. You could move to cheaper digs, but that costs money too!

Make no mistake, the investor-led increase in home prices affects the rental market. Investors are scooping up single family homes and converting them to rental properties. That injection of upscale rental inventory then drives up the cost of other rental properties. The Market for Single-Family Rentals Grows as Homeownership Wanes. Don't take RHINO's word for it, ask the New York Times. "As buyers bid up prices on single-family homes and condominiums, many people who would have otherwise moved toward homeownership found themselves unable to afford it, increasing demand for apartments and home leases. Rents have been further boosted by the large number of people searching for places with more space and home offices during the pandemic, and as millennials in their late 20s and early to mid-30s look for more autonomy."

Ideally, there should be a way to damp down speculator homebuying without raising overall interest rates. Two weeks ago Politico Morning Money said that arch-conservative Senator Patrick Toomey (R-Pa) would propose legislation to keep FannieMay and FreddieMac from lending to investor buyers. But so far, no legislation in evidence.

The Biden administration had hoped to avoid housing inflation when they proposed building 100,000 new affordable homes to rent or buy under the Build Back Better (BBB) reconciliation bill which is still languishing in the Congress. Even if BBB survives in the House and the Senate, it will take a long time for the allocation to turn into new housing. Housing is not shovel ready.

No wonder local advocates are looking to rent control as a remedy for skyrocketing rents. The November 4, 2021 of CityLab reports As Housing Costs Spike, Voters Look for Hope in Rent Control. "Measures that seek to cap rent increases appear to be increasingly popular with voters in costly cities, reviving interest in a housing policy that most economists dismiss." While rent control is unlikely to become a big city movement in Ohio, smaller jurisdictions where rent burden is hurting a local economy may take a second look at this remedy.


  • November 8, 2021. NYT via dnyuz Winter Heating Bills Loom as the Next Inflation Threat. "Last winter was warmer than average, which led to residential energy bills that were comparatively low. This season, heating costs could rise to levels not seen a decade, even if there isn’t a severe winter. Several factors — lower global fuel inventories, incentives for producers to let prices rise and a mismatch between supply and demand as economies emerge from the pandemic — may combine to push bills higher regardless."

  • Nov 11, 2021. Vox. Democrats have no plan to fight housing inflation. "But perhaps Democrats aren’t serious about stopping housing inflation. In his statement about Wednesday’s inflation numbers, Biden touted that “home values are up,” as evidence that the economic recovery is progressing. It’s a window into the confused nature of American housing policymaking that the government cannot decide whether it’s interested in bringing down the price of homes or increasing it."

  • NOVEMBER 11, 2021. NextCity. Housing in Brief: Coloradans Vote Yes on Housing, Twin Cities Pass Rent Control

  • Nov 11, 2021. Marketplace. What rising rents mean for inflation. "The consumer price index looks at rents being paid right this second by people who are already in a lease — perhaps they are a month in, perhaps they’re 11 months in. CoreLogic took a look at single-family rents at their current market rate, what the new rent would be if you signed a lease today."

  • 17 November 2021, New Statesman. “Capitalism’s over”: The man who made millions by betting the economy would never recover, "Gary Stevenson, the Patriotic Millionaire and former trader, on predicting disaster – and why it can only be avoided by closing the wealth gap." A friendly deep dive that argues for perpetual low mortgage rates to please the investment (FIRED) class.

Snow Woe in Ohio rhino!UP for November 14, 2021

The Columbus Dispatch asks: "Will it snow this weekend in Greater Columbus?" The answer seems to be "YES". The Dispatch cites this year's Old Farmer's Almanac, which forecasts cold and snow for about 2/3 of Ohio. Meanwhile, Vermillion Ohio's Woolly Bears are forecasting a mild start to winter but an icy new year. Sooner or later, tenants will have to deal with the problem.

Why worry? Well, even though the Ohio Landlord Tenant Law requires landlords to "Keep all common areas of the premises in a safe and sanitary condition" (ORC 5321.04 A3), the Ohio Supreme Court disagrees.

In 1979, the Ohio Supreme Court decided that landlords are not responsible to remove "natural accumulations" of snow. Later in a 1993 case, Justice Andy Douglas warned of "inherent dangers" in a case involving a local snow removal ordinance.

So what is a natural accumulation? A logical conclusion for landlords seems to be--don't disturb the snowfall or else risk becoming liable for a hazard. If landlord disturbs the natural accumulation, then the landlord must monitor the conditions to assure that no hazard was created. Examples include:

Can a landlord shift the snow removal duty to a tenant? Maybe!

  • The Ohio Landlord Tenant Law prohibits a landlord from shifting a landlord duty to a tenant. ORC 5321.13A, but....

  • A landlord may compensate a tenant to do snow removal in common areas. Tenant advocates recommend that the parties make a written agreement, separate from the lease, so that it's clear who performs what service and when. If a hazard is accidentally created, the tenant acting as an agent of the landlord would have minimal liability risk.

Keep in mind that in a single family rental (SFR) property, the driveway and walkways are usually under the exclusive control of the tenant and not covered by the landlord's "common area" duty. When renting a SFR, be sure to ask if the landlord will assume the tenants' duty of snow removal (ORC 5321.13F). IF YES, make sure that duty is listed in the rental agreement. IF NO, put snow removal services or equipment into your household budget. When a tenant disturbs the natural accumulation, the tenant must monitor the conditions to assure that no hazards result. Ask your insurance provider if you need additional coverage when you take on snow removal duties.

The Federal and State Fair Housing Acts may be of assistance with snow removal if a tenant has a mobility impairment. When a tenant with a disability needs a change in a rule, policy or procedure, that tenant can ask for a reasonable accommodation (RA) of the snow removal policy. Don't wait til you trip or fall! Make the request before the snow flies. If the landlord refuses to comply or offer an alternative to your requested accommodation, you may file a complaint with the Ohio Civil Rights Commission (OCRC).

Municipal sidewalk ordinances may be helpful to tenants, if your local government is willing to enforce them. A winter safety publication from the State of Ohio is pretty vague. "Some Ohio cities with snow removal ordinances levy fines for not removing snow in a timely manner, while others issue warnings. However, a local ordinance does not automatically implicate a homeowner if someone slips and falls on un-cleared property."

You know how hard it is to enforce local "mask mandates." Still, seeking municipal enforcement of sidewalk ordinances in neighborhoods that depend on pedestrians as business customers or voters may be successful. Engage your local council persons to "test the water"...before it turns to ice.

Click here for last year's story on Snow in Ohio.