In her first major rally as the Democratic frontrunner, Vice President Kamala Harris made a bold statement on the pressing issue of housing affordability. She pledged to “take on corporate landlords and cap unfair rent increases,” proposing a limit of 5% on rent hikes for two years for landlords with over 50 units. This plan, announced in front of 10,000 supporters in Atlanta, echoes the Biden administration’s recent proposal to curb rising rents while new housing is being built. However, Harris’s plan omits the Biden administration’s exemption for newly constructed units, a move that aims to avoid discouraging development.
Harris’s proposal targets corporate landlords, aiming to provide immediate relief to millions of renters, especially those in areas where housing costs are soaring. The message resonates with voters struggling with rising housing costs, as evidenced by a May poll from Navigator, a Democratic-aligned group, showing strong support for curbing rent gouging by large landlords. This resonates deeply with the Democratic base, particularly in areas where housing affordability is a critical concern.
While the proposal scores political points, economists are raising concerns about its potential downsides. A review of over 200 studies on rent control revealed that it often leads to negative consequences like lower housing quality, reduced availability, and a slowdown in new construction. Economists argue that rent caps can shrink the housing supply and exacerbate existing problems in rental properties.
Even some Democrats, including Colorado Governor Jared Polis, have expressed reservations about Harris’s approach, fearing that it could worsen the housing crisis it aims to address. They emphasize that the solution lies in building more affordable housing, not just limiting rent increases. Former Obama administration economic advisor Jason Furman similarly voiced concern, stating that rent control is a discredited economic policy that could further exacerbate housing supply issues.
Harris, however, is relying on the political power of rent control to overshadow these concerns. With over 22 million American households spending over a third of their income on rent and mortgage rates on the rise, the housing crisis is becoming increasingly acute. As her campaign progresses, Harris will likely face pressure to reconcile voter demands with the economic pitfalls critics highlight. Whether her bold gamble pays off at the polls or leads to long-term problems for the housing market remains to be seen.
