CONLEY COMMENTARY (WSAU) – Look at the ‘for rent’ listings in Central Wisconsin. A two or three bedroom apartment will cost you $900 to $1,200 a month. A studio or a one-bedroom, $800. Yet I own a house, and my mortgage payment is substantially less that what most renters are paying. I was part-smart and part-lucky. I bought a modest house, so I’m not paying for extra space that I don’t need. And I put down 20%, which keeps my monthly payments reasonable. Lucky? I bought at a time when interest rates were 4%. They’ll be double that by the end of the year.
Whenever rents are high, there are government interventionalists who try to help. The worst idea is rent control, which is an abject failure in New York. Why are some renters paying $10,000 a month? That’s the price the landlord must change to make up for the renter down the hallway who pays $500 under rent control. In Manhattan, that’s below the cost of maintaining the property. The owner literally loses money month after month. Everyone else pays sky-high rent to subsidize the freeloaders.
Giving COVID-cash vouchers to renters doesn’t work either. Why would a landlord lower the rent if they know their tenants are getting $300 or $400 each month from the government?
The eviction moratorium, in addition to being illegal, made things worse. A landlord who hasn’t been paid for months will raise rents once the deadbeats are finally out.
What’s the solution? Basic economics of supply and demand. At times of full employment, or if the government is giving out free money, rents will stay high. When the economy cools off and people are not as flush, landlords will lower their rents so their apartments aren’t empty.
The challenge in Wausau is having the right mix of housing. Wausau has built lots of high-end rental units. Not everyone can live in the Taj Mahal. And while no one should live in squalor, Wausau does not have enough basic, no-frills apartments. Living in a walk-up over a downtown store isn’t glamorous, but those are the types of accommodations families of modest means can afford. That’s what a market-based housing market looks like, and that’s what we need.
I’m Chris Conley
Comments