Rent Stabilization, The Answer to Housing Inequality in Big Cities

Upward mobility is part of the American Dream.

We Americans encourage hustle culture and praise workaholics because collectively we accept the notion that hard work will be rewarded ... one day.

But here is the truth, our system rewards some behaviors above others and home ownership is still the key.

Well... we should say PROPERTY ownership is the key to building wealth in America.

It’s going on four years of us hosting the Flourish Media Conference, Where Women Do Business. Each year we invite angel investors to listen to business women pitch for up to millions in business funding. In 4 years 80% of the women who pitch received support for her business.

One common thread each angel investor has is PROPERTY. Not only are they homeowners but when asked, each confirmed they have a portfolio of properties.

Millennials remain late to the wealth building game for many reason that includes massive student loan debt, lack of well paying job, and an ever growing distrust for traditional systems. Banking policies built on traditional norms contribute to this stagnant market.

Consider this, millennials who live college with massive debt also enter a job market that ask for years of experience for entry level positions that are often underpaid. In that situation many millennials measure the choice of pursuing work that matches their education, or accepting higher paying work that does not reflect their education.

Working while being underpaid is often supplement by living with roommates but often than any other generation, millennials find themselves at home with their parents who often do not require those adult-children to pay rent.

As time goes by eventually that millennial will try to buy a house. When the banks looks at their job history and sees multiple overlapping positions, bank policies unfortunately interpreted that applicant as “unstable” when it couldn’t be further from the truth. When that same applicant is pressed for rental history he or she has none further perpetuating the “unstable” narrative in the eyes of the bank.

We don’t have to tell you an “unstable” person with now crippling student loan debt will most often be denied a home loan...and the cycle continues.

So what’s the solution?

Behind The Leaf is based in Miami, Florida where housing and earning statistics are further apart than in any other US city. Despite the fact that most people can’t afford to live here...we do it. Many of the homeowners own from afar with New York being a regular reply to the question, “where are you from.”

Those same New Yorker offer a dynamic idea - Rent Stabilization.

What is rent stabilization?

Rent stabilization is the decision for cities to commit a portion of homes to a living wage sales price. If the average person living in a city makes $14 per hour. A percentage of homes in that city are caped at $262,080. That amount is 1/3 of that person’s wages over 30 years. This means FHA first time homeowners can get into a home at 3.5% or $9,172.80.

You may say but millennials can find homes for that?! Yes, but in what neighborhoods with what issues?

We as voting citizens have the option to demand changes from our elected officials, to ask for living conditions that benefit us. When new developments go up in Miami - in the most trendy neighborhoods (defined by where millennials hang out but can’t live) cost of living sky rockets. With rent stabilization we can ask for 20% of that complex to be priced at a living wage. Yes that means some lucky souls get homes in luxury buildings at a heavily reduced rate but what is the alternative?

Do we really want cities deeply segregated by wealth? Do babybommers really want their neighborhoods crowded by millennials who are trapped in this cycle?

Statistics show that millennials have different priorities from other generations. One of the top goals is freedom.

The American Dream used to look like upward mobility in a steady job but now it’s freedom to get off our mom’s coach.

If you relate to this story or any others share it! We’d love to keep the conversation going. Are you a millennial - homeowner? Tell us about it.

In the story we mention the Flourish Media Conference, tickets are on sale now.