June brought with it new realizations about inflation and interest rates. It also brought us one hearing closer to our goal of bringing greater transparency to rental assistance.
Inflation is going to be a real problem for us individually and as housing providers. At MassLandlords we became aware of high inflation eight months ago, in October. Each month we review wage rates for team members originally hired in that month. Our intent is to hold compensation constant or increasing in real dollar terms, according to local inflation and skill development. In October we thought, “uh oh.” Now in June, we saw the largest year-over-year inflation in 40 years.
The Federal Reserve has raised interest rates to control inflation. It may take a couple years for the current and planned rate increases to soak into the market. There were earlier opportunities to start raising rates, despite the pandemic. Alas, we didn’t.
The pandemic has left banks flush with pandemic savings. Low interest rates means money is available. Many are using savings or loans to renovate. This has made it very difficult to hire a contractor in the last six months. Housing supply in need of touch-up therefore remains off-market, contributing to historically low availability.
Contrary to what many landlords may think, now is not a great time to raise rents. Yes, prices are high. Yes, your costs are increasing. But renter households are hurting even worse with gas, eggs, and other daily necessities exceeding budgets. Every renter getting a 9% rent increase is calling the mayor’s office or the news to demand that rent control be resurrected before the current legislative session ends this July 31.
If rent control is resurrected in Massachusetts, it will surely take a hideous Frankenstein form. Even in the best of times, it is extremely difficult to craft a rent control policy that won’t run amok with unintended racist disparate impact. The leading bill, sponsored by Representatives Connolly and Elugardo, allows towns to stitch together all the failed bits and pieces from the past. Boston’s Rent Stabilization Advisory Committee remains uninterested in listening to our warnings. We need every housing provider to call their Representatives and Senators to oppose local control of housing policy. Statewide problems need statewide solutions, not mad scientist towns waiting for lightning to strike.
Policy-wise, we are being effective. For instance, our litigation for pandemic rental assistance records continues.
We are currently reevaluating our electronic newsletter (not our print newsletter). Please complete our survey if you would like to guide us toward a more useful electronic presentation.
We supported a Boston Globe article on raising the rents, as well as a WHDH story on airline crash pads.
MassLandlords is an enormously valuable service to owners, managers and service providers of rental housing. Please join as a member, become a property rights supporter or increase your level of support.