With monthly inflation down to its lowest point in more than two years and heading toward the Federal Reserve’s target, the Biden administration on Wednesday celebrated “welcome progress.”
But an analysis from Accountable.US showed how more than 100 million people who rent their homes in the U.S. are not seeing the benefits of what one Biden spokesperson called “the great American comeback” in their housing costs, particularly millions of people whose homes are owned by corporate landlords.
The government watchdog found that the six largest corporate landlord companies brought in close to a combined $300 million in increased profits in the first quarter of 2024, with the profits mostly stemming from rent hikes.
Overall in the U.S., rent prices have skyrocketed by 31.4% since 2019 while wages have increased by just 23%, meaning tenants need to earn nearly $80,000 per year to keep from being rent-burdened and spending 30% or more of their income on rent.
The six companies included in the Accountable.US analysis on Wednesday have more than rent increases in common: They have all faced lawsuits regarding their use of the property management software company RealPage, which is alleged to have used an algorithm to fix rent prices, impacting about 16 million rental units in the United States.
The largest net income increase Accountable.US found among the six corporate landlords was that of Camden Property Trust, which increased its net income by 97% in the first quarter of this year to $85.8 million. The company spent $50 million on stock buybacks that it said were made possible by its “weighted average monthly rental rate,” which went up nearly 2% year over year.
“Big corporate landlords have kept right on raising rent on everyday families regardless of how high their profits have grown.”
Essex Property Trust increased its net income by 76% year over year to more than $285 million, also raising rents by 2.1%, while Equity Residential’s income jumped 39% to $305 million as it increased its rental rates by 3.4%, with tenants paying an average of $3,077.
AvalonBay Communities saw its net income increase 18% to $173.6 million, apparently owing both to its “rental and other income” revenue going up by 5.6% and its “management, development, and other fees” for tenants soaring by 68.4% to nearly $1.8 million.
“Big corporate landlords have kept right on raising rent on everyday families regardless of how high their profits have grown. Adding insult to injury, many landlords rewarded a small group of wealthy investors with new handouts at the expense of struggling tenants,” said Liz Zelnick, director of the economic security and corporate power program at Accountable.US.
The group’s analysis was released weeks after the Federal Bureau of Investigation conducted a raid on an Atlanta-based property management firm in the Department of Justice’s antitrust investigation into RealPage regarding “allegations of a nationwide conspiracy to artificially inflate apartment rents.”
As Competition Policy International (CPI) reported earlier this month, “RealPage’s system, which provides rental price recommendations based on real-time data from landlords, is alleged to be a key tool in manipulating the rental market. The firm’s influence covers 70% of multifamily apartment buildings.”
“The scheme purportedly operated by encouraging landlords to adopt RealPage’s pricing recommendations, a practice they follow 80-90% of the time,” reported CPI. “This coordinated approach reduces the availability of rental units, driving up prices. One of the architects of RealPage’s system reportedly stated that the aim is to prevent landlords from undervaluing their properties, ensuring consistently higher rents across the board.”
Zelnick said it was “unsurprising that some of the same companies that needlessly inflated housing costs have worked closely with a software company accused of helping landlords coordinate a massive price fixing scheme. Through-the-roof rent hikes based on greed—not need—have kept many Americans from getting ahead, which is why Congress must do more to support the Biden administration’s affordable housing actions.”
President Joe Biden has urged Congress to pass legislation to stop price gouging by landlords and to build millions of affordable rental units.
Rent control can either be your friend or your enemy.
The laws are often the bane of landlords who’d like to charge more and a potential safety net for tenants who can’t afford steep rent hikes. But why it’s around isn’t necessarily because politicians want to protect the little guy — rent control has historically been used to mitigate another problem.
If you want a breakdown of how rent control may work in your area today, here’s the guide for that. But in this one, we’ll explore more of the backdrop: how high inflation, wartime efforts and a housing crisis birthed different eras of rent control.
The wartime effect
L.A.’s first round of modern rent control came more than 80 years ago — and it was perhaps the strictest we’ve seen.
When World War II began in 1939, industrial employment ballooned. The Great Depression was easing, so workers migrated to Los Angeles in the tens of thousands for employment. But the surge in population, combined with the war effort, created a perfect housing storm that lasted for years.
More people were coming at a time when our housing stock couldn’t keep up. About 15,000 residential projects went unfinished because labor and supplies were diverted to the war, according to research from the UCLA Luskin Center. With demand way up, many people had no choice but to live in severely overcrowded and unsuitable conditions. The situation was so dire when a federal study was conducted that a veteran shar
A 1945 poster letting tenants know about their rights under rent control. (United States Office of Price Administration/ Illinois Digital Archives, Illinois State Library, and Secretary of State Alexi Giannoulias)
ed how he was living in a house with 18 other people while trying to turn a chicken coop into a place to stay.
The ultimate solution would be more housing, but that would take years to improve. In the interim, the federal government deployed a rent freeze (and other price controls)in 1942 to ensure essentials remained affordable. Alisa Belinkoff Katz, lead author of UCLA’s study of rent control in L.A., says this move made rent control part of the war effort and more acceptable to landlords.
“It was considered sort of the patriotic thing to do, at least at first while the war was going on,” she said. “It became something that was widely publicized and that people were engaged in.”
That publicity campaign helped to make tenants aware of their rights. Landlords and renters were also required to sign a property registration form that recorded the rent amount under the freeze. To Katz, the tenants who kept tabs on compliance, along with federal enforcement, is what made the rent freeze effective.
A line of people outside of the rent control office at Broadway in Los Angeles on Nov. 5, 1942. (Herald Examiner Collection / Los Angeles Public Library)
Property owners register their rentals at the Broadway rent control office in Los Angeles on Sept. 25, 1942. (Herald Examiner Collection / Los Angeles Public Library)
The support of landlords didn’t last long, though. The L.A. County apartment association’s president at the time, David Culver, complained about treatment in a meeting with landlords, and together they vowed to take action. They argued that the rent cap was too low to afford taxes and maintenance, and some threatened to take their rentals off the market.
Once the war ended, rent control became a ticking clock. After a postwar federal housing act went into effect, allowing local governments to lose the rules, the L.A. City Council voted to decontrol. Residential rents went back under the sway of the market.
Property owners cheer as the L.A. city council votes 10 to 4 in favor of rent decontrol on July 2, 1950. More than 2,500 owners and tenants packed the council chamber. (Herald Examiner Collection / Los Angeles Public Library)
‘Stagflation’ in the 1970s and Proposition 13
Decades later, L.A. was in a different predicament.
An oil crisis was going on, aiding a surge in inflation while economic growth was at a snail’s pace. This is when the term “stagflation” was coined (a portmanteau of stagnation and inflation). Among a number of other things that became more expensive, L.A. home prices were skyrocketing along with owners’ property tax bills.
Landlords again organized around this issue. Howard Jarvis, then-executive director of the L.A. County apartment association, went down in history as the champion of 1978’s Proposition 13 — a measure that aimed to cap property tax rates. But in order for it to pass, he knew that the state’s renters — which made up 45% of households, according to Katz’s research — needed to be convinced to vote for the proposition.
Howard Jarvis and Paul Gann, co-sponsor of the measure, celebrating after Proposition 13 was declared a winner on June 6, 1978. (Ken Papaleo / Herald Examiner Collection/Los Angeles Public Library)
Landlords got involved to persuade their tenants. They argued that getting their tax bills reduced would trickle down to their tenants, too. Some even offered rent rebates if it was successful. But after Proposition 13 prevailed at the polls, the rose-colored glasses fell off. Despite what they’d said previously, many owners continued to raise their rents — some by more than 20% that same year.
“It should be an incentive to keep rents low, one would think,” Katz said. “But it hasn’t worked out that way because property values continue to rise all over the city. [It helps landlords] because their taxes aren’t going up. So if their taxes are stable and their rents are allowed to increase all the time, then of course it helps them.”
In effect, the law was a type of rent control but for landlords, because it lowered their property taxes and limited increases.
Renters feeling the pinch
Demand for tenant protections was high in this decade, especially in middle-class communities. Renters had few rights and people were feeling the pinch.
“Our phone started ringing off the hooks,” said Larry Gross, executive director of the Coalition for Economic Survival. “It appeared that the speculators discovered Los Angeles. They were buying up rental units throughout the area, raising rent, putting a fresh coat of paint on it, some minor repairs, and then selling it again.”
Gross was one of the key people leading the fight for rent control and helped organize tenant unions. He says some apartment buildings were getting flipped four to five times a year. And after Proposition 13, he says the “lid blew off” with rent.
It was the first of many broken promises that landlords provided to their tenants. — Larry Gross, executive director of the Coalition for Economic Survival
Renters rallied, urging L.A. leaders to take action. The city council members who represented white, middle-class districts supported the measures, but the ones leading Black and Latino districts did not. Back then, rising rent was viewed as a middle-class problem, and community leaders in lower-income districts worried that rent control would drive away investment in their communities.
Still, the council got enough support to roll back and temporarily freeze rents. Mayor Tom Bradley claimed it was a necessary step to halt “outrageous rent increases.”
The freeze gave the council time to draft a long-term response, which is where the Rent Stabilization Ordinance in place today came from. With this law, landlords can only increase rent in certain properties (built on or before Oct. 1, 1978) generally between 3% and 8%, based on inflation. (There’s a rent freeze on these properties currently because of COVID-19.)
Where we are now
Since the ’70s, a lot has changed. Rent control has grown to multiple cities, but so have the legal battles surrounding it.
“It’s literally been somewhat of a cat-and-mouse game with landlords,” Gross said. “Because landlords will find loopholes in the law and then use that to evict tenants or increase rent. And then we’d identify those loopholes and we get the city council to close them.”
Property owners looked to change these rules, too, and they got key laws passed from higher up.
New rent laws
1985: The Ellis Act, a California law that allows landlords to evict residential tenants in order to leave the rental business, passes. A landlord filed a lawsuit against Santa Monica, which instituted rent control six years earlier, for refusing to let him demolish his rental property, claiming it was in bad repair. He lost the case when it reached the California Supreme Court, but shortly after the state legislature passed the Ellis Act.
1995: The landlords’ grand slam, the Costa-Hawkins Rental Housing Act, passes. This was the state legislature’s response to landlords’ building frustration with rent control laws, which were more regulated in some cities.
West Hollywood and Santa Monica, had the strict “vacancy control” rule. Under that provision, owners couldn’t raise rents to market rates between tenants, but small increases were allowed during tenancy. The act made that provision illegal statewide.
It literally puts a bullseye target on the back of particularly low-rent, long-term [rentals]. — Larry Gross, executive director of the Coalition for Economic Survival
“It literally puts a bullseye target on the back of particularly low rent, long-term [rentals],” Gross said on the removal of vacancy control. “If they get those tenants out by any means, they can jack up rents to whatever they want.”
The act also prohibited rent control on residential properties built after Feb. 1, 1995, excluded single-family homes and condos, and generally tied city leaders’ hands.
“It froze existing local rent control laws,” Katz said. “It had a huge impact because it prohibited what local governments were able to do to protect renters in their jurisdictions.”
It can be tough to easily understand how, when, and where rent control affects you. Everything can change depending on what city you’re in, your building type and when it was built.
Some basics you should be aware of are the main types of rent control:
Rent freeze (rents are not allowed to rise at all in a given period).
Vacancy control (rent can’t rise to market rates between tenants, but smaller increases are allowed during tenancy — this is illegal in California).
Vacancy decontrol (rents can rise to market rates between tenants, and increases are allowed during tenancy — the standard in the state now).
Another way that rent control can change is with how much of the consumer price index, which measures inflation, gets factored in. For example, the city of L.A. typically lets rent controlled properties increase between 3% and 8% a year, depending on the full rate of inflation. But Katz says that other cities have used a lower percentage of CPI. And the city of L.A. has a freeze on increases in rent controlled buildings until February 2024.
Cities with floors for increases, like L.A., can wind up with a problematic deal for renters and a better one for landlords if rents rise above CPI.
“Several times in the last few years, CPI has actually risen less than 3%, but landlords were allowed to raise the rents by 3%. So that’s another question, whether that should be adjusted,” Katz said.
Figure out where you stand
Rent control is a tangled web of seemingly boring rules, but it does have real effects. To supporters of the protections, the aim is about keeping things affordable and fair.
“It helps to give some security to tenants in a sense that it extends the protections that homeowners have,” Gross said. “What rent control does is level the playing field.”
If you’re a renter and would like to know more about where your home stands with rent control, check out my colleague David Wagner’s cheat sheet to rent hike. If you’re in the city of L.A., you can also put your address into ZIMAS and check the housing tab to see what laws apply.
Three months after the Biden administration unveiled a nonbinding “Blueprint for Renters Bill of Rights” that was applauded by corporate landlords for doing little to rein in unfair rent increases and evictions, a new report by government watchdog Accountable.US showed on Monday that those same property owners reaped enormous profits in 2022 as they demanded more of their tenants’ incomes in rent and excessive fees.
The group found that the six biggest property management companies in the United States—Starwood Property Trust, Mid-America Apartment Communities (MAA), Invitation Homes, AvalonBay Communities Inc., AMH, and Tricon Residential—brought in $4.3 billion in net income last year, over $1.3 billion more than in 2021.
That financial windfall came as the companies were raising rent prices and engaging in what Accountable.US called “abusive tactics” to evict people, in some cases after they had applied for rental assistance.
Starwood Property Trust increased rent by 30% or more at some of its thousands of properties in 2022 and saw its net income skyrocket by 115% to more than $1 billion—$591 million of which it spent on dividend payments to shareholders.
AMH and Tricon Residential credited their “pricing power” and “strong rent growth” for helping them secure $310 million and nearly $780 million in net income last year, respectively. The former company recorded a 47% increase while the latter’s income grew by 70%.
MAA also reported that “higher fee income” and “continued growth in average rent per unit” were behind the ballooning of its net income, which grew by nearly 19% to more than $654 million.
“This is egregious,” said tenants’ rights organizer René Christian Moya of the report’s findings.
Four of the companies included in the Accountable.US report are members of the National Multifamily Housing Council (NMHC), which celebrated the omission of national rent control measures in the renter protections that President Joe Biden proposed in January while also claiming the proposal’s recommended regulations would be too “onerous” on landlords and would “discourage much-needed investments in housing supply.”
Part of the companies’ financial windfall was driven not by rent increases but by fees the landlords have piled on top of rent, including late fees, and extra charges for “smart locks,” pets, and using online systems to pay rent.
“Corporate landlords ‘squeeze more revenues from portfolios’ by charging a range of ‘ancillary’ fees, resulting in ‘fee revenue vastly outpacing rental growth,'” said Accountable.US.
Invitation Homes is one landlord that’s been accused in the past of “fee-stacking” by tenants who filed a class-action lawsuit in 2018—all while providing tenants with homes where they face “leaky pipes, vermin, toxic mold, nonfunctioning appliances and monthslong waits for repairs,” according to the report.
The record profits, dividend spending, and poor service of the six companies, said Accountable.US—in addition to shelter costs rising by a “striking” 8.6% overall in the consumer price index last month—demonstrates that “aggressive interest rate hikes” imposed by the Federal Reserve “have done little to deter profiteering from corporate landlords.”
The group called on Congress to work with the Biden administration to “stabilize runaway housing costs,” for example by passing legislation proposed by Reps. Pramila Jayapal (D-Wash.) and Grace Meng (D-N.Y.) last month which would invest $200 billion in affordable housing, or a bill introduced by Sen. Elizabeth Warren (D-Mass.) and Rep. Jamaal Bowman (D-N.Y.) to end rent-gouging by coporate landlords.
“The nation’s largest landlords have shown their burdensome rent hikes are based on greed, not need, after reporting billions of dollars in higher profits over the last year,” said Liz Zelnick, director of Accountable.US’ Economic Security and Corporate Power program. “These companies fueling the housing affordability crisis are among many corporations across industries that have shamelessly profiteered, undeterred by the Fed’s repeated interest rate hikes.”
“Higher interest rates have not curbed inflation sufficiently and have done nothing to combat corporate greed,” Zelnick added, “and instead are causing severe economic consequences for everyday Americans, from lower wages to lost jobs.”
How Investors Accelerate the Affordable Housing Crisis
With billions of dollars of cash on hand, and millions of working-class families unable to find affordable housing, corporations are increasing their share of the housing stock and expanding their portfolios. A 2021 report co-authored by the Institute for Policy Studies, Bargaining for the Common Good, and Americans for Financial Reform Education Fund demonstrated how corporate and institutional investors were well positioned to take advantage of a red-hot real estate market. In the final quarter of 2022, investors purchased more than $31 billion worth of residential property in 40 of the largest metropolitan markets in the country – not a small sum.
Digital technologies helped facilitate this process. New business models like iBuying – which allow companies to instantly assess the value of and make offers on properties that are then resold – provide corporate landlords with privileged access to residential homes. Real estate tech companies are transferring close to a quarter of their inventory directly to institutional investors off market. Even when these tech firms go belly up, thousands of homes are snapped up by Wall Street, granting the latter greater undue market power.
All of this translates to a more expensive real estate for working families, as unlisted corporate purchases lower the housing supply available to thousands of households. As a result, four out of five homes are now classified as unaffordable to median income earners, up from just half a decade ago.
“Housing affordability is at the lowest level in history,” declared Taylor Marr, deputy chief economist at Redfin, in a recent interview.
The ever-expanding presence of corporate landlords also increases precarity for renters. Large portfolios incentivize the development and use of software to automate property management and eviction filings to the detriment of tenants. The aggressive pursuit of evictions and unwillingness to negotiate alternative resolutions to ensure families remain housed highlights the need for more robust tenant protections.
Potential Revenue from a Tax on Investor Purchases of Residential Properties
A tax on institutional investors could dissuade corporate purchases, giving working-class households an equitable opportunity to buy a home while also generating revenue for affordable housing. To illustrate the potential revenue a 10 percent tax on investors could generate, the Institute for Policy Studies analyzed the sale records of Boston, Massachusetts in the final quarter of 2022. Any record where the buyer’s name included the words “LLC”, “Trust”, “Corporation”, “Partnership”, “Inc”, or “Homes” is categorized as an investor. The methodology excludes all transfers where the transaction was less than $1,000.
Investor purchases accounted for 24 percent of all residential real estate sales in Boston between October and December of 2022. The total value of their residential acquisitions was $820 million, with a median sale price of $1.1 million. A 10 percent tax on all investor purchases could yield $82 million in revenue.
Boston is just one city where investors are snatching up residential properties. If a 10 percent tax on investor purchases were in effect in Boston as well as the country’s nine other top housing markets, it could’ve generated a total of $1.4 billion just on 2022 fourth quarter sales alone.
The time for our elected representatives to address the affordability crisis and guarantee dignified housing for all is now.
The solution is straightforward: the federal government should ramp up the production of decommodified public housing to put downward pressure on real estate prices. All newly constructed housing should serve the social needs of our communities instead of further enriching corporations and institutional landlords.
A federal tax on institutional buyers has the potential to generate significant revenue to help fund the construction of new public and social housing.
The lack of housing affordability is the direct result of commodification – the use of residential real estate as an asset for the purposes of financial speculation and capital accumulation. The sooner we start treating housing as the public good that it is, the sooner we can create an economy that works for everyone.
Vivian Thomas Smith loved her apartment. For nearly three decades, she and her husband, Bradley, had lived in a modest one-bedroom at 2420 Morris Avenue, just two blocks from the raucous beauty of the Grand Concourse in the Bronx. The brick apartment complex was a co-op where some families, like theirs, still rented. Vivian, 71, was a retired secretary who had worked for decades at Montefiore Medical Center. Bradley, 81, had also been employed by Montefiore, doing maintenance work before his retirement. Vivian watched her neighbors’ kids grow up. When her own son got sick, her friend down the hall helped nurse him through the long illness that preceded his death. Vivian may have worried about the increasing crime in her neighborhood, but when she walked through her building’s beautifully tiled lobby, she felt secure that she and Bradley would stay there for the rest of their lives.
That all changed in November 2020, when the private equity firm Glacier Equities bought all the rental units in her building. Just over a year later, on December 1, 2021, the Smiths got a letter offering them an ultimatum: buy your apartment or leave when the lease expired on March 31, 2022. “Out of the clear blue sky. No reason, nothing. For 27 years we were never late on rent, never missed a month,” Vivian said.
The couple wanted to buy, but bills from their son’s illness had wrecked their credit. No bank would give them a mortgage. At the same time, their economic situation made finding a new rental almost impossible. Because of the small pensions they received in addition to their Social Security, they made too much money to qualify for subsidized housing. Yet they made nowhere near enough to rent a new apartment.
“We spoke to housing lawyers. The first one said ‘cause our apartment was not rent-stabilized, ‘You don’t have a choice. You have to leave,’” Vivian said.
Throwing an elderly couple out on the street might be monstrous, but it’s perfectly legal in New York State. If, like the Smiths, you are a tenant in one of the state’s 1.6 million market-rate apartments, your landlord can get rid of you at the end of your lease—no reason necessary—by means of what’s called a holdover eviction. And landlords do it all the time. The more than 32,000 holdover eviction cases brought before New York State housing courts in 2022 represent a small sliver of the problem; unable to afford the stress and financial costs of a legal battle, many tenants just pack up and leave.
A bill that had been making its way through the state Legislature for several years could have been a life raft for the Smiths. Backed by a coalition of housing organizations, the legislation—dubbed the Good Cause Eviction bill—required most landlords to offer lease renewals to tenants like the Smiths, who had paid their rent on time and stuck by the terms of their leases. It also limited rent increases to prevent landlords from forcing people out by raising their rent hundreds of dollars a month.
This bill could have saved the Smiths, and countless other New Yorkers, from eviction. But despite loud, passionate, and relentless campaigning by housing activists and tenants—including Vivian Thomas Smith—lawmakers refused for years to even put Good Cause legislation up for a vote. The Smiths, and all the other tenants like them, were on their own.
The story might have ended there, in defeat. But movements are stubborn creatures. If people fight long enough, they learn that losses are temporary and that victory can only come through a refusal to retreat. Last December, just a month after Democrats held their statewide majority in the midterms, the tenants’ rights group Housing Justice for All renewed its Good Cause campaign and then went even bigger, unveiling “Our Homes, Our Power,” a package of five bills intended to address the worst housing and homelessness crisis in decades. All of the proposals are important, but Good Cause remains the most crucial—not only because it has the power to save people right now, in the present, by slowing the constant stream of evictions, but also because it’s the only one that fundamentally reshapes the relationship between landlord and tenant. Housing activists have until June 8 to persuade state legislators to stand up to the real estate industry and protect their constituents.
New York City is brutal to renters. As of 2017, half of us spent a third of our income on rent; a third of us spent more than half. The competition for an affordable place is harrowing, with the vacancy rate for apartments that rent for under $1,500 a month hovering at less than 1 percent. Many of us pay nonrefundable application fees just to get our foot in the door, followed by thousands of dollars to the landlord’s broker, and often thousands of dollars more in glorified bribes to the landlords themselves. If we are lucky enough to score a place, it had better be rent-stabilized (a rare prize when landlords are pulling tens of thousands of rent-stabilized units out of circulation every year) if we want to stay. A lease on a market-rate apartment gets us only 12 months of stability. After that, we’re vulnerable to whatever unconscionable rent increases the landlord feels like imposing, or we are back on the apartment hunt—or, for many low-income people, the street—again.
Ideally, this collective precarity should unite people. As Anh-Thu Nguyen, a labor and tenant organizer in Brooklyn, told me, “I don’t care if you’re some bro in the West Village paying $5,000 a month, or a little old lady in Spanish Harlem in a rent-stabilized place for 30 years. You represent a class. That class is the landless…. You want stability, a place you can call home.”
Instead, communities often wind up pitted against each other. One group is forever being forced out, then pushed into areas where another group, often poorer, is being forced out too. This gentrification gets blamed on tenants, even though landlords are the ones raising the rents. When a landlord evicts an abuela and rents her apartment to an NYU grad student, politicians point to gentrifiers or transplants, not the landlord, as the problem. They seldom mention that there was an actual bill that could have kept the abuela in her home.
This is not just theoretical. Good Cause Eviction has long been the law in New Jersey, where cities like Trenton and Jersey City have some of the lowest eviction rates in the country. It also exists in cities like Montreal, as well as in Japan.
Good Cause was first proposed in 2018 by a collection of tenant groups in New York State that was then called the Upstate Downstate Alliance (it eventually became known as Housing Justice for All). In 2019, it found a legislative champion when democratic socialist Julia Salazar came to the state Senate.
One of Salazar’s first acts was to write the Good Cause Eviction bill. The bill was then folded into a major package of housing reforms, including legislation that makes it much harder for landlords to kick out rent-stabilized tenants by renovating buildings in order to raise rents and prevents them from taking apartments out of stabilization once the rent reaches a certain threshold. While those reforms were passed into law, the party leadership refused to bring Good Cause up for a vote. This was largely due to the resistance of the real estate lobby, which found Good Cause threatening precisely because it diminishes some of landlords’ unchecked power.
The next year, Covid hit, and over 330,000 people fled New York City—mainly from the richest zip codes. Many of them moved upstate in search of a slice of virus-free paradise, driving up rents and home prices in those spots as they went. Back in the city, some landlords panicked in the face of the exodus and offered previously unthinkable rent reductions to entice tenants to stay. Others, especially if they owned rent-stabilized apartments, warehoused their empty units and bided their time.
By April 2020, more than 16 percent of the state’s population was out of work. For hundreds of thousands of tenants, making rent became impossible. If they didn’t pay, what then? Would the courts really send sheriffs to chuck their possessions out onto the sidewalk, then shuttle them to crowded homeless shelters?
A movementerupted to cancel the unpayable rents—led by both established tenant groups and young people radicalized in the uprising that emerged after George Floyd’s murder. Banners were dropped from bridges. Raucous protests were held outside the homes of recalcitrant politicians. It made only a modest impression. While the state and federal governments did act, declaring moratoriums on evictions starting with the CARES Act in March 2020, they wouldn’t cancel rents. Bills still came due each month, and the debts metastasized. Two years later, 595,000 New York City renters were still behind—and landlords were anxious to get them out.
With the arrival of the Covid vaccine, the bars reopened, restaurants buzzed, and the rich flooded back to the city like some revanchist army. For landlords, these returnees were more enticing than those of us who stayed, whether or not we owed back rent.
The federal moratorium expired in October 2021 and the state moratorium in January 2022. Immediately, the evictions began.
The pandemic was a bonanza for institutional investors in residential real estate. The most famous villain is BlackRock, the multinational investment behemoth, but Glacier Equities has also done a number on New York City. Glacier is a real estate private equity firm, or REPE. A REPE raises cash from private investors to buy a property—say, an apartment building. The REPE then tries to get tenants out, often neglecting the building or hiking rents. Finally, the REPE sells the building, gobbling up the profits for its investors and itself. Over the past two decades, Glacier has flipped—or as it says on its website, “acquired, developed, and sold”—2,200 condos and co-ops in and around New York City. During the first year of the pandemic, it snapped up 255 units in Bronx and Manhattan co-ops. The Smiths’ apartment was one of them.
When the Planning Commission approved a condo project at 1863 Mission in 2018, the staff wrote:
The Project will add 37 units to the City’s housing stock, including 15 two-bedroom, family-sized units and will replace long vacant site that has been a blight to the neighborhood with a high quality mixed-income development.
That’s typical. We hear this over and over when developers want to build market-rate housing: Families in San Francisco need places to live.
When the supes rejected the Environmental Impact Report for 469 Stevenson, Yimby Law noted:
Hundreds of families were denied housing in San Francisco because of Supervisors Gordon Mar, Dean Preston, Myrna Melgar, Connie Chan, Rafael Mandelman, Aaron Peskin, Hillary Ronen, and Shamann Walton.
But as of today, the planners have agreed that at least seven of the units at 1863 Mission will not be available for families who need housing. They will be corporate rentals, in essence high-priced hotel rooms for people who are in the city for more than 30 days but less than a year.
It’s called “intermediate length occupancy,” and the Planning Commission, without dissent, gave the owners of 15 units in six buildings the ability to take housing out of the rental or ownership market and turn it into ILOs.
Teresa Flandrich, a longtime North Beach housing activist, told the panel that the units at 240 Lombard were owned by an absentee corporate rental firm. “I think of individuals who are searching for homes,” she said, mentioning as neighbor who lost her home to a fire and needs a new place to live. “This is not providing housing for San Francisco residents,” she said.
Sup. Aaron Peskin, who sponsored the legislation, noted in 2020 that there are legitimate uses for these types of rentals:
“There are legitimate reasons for this type of use,” he said. There are, for example, musicians or actors who may be in the city for a six-month run at the opera or a stage production. Some people need short-term rentals while their normal residence is being repaired after a fire or flood.
“I am open to this kind of housing,” Peskin said, “but we clearly need reasonable regulations. We need to know what’s housing for people who want to live here and work here.”
So: The supes voted to limit the number of these rentals, and to require a conditional-use hearing at the Planning Commission each time a landlord applies for a permit.
The idea: If people oppose the conversion of, say, a building they live in or a neighboring building into a hotel, they can come to the commission and make the case.
But the planning staff doesn’t see this as a serious obstacle. In fact, staffers today told the commissioners that in the future, all of these ILO conversions will be placed on the Consent Calendar as items that are non-controversial.
“I didn’t want full-time renters,” she told me. “I don’t want to be stuck with the problems.”
Solomon said she thinks that the rent laws are “stacked against the landlord” and “have morphed into something socialist. The city has taken away all the landlord rights.”
The problem is that the city doesn’t allow residential units like these three flats to be kept out of the housing stock and turned into hotel rooms. A neighbor. Alfonso Faustino, told me that he has filed numerous complaints with various city agencies – and indeed, Department of Building Inspection and City Planning records show that the property has been investigated for illegal short-term rentals.
“She is taking precious housing out of the market,” Faustino told me.
The commission determined that she was acting in violation of city codes:
The project sponsor has received a Notice of Violation for the use of the subject building for short-term accommodation by transient guests. The property owner is seeking to legalize the use of the subject property for short-term rentals.
Solomon, who now owns a condo at 1450 Greenwich, showed up at the hearing to say that she likes to rent out her place to performers when she is out of town, which seems to be most of the time (“I travel a lot,” she said).
Eric Basart, who also lives in the building, wrote to the commission:
Does our neighborhood need a high priced hotel, whose “tenants” are corporations and wealthy tourists? Although there are numerous surrounding hotels, Solomon’s proposed corporate/tourist hotel has historically charged more than double the median nightly hotel rate in the area, and does not fit in with the surrounding residential context on Russian Hill, the long-term renters and owners who reside in building, or the residential district in which the subject property is located?
The ILO rent, Basart said, is more than $6,000 a month—almost double what traditional renters are paying for a one-bedroom unit in Russian Hill these days.
The bottom line: Landlords can make a lot more money right now with these ILO corporate rentals. They also avoid those pesky tenant laws like rent control and eviction protections.
Thanks to Peskin, the number is limited. And I’m not going to argue that this use is always wrong.
But people who, say, are displaced by fire or are arriving here looking for a permanent place to live and need shorter-term housing are not going to be able to afford these units unless they are rich, or some corporation is paying for it.
If I were writing the law, I would add this:
No building that is ever sold to the city as providing “needed housing for families” should be eligible to become corporate rentals. Because that becomes a total lie.
The Ninth U.S. Circuit Court of Appeals struck down part of a Seattle ordinance in a ruling that will affect laws in Oakland and Berkeley that ban nearly all questioning about a rental housing applicant’s criminal record. Rich Pedroncelli/Associated Press
Landlords can ask applicants for criminal history, court says in ruling that impacts Oakland, Berkeley
Cities can’t completely prohibit rental property owners from asking prospective tenants about their criminal history, although they can prohibit owners from excluding all tenants who have criminal records, a divided federal appeals court ruled Tuesday.
The 2-1 ruling by the Ninth U.S. Circuit Court of Appeals in San Francisco struck down part of an ordinance in Seattle and also will affect laws in Oakland and Berkeley that ban nearly all questioning about an applicant’s criminal record. But the court approvingly cited a 2014 San Francisco ordinance that lets owners of affordable housing consider a would-be renter’s convictions from the previous seven years.
That ordinance, the Fair Chance law, allows an owner to reject an applicant whose record raises serious concerns about safety, as long as the renter has a chance to present evidence of rehabilitation and recommendations from others.
While San Francisco argued in a court filing that cities should be allowed to go further and ban nearly all inquiries about tenants’ criminal records, the court said the Fair Chance law showed that a local government could protect prospective renters from discrimination while remaining “significantly less burdensome on speech” by the property owners.
On the other hand, Judge Kim Wardlaw said in the majority opinion, owners have no right to automatically exclude all tenants with past criminal convictions. Laws in Seattle and other cities against such prohibitions serve the legitimate purposes of “reducing barriers to housing faced by persons with criminal records and lessening the use of criminal history as a proxy to discriminate on the basis of race,” Wardlaw wrote.
She said formerly incarcerated people are nearly 10 times as likely as the general population to experience homelessness or housing insecurity, and the disparities were far more likely to affect racial minorities than whites.
The court set aside a federal judge’s 2021 ruling upholding the entire Seattle ordinance and told the judge to decide whether the city’s ban on excluding all applicants with criminal records could stand on its own.
Wardlaw’s decision drew partial dissents from the other members of the panel. Judge Mark Bennett said a property owner “who prioritizes the safety of other tenants” should be allowed to reject any applicant with a criminal record. But Judge Ronald Gould said cities that seek to protect tenants against discrimination should be able to bar all questioning about criminal history.
Property owners could still get pertinent information about an applicant’s “rental history, income history, character references, job history,” and could ask for references from others who have rented to the prospective tenant, Gould said.
The federal government, under Presidents Barack Obama and Biden, has issued “guidance” statements saying property owners nationwide should consider ending all questioning about prospective tenants’ past convictions. “Criminal history is not a good predictor of housing success” and its use can result in discrimination, the Department of Housing and Urban Development said in a report last June.
Tuesday’s ruling was praised by the Pacific Legal Foundation, a nonprofit property-rights supporter representing owners who challenged the Seattle ordinance.
“The Ninth Circuit’s decision recognizes that the First Amendment protects the right to ask questions and receive information relevant to our livelihoods,” said Ethan Blevins, the foundation’s lawyer in the case.
Despite the court’s favorable reference to San Francisco’s approach, Jen Kwart, spokesperson for City Attorney David Chiu, said the city would have preferred a ruling that barred all inquiries into rental applicants’ criminal records.
“We are disappointed the court struck down this portion of Seattle’s ordinance because we believe strongly in reducing barriers to formerly incarcerated people,” Kwart said.
