Arizona business community: Rent control would further deepen housing shortage

Determined not to exacerbate the state’s massive housing shortage, stakeholders from across the Arizona business community are speaking out against an onslaught of rent control proposals put forth recently by national and state-level Democrats.  

The measures – which supporters claim would help make housing more affordable – actually would do the exact opposite, according to Courtney Gilstrap LeVinus, president and CEO of the Arizona Multihousing Association, which represents more than 2,300 property owners and managers across the state.  

“The verdict on rent control is in and it has been for decades,” LeVinus said. “In cities from coast to coast that have passed measures to stymie the marketplace, the results have been unfortunate. New construction of homes comes to a crashing halt as builders flee the market. Property owners, who need to cut costs to stay afloat, stop investing in existing homes. Property tax revenues plummet and renters at the lowest income levels find themselves with fewer housing options.” 

Danny Seiden, the head of the Arizona Chamber of Commerce & Industry, echoed this opposition, adding that his organization will fight any and all rent control proposals. Rent control is currently illegal under Arizona law.  

“The Arizona Chamber will oppose any attempts to impose a rent control scheme on property owners,” Seiden said. “We need to increase our housing supply to keep pace with demand, but rent control will do just the opposite by making it harder for developers and rental property owners to recoup their investments, which will just discourage more homes from being built. Meanwhile, demand will continue to tick up along with prices.” 

The Arizona Department of Housing has estimated that the state needs to build about 270,000 new homes in the near future to keep up with demand. More than 100,000 new residents a year have relocated to the state annually for the past several years, making Arizona one of the fastest-growing states in the U.S.  

At the federal level, the Biden Administration recently published a Blueprint for a Renter’s Bill of Rights. The proposal’s principles direct the Federal Housing Finance Agency (FHFA) to examine limits on rent increases for future investments and actions promoting renter protections. This new guidance, alongside the document’s sweeping recommendations, represents an unprecedented federal attempt to influence rental policy, which is typically handled by municipal and state governments. 

In a statement opposing the Blueprint, the National Multifamily Housing Coalition expressed skepticism, saying “we are disappointed (the Biden Administration) are pursuing potentially duplicative and onerous regulations that are already appropriately addressed under state and local law. These efforts will do nothing to address the nation’s housing shortage and could discourage much-needed investments in housing. We continue to urge the Administration to prioritize enacting the Housing Supply Action Plan they issued in May. The best renter protection is an abundant supply of housing.” 

This administration plan coincides with 50 progressive Democrats who united to urge Biden to direct different agencies, including the FHFA, the Federal Trade Commission and Department of Housing and Urban Development to implement national rent control policies.  

The idea was promptly panned by The Wall Street Journal Editorial Board, which wrote: “If there’s any consensus in economics it’s that rent control achieves the opposite of its intended goal. It leads to housing shortages by discouraging new development and maintenance of existing properties. Rents rise faster in properties not subject to controls.” 

In Arizona, meanwhile, Democratic lawmakers proposed several bills to impose new regulations on rental property owners and rental rates  

HB 2161, legislation by state Rep. Judy Schwiebert, D-Phoenix, seeks to cap annual rent increases. Business community advocates, who support policies to increase the number of available homes, are expected to oppose the bill, which is scheduled to be heard Wednesday in the House Regulatory Affairs Committee. 

Four bills by Rep. Analise Ortiz, D-Glendale, would allow for the implementation of rent control and put constraints on how landlords can manage their properties.  

“While rent control sounds good in theory, the practice has been disastrous,” said LeVinus of the AMA. “You only need to look at the most recent experience in St. Paul to see what would happen here. Rent control passed, builders fled and housing starts plummeted. In just a few months, the Council flipped its decision and walked back the entire bad idea. It didn’t work there, and it won’t work in Arizona.” 

Although rent prices dropped slightly in Phoenix in 2022, homelessness remains a challenge and housing remains a major driver of inflation. 

Arizona home prices continue to rise as a result of a lack of available properties and high buyer demand. This has led business community advocates to argue that the government should drive attention to removing barriers to the construction of new single and multifamily homes.  Criticism of rent control does not come solely from the political right. The Brookings Institution, a center-left think tank based in Washington, D.C., argues that the evidence shows that rent control appears to help current tenants in the short run, but in the long run, it decreases affordability, fuels gentrification, and creates negative spillovers in surrounding neighborhoods