High housing costs are no laughing matter, as John Oliver's latest monologue confirms.
On Sunday, the comedian devoted a 22-minute segment of his HBO show Last Week Tonight to the issue of rising rents and all the attendant problems of housing unaffordability and instability that those can cause.
"Rents are skyrocketing, and that is the last thing you want to hear is on the rise, along with COVID cases, murder rates, and Henry Kissinger's life expectancy," quipped Oliver. "You or someone you know may be struggling to find a place right now or being priced out of where you currently live by your landlord."
Rising rents are a very real phenomenon driven by a mismatch in many cities between the number of homes that are being built and the number of people who would like to live in them. The wedge between supply and demand is created by cities' elaborate zoning codes, price regulations, and permitting processes that all combine to reduce housing availability and raise prices.
It should be no surprise that rents are high when a majority of land in major cities is off-limits to new development, it takes years to approve whatever new housing is allowed, and some of those new units have to be given away at below-market rates.
The details of these restrictions are a wonky topic, to be sure. One expects only so much depth or insight from a comedic explanation of it all. But even allowing for that handicap, Oliver's treatment of the housing supply issue proves to be superficial, brief, and confused.
Oliver either misunderstands or fails to explore the link between government regulation, housing supply, and housing market outcomes. His perfunctory explanation of it serves only as a brief prelude to his attack on the real villains in his story: greedy private landlords with carte blanche to raise rents and evict tenants.
The solutions he puts forward, therefore, have little to do with eliminating needless, harmful regulatory barriers to new supply. Instead, he calls for legally constraining landlords' ability to raise rents and evict tenants and declaring housing a federally funded, government-provided right.
Oliver starts off his segment well enough.
"You'll often hear that high rents are a supply and demand issue; basically: too many renters, not enough units. And that is partially true because there are not nearly enough affordable units in the U.S," he says.
Things go downhill fast, however, as Oliver adds that the supply narrative is "a little weird because… you probably see new buildings cropping up all the time."
"Apartments are being built, but the problem is, thanks in part to local NIMBY opposition to more affordable multifamily housing, it's mainly been at the high-end," he says. "This serious lack of affordable housing has enabled landlords to charge higher rents for the units that exist."
The above statement demonstrates an easy-to-make but very serious misunderstanding of how housing markets work.
A lack of affordable housing doesn't enable landlords to charge higher rents on existing units. Rather, a lack of housing per se allows landlords to charge higher rates for the units that exist, which makes them unaffordable.
The corollary is that building new housing, even high-end housing, improves affordability for everyone by absorbing the demand of high-income renters, who are no longer bidding up the costs of older, naturally cheaper housing units. A growing body of empirical research shows this is a fact, not a free market fantasy.
Oliver doesn't really grok this point. Instead, he heaps a lot of blame on the greed and avarice of landlords who unscrupulously can raise prices because of a lack of capital-A affordable housing—where low rents are subsidized by the government or mandated through rent control.
That misidentified starting point leads him to support a lot of counterproductive solutions. Evidence of those solutions' failure is treated as a need for more government intervention still.
Oliver argues that we need rent stabilization—a form of rent control that caps price increases at a certain percentage per year—in order to improve affordability.
Despite Oliver's misleading statement that only two states (California and Oregon) and D.C. "mandate rent stabilization," it's actually a common policy in America's most expensive cities.
In San Francisco, a synonym for housing unaffordability and dysfunction, about 40 percent of the city's housing stock, and nearly two-thirds of its rental housing stock, is covered by the city's decades-old rent stabilization program. In New York City, another epicenter of the country's housing affordability crisis, close to half of the city's 2.1 million rental housing units are rent-stabilized.
One criticism of rent stabilization is that rents are permitted to grow at a slower rate than operating costs, forcing building owners to cut back on maintenance and other expenses. Oliver acknowledges the reality of deferred maintenance but attributes it to loopholes in rent stabilization law that are exploited by devious landlords.
"Even when protections exist, landlords can find ways around them. For instance, they might try to force rent-stabilized tenants out by allowing a property to fall into disrepair or by harassing them with incessant construction," he says. The odd implication is that landlords try to force out tenants by both repairing a unit and not repairing a unit.
Oliver also heaps criticism on landlords for not accepting housing vouchers and discriminating against tenants who've previously been evicted.
I think good faith people can disagree on how rational or fair it is for landlords to take past evictions into account when considering whether to rent to a tenant or whether or not to accept housing vouchers.
Surveys of landlords find that many landlords don't accept vouchers because the inspections and paperwork that come with the program raise costs and delay their ability to rent out units. The federal government's own research has found landlords' willingness to accept vouchers falls in tight rental markets, where supply is limited and tenants are easier to come by.
In a world of housing abundance, more landlords would likely be willing to take a chance on a once-evicted tenant or put up with the bureaucracy that comes with a housing voucher than let a unit sit vacant and unproductive.
Oliver doesn't explore either possibility much. He does, to his credit, say we should make housing vouchers easier to accept.
Then, he speeds toward a grand conclusion: "We need to agree housing is a human right," he says, assuring the audience "that is not actually just some empty slogan."
To guarantee that right, Oliver suggests massively increasing federal rental assistance and federal funding for affordable housing construction. That would be coupled with expunging tenants' eviction records, guaranteeing tenants' a right to a lawyer in eviction proceedings, and ending the mortgage interest deduction.
The trouble is that the former two solutions aren't going to do much good if one doesn't repeal the same restrictions that prevent new, private housing from being built. In fact, they'll likely make problems worse.
Dumping a bunch of housing vouchers into supply-constrained housing markets will only raise prices. If there are not enough units already, and it's difficult to build more, landlords can easily raise prices to capture the value of the new vouchers without fear that they'll lose customers.
People that don't receive a housing voucher will see their housing costs go up. The government will have to perpetually increase voucher funding to try and stay ahead of the higher prices they're causing.
Meanwhile, the same regulations and approval processes that stop developers from building "luxury" high-rises also prevent the construction of "affordable" high-rises. No amount of federal money is going to change the fact that your city takes multiple years to approve a new multifamily development on one of the few properties where it's even legal.
Indeed, throwing a bunch of federal money into affordable housing construction will just crowd out private construction. A number of studies show that new, price-restricted affordable housing raises nearby home prices. The people who qualify for the affordable housing benefit. Those who don't are back to fighting each other for an even more limited supply of market-rate units.
Oliver concludes his segment by saying, "I would argue what we really need to do is fundamentally change our mindset away from simply hoping we can tinker around the edges of housing policy and the private market will sort the rest of this shit out. We have tried that for decades, and yet, here we are."
I agree with that. Unfortunately, his solution of housing subsidies, government-funded housing supply, and tenant protections are the definition of tinkering around the edges—even if they come with an astronomically high price tag.
A more radical solution would be to declare building housing as a human right subject to no arbitrary restrictions on residential density from city hall and no inherent veto from the neighbors. If you own a property, you can build as many homes as you want on it.
That would force the greedy landlords Oliver demonizes into lowering their rents. It would force the private equity firms he criticizes to invest in housing construction instead of just housing ownership and management.
Better yet, it wouldn't subject housing investment to the whim of budget writers in Washington, D.C., Albany, or any of the other capitals that caused the housing affordability crisis to begin with.