Midterm elections have come and gone and while some measures and races have yet to be called, it seems like there is a good sense of the likely impact on rental housing in the coming years. Rent control was the main topic around rental housing in these elections and NMHC recently reported what 2023 and beyond could look like in some key states:
Governor Races Will Have Some Impact on Multifamily
Arizona, Maryland and Massachusetts’ gubernatorial races flipped from Republican to Democrat, though Arizona’s Republican candidate, Kari Lake, has not conceded due to how close the race was when Arizona called it. Maryland’s Democratic nominee Wes Moore will take over Republican Governor Larry Hogan’s position. According to NMHC, Maryland does not prevent local regions from implementing rent control. Some Maryland counties are considering rent control measures at present.
Massachusetts saw an easy victory with their current Attorney General, Maura Healey (D), who will replace Republican Governor Charlie Baker after he chose to not seek re-election. Healey supports incentivizing communities to fulfill housing supply by building new developments around public transit. She does, however, still support regions adopting rent control policies.
Nevada finally called their gubernatorial race on Friday and Sherriff Joe Lombardo won by a slim margin for the Republican party. His opponent, Democratic incumbent Steve Sisolak was supportive of rent control efforts and had mentioned statewide rent control in 2023 legislation. According to the Las Vegas Review-Journal, Lombardo will “implement a long-term plan to build affordable housing infrastructure.” He wants to “streamline permitting and licensing for housing projects and will direct the Governor’s Office of Economic Development and the Nevada Housing Division to provide incentives and defer payments on land that would be paid after development.”
Michigan and Minnesota’s Potential Impact on Rental Housing at the State Level
Nearly all states held elections for open seats in their state Legislatures. Most seats continued to be controlled by the same party, however, Michigan and Minnesota seemed to have the biggest changes.
For the first time in four decades, Democrats will control the governor’s office and the state seats in Michigan. Michigan currently prevents local legislation from implementing rent control. Detroit and other cities’ housing affordability crisis, however, might mean changes to that in the future.
Minnesota also has rent control preemption in place and Democrats are now in control of the State House, Senate and governor’s office. In 2020, St. Paul and Minneapolis voters notably leveraged exemptions to implement rent control. With Democrats controlling the full legislature, changes to rent control may happen.
Local Ballots and Measures
Many localities had rent control on the ballot this election and areas like South Las Vegas, St. Petersburg, and Tampa all voted against it. However, states like Maine, California and Florida had a different outcome.
Approved Local Ballots affecting rent control were as follows:
Portland, ME – a “tenants’ rights” measure was approved, and the referendum further limits annual rent increases to 70 percent of the increase in the Consumer Price Index. The ballot also includes a 90-day notice for any lease termination, a restriction of security deposits to amounts equal to one month’s rent and a prohibition on fees for applications, credit reports and background checks.
Pasadena, CA – According to NMHC, the measure would limit rent increases to 75 percent of the annual increase in the Consumer Price Index, establish a Pasadena Rental Housing Board and would provide guidelines around “just cause” evictions. The votes were close with “Yes” only leading by 149 votes and is still too close to call as of now.
Santa Monica, CA – In Santa Monica, a measure was approved to lower annual rent increase limits from 6 percent to 3 percent. A second measure prevents rent increases during a state of emergency declared at the federal, state, or local level.
Richmond, CA – In Richmond, voters approved the further limiting of rent increases to 3 percent. The full measure can be found here.
Orange County, FL – Voters approved a measure that would limit rent increases to 9.8 percent over the next year. However, a State Circuit Judge previously ordered election officials not to certify the results of the vote, declaring the ballot summary to be misleading. NMHC predicts Florida, despite their current prohibition of rent control, may revisit the issue in 2023.
Regardless of the outcomes, rental housing and affordability is a hot conversation across the country. While many legislatives see rent control as an easy response, it is putting a band-aid on a gaping wound. The flawed policies, though they may have good intentions, will only create further housing shortages. Multifamily should be prepared to fight back on rent control measures when they come up.