AUSTIN (KXAN) — In recent years, rent prices in Austin have soared to such an extent that many have called it an affordability crisis.
Among the most populous cities in the U.S., Austin saw the largest increase in rent prices from Nov. 2021 to Nov. 2022, according to an analysis by Dwellsy, a rental market search engine. In that timeframe, rent increased by 45.4% in the area, the report showed.
Because of these precipitous increases, many Austinites have been priced out of homes they have lived in for years.
Some KXAN viewers have written in asking the question: Why doesn’t Austin have a policy on the books preventing property owners from implementing abrupt, steep rent increases on tenants? A policy other U.S. cities with affordability issues have used in the past- something like rent control.
What is Rent Control?
“It takes different forms, but the basic idea is that the government would regulate how much and when property owners can raise their rents,” said Jake Wegmann, an Associate Professor in regional planning and researcher in housing affordability at the University of Texas Austin.
Wegmann said most Americans live in cities without any rent control policies. The few that do mostly are on the coasts, such as California, Oregon, New Jersey and New York.
“It’s a very controversial policy,” Wegmann said. “Economists tend to hate it.”
This is for a couple of reasons, Wegmann explained. For one, if a city passes a rent control law that applies to all buildings – newly constructed and older – developers may be disincentivized from taking on more housing projects. And we know less housing leads to higher rents, he said.
In Saint Paul, Minnesota, for example, voters passed a rent stabilization ordinance in 2021 that capped residential rent increases at 3% for a 12-month period. In the three months following the adoption, building permits were down by 80%, according to reporting from the Minnesota Post. In recent months, the Saint Paul City Council amended the law to make developments constructed in the last 20 years exempt from the rent control cap.
Wegmann explained that another reason why some find rent control controversial is that if a city were to adopt an ordinance, it would need to apply to all renters in a city, not just lower-income people. If a rent cap is applied only to lower-income renters, then there is a higher likelihood that landlords reject housing applications to avoid caps.
And then, when rent control applies to renters of all income levels, “you’ll get these stories about someone who is renting an incredibly luxurious, four-bedroom apartment in an amazing neighborhood of Manhattan for next to nothing,” Wegmann explained. “That’s just an inevitable thing that happens with rent control.”
But conversely, the policy can be very beneficial to some. Renters typically only stay in a dwelling for a short time, Wegmann said. In San Francisco, where there is rent control, people tend to stay in places longer.
“It does seem to provide some stability for renters,” he said. “The other thing I always point out is, we have all these mechanisms that stabilize housing costs for homeowners,” Wegmann continued. “In Texas, we have a state law that says that your assessed home value in a homestead can only go up by no more than 10% per year. And we just don’t have anything like that for renters.”
Why can’t there be rent control in Austin?
In Texas, there are currently no laws limiting how much a landlord can increase a tenant’s rent. There are, however, two exceptions. One is if a housing emergency emerges from a disaster that causes widespread and severe damage. The second is if the governor approves a rent-control ordinance passed by a city’s government.
Would a Texas governor approve a rent-stabilization ordinance in Austin? Mechele Dickerson, a law professor and housing affordability expert at UT Austin, currently does not think so.
“One of the challenges that we face in the city of Austin is that we’re in the state of Texas, that likes light regulation, I’ll guess I’ll put it that way,” Dickerson said.
“With respect to housing and building, real estate developers and the lobby, they are quite powerful. And it makes it hard to do things that affect their bottom line,” she continued.
Wegmann agreed that ideological factors prevent rent stabilization or rent control ordinances from being passed in the state.
“Limiting property tax increases kind of comes across as protecting people from taxes, where rent control comes across as regulating the behavior of business people or landlords,” Wegmann said. “Tax relief is a lot more politically popular to a conservative than regulating the activities of a business person,” he continued.
If not rent control, then what?
Dickerson thinks the solution is providing more affordable housing. She said this is done by changing zoning laws to become less restrictive so more “middle housing” – like townhomes and duplexes – can be developed.
“The concept of affordable housing triggers negative thoughts in people,” Dickerson said.
“When we’re talking about housing affordability, we’re not just talking about (housing vouchers),” she said. “We’re talking about people who are the middle class who can no longer afford to live in the city of Austin.”
Wegmann thinks that while a rent stabilization policy getting passed in Texas may not happen in the upcoming legislative session, something like it may be possible in the future.
“I could see a day coming,” he said. “Maybe (it will come in) five years. Maybe it’s (in) ten years when high rents are harming enough people across the state – not only in Austin but all over the state. (Rent control) starts to become more feasible to imagine something like that happening.”