Cities in Texas had rent control at one point in history. Why don’t they now?
To answer that question, we need to go back to World War II and the era of federal rent control.
In the summer of 2021, Jillian Herstein and her roommate received a notice many renters dread: If they wanted to renew the lease on their two-bedroom apartment in South Austin they’d have to pay more.
Five hundred dollars a month more — a nearly 30% uptick.
“I wrote back to the manager hoping they would negotiate,” Herstein, 29, said. “He told me that the corporate office was not negotiating at this time.”
So, she went in search of cheaper rent. As she spent months looking for a place she could afford on her teacher’s salary, Herstein wondered how it was possible her rent could go up so much.
“I mentioned the idea of rent control to my friends and I was like, ‘We absolutely need it here because this is just absurd,’” she said.
Renters in Austin have endured more than a year of rapidly rising rents. Unlike homeowners, who lock-in a monthly mortgage payment and benefit from property tax breaks, renters are not protected from increased housing costs.
Rent control is one response to this. While policies vary, rent control is when a government caps the monthly rent a landlord can charge or limits how much rent prices can rise each year. Rent control has experienced a resurgence as housing costs rose during the pandemic; voters in St. Paul, Minn., passed a strict rent control measure last year, while Boston’s new mayor ran on the policy.
In Texas, state law makes it difficult to enact these protections. But half a century ago, cities in the state did have rent control. Understanding that history can help explain why cities don’t have it now.
A wartime move
The U.S. entered World War II in 1941. As American troops traveled overseas, others began migrating across the country to support the war effort by working in factories and training at military camps. Suddenly, cities and towns had to accommodate a surge of new residents.
“There are some places, especially places where they were building ships or airplanes, where there could be double the number of people in that city … and that put a lot of upward pressure on rents,” Daniel Fetter, an economics professor at Stanford University who has studied rent control, said.
“Landlords had to be patriots. They had to do their part for the war effort and their part was basically living under rent controls.” W. Dennis Keating, a professor of urban studies at Cleveland State University
The federal government needed to ensure that those moving into new cities could both afford housing and not displace current residents. So, as the war began, the Roosevelt administration established the Emergency Price Control Act, which included national rent control.
“Landlords had to be patriots,” W. Dennis Keating, a professor of urban studies at Cleveland State University, said. “They had to do their part for the war effort and their part was basically living under rent controls.”
The federal government designated "defense rental areas" that were subject to rent control. This included the Austin area; about 1,500 officers and their families had arrived at Camp Swift in Bastrop early on in the war.
The federal Office of Price Administration controlled rents, which were tied to historical prices. Starting in December 1942, Austin landlords could not charge more than the monthly rent they collected on March 1. Officials worried renters would try to outbid one another for homes — something that has happened recently in Austin.
“’[I]t would be grossly unfair for a war worker making $75 a week to bid against some citizen making only $30 a week and thereby cause an increase in the rent of the property both are seeking to rent,’” Murray Graham, OPA director for the Austin area, told an Austin Statesman reporter that year.
Evictions were also outlawed.
Not everyone was happy about this. When the war ended in 1945, federal rent control remained — and some Texas landlords threatened to stop renting their homes in protest of the continued policy.
But they didn't have to follow through on these threats. In the summer of 1946, the act establishing federal rent controls expired and landlords began raising rents.
“[O]ne apartment owner served notice Monday of a 50 percent increase in rent effective immediately,” reads an Austin Statesman article that July. “Rents were raised on a 12-unit apartment house from $40 to $75 a month, with a $5 month charge for use of the ice box.”
At some point, the federal government reinstated rent control. But it didn’t last much longer.
In 1947, the Truman administration began allowing states and local governments to opt out of federal rent control — to "decontrol" the rent. Towns throughout Texas did just that; a Washington Post reporter wrote in 1949 that rent control had ended in Sweetwater, Marshall and Corsicana.
Local officials in Austin voted to end rent control on Sept. 1, 1949.
“The decontrol action followed a lengthy public hearing held Tuesday night in which the council found there is no further need of rent control and that the housing shortage here has passed,” a reporter for the Austin Statesman wrote.
Renters worried that without controls they would be hammered by rent hikes.
“I couldn’t go to school if rents were raised,” Charles Garrison, a student at UT Austin, told a city committee in May 1949. “It’s not fair to bleed guys who are trying to get an education.”
Nonetheless, the decontrol of rents continued. That same year, Texas Gov. Beauford Jester signed a law ending federal rent control in the state. “All federal rent controls are hereby declared no longer needed in the State of Texas,” the bill reads.
If a local government declared a housing emergency and got the governor’s signature, however, officials could return to capping rent prices.
And as the Korean War unfolded, municipalities in Texas returned to rent control. In 1952, counties outside Austin — including Hays, Comal, Caldwell and Guadalupe — adopted rent control policies as military personnel flocked to nearby Gary Air Force Base.
Protections didn’t last much longer, though. Officials ended rent control in the region surrounding Austin the next year.
So, where did rent control go?
In the original version of Texas’ rent control law, cities and towns could simply declare a housing emergency and then, with the governor’s signoff, begin limiting rent prices.
In 1985, state legislators amended the law, making it harder to enact these types of policies. They tied rent control to a disaster declaration, meaning the governor had to declare a natural or manmade disaster before a city could pursue rent control.
Texas currently remains under a disaster declaration in response to the COVID-19 pandemic. So, is rent control likely to happen? Unclear. Likely not.
Gov. Greg Abbott’s office did not respond to a request for comment about whether he would approve a city’s request to enact rent control. KUT asked each Austin City Council member if they would pursue it; those who responded said they had no interest because rent control isn’t “legally viable.”
Council Member Kathie Tovo, who represents a district where 70% of households rent their homes, said the idea of it has been floated, but the city’s legal department has said it’s not a real option.
“The governor would have to sign off on that declaration and the likelihood of that happening with the current administration is very, very low,” she told KUT.
If we could have it, would we want it?
One obvious benefit of rent control is stability. Capping prices can help tenants, like Herstein, avoid the annual search for a cheaper home — which often means moving farther away from a workplace or a child's school.
Looking at rent control in San Francisco in the late '90s, researchers at Stanford University found that tenants living under rent control were up to 20% more likely to stay in their homes — and in the city.
But in the same study, researchers noted an oft-cited downside of rent control: “While rent control prevents displacement of incumbent renters in the short run, the lost rental housing supply likely drove up market rents in the long run, ultimately undermining the goals of the law.”
Economists often posit that rent control won’t solve the core cause of skyrocketing housing costs: not enough homes for the people who want to live in them. If you cap prices, there is less incentive (i.e., profit) for developers to build more housing in a country already short on housing.
“If the rent is too damn high then really the problem is that there's not enough housing for people who live there,” Fetter said. “So, lowering the price that can be charged is not actually solving that problem.”
Herstein, who is moving to Colorado at the end of the year, said rent control should be an option while the city waits for more affordable housing to get built.
“I've read articles about the need for more affordable housing in Austin and the rates at which that is actually happening,” she said. “And there's no way that we can keep up with the need at the rate that we're going.”
But while some elected officials in Austin say they support rent control policies, pending a change to state law they won't attempt to implement it here. Thus far, no Texas lawmakers have filed a bill having to do with rent control ahead of the legislative session, which begins in January.
Copyright 2022 KUT 90.5. To see more, visit KUT 90.5.