In the United States, more than 100 million Americans rent their home, accounting for more than 36% of U.S. households, according to the U.S. Census Bureau.
While federal housing policy has historically emphasized homeownership, on Monday, Democratic presidential candidate Sen. Elizabeth Warren released a plan addressing the issues that impact renters.
"The same Wall Street firms that tanked the dream of homeownership for millions of American families are now some of the country's biggest landlords — and we can't keep letting these vultures trample on the rights of hard-working families," Warren tells CNBC Make It in a written statement. "It's time for big structural change to strengthen tenants' rights, combat the homelessness crisis and hold predatory lenders and landlords accountable."
In the plan titled, "Protecting and Empowering Renters," Warren lays out policies she says will help lower rents by 10%.
At the center of Warren's plan is the economic principal of supply and demand.
The senator proposes increasing the supply of housing by investing $500 billion over 10 years to build, preserve and rehabilitate more than 3 million units for lower-income families as a part of her "Housing Plan for America." A portion of these units would be prioritized for "particularly vulnerable groups like the chronically homeless, people living with HIV, people with disabilities, seniors who want to age in place and people who have been incarcerated and are returning to the community."
Warren's team had the plan assessed by Mark Zandi, chief economist at Moody's Analytics, who reportedly says the proposal would reduce rental costs by 10% over 10 years and would create 1.5 million new jobs.
Additionally, Warren suggests making targeted investments in rural housing programs, the Indian Housing Block Grant and the Native Hawaiian Housing Block Grant, as well as creating a new "Middle-Class Housing Emergency Fund" to create housing for middle-class renters in communities with housing supply shortages.
Warren says she will cover the $500 billion plan by lowering the estate tax exemption from $22 million (which was set by Republicans in 2017) back down to $7 million (set by George W. Bush's administration in 2009).
The senator also says these funds can be leveraged to encourage states to adopt protections for tenants, such as a right to lease renewal and a right to organize.
Warren proposes creating a new Tenant Protection Bureau within the Department of Housing and Urban Development and a federal "just cause" eviction standard, which would outline grounds for eviction. Currently, landlords in many cities can evict renters without giving a reason.
Corianne Payton Scally, principal research associate at the Urban Institute, studies renter households and communities. She says Warren's plan correctly pinpoints the issue of limited supply of affordable housing.
"Construction of new housing units haven't kept up with demands," she says. "We're definitely facing a supply shortage of housing in general, and among lower-income groups, that's really where we're seeing the housing crisis manifest itself in it's worst form."
But Scally stresses it's extremely difficult to predict how big the demand is in each community. For instance, she points to recent research from her colleagues that found the Washington, D.C. region will need 374,000 more housing units and at least 40% more middle-cost housing units by 2030.
"That's just the D.C. region," she says.
As for a reduction in costs, Scally says an increase in supply could have Warren's desired effect, but geography would be a major variable.
"Housing markets are so local. It really depends on the pent-up demand," Scally says. "But obviously, 3 million [units] is better than nothing."
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