Herrera Beutler: Washington’s rent cap will backfire — Here’s what we should do instead

The road to hell is paved with good intentions, and as bad as Washington’s housing market presently is, interventions by elected leaders in Olympia — including the rent control measure they passed last week — promise to only make things worse.

Prolonged nationwide inflation has taken its toll here in Washington. In 2021, nearly one-third of Washingtonians spent over 30% of their income on housing before inflation peaked. A recent National Low Income Housing Coalition report placed Washington state fifth in the country for the highest “housing wage,” meaning renters need to earn more than $40 an hour to afford a two-bedroom home. According to Up for Growth’s 2024 Housing Underproduction report and dataset, Washington has the sixth largest housing shortage in the U.S.

The Washington Department of Commerce called the lack of affordable housing options “critical.” There’s little debate that a housing problem exists here; it is a rare bipartisan area of agreement. In December, my former colleague and our current Lt. Gov. Denny Heck told a housing advocacy coalition, “It is a supply problem ... We’ve got too damn few houses of all kinds,”
But if legislators plunge ahead with feel-good solutions that make for good press releases but deny market realities, all Washingtonians stand to suffer, especially those who can least afford it.

On April 28, the Washington House of Representatives approved a bill to cap rent increases at 7%. On its face, the price cap is appealing, but history tells us that such controls will only deepen the crisis.

Rent prices increase when demand outpaces supply. Our neighbors in Oregon are experiencing a soaring 70% increase in their eviction rate, despite 2019 rent controls already in place. While an expiring eviction moratorium plays a role, if rent controls were the solution, this surge should have already abated. It has accelerated.

Higher mortgage interest rates, higher construction costs, restrictive zoning and regulations, onerous building code requirements, lack of permitted buildable land, and increasing insurance rates all contribute to a lack of supply. There are sound policy steps that meet most of these challenges, but artificially controlling prices is not a solution.

Treating the symptoms, not the disease, elected officials here have also blamed pricing software for rent increases.

Washington Attorney General Nick Brown even filed a lawsuit attributing rent increases in our state to algorithmic software. Legislators followed suit by introducing a bill to outlaw the use of such software in the Evergreen State. But if the software tools raised prices wherever they were used, why have rents decreased in Olympia and Everett over the past year?

The answer is simple — there are other factors in play. We could ban all such tools from property management in our state and we would still have a housing crisis because the problem is one of inadequate supply. It’s not because of greed or new technology.

Reforming regulations is essential to lowering the barriers that prevent new housing supply. The Growth Management Act requires cities to adopt plans that limit where developers can build. But in the very areas designated for growth, excessive city-imposed regulatory barriers limit building.

If we don’t want to grow outward, we must be willing to build upward. Likewise, the critical areas regulations force local governments to designate critical areas with land-use restrictions. Additionally, mandates imposing costly energy efficiency requirements under the State Building Code raise costs that renters ultimately pay. The list of these types of regulations goes on, but meaningful steps that ease our housing crunch are not being taken.

True reform targets the underlying supply shortage rather than relying on superficial political fixes. Hopefully, Washington’s political leaders learn this sooner rather than later.

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Jaime Herrera Beutler is a former U.S. Congresswoman and state representative from Southwest Washington.