Rent Control Is Squeezing Landlords in D.C. Suburbs

See Wall Street Landlords Loved These D.C. Suburbs. Rent Control Ended That.: Montgomery and Prince George’s counties limit rent increases to the lower of either 6%, or 3% plus the inflation rate by Rebecca Picciotto of The WSJ. Excerpts:

"In July, Montgomery County and Prince George’s County enacted laws that limit rent increases to either 6%, or 3% plus the inflation rate, whichever is lower."

"the new laws restrict rent increases not just on apartments where tenants are living but also on vacant units"

"Multifamily transaction volume in both counties was down 13% in the first three quarters of 2024 compared with the same period in 2023"

"“There’s no question that [the rent restrictions] had more than a chilling effect,” said Scott Melnick, president of Montgomery County-based brokerage Melnick Real Estate Advisors."

"institutional investors have been deterred by the perception of a more aggressive regulatory environment and its uncertainties."

"“The goal should be creating more units of affordable housing,” said Barry Altshuler, Equity Residential’s executive vice president of investments. “Numerous studies have shown that rent control does not accomplish that goal.”"

"multifamily transactions in Montgomery County and Prince George’s County declined 80% this year compared with 2023"

"housing economists often warn that rent restrictions can scare away developers and investors, choking off new supply and renovations and worsening affordability issues."

"“In general, rent stabilization programs don’t end up helping the people that they are intended to help,” said Lisa Sturtevant, chief economist at Bright MLS, a real estate technology company."

"For now, the biggest beneficiary may be apartment building owners in northern Virginia. In that other hot spot for government commuters, multifamily transaction volumes over the first nine months of this year are 155% higher compared with the same period in 2023.

Northern Virginia “is now being considered a top-three market nationally for institutional multifamily investment,” said David Leopold, senior vice president and head of affordable housing at commercial property lender Berkadia."