The Complexities Of Rent Control

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Expensive rents can be a byproduct of gentrification and rising property values. So isn’t rent control one way to keep housing affordable?

Turns out that it’s not always that simple.

This week’s Washington City Paper Housing Complex column explores how one developer’s approach to purchasing and renovating old apartment buildings in D.C. has become a double-edged sword for renters. When landlords wants to sell their buildings, a D.C. law requires that they offer tenants the first right to buy. Urban Investment Partners buys old buildings, but they get the tenants to waive their right to purchase by striking deals that include keeping rents relatively stable for original tenants. Those old buildings need major renovations, and the company pays for them by substantially increasing rents for newcomers to the building. The result: rent-controlled, low rates for those who remain, but the number of affordable apartments in the building — and the city– declines.

But what other options exist? The pot of money intended to preserve affordable housing in the District is dwindling. For-profit developers want to make money, and it’s difficult to massively renovate a building without charging people more to live there.

These issues disproportionately affect people of color in the District. About twice as many African Americans, Asians and Latinos rent rather than own homes in D.C. Meanwhile, nearly the same number of whites own homes as rent them in D.C. About 55 percent of people who live in D.C. rent.

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How Expensive Is D.C. For Renters?

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The D.C.-metro area is an expensive place to live, but it isn’t the priciest of places. The Washington region ranks as the 10th most expensive place for renters in the U.S., according to National Low Income Housing Coalition’s (NLIHC) new 2012 rankings.

Members of household would have to earn $28.96 per hour, or $60,240 a year, in order to afford a fair market, two-bedroom apartment in D.C., which costs $1,506 a month. Housing is deemed “affordable” if the resident spends no more than 30 percent of his or her income on rent.

The Washington region moved up one spot from last year, when the housing wage was $28.06 an hour.

More than half of the District’s population rents, and the median income for renters is an estimated $40,000 a year. That’s well below the threshold NLIHC set for affordability.

Here are the top 10 most expensive metro areas for renters, and their respective housing wages:

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Competing For Flat-Screen TVs and Affordable Housing

Hundreds of people anxiously waited in a long line near 14th Street NW in Columbia Heights last week so they could buy heavily discounted flat-screen TVs and tablet computers. Another long line formed in the neighborhood last night, but this time it was full of people waiting to sign up for affordable housing.

Hundreds people waited Tuesday night, through the rain and with some camping overnight, to sign up for newly-renovated Hubbard Place’s waiting list. And according to The Washington Post, competition for the apartments “was intense:”

Security guards and two D.C. police officers tried to keep the line orderly, but shouting matches broke out, and some of those who had waited accused others of cutting in line and not waiting their turn.

“There are a lot of people that need housing, a lot of homeless right now,” said Katherine Felder, a security guard who had been waiting in line since midnight. She lost her apartment this year and has been staying with relatives, along with two granddaughters, ages 3 and 2, who are in her care.

“I don’t have anywhere to stay,” she said from under a black umbrella, shifting her weight to keep warm. “I’m cold, wet and soaked to the bone, soaked from my head to my toes. Cold, cold, cold. Haven’t slept all night.”

As the Post points, out, there’s quite a high demand for affordable housing in the city: about 20,000 people are currently on the city’s waiting list. Although D.C. rents aren’t the highest in the nation, they are out-of-reach for many in the city. A little more than half of District residents don’t make enough money to afford a market rate, two bedroom apartment. Development has caused Columbia Heights in particular to become more expensive, which is one reason behind Latinos increasingly settling in more affordable neighborhoods in the city.

Black Home Ownership and ‘the American Dream’ in Ward 8

D.C. Councilman Marion Barry wants to encourage home ownership in majority black Ward 8, where only 24 percent of residents are homeowners. How? By banning construction of new apartment buildings. He tells Washington City Paper‘s Lydia DePillis:

“The American dream is to own a home. And black people have not gotten the American dream as much as they need to,” Barry says. “Somebody can rent for 20 years, and has no equity in their unit at all.”

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Renters are the most vulnerable to forces of redevelopment and gentrification, since they can’t really profit from leaving a neighborhood with exploding housing prices the way a homeowner can. But owning a home, and having equity tied to it, doesn’t necessarily buffer one from poverty, either. As noted yesterday, one of the contributing factors to the decline of the black middle class is the fact that African Americans generally had more of their wealth tied up in housing than white people did at the start of the recession — 63 percent versus 38.5 percent. Declining housing prices and foreclosures meant the loss of a lot of black wealth — between 2004 and 2009, the median net worth for black households dropped by 83 percent. For white households, it dropped by 24 percent.

On the other hand, the value of homes in D.C. as a whole hasn’t dropped at drastic levels since the peak of the bubble. Only a few portions of Ward 8 saw home values decline at higher rates than the national metro area average.

Even still, there are plenty of questions as to whether banning new apartment construction would even be effective in increasing home ownership. Matthew Yglesias of ThinkProgress writes:

There’s just no way that zoning policy in Ward 8 of Washington, DC could possibly influence black people’s ability to own homes. Banning apartment buildings will reduce the supply of affordable housing and reduce construction jobs. That’s it.

Tweet of the Day, 05.17

@DCntrc for all the bias against renters they are more tight knit than single family homeowners, i think.
Sylvia C. Brown

This tweet was sent in response to our post on tightly-knit communities in Anacostia.