A new study by San Francisco-based research firm MetroSight sheds light on key factors behind rising housing costs nationwide, emphasizing the significant role that local and state-level regulations play in driving up rental expenses.
The report, commissioned by the National Apartment Association and National Multifamily Housing Council, highlights how regulations hinder the construction and operation of rental units, leading to a shortage that ultimately pushes prices higher.
This crucial finding aligns with the Arizona Multihousing Association’s long-standing message to policymakers: Excessive regulations limit housing supply.
The report notes that since 2012, the U.S. added 15.6 million households but built only 13.3 million new homes, apartments, and condos.
Report author Issi Romem identified several specific regulations that increase costs for building and managing rental properties, including restrictions related to source of income, eviction laws, and applicant screening.
After analyzing 2,500 properties in 50 metropolitan areas, the conclusions were simple.
“Properties operating under resident screening laws and strict eviction regulations reported lower revenue and greater operating costs,” Romem wrote.
Additionally, jurisdictions that prohibited property owners and managers from considering an applicant’s source of income delayed lease signings, increased turnover rates and contributed to nearly a 1% increase in vacancies.
Meanwhile, property managers’ costs rose by nearly 6% under more stringent eviction laws, such as prohibitions on evicting renters who remain after a lease expires.
“Just-cause laws could enable renters to exploit complex or prolonged eviction processes,” the report said.
On a positive note, the MetroSight report found a solid way to bring down costs —provide regulatory stability.
When states prevented municipalities from creating a hodge-podge of regulations, properties reported higher revenues, lower operational costs and increased capital investment.
The study reinforces why the Arizona Multihousing Association’s work with state and local leaders is so important to simplify regulations so the multifamily housing industry can increase supply and make rental homes more affordable to all Arizonans.
Read the full report at www.metrosight.com/articles/behind-the-high-cost-of-rent.
