I love living in Portland, but I’m concerned with how much influence self-avowed socialists have over its future. The rent formula they created is a dumpster fire; Question A would at least downgrade it to a simple trash fire.
Question A would make a small change in the city’s housing control formula which would only come into play when a tenant chooses to move out, allowing a landlord to bring rent to the market rate. This is often the best time for a landlord to fix up a rental unit and show more value for the next tenant.
Portland’s rent formula is convoluted and confusing, a product of overlapping ballot initiatives (which can only be altered by future ballot initiatives, until five years have passed) and dreamt up by the out-of-touch Democratic Socialists of America (DSA).
Building owners and tenants alike have complained that the new system promotes raising rents to the maximum amount allowed every year just to keep up with inflation. Now that property owners may only take 70% of the annual change in CPI, it will be literally impossible to do so. Sadly, renters will pay the price in the form of lost housing stock, high prices, and unliveable units.
As prices for building materials, energy, and nearly everything else continue to rise, small landlords cannot afford basic maintenance because what they’re allowed to charge in rent can’t keep up with inflation. So what happens to the city’s housing stock? Those small landlords eventually sell their buildings to a large property management firm, or possibly to an out-of-state investor, who try to turn it into a condo or short-term rental.
The DSA complains of “rent-gouging” without noting how much profit would be acceptable. The argument is ridiculous. Are the grocery stores and chicken farmers engaged in “egg-gouging?” The DSA effort is the product of pure intellectual dishonesty (or laziness).
By now, Portland voters know that socialism doesn’t work. No matter how enlightened its members are, no Rent Board can organize enough information to effectively coordinate an entire city’s housing stock. Little evidence exists to suggest that housing is better in the city today than before these rent control rules were adopted.
The DSA claims that Question A would allow rents to be raised to whatever level a property owner wants, but wouldn’t a “greedy” landlord charge $10,000 per month in rent if they could? Of course, this price would be way out of balance with the market, and that landlord would receive $0 per month instead because nobody would pay that much for a small apartment in Portland.
A survey of economists from the American Economic Association showed that 93 percent agreed that a cap on rental prices “reduces the quality and quantity of housing available.” Rent control reduces the quantity of housing because landlords are incentivized to convert their properties into something that will yield a larger return.
Government-controlled markets are not a new idea, yet one which must be continually debunked. A Brookings Institution review of a study on the effects of rent control in Cambridge, MA between 1994 and 2004 found that “the policy imposed $2.0 billion in costs to local property owners, but only $300 million of that cost was transferred to renters in rent-controlled apartments.”
The economic reality is that the costs have to go somewhere. If they fall entirely on the property owner, do not be surprised when they simply cannot cover their costs and are forced to sell, transition the property, or it falls into disrepair. As is so often the case, socialist policy leads to the very scenarios they warn about.
I love living in Portland, but I would hate to watch the housing stock deteriorate and see more small-time landlords leave the city year after year because of misguided policy. We are not New York, San Francisco or Cambridge.
If the socialists took a moment to look beyond their rose-colored glasses, they would see that their policies end up punishing well-meaning people and only serve to make Portland more expensive and less liveable. This will only end if Portland voters make it stop.