A New ‘Holy Grail’ in the Housing Crisis: Statewide Rent Caps

OLYMPIA, Wash. — For the past 10 years, Dominique Horn has worked for a community health organization in the fast-growing city of Vancouver in Washington state, helping people squeezed by soaring rents to try to avoid homelessness.

Sometimes she wonders if she’s going to be her agency’s next client.

With her husband struggling at times to find work, Horn has maxed out her credit cards to keep pace with the rent. She has relied on public assistance and stayed in shelters. The couple and their two children have moved so many times that she keeps sentimental items like photos and heirlooms boxed up, because no place feels like home yet.

“I’m just in a constant state of waiting for the other shoe to drop,” said Horn, 42, whose current lease expires in May. “I am one price hike away from being back into instability.”

Horn is one of thousands of Washington residents who have converged in recent weeks on Olympia, the state capital, to lobby legislators about one of the most closely watched housing bills in the country: A measure that would cap residential rent increases at 7% a year.

Deemed a priority by the Democratic leaders who control the state Legislature, the bill has cleared the House of Representatives and is now in the Senate. If it is enacted, Washington would become the third state in the country to adopt statewide rent regulations, after Oregon and California — and all within the past five years.

From coast to coast, housing has emerged as perhaps the biggest statehouse issue this year. The number of households considered by the federal government to be rent-burdened — meaning that rent consumes more than 30% of their income — climbed to a record high of 22.4 million in 2022, according to a new report from the Joint Center for Housing Studies at Harvard University.

“People are facing skyrocketing rents,” Rep. Laurie Jinkins, a Democrat and the speaker of the state House, said during the Legislature’s opening session in January. “They are stressed, they are afraid, and they are asking us to help.”

Rent regulations have historically been adopted by municipalities rather than states. New York City’s system covers 2 million people — almost one-quarter of the population. San Francisco and Los Angeles — and more recently, St. Paul, Minnesota, and Montgomery County, Maryland — are among the 200 local governments that regulate rents.

When states get involved in the issue, it has often been to prevent local jurisdictions from enacting rent regulations. More than 30 states have done that, with Montana, Florida and Ohio being recent additions; West Virginia could be next, according to Jim Lapides, who tracks legislation for the National Multifamily Housing Council, a group that represents the apartment industry.

The state of Washington blocked local rent regulations in 1981, when Republicans last controlled the governor’s office and Legislature. Rather than lift that ban, the current bill would protect tenants throughout the state, including those in towns that may be unable or unwilling to take their own action.

The measure faces formidable challenges in the Legislature, which is due to adjourn March 7. A similar attempt last year failed. And this time, the original proposal, which called for a 5% cap, stalled in a Senate committee after a moderate Democrat said she could not support “adopting risky policies that might do more harm than good.”

The proposed 7% cap would be flat, unlike those in Oregon and California, which can vary somewhat depending on how fast consumer prices are rising. The cap is 7% plus the inflation rate in Oregon and 5% plus inflation in California; both states set a maximum of 10%.

The Washington bill would apply only to lease renewals; landlords would be allowed to increase rents at will when leasing to a new tenant. To avoid discouraging construction, the restrictions would not apply for the first 10 years that a building is occupied, according to state Rep. Emily Alvarado, the bill’s prime sponsor.

Gregg Colburn, a professor of real estate at the University of Washington and co-author of a recent book, “Homelessness is a Housing Problem,” said he was not surprised that state officials around the country would adopt “an almost paternalistic” approach.

“It is becoming the topic du jour,” he said. “If you’re an elected leader at the state level, you now say, what are we going to do? What are the tools we can use?”

The ‘Year of Housing’

Median residential rents in Washington rose by 34%, adjusted for inflation, between 2001 and 2019, outpacing the 21% rise in renters’ incomes over the same period, according to the Center on Budget and Policy Studies, a national research group.

In 2023, which some state leaders called the “year of housing,” lawmakers focused on supply, passing laws to permit more duplexes, fourplexes and accessory dwelling units in residential areas, while budgeting a record $400 million for a housing trust fund aiding low-income residents.

This year’s abbreviated legislative session has been marked by bills related to housing affordability and to raising new revenue, most of them sponsored by Democrats with little or no Republican support. Besides the rent bill, lawmakers are weighing a tax on real estate transactions over $3 million and an excise tax of up to 10% on short-term rentals like Airbnb units.

“The holy grail of holy grails is rent control,” said state Rep. Andrew Barkis, a Republican who represents a district east of Olympia. “They’re hellbent to do it,” he said of the Democrats, “and they’re on the precipice of thinking they can.”

Barkis, who owns a property management company, has been an ally of the Washington Multi-Family Housing Association, which represents large property management companies. The group sent 150 members to lobby in Olympia in January, the biggest contingent ever.

The association attributed a slight recent dip in rents to increased housing supply. It said that profit margins in the industry were low, with each $1 in rent yielding just 6 cents of profit, so imposing a rent cap might jeopardize the construction of 15,000 units of housing over the next 20 years.

The association called instead for more vouchers and credits, like state reimbursement for landlords who freeze or reduce their tenants’ rents.

“Incentives are what bring people to the table,” said Brett Waller, general counsel of Devco Residential Group, which develops affordable and market-rate apartments in more than a dozen states.

272 Square Feet for $1,200 a Month

More vocal than the landlords during the legislative session were the tenant activists, several hundred strong, who filled the Capitol campus for a midday rally, organized by the Washington Low Income Housing Alliance, a statewide coalition.

Also on hand were older residents living on fixed incomes who were involved with the Association of Manufactured Home Owners, which represents people who own homes in mobile home parks and rent the land on which they sit. They, too, have faced steep rent hikes.

For Horn, the community health worker, the most wrenching moments in the state Capitol came during a standing-room-only meeting with legislators from the Vancouver area, which had the highest rate of eviction filings per capita in the state in 2023. One after another, constituents shared stories of evictions and homelessness.

Monica Zazueta, who brought her 9-year-old son Aries to the meeting, said Aries had become increasingly despondent over his family’s unstable housing situation.

“The youth crisis mobile team came out to help, because Aries said he didn’t want to be living anymore,” she said, sobbing.

Another group that is a regular presence in the state Capitol is the Rental Housing Association of Washington, which opposes rent regulations, and represents smaller property owners like Mike Frost.

Originally from Montclair, New Jersey, one of about 100 New Jersey municipalities with rent regulations, Frost, 67, owns two buildings in the Capitol Hill neighborhood of Seattle, totaling 26 units, and does his own repairs. During a tour of his garden apartment building, built in the 1950s, Frost said he was proud to provide relatively affordable units — a 430-square-foot one-bedroom goes for $1,385 a month — on a fast-changing block.

Across the street, new town houses are selling for $800,000. To the left, a five-story building has 56 micro-units — studios as small as 272 square feet, one of the city’s latest stabs at affordability — that rent for $1,200 a month.

Frost said statewide rent regulations of the kind being discussed in Olympia would hurt small landlords who are already struggling with escalating expenses and red tape, and would prompt some of them to sell their buildings.

Referring to the likely buyers, Frost said, “It brings in people that are going to be more bottom-fishers.”

One of Frost’s tenants, Brittaney Moses, a 37-year-old interior designer, recently suffered a seizure, limiting her mobility. She owes $955 in back rent. But Frost — “such a great landlord,” she said — has helped her tap community grants and other resources to keep from falling any further behind.

Since she moved in three years ago, Moses’ monthly rent has gone up once, by $120, or 9.5%. The increase has been daunting.

“I’m for anything that keeps rent down low,” she said. “But I understand the landlord’s perspective as well. I know how expensive it is.”

A Room With a Vue

Local governments have also been tackling housing issues.

In Seattle, a proposed ballot initiative, now in the signature-collection stage, would levy an “excess compensation payroll tax” on companies for each employee who is paid more than $1 million annually to finance new public housing.

Edward R. King Jr. and Kerri Burnside are tenant activists in Bellingham. In an interview at the Little Cheerful Cafe, which King once owned, he said that a decade ago he was struggling with multiple sclerosis and a divorce, and finally found a one-bedroom apartment in 2015 for $750 a month in the complex where Burnside lives.

When the property was acquired in 2021 by a Michigan-based management firm, King’s rent was $850, but it soon jumped — first to $1,100, then to $1,750.

His next home was his 2007 Saturn Vue.

“I really couldn’t afford to move into anywhere,” said King, 59.

He eventually made his way to the top of an eight-year waiting list for public housing. And he was stunned at how many of his former neighbors had been forced to move, sometimes to other states.

“I stopped counting at 20,” Burnside said.

This article originally appeared in The New York Times .