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Rent Control Is Making A Comeback. But Is That A Good Idea?





After decades of being dismissed by economists as a has-been, rent control is making a comeback.

It’s a high-stakes resurgence, fueled by a rapidly worsening housing crisis — but it faces strong opposition from the real estate industry.

In the past year, an energized renters’ rights movement has won approval of rent control measures in Berkeley, Chicago, Washington, D.C., and Westchester County, New York. In March, New York City’s mayor, Bill de Blasio, signed legislation extending rent regulation laws through April 2021.

The issue also is attracting attention in statehouses. Lawmakers in Hawaii, Illinois, Minnesota, New Jersey and Washington state have considered rent control bills in the last two years. Some of the measures would overturn existing bans on rent control; others, as in Hawaii, would establish rent control in the state or expand existing laws.

In New York state, where rent regulation laws are set to expire next year, legislators are considering a flurry of bills to strengthen those laws, which are a complex mix of rent control and rent stabilization.

New York state’s current rent regulation laws need strengthening in order to effectively promote housing stability, said Elizabeth Ginsburg, senior program officer with Enterprise Community Partners, a nonprofit housing group. “Under the current system, landlords can revoke preferential rent upon lease renewal, putting families at risk of losing their homes,” Ginsburg said.

But rent control supporters also have suffered some setbacks, none more significant than the failure earlier this month of a California ballot initiative.

Proposition 10 would have overturned a 1995 law that blocks California cities and counties from imposing rent control on single-family homes and apartments built after that year. Opponents raised nearly $80 million to defeat the measure, the Los Angeles Times reported, arguing that it would worsen the state’s housing shortage and hurt the investments of single-family homeowners.

Much of that money came from national real estate investors with extensive holdings in California who feared that the measure might spur similar efforts in other states. Supporters raised nearly $25 million.

“I’m very happy,” said Steven Maviglio, spokesman for No on Prop 10, Californians for Responsible Housing, the opposition campaign. “It was a lopsided policy that would’ve resulted in a loss of affordable housing units and a freeze on new construction.”

Homes and apartments would’ve been taken off the market with rent control, he said.

“That said, this issue isn’t going away,” Maviglio said. “All parties understand that. We’re going to work closely with the new governor on policies that work.”

Mark Willis, senior policy fellow with New York University’s Furman Center for Real Estate and Urban Policy, said, “It’s striking how much [rent control] has risen to the fore. It’s become very political. But California’s an indication that it’s not a slam dunk.”

Supporters argue rent control is the quickest and easiest way to provide relief to renters in danger of being priced out of their homes. But critics say it just makes the problem worse, by causing renters to hold fast to large apartments they may no longer need and by pushing many landlords out of the rental housing business.

Willis said that more localities may look to rent control in the near future, partly because it is a way for cities to address their affordable housing woes without spending taxpayer money. But he noted that many states have laws preventing cities from enacting rent regulations.

Out of Favor

Rent control fell out of favor in the 1970s and 1980s, as urban populations waned and apartments lay vacant. Under pressure from real estate interests, more than half of all states outlawed rent control.

As noted by the Chicago Reader earlier this year, many of the laws echoed language in a model law crafted by the American Legislative Exchange Council (ALEC), a conservative advocacy group.

But as more people have flocked to urban cores where jobs, transit and good restaurants are abundant, the available housing stock has shrunk, and rents have skyrocketed.

Nearly half of renters fit the federal definition of “cost burdened,” which means they spend at least 30 percent of their income on housing and “may have difficulty affording necessities such as food, clothing, transportation, and medical care,” according to a 2017 report by the Harvard Joint Center for Housing Studies.

The share of renters earning $30,000 to $45,000 who were cost burdened jumped from 37 percent in 2001 to 50 percent in 2016, and the share earn­ing $45,000 to $75,000 nearly doubled from 12 to 23 percent, the study found.

A January study by the Stanford Graduate School of Business found that rent control creates both winners and losers — even among renters. Longtime renters who have been living in rent-controlled units benefit greatly from rent control, while newcomers end up paying higher rents because the supply of available units is constricted.

Meanwhile, landlords facing rent control regulations are more likely to convert units into condos or redevelop buildings to circumvent regulations, further reducing rental stock and driving up rents, the study found.

“There’s definitely a housing crisis. Everyone agrees on that,” said Alexandra Alvarado, director of marketing and education at the American Apartment Owners Association, a national advocacy group. “But we don’t agree on how to remedy that. We think that rent control is just not the way to go about it. Landlords are worried about shorting the housing supply.”

Rent-stabilized apartments turn over less frequently, said Howard Husock, vice president for research and publications at the Manhattan Institute, a libertarian-leaning think tank. In New York, where rent stabilization laws have been on the books for decades, there are older people who live in rent-stabilized apartments who have no incentive to leave, he said.

“As a result, you’ve got a lot of young people in New York City doubled and tripled up,” Husock said. “And you’ve got affluent old people living in large [rent-stabilized] apartments with empty bedrooms where their kids once lived.”

Rent control is just one tool among many, said Willis of New York University. To truly address the housing crisis, cities need to build more affordable housing; preserve existing affordable housing units; help people stay in their homes; and help tenants find housing in resource-rich, “high opportunity” neighborhoods, he said.

“You need a comprehensive and balanced plan if you’re even going to begin to address the difficulty of finding affordable housing,” Willis said.

Pushing Cities

In the past year, housing activists in Denver, Minneapolis, Nashville, Providence and Seattle have pushed city officials to enact rent control, staging rallies and crowding town halls. But most cities are constrained by the state laws that prohibit or greatly restrict rent regulation.

“It’s a protracted fight,” said Shanti Singh, communications and development coordinator for Tenants Together, a San Francisco-based tenants’ rights group, which backed Proposition 10 in California. “Even if you can’t get rent control on the ballot one year — doesn’t mean you won’t get it on the ballot the next year.”

After the housing bubble burst in 2008, the housing crisis in California accelerated and housing advocates started pushing for rent control measures at the local level, she said.

Richmond, California, was the first in the state to act in this new era, Singh said, passing a local rent control law in 2016. Once that happened, Singh said, “it opened up the floodgates.” Meanwhile in Mountain View, California, a landlord-backed effort to repeal the city’s 2016 rent control law failed this summer.

On the other side of the country, weeks of rallies spurred the village board in Ossining, New York, to approve rent stabilization in September, joining 19 other municipalities in Westchester County. The county will set annual rent increases for certain buildings in the village.

In Washington state, lawmakers in both chambers introduced bills to roll back a law prohibiting local governments from enacting rent control. But facing stiff opposition from the real estate lobby, both bills failed to make it out of committee.

Rob Trickler, president of the Washington Landlords Association, said he lobbied against the bills because rent control “does exactly the opposite of what it’s intended to do.”

Rent control restricts the housing supply, leading to higher prices overall, Trickler said. And because landlords can’t raise rents, they can’t afford to keep up with maintenance, which reduces the quality of rental stock.

Trickler said the majority of his members are small landlords who are in danger of being pushed out of the rental business. Usually they sell the single-family homes they’ve been renting out, and sometimes they convert them to condos.

“It’s a perfect storm,” Trickler said. “We keep telling municipalities, ‘You are driving people out of this market.’”

Washington state Rep. Nicole Macri and state Sen. Rebecca Saldaña, Democrats who sponsored the House and Senate bills respectively, said they were prompted to act after hearing from long-term constituents in Seattle who were getting socked with 30 percent rent increases. Smaller cities are feeling the pinch, too, they said.

“The statute is broad enough that it really limits city councils from enacting rent control at all because they’re afraid of litigation,” Macri said.

Saldaña and Macri said they’re planning to push the issue again once the legislature is back in session in January. But this time, Macri said, she will focus on prohibiting landlords from rent gouging and slapping on excessive fees, rather than specifically pushing for rent control.

“We’re trying to figure out the right approach, to give communities the right to take action,” Macri said.


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4 things kids need to know about money





(NC) Responsible spending includes knowing the difference between wants and needs. Back-to-school season, with added expenses and expectations around spending, is the perfect time to not only build your own budget for the year ahead, but also to introduce your own children to the concept of budgeting.

The experts at Capital One break down four basic things that every child should know about money, along with tips for bringing real-life examples into the conversation.

What money is. There’s no need for a full economic lesson,but knowing that money can be exchanged for goods and services, and that the government backs its value, is a great start.
How to earn money. Once your child understands what money is, use this foundational knowledge to connect the concepts of money and work. Start with the simple concept that people go to work in exchange for an income, and explain how it may take time (and work) to save for that new pair of sneakers or backpack. This can help kids develop patience and alleviate the pressure to purchase new items right away that might not be in your budget.
The many ways to pay. While there is a myriad of methods to pay for something in today’s digital age, you can start by explaining the difference between cash, debit and credit. When teaching your kids about credit, real examples help. For instance, if your child insists on a grocery store treat, offer to buy it for them as long as they pay you back from their allowance in a timely manner. If you need a refresher, tools like Capital One’s Credit Keeper can help you better understand your own credit score and the importance of that score to overall financial health.
How to build and follow a budget. This is where earning, spending, saving and sharing all come together. Build a budget that is realistic based on your income and spending needs and take advantage of banking apps to keep tabs on your spending in real-time. Have your kids think about how they might split their allowance into saving, spending and giving back to help them better understand money management.

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20 Percent Of Americans In Relationships Are Committing Financial Infidelity





Nearly 30 million Americans are hiding a checking, savings, or credit card account from their spouse or live in partner, according to a new survey from That’s roughly 1 in 5 that currently have a live in partner or a spouse.

Around 5 million people — or 3 percent — used to commit “financial infidelity,” but no longer do.

Of all the respondents, millennials were more likely than other age groups to hide financial information from their partner. While 15 percent of older generations hid accounts from their partner, 28 percent of millennials were financially dishonest.

Regionally, Americans living in the South and the West were more likely to financially “cheat” than those living in the Northeast and Midwest.

Insecurity about earning and spending could drive some of this infidelity, according to industry analyst Ted Rossman.

When it comes to millennials, witnessing divorce could have caused those aged 18-37 to try and squirrel away from Rossman calls a “freedom fund”.

“They’ve got this safety net,” Rossman said. They’re asking: “What if this relationship doesn’t work out?”

As bad as physical infidelity

More than half (55 percent) of those surveyed believed that financial infidelity was just as bad as physically cheating. That’s including some 20 percent who believed that financially cheating was worse.

But despite this, most didn’t find this to be a deal breaker.

Over 80 percent surveyed said they would be upset, but wouldn’t end the relationship. Only 2 percent of those asked would end the relationship if they discovered their spouse or partner was hiding $5,000 or more in credit card debt. That number however is highest among those lower middle class households ($30,000-$49,999 income bracket): Nearly 10 percent would break things off as a result.

Roughly 15 percent said they wouldn’t care at all. Studies do show however that money troubles is the leading cause of stress in a relationship.

That’s why, Rossman says, it’s important to share that information with your partner.

“Talking about money with your spouse isn’t always easy, but it has to be done,” he said. “You can still maintain some privacy over your finances, and even keep separate accounts if you and your spouse agree, but you need to get on the same page regarding your general direction, otherwise your financial union is doomed to fail.”

With credit card rates hovering at an average of 19.24 percent APR, hiding financial information from a partner could be financially devastating.

But, Rossman adds, it’s not just about the economic impact but also the erosion of trust.

“More than the dollars and cents is that trust factor,” he said. “I think losing that trust is so hard to regain. That could be a long lasting wedge.”

Kristin Myers is a reporter at Yahoo Finance. Follow her on Twitter.

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7 Examples Of Terrible Financial Advice We’ve Heard





Between television, radio, the internet and well-meaning but presumptuous friends and family, we’re inundated with unsolicited advice on a daily basis. And when it comes to money, there’s a ton of terrible advice out there. Even so-called experts can lead us astray sometimes.

Have you been duped? Here are a few examples of the worst money advice advisers, bloggers and other personal finance pros have heard.

1. Carry a balance to increase your credit score.

Ben Luthi, a money and travel writer, said that a friend once told him that his mortgage loan officer advised him to carry a balance on his credit card in order to improve his credit score. In fact, the loan officer recommended keeping the balance at around 50 percent of his credit limit.

“This is the absolute worst financial advice I’ve ever heard for several reasons,” Luthi said. For one, carrying a credit card balance doesn’t have any effect on your credit at all. “What it does do is ensure that you pay a high interest rate on your balance every month, neutralizing any other benefits you might get from the card,” Luthi explained. “Also, keeping a 50 percent credit utilization is a surefire way to hurt your credit score, not help it.”

Some credit experts recommend keeping your balance below 30 percent of the card limit, but even that’s not a hard-and-fast rule. Keeping your balance as low as possible and paying the bill on time each month is how you improve your score.

2. Avoid credit cards ― period.

Credit cards can be a slippery slope for some people; overspending can lead to a cycle of debt that’s tough to escape.

But avoiding credit cards on principle, something personal finance gurus like Dave Ramsey push hard, robs you of all their potential benefits.

“Credit cards are a good tool for building credit and earning rewards,” explained personal finance writer Kim Porter. “Plus, there are lots of ways to avoid debt, like using the card only for monthly bills, paying off the card every month and tracking your spending.”

If you struggle with debt, a credit card is probably not for you. At least not right now. But if you are on top of your finances and want to leverage debt in a strategic way, a credit card can help you do just that.

3. The mortgage you’re approved for is what you can afford.

“The worst financial advice I hear is to buy as much house as you can afford,” said R.J. Weiss, a certified financial planner who founded the blog The Ways to Wealth. He explained that most lenders use the 28/36 rule to determine how much you can afford to borrow: Up to 28 percent of your monthly gross income can go toward your home, as long as the payments don’t exceed 36 percent of your total monthly debt payments. For example, if you had a credit card, student loan and car loan payment that together totaled $640 a month, your mortgage payment should be no more than $360 (36 percent of $1,000 in total debt payments).

“What homeowners don’t realize is this rule was invented by banks to maximize their bottom line ― not the homeowner’s financial well-being,” Weiss said. “Banks have figured out that this is the largest amount of debt one can take on with a reasonable chance of paying it back, even if that means you have to forego saving for retirement, college or short-term goals.”

4. An expensive house is worth it because of the tax write-off.

Scott Vance, owner of, said a real estate agent told him when he was younger that it made sense to buy a more expensive house because he had the advantage of writing off the mortgage interest on his taxes.

But let’s stop and think about that for a moment. A deduction simply decreases your taxable income ― it’s not a dollar-for-dollar reduction of your tax bill. So committing to a larger mortgage payment to take a bigger tax deduction still means paying more in the long run. And if that high mortgage payment compromises your ability to keep up on other bills or save money, it’s definitely not worth it.

“Now, as a financial planner focusing on taxes, I see the folly in such advice,” he said, noting that he always advises his client to consider the source of advice before following it. ”Taking tax advice from a Realtor is … like taking medical procedure advice from your hairdresser.”

5. You need a six-month emergency fund.

One thing is true: You need an emergency fund. But when it comes to how much you should save in that fund, it’s different for each person. There’s no cookie-cutter answer that applies to everyone. And yet many experts claim that six months’ worth of expenses is exactly how much you should have socked away in a savings account.

“I work with a lot of Hollywood actors, and six months won’t cut it for these folks,” said Eric D. Matthews, CEO and wealth adviser at EDM Capital. “I also work with executives in the same industry where six months is overkill. You need to strike a balance for your work, industry and craft.”

If you have too little saved, a major financial blow can leave you in debt regardless. And if you set aside too much, you lose returns by leaving the money in a liquid, low-interest savings account. “The generic six months is a nice catch-all, but nowhere near the specific need of the individual’s unique situation… and aren’t we all unique?”

6. You should accept your entire student loan package.

Aside from a house, a college education is often one of the biggest purchases people make in their lifetimes. Often loans are needed to bridge the gap between college savings and that final tuition bill. But just because you’re offered a certain amount doesn’t mean you need to take it all.

“The worst financial advice I received was that I had to accept my entire student loan package and that I had no other options,” said Gina Zakaria, founder of The Frugal Convert. “It cost me a lot in student loan debt. Now I tell everyone that you never have to accept any part of a college financial package that you don’t want to accept.” There are always other options, she said.

7. Only invest in what you know.

Even the great Warren Buffett, considered by many to be the best investor of all time, gets it wrong sometimes. One of his most famous pieces of advice is to only invest in what you know, but that might not be the right guidance for the average investor.

In theory, it makes sense. After all, you don’t want to tie up your money in overly complicated investments you don’t understand. The problem is, most of us are not business experts, and it’s nearly impossible to have deep knowledge of hundreds of securities. “Diversification is key to a good portfolio, and investing in what you know leads to a very un-diversified portfolio,” said Britton Gregory, a certified financial planner and principal of Seaborn Financial. “Instead, invest in a well-diversified portfolio that includes many companies, even ones you’ve never heard of.”

That might mean enlisting the help of a professional, so make sure it’s one who has your best interests at heart.

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