County council member Marc Elrich on Wednesday announced he was pulling together a bill that would reign in residential rent increases. Ditto, said two more council members.
“If we’re going to maintain the diversity of this community, we have to maintain the affordability of housing,” Elrich (D-At large) said during a town-hall meeting at downtown’s AFI Silver Theatre.
Elrich’s bill would put rent increases in line with the consumer price index, which measures inflation. However, steeper hikes would be allowed under Elrich’s bill if smaller increases cut into landlords’ profits.
Elrich also proposed a temporary pass on rent stabilization for newly constructed homes. Those buildings would have up to seven years to get their operating expenses together before rent-increase rules kick in, he explained.
The proposed rent-stabilization rules would not be as stringent as those in New York, Elrich said. There, the city government keeps a tight lid on rent increases for many apartments, which benefits low and fixed-income residents. However, extended leases put a squeeze on available housing and jack up market rates.
Instead, Montgomery County would “learn from [New York's] mistakes,” Elrich said. He did not say when the bill would drop.
Council members Valerie Ervin and Duchy Trachtenberg said they too would kick out some rent stabilization bills this spring, though theirs would differ slightly from Elrich’s bill. Neither elaborated on the details.
“The solution will come from the community, and that includes the development community,” Trachtenberg (D-At large) said.
Almost half of all Silver Spring residents rent their homes, according to Ervin, the District 5 Democrat.
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Boxed wines and rosés are back in vogue. Just ask The Penguin's sommeliers.
– Vietnamese Foreign Minister Nguyen Co Thach
And if history is correct, it was the communist North Vietnamese that defeated the capitalist military superpower called the United States.
Happy 40th Tet Offensive anniversary!
btw…If you are a low-income provider struggling to care of your family, you would understand the arguments for rent control.
I think rent stabilization would be good. My husband and I were lucky enough to be able to buy a house this year. Our rent was raised to the point that it actually costs us less to pay the mortgage than the rent we were forking out. And now we have twice as much space! We already have several friends that have moved away in search of lower housing costs. How are people supposed to save for a house when they are paying all their money in rent? I am glad the county is finally addressing this important matter.
IHY, you realize that the Tet offensive was a major defeat for the North Vietnamese, right?
You also realize that on the field of battle the North Vietnamese could not match the US, right? Unfortunately the North Vietnamese won the battle of public perception.
Furthermore, why do you seem pleased that the United States lost?
I think rent stabilization is a good idea.
As for the Vietnam War, I think it’s a terrible tragedy that all those American soldiers & Marines lost their lives or were wounded there, but it was a war we deserved to lose.
Really Roader, why is that?
Rent stabilization is a great idea. The greedy developers and apartment managers have hammered tenants with stiff rental increases.
Gas prices are high. Incomes are stagnant for most families. Stocks and 401K accounts are in the crapper. Costs have to be contained somewhere.
This is not the forum to have lengthy debates about the Vietnam War. I would only add that we intervened in a civil war between Vietnamese who had different ideologies. We had no business sending 58,000 military men to their death in what amounts to a civil war that should have been settled by the Vietnamese themselves.
IHY I noticed you did not respond to my questions.
A free market = a free people
People’s Republic of Maryland indeed.
Hi, everybody!
Let’s stick with the rent control discussion for now, and save the Vietnam debate for another time.
Thanks!
Bad Idea,
There’s no such thing as a “free” market. Businesses and corporate interests rig the rules and prices to their favor. Because of that, there is not much freedom. I think freedom means to live in a community where you can afford to pay for housing. Market economics is another form of tyranny placed on society.
Editor’s note: This comment was edited for content. — JD (Jan 31, 2008)
The free market, where the market can charge for housing what the public is willing to pay, and if there are enough well-to-do people around to afford the rent, then that will do quite nicely.
“The poor have to labour in the face of the majestic equality of the law, which forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.” – Anatole France
Silver spring is becoming in demand.. has been more and more so for the 3 years i’ve lived here. With demand, so goes prices. Land prices, assessments (and hence property taxes) etc… To some degree, yes, landlords that have operated since it was not-so-nice are making a killing. But everytime a new building is built, the land acquisition costs account for the supply/demand equation and hence it costs a fortune. Everytime an apartment complex gets reassessed, the value goes up due to supply/demand and so do the owner’s taxes. Forced economies create corruption. If silver spring were under strict rent control throughout it’s revitalization it would have been disaster. If rents were still circa 1998 (+inflation), but the town was like it is today, demand would be through the roof – the higher prices keep a cap on that demand, and hence on the corruption that is guaranteed to occur in such a system. I’m not saying it’s should be let to run totaly free – but any rent stabilization program MUSt take into account the simple fact that it’s NOT going to cost the same to live in downtown SS (or bethesda) as it does glenmont where you have half the metro trains and nothing in walking distance. If it did, everyone would want to live in downtown SS, and supply/demand would be TOTALLY out of wack. It’s unfortunate, but the other way is impossible.. you’d have corrupt landlords pocketing payoff money to bump people to the top of the list and everything else that happens in EVERY socialized nation. Regulated capitalism, yes, socialism, no thanx.
Paul_Silver_Spring: “Silver spring is becoming in demand”.
Really, show me the numbers. I would argue that population growth in Silver Spring has leveled off since the beginning of the housing bust in early 2007. If Silver Spring was in such demand, just about every condo unit would be full and new retail and restaurant projects would be blossoming everywhere. South Silver Spring is still an economic development equivalent of a DMZ.
Paul_Silver_Spring: “Everytime an apartment complex gets reassessed, the value goes up due to supply/demand and so do the owner’s taxes.”
Right, maybe we should look at how the county assesses property value.
Paul_Silver_Spring: “If rents were still circa 1998 (+inflation), but the town was like it is today, demand would be through the roof – the higher prices keep a cap on that demand, and hence on the corruption that is guaranteed to occur in such a system.”
Again, how do you really know this? I know some people who would rather live in a house, with a yard on a quiet road. Not everyone is attracted to the dense living conditions. Takoma Park has a well-known rent stabilization program and I don’t hear about landlords gaming the system there. I looked at housing in TK PK and I found plenty of available apartment units for rent. Even in Takoma, there is considerable slack in the market to fill the demand. I think your argument against rent stabilization here isn’t up to par.
Look, the reception by the crowd at AFI last night was very enthusiastic towards a proposed rent control program. You can call these people socialist hippies from the Peoples Republic of Montgomery County. But these people realize that a community priced for only one economic class does not mean that the community is healthy or diverse. If anything, the business environment suffers in the long term because consumers won’t be able to afford the prices of shopping and dining. You mind as well just build a giant gate around DTSS…a gated community for the wealthy.
If you want affluence, please start a life in Bethesda/Chevy Chase. If you want the next thing to affluence, there is Rockville. But Silver Spring IS and ALWAYS will be a middle class community for professionals and families…not some super Yuppie playground a la Bethesda/CC.
Rent stabilization is a bad idea. It is not needs-based (this is hardly a progressive solution for our PR of MC!).
Now, how about some property tax stabilization?
Stuart
Yes… diverse and affordable.. just like manhattan.. ask them how their rent control program is working. Low rent controlled homes and outrageously expensive apartments for the wealthy, no middle class. You say you want a diverse cross-section of economic backgrounds, but what you’re missing is that over-regulation will PREVENT that. The demand for the remaining, non-income-dependent housing will drive the price so high the middle income levels will be missing entirely. Go take an economics course or read a history book.
PLAY NICE, PEOPLE.
IHY: “I would argue that population growth in Silver Spring has leveled off since the beginning of the housing bust in early 2007.”
If this were true, prices would have leveled off too – plain and simple. Rents are still going up +5% a year since revitalization, a very direct sign of demand doing the same.
“Right, maybe we should look at how the county assesses property value”
Then do that county-wide. See how well all of MoCo’s outstanding social services fare when you bring in half the tax dollars from the other 80% of the county that hasn’t had the same boom silver spring has, in order to “keep silver spring affordable”.
IHY: “Takoma Park has a well-known rent stabilization program and I don’t hear about landlords gaming the system there”
Takoma Park’s rental units are off on Lee St and places like that, nowhere near the vibrant downtown – which isn’t nearly as vibrant as silver spring. Irrelevant anaology.
IHY: “But Silver Spring IS and ALWAYS will be a middle class community for professionals and families”
I think i’ve addressed many many times that this is exactlly the class that will be eliminated by vastly increasing any subsidization type of program – be that rent control, housing subsidies or whatever else.
Instead of calling me a yuppie, how bout you provide some rational, logical economic reasoning for how it’s going to work? Here’s how I propose it will work, tell me what you disagree with:
County requries 50% of apartments to be under rent controls. Those 50% can only follow inflation. County places a 80% of median income limitation of residents of rent controlled apartments. Silver Spring remains a great community, so the 25% who used to live in those apartments but don’t meet income requirements are now in competition with the other 50% of silver spring, leaving 50 available apartments for every 75 potential residents. To compat ridiculously long waiting lists and to make up the income they’re losing on the first 50% of their units, owners jack up rent on the remaining 50% of units. The lower income 25 of those 75 waiting residetns can no longer afford to live in downtown.. the coincidentally, fall directly in the “middle class” income brackets that you so desperately are trying to preserve. We now have a population of folks making less than 80% of median income in rent controlled apartments and more than 150% who can afford the remaining units.
There’s two solutions to a supply and demand problem. Combat supply or combat demand. The only way to combat demand is higher prices. So if we want to prevent that, we’d better get to work on the supply side. If downtown apartment buildings were sitting 25% vacant, you can rest assured rents wouldn’t be increasing by +5% a year.
I think the tax dollars coming in from other Montgomery County districts are SUBSIDIZING Silver Spring. They are SUBSIDIZING yuppie development projects such as Live Nation. Oh yeah, the taxpayers from Potomac and Bethesda got their money’s worth with Discovery coming to downtown Silver Spring. Silver Spring has been a DRAIN on Montgomery County’s resources.
PSS…here’s the reality:
1. There was a housing bubble in Silver Spring. Can you at least recognize that? Do you know that bubbles do not follow rational supply/demand models in economics? When housing prices shoot up 100 percent from 2001 to 2007 in the Silver Spring area, this is not “normal” economic behavior. Resident incomes and savings have not increased 100 percent in a span of six years.
When landlords raise rent by cumulative 50-75 percent in the same time frame, this does not follow rational economic thought. I know that property taxes and insurance rates haven’t risen that high during that time frame. Why have landlords instituted double-digit rent increases on residents in the Silver Spring area? It’s not because of taxes. It’s not because of property insurance or utility fees. The answer is because the landlords can do anything they want!!!! If the landlord thinks the redevelopment of Silver Spring will bring more people, he can raise the rent by 10 or 20 percent. Maybe even more. The landlord can raise rents to any level that he sees fit. Where is the rational calculus in this? How does this meet the supply vs. demand calculation? Just like the real estate agents, the shady mortgage lenders, and greedy home sellers, landlords GAME THE SYSTEM TO ACHIEVE MAXIMUM PROFIT!!!!! Don’t believe me? Just ask lots of renters in Montgomery County.
I can see one big argument against rent stabilization.
Because of the housing bubble in Silver Spring, you can expect a large amount of new buyers who used non-traditional mortgage payment plans (i.e. ARMs, interest-only, no down payment) to be able to afford a condo or house in Silver Spring. Despite the interest rate cuts by the Federal Reserve, the adjustable rates will continue to climb and the new buyers will be looking ever increasing mortgage payments. This could lead to increasing foreclosures in the Silver Spring community. This will have a negative impact on prices in the long term. You seem to think that sunny days will keep coming to Silver Spring. I see a more cloudy, turbulent forecast in our real estate market. But the great housing bubble bust of 2007-2009 could cause a leveling of rents in apartments. This is when a rent stabilization program might be counterproductive because the market prices could decline on their own.
The demand/supply problem did not exist during the housing bubble. Higher prices were not caused by demand…higher prices were caused by SPECULATION! S…P…E…C…U…L…A…T…I…O…N!!!!
The landlords were betting (key word is betting) on huge demand for rental units and they jacked up rents to non-sensical levels. Paul, if you can’t recognize this problem, I don’t know how else I can get through to you.
We need to curb the irrational market behavior of landlords for the good of the community. But maybe…just maybe…the housing bust will prevent any county government action.
Paul in S.S., my sister lives on the Upper West Side in a rent controlled apartment. Her income level is “poor” (starving artist, wouldn’t ya know). Rent control does work in Manhattan, and it can work in S.S., though I think a needs-based system is probably the most fair way to go.
Terrible idea. What we need is more supply to bring those prices down, not a meddlesome county government. All rent controls do is discourage development (seven years is hardly a long-term horizon!) and encourage people not to invest in their own property. Why doesn’t the county start regulating mortgage interest rates while they’re at it?
No one’s rigging the rental market against the people, either, unless you count the anti-growth contingent who are holding up more housing on spurious reasoning. If anything, Silver Spring has a very competitive rental market as it is. As far as I’m concerned, if you can’t afford the rent, there are plenty of cheaper spots in other areas.
IHY – Agreed that there has been a nationwide housing bubble because of speculation. And it’s been deflating/bursting in the past 6 months with forclosures, declining sale prices, etc… Foreclosures in MoCo, however, are lower than much of the rest of the DC area – The middle-of-nowhere-mass-sprawl NoVa areas(Loudon and such) are well in the lead in that race if I’m not mistaken.
However, I disagree with your conclusions. Yes things get out of control with a bubble. But that bubble is rapidly deflating and we’re within 6 months to a year, I think, of seeing the consequences. Mortgages are FAR more difficult to get than they were a year ago, which will decrease the “bubble induced” demand. Thus far, that has not had an effect (or much of one) of downtown SS rents or condo prices, which I think we can all agree on. But if things don’t come down naturally in the next year, then I think thats indicitive of actual supply and demand, not the housing bubble. Speculators can’t hold property forever and landlords can’t operate 30% vacant, after doing it for a while, both must eventually change their pricing scheme to match real demand, not speculative demand. The best way to make landlords act honorably is to make them have to compete for their customers, not give them an unlimitted supply. Forcing prices artificially low yields the second result – because if rent in Glenmont and Downtown SS were the same, why would you NOT try to get a place in SS?
Springvale – that’s exactly my point, the upper west side is “starving artists” in rent controlled apartments and multi-millionare bankers and such. It ENTIRELY lacks a middle class. I consider that a PROBLEM not an ASSET. There should be subsidies that help some starving artists and lower income residents afford rent, but after that the market should be allowed to mostly operate uninterfered with to bring prices to a level where they match reality. The rent controlled apartments are far below reality and the non-rent controlled are far above.
Paul, my OTHER sister also lives on the Upper West Side, and she’s in the middle of the middle class. So are many of her neighbors, so I can’t agree.