The Issue of Affordability

What is your definition of “affordable” housing?

To some, it means rental prices that are affordable to those earning the area’s median income or greater. As cities struggle to pass rent control measures, some real estate companies are surprisingly putting a cap to rent renewals. Michael Schall, CEO of Essex Realty Trust, is changing the game by enforcing a 10% rent cap renewal.

The issue of affordability—and how it taints the public perception of our industry—isn’t going away anytime soon.
As the words “rent control” creep into the political dialogue of more cities across the nation, we’re not doing ourselves any favors by doing ourselves so many favors.

In the Bay Area of California, several towns, including Richmond, Pacifica and of course, San Jose, are mulling rent control measures. To the North, Seattle isn’t far off. Are they bellwethers?
As I wrote in a series of editorials about the abuses of revenue managementsoftware, maybe it’s time to focus attention on retention rather than forcing so much turnover for a short-sighted buck.
At last week’s Multifamily Executive Conference, I asked six of the nation’s top CEOs how they thought the rent-control groundswell would play out. And I was shocked when Michael Schall, CEO of Essex Realty Trust, said that he decided to cap rent renewals at 10% in some of his markets.

“It’s pretty controversial, our investors are hammering us over this,” he said, “but we’re doing it out of concern of this affordability issue.”

Think about that—one of our industry’s biggest, smartest public companies is capping renewal rates, not because it has to, but because they think it’s smart business in the long run–and a way to prevent rent control measures from taking root.
The issue of affordability—and how it taints the public perception of our industry—isn’t going away anytime soon.
As the words “rent control” creep into the political dialogue of more cities across the nation, we’re not doing ourselves any favors by doing ourselves so many favors.

In the Bay Area of California, several towns, including Richmond, Pacifica and of course, San Jose, are mulling rent control measures. To the North, Seattle isn’t far off. Are they bellwethers?

As I wrote in a series of editorials about the abuses of revenue managementsoftware, maybe it’s time to focus attention on retention rather than forcing so much turnover for a short-sighted buck.
At last week’s Multifamily Executive Conference, I asked six of the nation’s top CEOs how they thought the rent-control groundswell would play out. And I was shocked when Michael Schall, CEO of Essex Realty Trust, said that he decided to cap rent renewals at 10% in some of his markets.

“It’s pretty controversial, our investors are hammering us over this,” he said, “but we’re doing it out of concern of this affordability issue.”

Think about that—one of our industry’s biggest, smartest public companies is capping renewal rates, not because it has to, but because they think it’s smart business in the long run–and a way to prevent rent control measures from taking root.

The issue of affordability—and how it taints the public perception of our industry—isn’t going away anytime soon.
As the words “rent control” creep into the political dialogue of more cities across the nation, we’re not doing ourselves any favors by doing ourselves so many favors.
In the Bay Area of California, several towns, including Richmond, Pacifica and of course, San Jose, are mulling rent control measures. To the North, Seattle isn’t far off. Are they bellwethers?

As I wrote in a series of editorials about the abuses of revenue managementsoftware, maybe it’s time to focus attention on retention rather than forcing so much turnover for a short-sighted buck.
At last week’s Multifamily Executive Conference, I asked six of the nation’s top CEOs how they thought the rent-control groundswell would play out. And I was shocked when Michael Schall, CEO of Essex Realty Trust, said that he decided to cap rent renewals at 10% in some of his markets.

“It’s pretty controversial, our investors are hammering us over this,” he said, “but we’re doing it out of concern of this affordability issue.”

Think about that—one of our industry’s biggest, smartest public companies is capping renewal rates, not because it has to, but because they think it’s smart business in the long run–and a way to prevent rent control measures from taking root.

Story by Jerry Ascierto as featured on Multifamily Executive. Read the original story.