Massachusetts Housing Business & Regulating the Residential Real Estate Rental Market
By Tomi Michel
Boston, MA — On the morning of May 29, 2024, after having breakfast, I headed to the State Library of Massachusetts, located inside the State House. As I walked along the steep sidewalk of Beacon St., approaching the Beacon Hill neighborhood’s golden dome public building, I noticed a rally on its main entrance steps. An estimated one hundred people were wearing blue shirts and holding signs that read “Housing Stability for Families,” “No Homeless Vets,” and “The Rent is Too Damn High.” Soon enough, I realized that this was the work of the Abundant Housing Organization, identified by the logos on the marketing materials.
I walked into the middle of the gathering and saw familiar faces. First, former Haverhill City Council Candidate Mike Morales, and then former Lawrence School Committee Member Kassie Infante, who serves as the organization’s Associate Director of Operations. As she was leading the event called “Lobby Day,” we greeted each other. I tried to continue my walk, but she stopped me and said, “Hey! Why don’t you stay?! After the demonstration outside and the speakers’ lineup are over, we will go inside the State House to convince legislators to support the accessory dwelling units initiative!” I thought to myself, “Lobbying? This sounds very much in my lane.” I agreed. Soon after, I saw someone raising a sign in the air that read “Movable Tiny House Bill S897/ H1359.” I then headed to grab a sign for myself, under the bright sunlight.
The real estate market in the United States is one of the most important sectors of the national economy, along with technology, healthcare, financial services, manufacturing, retail, energy, and agriculture. With $236.4 billion in revenue (according to IBISWorld), it is larger than the entire economy of Greece, whose Gross Domestic Product is approximately $224 billion. Residential sales account for $186.5 billion, and commercial sales account for $49.2 billion.
In Massachusetts, the real estate market size is $5.1 billion, with 17,099 businesses operating in the brokerage industry. Despite the size of the market, Massachusetts is currently experiencing a housing deficit, with the U.S. Census Bureau reporting 3,045,948 housing units against a population of 7,001,399 as of July 1, 2023.
A deficit triggered by factors such as a disproportionately growing population due to immigration, limited land space considering Massachusetts’ geography (compared to the state of Texas), zoning laws that restrict new real estate developments, the high and growing cost of housing, and income disparity. However, the current state of affairs is not an unexpected force majeure; there is a history to it—a history in which the government has played a leading role.
The public sector as an institution, at the national, state, and municipal levels, has left a tangible and disastrous legacy that has unreasonably and detrimentally impacted communities of color through the discriminatory housing practice known as redlining. In his book “The Color of Law,” Richard Rothstein explains in detail how the government, through policies and guidelines, supported banks and insurance companies in refusing or limiting mortgages and housing-related services in certain neighborhoods due to their racial and ethnic makeup. Systemically, this action deprived generations of the opportunity to build wealth through real estate equity and created and promoted ghettos, now referred to as “inner cities.” It wasn’t until Congress passed the Fair Housing Act of 1968 that this practice was made illegal, with the support and leadership of people such as President Lyndon B. Johnson and Rev. Martin Luther King Jr. Yet the struggle seems to not be over.
Regulating residential rentals in the Bay State is critical to citizens’ safety and integrity. Though housing is a human right, it has also been a profitable business. Many service providers (landlords) have been financially abusing their consumers (tenants) with steep rent increases, among many other actions now irrelevant to this article.
Mike Morales, who is a real estate broker and served as the State Director of the Massachusetts Realtor Association, differs from my viewpoints. “I disagree with rent control for multiple reasons. First, rent control can discourage investment in rental properties, reducing the incentive for developers to build new housing units. This can lead to a decrease in the overall housing supply, exacerbating housing shortages in the long term. Second, landlords may have less revenue to invest in property maintenance and upgrades, leading to a decline in the quality of rental housing. This can result in substandard living conditions for tenants. Third, rent control can create market distortions by preventing rents from reflecting the true market value of properties. This can lead to inefficient allocation of housing, where tenants in rent-controlled units may stay despite better opportunities elsewhere. As you know, I take the housing crisis in our region very seriously, as it impacts nearly every demographic. Instead of rent control, alternatives such as housing vouchers, subsidies for low-income renters, and incentives for developers to build affordable housing can address affordability issues more effectively without the negative side effects.”
I, nonetheless, believe rent control will ensure accessible housing costs for low-income workers in a high-cost-of-living state. It will protect individuals from sudden rent hikes, which will prevent displacement and homelessness. It will provide financial security for families to allocate money to other essential needs such as education. Lastly, it will regulate the extreme fluctuations in the rental market, where a landlord can increase the rent to a tenant without any repercussions. Bill S897/ H1359 is an option that helps, like many others, but does not address the root problem: an unregulated residential housing rental market. One where the bargaining power sits at the landlord’s hand.
Tomi Michel is a Rumbo Columnist. He can be reached at tomi@michelpublicrelations.com.
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