Last summer, Wisconsin lawmakers enacted into law the biggest investment in new housing supply in our state’s history. This $525 million investment, which was enacted with huge bipartisan support, aimed to make housing more affordable by increasing the supply of housing, and providing incentives to both builders and municipalities to lower building and regulatory costs associated with new housing. With near-unanimous support for a package of bills aimed at increasing supply to address affordability concerns, we thought Wisconsin had turned the corner.
  
Six months later, a group of legislators, all of whom voted for the supply-side solution, introduced legislation that would attempt to make housing more affordable by placing government price controls on rental housing. While Wisconsin law currently prohibits communities from regulating the amount of rent or fees charged by owners of residential rental property, also known as rent control, the recently proposed 2023 Senate Bill 821/Assembly Bill 877 legislation would repeal this law and restore the ability of communities to impose rent control requirements on rental properties.  

The proponents of rent control often argue that landlords benefit from substantial profit margins, making them capable of absorbing restrictions on rent increases. However, this argument fails to align with reality. According to the National Apartment Association, a mere 9 cents of every rent dollar finds its way into a landlord’s pocket. The remaining 91 cents is allocated to essential expenses such as maintenance, property taxes, utilities, insurance and other operational costs crucial to keeping the property running.

Contrary to its purported goal of making housing more affordable, rent control introduces a host of challenges that could potentially render housing less affordable. By restricting the returns for landlords and disincentivizing property investment, such legislation may lead to a reduction in the supply of available housing. The consequences of a diminished supply include increased competition for limited housing stock, ultimately driving rental prices higher.

As Wisconsin grapples with the complex issue of housing affordability, it’s essential to carefully consider the potential drawbacks of rent control. Rather than jeopardizing the progress made through significant investments in supply-side solutions, policymakers should focus on alternative strategies that encourage investment, streamline regulatory processes, and address the diverse needs of communities. A balanced and multifaceted approach is crucial to achieving lasting affordability in Wisconsin’s housing market, steering clear of unintended consequences that may arise from well-intentioned yet potentially detrimental policies like rent control.

In the upcoming 2024 elections, candidates will focus primarily on high-profile issues like abortion, the economy, school funding and tax policy. Issues like rent control will rarely be discussed and will likely not be featured in campaign ads or direct mail pieces. However, the role of government and free markets to solve important housing and real estate issues will be on the ballot. They always are but are rarely discussed.  

This is why the WRA gets involved in political advocacy and the reason we endorse candidates. We advocate for preserving free markets, protecting private property rights, and providing homeownership opportunities for everyone in the state Capitol, in our courts and at the ballot box.  

In the upcoming months, we will be talking to you more about issues that are important to the real estate industry and how the upcoming elections may impact them. Stay tuned.

Best regards,
Tom Larson
WRA President & CEO