According to an apocryphal story, Galileo Galilei gave in to religious authorities upon being browbeaten and threatened for his belief that the Earth moves around the sun. He is said to have muttered, perhaps under his breath on the way out the door, Eppur si muove! It moves! 

In the world of housing, what moves are prices, and they don’t always go up. Today, rents across the country are flat and falling. But some on the left claim rents are on the rise, and are calling for President Biden to nationalize housing policy in response.

A letter from Massachusetts Senator Elizabeth Warren and New York Congressman Jamaal Bowman of New York and more than 40 other congressional Democrats to President Joe Biden set the stage. It began with a frantic paragraph: 

Reports of corporate landlords and real estate companies increasing the rent for their own profit are rampant, placing additional strain on already struggling working families. In a country where increase [sic] in rental costs have far outpaced wage growth, it is clear that these heightened costs and acts of corporate profiteering are exacerbating an already-existing crisis of housing unaffordability and instability.

According to a recent report from Moody’s Analytics, however, this is misleading. Moody’s notes that while rents did climb back to pre-pandemic levels at the end of last year, “multifamily vacancies rose in nearly half of primary US metros, which was 20 more than Q3,” and “multifamily effective rents fell in 15% of primary markets, 40% of which were ‘pandemic darlings’ with the fastest rent growth during COVID.” 

The effect of changes in the wider economy have been uneven, with some cities experiencing increases in rents, others flat rents, and others falling rents. But Moody’s sees the declines as a sign of things to come: “Monthly data shows a decline in market rent across over 20 markets. We expect quarterly rent decline in some of those markets early in 2023.”

Moody’s found asking and effective rent growth fell from between about 16 to 18 percent in the second quarter of 2022 to around 9 percent by the end of the year; asking rent is what a housing provider advertises, while effective rent is what ends up actually getting paid after discounts or other changes. 

And what about rent increases? Anthemos Georgiades, CEO of Zumper, says in the company’s recent report on national apartment rent trends, “over the last two years we saw unprecedented rises in rent prices driven by a booming economy, low interest rates, a one-off spike in demand post vaccines, and supply chain issues that delayed new units coming to market.” 

But Zumper is now seeing movement in the other direction:

Now—with inflation and interest rates high and the labor market beginning to tighten—Americans are holding off on major economic decisions,” Georgiades says. Household formation has paused and even inverted, driving demand down and cooling off rent prices.

Their report contains the following graph, depicting the movement of national rent growth over time:

There was a steep decline in rent growth at the beginning and through the first year of the pandemic, followed by a rise through the middle of 2022, and then a slowing trend at the end of last year. A look at Boston rents for one-bedroom apartments, in Warren’s home state, illustrates this phenomenon. Rent for a one-bedroom in January 2020 was $2,500. By January 2021, it fell as low as $2,000, then rose back to $2,500 by June of 2022. That’s a 25 percent drop, then a 25 percent increase in the span of 18 months. Volatile, yes, but hardly evidence of “companies increasing the rent for their own profit.” 

Instead, price swings are evidence that prices change and are impacted by broader economic trends. Housing providers, investors, builders, and developers are all subject to those trends just as much as renters. The difference is that many renters are living paycheck to paycheck, and for them, the answer is obvious: keep building more housing. As I’ve pointed out, now is the time to pull back on regulation, not add more. Adding more rules won’t boost new housing construction, it will limit it. What Warren and her colleagues are suggesting is a drastic federal takeover of housing. 

And that’s precisely what the Biden administration is poised to do. On Wednesday, the president responded to the House letter with a list of executive actions “to increase fairness in the rental market and further principles of fair housing.” You can read the entire announcement here, but a few provisions stand out.

First, Biden ordered the Federal Housing Finance Agency (FHFA) to lean on housing providers with backing from the agency, imposing what amounts to rent control on those properties and limiting their ability to evict people who are disruptive or don’t pay the rent. The FHFA did just that, announcing “a new public process to examine proposed actions promoting renter protections and limits on egregious rent increases for future investments.”

Biden also instructs the Federal Trade Commission (FTC) to define and prohibit “excessive rent increases” under the Commerce Clause of the Constitution, which amounts to federal rent control. He proposes putting the Federal Emergency Management Agency in charge of homelessness, which sounds like a recipe for bloating the agency and setting it up to fail. Finally, he calls for the creation of a panel or committee for tenant’s rights. Tenants already have rights – and responsibilities – under every state and local law governing their relationship with the private property owner they contract with when they sign a lease. Many of these laws have already undermined rental housing by increasing risk.  

The president’s letter concludes with a call for action: “People are struggling to pay the rent today, and we must pursue all options on the table that will help renters stay housed.” The White House announcement is high on rhetoric and charges to “explore” and “examine” and “inform,” but is short on anything that would help someone who is struggling to pay their rent next month. 

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Apparently, all of those “options” involve dismissing basic economics. The massive bureaucracy being proposed would accelerate what I predicted at the beginning of the decade as a slow but steady government takeover of rental housing. This wouldn’t result in justice, lower prices, or more housing, but it would result in rationing—not by an impersonal price system, but by a hodgepodge of quangos and bureaucrats. 

President Biden, Senator Warren, and her colleagues have demonstrated their strong and unyielding faith in ideology over the data. Thankfully, while the letter makes for good theater, it is unlikely to manifest itself as policy any time soon. But unless more efforts are made to change the narrative, we could see pressures to impose a “faith-based” set of interventions in the housing economy that will only make things worse for poor and middle income people. The solution is simple: allow more housing of all kinds, everywhere, for people of all levels of income.

This New Urbanism series is supported by the Richard H. Driehaus Foundation. Follow New Urbs on Twitter for a feed dedicated to TAC’s coverage of cities, urbanism, and place.