Two indicators for lowering the rent

The popular belief about what keeps rents high has it backwards. Corporate landlords often get the blame for driving up housing costs, but the evidence actually points the other way: they tend to lower rents by adding supply, and restricting them could make affordability worse. Meanwhile, the near disappearance of single-room occupancy housing, which once made up 10% of rental stock in cities like New York, was a policy failure that directly fed the homelessness crisis. Well-intentioned regulations ended up eliminating the cheapest form of housing, and the effects are still compounding decades later. This points to two non-obvious ways to lower rents: allowing institutional investors to build rental homes, and legalizing boarding houses again. For anyone in housing policy, development, or advocacy, the real insight is recognizing where immediate political instincts cause long-term damage, and where delayed payoffs from unpopular moves are the only path to lasting affordability.

Corporate landlords are an easy target. Politicians like Elizabeth Warren and J.D. Vance have gone after them. But the story misses the bigger picture. Across the country, institutional investors account for less than 1% of home purchases, a tiny share. The much bigger drivers of housing costs are low construction and low interest rates, not Wall Street. That said, large investors do increase home prices slightly, as University of Colorado professor Stephen Billings notes. That is a grain of truth. Yet at the same time, they lower rents by bringing more rental supply online. About one in every twelve new houses built in 2024 were build-to-rent homes that likely would not exist otherwise. Restricting institutional ownership, as proposed in the 21st Century Road to Housing Act, would stop that construction cold. Lori Goodman of the Urban Institute puts it plainly: "Build to rent activity would stop. These are homes that probably would not otherwise be built. I mean this is a bill designed to increase supply and you're actually cutting off the activity that is designed to do exactly that which doesn't make sense."

The hidden cost of scoring political points against corporate landlords is that it chills the very supply-side investment needed to lower rents. When regulation discourages building, less gets built, and over 12 to 18 months the shortage gets worse. There are real trade-offs. Billings found a small increase in crime in neighborhoods with concentrated investor ownership. But those need to be weighed against the broader benefits of rental availability. The most durable lesson is that letting build-to-rent continue feels politically uncomfortable but pays off in lower rents within a few years.

The second indicator looks at a housing form that nearly disappeared: single-room occupancy units. In 1950s New York, more than 200,000 SRO units existed, over 10% of rental housing. These were boarding houses and long-term hotels with shared bathrooms and kitchens. They were incredibly cheap, as low as $100 a month in today's dollars. But they were seen as slums. Urban renewal campaigns, new fire safety and minimum size regulations, and NIMBY pressure led to a wave of destruction. By the 1970s, a million rooms were eliminated or converted. The result was predictable but not anticipated: homelessness surged.

The causal chain is clear. About half of men entering homeless shelters in 1980s New York had previously lived in SROs. A congressional report following the violent evictions at San Francisco's International Hotel in 1977 acknowledged that SRO closures were a major driver of rising homelessness. Yet the problem was not just bad regulation. Cities had no replacement for the cheapest rung of the housing ladder. Rebecca Baird Remba, who reported on the history, notes that recent efforts to bring back SROs have been piecemeal and ineffective. The zoning changes in Washington State and Oregon are among the strongest, but most cities still effectively ban shared housing.

The uncomfortable implication is that the most powerful lever for lowering rents may be legalizing housing that looks nothing like a proper apartment. That requires fighting decades of stigma and outdated codes. But the payoff is massive. Remba's research shows that if SROs had grown at the same rate as other housing, there would be 2.5 million more rooms today, far more than the homeless population.

The two indicators share a common thread: the solutions that work require patience and tolerance for political discomfort. Letting corporate landlords build rental homes feels like surrendering to Wall Street. Legalizing boarding houses feels like accepting substandard housing. Both are unpopular in the moment. But the system rewards those who look past the first-order reaction and invest in supply.

Paul Freitag, who runs the organization operating Vera Hill's SRO, acknowledges the drawbacks openly. SROs are challenging environments for aging tenants. Navigating a walker in a dense dorm, managing incontinence, and high flu transmission are real issues. They are not a universal solution. But for many, especially younger people getting established, they are a lifeline. Vera Hill, 77, gives her experience four out of five stars. She renewed her lease for three years and her rent went down. That is a rare story in today's housing market.

The key is to see SROs as one tool in a systems-level strategy. There is no single villain and no single fix. The housing market is a complex system where restricting one player or eliminating one housing type triggers cascading consequences. Organizations that will succeed, whether nonprofits, developers, or policymakers, are those that map the full chain: what happens when you ban build-to-rent? What happens when you outlaw shared housing? The answer is usually that the problem gets worse.

The most valuable insight from this episode is about time horizons. Banning corporate landlords feels productive immediately. Legalizing SROs takes years of zoning battles, construction, and then tenant occupancy. The first gives political payoff now; the second gives actual housing later. Stephen Billings, who generally supports build-to-rent, says, "I think I agree with some of the conservatives on this view of let's allow more building of housing." That is an unlikely coalition, but it points to a truth that crosses partisan lines: supply is the only durable answer. Everything else is noise.

Here are the key actions to take away from this analysis.

• Push for legalizing shared housing (SROs and boarding houses) at the local level. Over the next 6 to 12 months, advocate for zoning changes that allow single-room occupancy units with shared kitchens and bathrooms. Washington State and Oregon are proof it can work. This is the highest-leverage, lowest-cost path to adding affordable rooms.
• Do not support blanket restrictions on institutional home ownership without analyzing supply effects. If you are a policymaker, demand an impact analysis of how these restrictions affect build-to-rent construction. The evidence suggests such bans reduce overall rental supply and raise rents over 12 to 24 months.
• Invest in build-to-rent single-family homes as a rental strategy. For developers and investors, this is a 3 to 5 year opportunity. The political risk is real, but demand is massive and the regulatory environment is still favorable in most markets.
• For housing advocates, separate the corporate landlord stigma from the actual impact. Channel anger toward the real drivers: restrictive zoning, lack of construction, and low interest rates. Pick fights that address root causes, not symptoms. This reframing takes effort but builds credibility with unlikely allies.
• Incorporate SROs into transitional housing strategies for young adults and seniors. Nonprofits should design SRO buildings with social services, like Westside Federation's model. But acknowledge the trade-offs: these are poor environments for aging in place. Plan for turnover.
• Monitor the unintended consequences of the 21st Century Road to Housing Act if passed. Over the next 2 to 4 quarters, track whether build-to-rent permits drop. If they do, that is a signal that the policy backfired and needs revision.
• Identify pilot projects for micro-unit boarding houses in high-cost cities. Over the next 12 to 18 months, push for demo projects that bypass outdated minimum size requirements. Use Vera Hill's building as a case study. It works, it is affordable, and it has a 4-star resident rating.