A new study backed by the real estate industry found that a proposed ballot question to implement rent control in Massachusetts could lower property values by 14% over a decade, costing homeowners $300 billion in that time.
The analysis, conducted by the Center for State Policy Analysis at Tufts University and commissioned by the Greater Boston Real Estate Board, said such a steep decline in values would blow a hole in local government budgets that rely on property values. Cities and towns would in turn need to either make deep cuts to services or turn to major tax hikes.
The Greater Boston Real Estate Board pledged last year to fight the rent control question “every step of the way.” Greg Vasil, the board’s president and CEO, said this week that he believes once the “unintended consequences” of the proposal are made clear, “people are going to quickly coalesce and realize this question has got problems.”
“We know that rents are high and people are struggling and affordability is paramount for young people, for old people, for people at all economic classes across the commonwealth,” Vasil said. “But this question is so poorly drafted and has so many issues, it’ll impact not only people and homeowners, but it’s really going to impact cities and towns in ways that I’m not sure that people fully understand.”
Backed by a coalition of housing groups, labor unions, community organizations, renters and homeowners, the ballot question would limit annual rent hikes across Massachusetts to either 5% or the rise in cost of living as measured by the Consumer Price Index.
The cap would not apply to owner-occupied buildings with four units or fewer, and new buildings would be exempt for their first 10 years.
The report contends that the measure would make properties less valuable in the short-term by limiting the revenue a landlord or homeowner could take in from rent. In the longer term, it said, landlords would have less money to spend on improving their properties and less reason to do so, since they wouldn’t be able to charge a higher rent to reflect the improvements.
But Carolyn Chou, executive director of Homes For All Massachusetts, told GBH News that real estate markets fluctuate, and called it ”premature“ to reach a determination on property values.
“We are putting forward a common-sense rent stabilization policy that limits rent increases to make things predictable for tenants and to support tenants, homeowners and small landlords,” Carolyn Chou, executive director of Homes For All Massachusetts, told GBH News. “This is one part of what we need to do to solve the housing crisis here in Massachusetts.
Study looked at Minnesota, Cambridge
Evan Horowitz, executive director of Tufts’ Center for State Policy Analysis, based his findings on a pair of studies examining rent control impacts in St. Paul, Minnesota, and in Cambridge, one of three Massachusetts communities that had local rent-control policies in place before voters banned them in 1994.
Horowitz said the potential ballot question represents ”maybe the tightest kind of broad-based rent control regime in the entire country.“
“A rent control regime this strict is going to have a dramatic impact on the ability of cities and towns to raise money,” he said. “And the chief vehicle for this is the decline in property values.”
A February poll from the University of New Hampshire found a majority of Massachusetts voters in support of the potential rent control ballot question. Voters in that same survey named the cost of living and housing as the top issues facing the state.
The idea has proven unpopular, though, with leaders on Beacon Hill.
Gov. Maura Healey told the Greater Boston Chamber of Commerce Tuesday that the ballot question has “already halted housing production in our state,” saying she heard last year from six developers who lost funding as the ballot question moved forward. She declined to name the developers.
House Speaker Ron Mariano, a Quincy Democrat, said last month that he believes the ballot question “really defeats the purpose of adding more housing” because it would dissuade investors from building.
State lawmakers are in the process of reviewing 11 proposed ballot questions to decide if they want to pass any of the policies on their own or let backers advance to the next step in the process of putting the ideas before voters in November.
The committee examining the questions plans to hear testimony for and against the rent control measure at a Tuesday hearing.
