The psychology of word association is fascinating and powerful. In the following sentences, fill in the blank with the first word that comes to your mind:
________ is where the heart is.
Habitat for _____________.
Most likely you chose Home and Humanity. What feelings do those terms conjure for you?
Now, let’s play a variation of this word association game. What is the first word or word phrase that comes to mind in response to each of the following:
- Philanthropic
- Nonprofit
- Ethical
- Generous
Do these terms evoke a positive feeling? Probably so. In general, public consensus is charities and nonprofits are generous and ethical. Now, what comes to mind in response to each of these words:
- Eviction
- Slumlord
- Profit
Do you experience a different emotional reaction? More negativity? Maybe some defensiveness?
Read these headlines:
“Why Are There So Many Scumbags in Real Estate?
“My Pain in the Ass Tenants”
Any emotions get triggered now?
These are the words of our industry. This is how tenants speak about landlords and vice versa, and unfavorable emotion and negative connotation often lie at the root of the conversation. Why is there such a disparity between rental housing and humanity? Whereas, “Habitat for Humanity” evokes mostly positive emotions. What’s the difference? Perception. And more specifically, perception of profit, which is mostly negative.
There are 44 million occupied rental households (36 percent of all housing) in the United States. The rental housing system is not perfect; delinquent rent disputes average about eight percent nationally, and most are temporary and eventually cured. Most visible to the public are issues that occur as a result of the approximate one percent chronic delinquent rent (often repeat tenants), and the majority of evictions. This one percent is largely responsible for the public misperception. The result is additional reactionary policy and legislation that lack new ideas or innovation to solve root causes. One percent of renters adversely impacts the other 99 percent.
Approximately 99 percent of rental housing is an equitable exchange between two responsible parties 44 million times over, where rent is paid each month. It is an embodiment and demonstration that free market principles in housing mostly works, where $519 billion of rent was paid in 2016 (according to Bureau of Economic Analysis estimates.) Rental Payments in Housing alone represents 2.8 percent of GDP, three times that of Agriculture, and nearly the size of the Auto Industry at three percent to the GDP. Each of those industries have large membership organizations that are highly influential advocates for their respective industries.
Providing housing is a humanitarian offering, and the idea that both sides of the transaction experience an equitable exchange in a free market is exemplary of what I’ve been referencing as humanitarian capitalism. Modest profits allow housing providers to significantly contribute to the overall economic impact, viability, and stability of housing markets. They are essential providers of low-income and low-cost housing. Profitability is stability in housing. Lack of profit is a cost burden that can lead to under-repair or disrepair and prevent re-investment into low-cost housing for families to call home.
Offering rental housing is a demonstration of humanitarianism in real estate. Rental housing providers are essential for 44 million households. It’s time to bridge this rhetorical divide and for both sides to end the class-war rhetoric to villainizing the “haves” against the “have nots.”
Why do the largest amount of rental property owners and their tenants, who largely operate without dispute, not have an organization that advocates for their best interests? The increasing trend to regulate for the one percent, which disenfranchises 99 percent will result in death by a thousand cuts unless a counterbalance is put in place to monitor, engage, and advocate for the majority. Hence the creation of a new organization to embody free-market principles: FAIR Housing (Foundation to Advance Innovation in Rental Housing).
Federal, State, and Local Governments are impotent on affordable housing
In reality, landlords are typically people of high ethics and integrity, and most tenants pay their rent on time and are also generous people of high ethics and integrity. If neither side desires to be perceived incorrectly, we must be willing to change our words. However, isolated incidents are often responsible for bad policy and legislation.
These policies continue to fail those who are most vulnerable. Housing instability and affordable housing are decades-old nationwide problems. Supply for affordable housing of habitable quality in sufficient quantity to meet demand is not currently being met. Low-cost housing availability is worsening at an unprecedented historical level. While market symptoms change with time, the impediment to progress is frequently caused by government departments operating as a silo. The result is no single entity is exclusively responsible for housing policy outcome.
I’ve had a front-row seat at the table with local and national politicians and lawmakers who, to both my surprise and dismay, were relatively clueless about evidence-based initiatives that can reverse and stabilize low-cost housing supply. The good news is they have expressed interest in talking and are eager to obtain data. Now, the rental housing industry can step up by a show of strength in numbers that cannot be ignored: 10-11 million individual investor/landlords managing an average of two units each, many with just one unit.1
It’s time for rental housing providers to take a seat at the table
FAIR Housing has been created as a nonprofit organization to bring a non-partisan, apolitical voice to advocate for the interests of the rental housing industry, whose beneficiaries are both landlords and tenants. As a nonprofit, doors open to opportunity for substantial impact.
Why create FAIR Housing now?
Industry advocacy is needed because irresponsible policy and legislation that impacts all rental housing (44 million homes) is often created in response to the one percent or less of rentals that have a dispute. Usually these disputes are disproportionately higher among low-cost rental units.
The rental supply for lower- and middle-income households is decreasing by a rate three times faster than new units being built in metro areas. Housing costs have risen higher than non-housing goods. And the predictable result is more delinquency and evictions. This increased activity fuels affordable housing advocacy that often points to a personal story of an eviction, which furthers public perception that housing providers are greedy profiteers who take advantage of the poor. Proliferation of tenant advocacy groups is immense, where the independent real estate operator/investor is not optimally represented by incumbent associations.
FAIR Housing + Social Enterprise
FAIR Housing is a nonprofit social enterprise to advance innovation in rental housing with a mission to eliminate unnecessary and preventable evictions. It leverages technology to match financial resources as an easy way for both landlords and tenants who might be in financial distress to apply for aid.
FAIR Housing addresses needs of vulnerable low-cost housing renters and the part-time landlords they rent from, where unstable rental housing dynamics are created, adversely impacting community economics, health, and education.
Our learning center helps landlords limit their legal exposure and preempt liability to prevent costly evictions. Tenants can receive rental payment assistance through a platform to match available resources and utilize the learning center to gain confidence and knowledge.
Affordable housing and evictions are decades old problems that researchers and government have failed to solve. It’s time to empower the community and partner with private enterprise to deliver different and innovative solutions.
Imagine the power of 10 million rental housing providers
Of all rentals, 60 percent are non-corporate, individually owned rentals between two parties where neither has a representative organization. If you’re in the business of providing rental housing of any sort (e.g., short-term, long-term, AirBnB, vacation, etc.), whether it be high-end luxury or low-cost affordable housing, you will be impacted by the affordable housing debate.
The trend to impose new rules on the growing private rental housing sector is unlikely to slow; expect an ever-increasing rising tide of regulation facing the private sector landlord, which ends up affecting the tenant due to increasing costs and rent.
There is a way to track and monitor both local, state, and national legislation. It requires real organized efforts to be effective at responding to and advocating for legislation. FAIR Housing will be highly influential even if we simply had a list of names. That is where we have strength — in numbers.
Your Voice Matters
What are your thoughts on this issue? Tell us. We really want to know. Go to FAIRH.org and share your views on our open forum. And be sure to come to the formal launching of this organization at the March 2020 Think Realty Expo in Baltimore.
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