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.
Local Housing Advocates Promote Rental Affordability -- rhino!UP for November 21, 2021
Congress is legislatively constipated with Dems fighting each other and Repubs fighting them all. It seems like local advocates are turning to local solutions to a rental affordability crisis using ballot issues and advocacy planning.
Ballot initiatives this year range from raising tourist taxes to finance affordable housing development in conservative Colorado to enacting "rent stabilization" in Minneapolis and St. Paul Minnesota.
In Colorado, business owners couldn't wait for Federal assistance. "While the Biden administration is seeking billions of dollars for rental assistance and housing in its giant economic policy bill, the federal government has largely stayed out of the problem for years, leaving states, localities and, at times, citizens to step up. 'I am not promoting taxes on anybody,' said Jerry Howard, chief executive of the National Association of Home Builders. 'But absent the federal government’s ability to get its act together, state and local governments are going to have to take on more burden.' "
By contrast, in Minnesota, the "rent stabilization" (rent control) campaigns drew fierce opposition from the property owners. "The industry raised and spent more than $4 million on a barrage of misleading and alarmist advertisements, promoted through mainstream media, social media, and mailings."
In Cincinnati, a ballot initiative this past Spring failed to enact a charter amendment that would have required the City to appropriate $50M yearly to support affordable housing. But the advocates did succeed at getting the attention of some Council candidates. Their campaign this Spring was likely a wake-up call that contributed to the wave of new members elected to Cincinnati City Council earlier this month.
Then, there's another kind of "local activism" we'll call Advocacy Planning that crops up when there is money on the line. In Columbus, African American religious, civic, and political leaders have joined together to put pressure on City Council to use American Rescue Plan Act (ARPA) funds for more affordable housing. "Black community leaders urged public and private officials to do more to create affordable housing in Greater Columbus, saying the need has become as dire as ever. 'We are demanding an affordable housing action plan,' said Nana Watson, president of the NAACP Columbus chapter, who said there still aren't enough units being built." Their demands call on the existing efforts to be expanded dramatically to meet the unprecedented increases in rents for the lowest income residents. Their message is that more housing will fix all the other social needs.
In Cleveland, a coalition of housing providers, homeless advocates, and the alt-media asks What can ARPA buy? Transformational housing for a more just future...." Their answer to this rhetorical question is a mashup of plan for new developments and expanded tenants' assistance. But besides an online petition and a flurry of media spots with glossy pix of people in business attire, it's not clear that this coalition will survive past when the ARPA funds are carved up by Cleveland City Council. That task has repeatedly fallen into chaos because of competing interests.
RHINO suggests that Advocacy Planning only works when there is a steady stream of Federal dollars to divide up. Advocates, like investors, are accustomed to playing with other people's money. In these cases it's taxpayer dollars. Alas, President Biden's Build Back Better (BBB) reconciliation bill is probably the last funding train to leave DC until 2025. Will Advocacy Planners in Columbus and Cleveland shift their efforts to building a voting base to support "transformational housing" by raising local taxes or capping local rents?
Next week, rhino!UP will look at local grassroots initiatives focused on expanding renters' rights. These campaigns, led and supported by grassroots activists, show some promise of attacking a wide range of issues that could shift the balance of power between housing providers and housing consumers. Will building from the bottom up be more successful that building from the top down?
Local Grassroots Organizing for Housing Rights. rhino!UP for November 28, 2021
When Northeast Ohio's Ideastream reported on two tenant organizing campaigns in Akron earlier this month, it was "news" because tenant-based organizing is a dog-bites-man story. After a year of stories about rental assistance and the eviction crisis, messaging around rental housing has been "tenants seek help." In contrast, as Ideastream reported, "Two tenants’ unions in Akron are demanding changes to the way complaints are handled about low-income housing. And they’re asking elected officials to get involved – or get out of the way."
One week later, a similar story out of New York City describes SHOUT-- an organizing campaign by residents in supportive housing. Residents are seeking a "bill of rights" for their formally unhoused community. This is not a matter of getting more shelter beds. Instead they are seeking the right to have a key to their "home" and a copy of their lease.
After what seems like a year of helpless tenant syndrome, NextCity reports on a national effort which is spurred by the power imbalance between owners and tenants. In the story Hear Us: A National Tenants’ Bill of Rights Is Foundational for Race Equity author Nia Johnson writes: "Tenants especially are confronted with unequal power dynamics between them and their landlords, leaving them with little agency or protections to overcome rental challenges."
Consider too, the experiences of tenant electoral initiatives in Milwaukee and St. Paul where tenants won legislative rent protections. "With only a fraction of the resources amassed by opponents, advocates in both St. Paul and Minneapolis fashioned a grassroots effort that aimed to make direct contact with as many renters as possible." Helpless seeking help? This is a different model.
This past week, a frustrated Cleveland activist complained to RHINO that tenants can be mobilized around a candidate, but quickly get disillusioned at the slow pace of progress. Then they swear off voting in the future. "It's pure frustration." For new organizers it's tough to learn that mobilizing for an election is not an end in itself. Building a base for citizen action though conversations, petitions, demonstrations, and testimony are the prelude to change.
Sustaining a grassroots campaign requires a range of activities from simple events with tangible outcomes to aspirational and value-ladened goals that seem out of reach in the moment. In the early 1970s, during a multi-year rent strike at Rainbow Terrace, tenants created a community garden that was not just a food program, but a place for gather and discuss without the formality of a "meeting." Building trust among neighbors is a prerequisite for grassroots organizing.
WKSU/Ideastream news report on the Akron organizing campaign illustrates this multi issue strategy model. "LaTonya Tyes, head of the Wilbeth-Arlington Homes union, feels many of the units simply need to be torn down and replaced, given their age and the issues involved. Some of the buildings date back to the 1940s. Her group wants regular inspections to check for structural issues, black mold, and pests such as mice and roaches." Get it? Inspections and pest control starting now and eventual demolition and replacement with modern homes.
NextCity's "Hear Us..." story (cited above) underscores the need for a repertoire of tactics from the immediate to the long-range. "Today’s housing crisis is an affordability crisis. But it’s also a dignity crisis, a morality crisis, and a corporate power crisis that values profit over people. A national Tenants’ Bill of Rights alone won’t fully deliver equity and justice, but it’s an essential step in the right direction." Back in the heyday of labor union organizing this concept of activism was called "Bread and Roses."
Politics can help, but organizers know that a campaign promise isn't worth a dime unless there's a citizen base to support implementing the changes they seek. Franklin D. Roosevelt told his activist supporters "I agree with you, I want to do it, now make me do it."