3 ms·

The point isn’t about the supply of new construction but rather about supply of open leases. Rent control incentivized renters to stay put thereby reducing supp

• TomMckenny 7y ago
  >Removing rent control hurts current renters in the short term. It also removes restrictions on supply that improve the overall health of the market over a longer time horizon. I'm just seeking proof of that. There are limitless alternative even contradictory theories. Why, other than matching preconceived world views, do we choose one over the other without evidence? In the Cambridge example 25 years have passed but there is, as you say, no additional housing and prices have risen further. Nor was there any burst of economic growth. In what way and to what end has the market become healthier? And if it does not increase supply of new construction then it is zero sum gain. It merely benefits one group, in this case landlords and new residents, over old residents and tenants generally. And the harm done is not temporary, the increased outlay in housing is permanent regardless of who is paying it. And wealth is transferred to unproductive literal rent seeking from productive activities such as consumption, employment and businesses (who now have bigger payrolls just to pass through employees to housing). And now, with transient population replacing a permanent one, interest in long term undertakings such as mass transit and community undertakings such as environment, homelessness or even economic stimulus also wane. The correct solution is to add more housing which evidently is unconnected to rent control. Certainly on existing units.
  • kahnjw 7y ago
    There is ample research supporting the notion that rent control increases prices and gentrifies neighborhoods [1][2][3]... The reason I believe this is economics 101. People want simple solutions to difficult problems. If prices are too high, we create laws that keep them low (so simple!). Problem is that supply is finite, even with new units being constructed cities have been unable to keep up with the influx of new residents. In many cases this is due to other similar suffocating regulations around building height, density, inability to pay out current residents for new construction etc. When supply is sparse and prices are often 50% less than market rate for long term renters, you increase their incentive to stay. That further restricts supply and prices go up for anyone not under contract. If you have an alternative theory of how this would work, I'm curious about it. What are the dynamics, beyond "prices are cheaper"? How does rent control reduce or solve a housing crisis? >And if it does not increase supply of new construction then it is zero sum gain. That's a hard thing to prove but I'd wager that isn't the case. Playing forward the rent control dynamic, it's likely that landlords could extract more money per unit on average than they would have in a less supply restricted market. The housing market is far from perfectly competitive without rent control. Landlords have many tools at their disposal to jack up prices beyond what the fair market value is with and without rent control. If the turnover rate is lower, those tools become easier to use. There are fewer comps and almost zero competition. That leaves a wider lane for price gouging on everything from rent to parking to laundry. [1] https://www.brookings.edu/research/what-does-economic-evidence-tell-us-about-the-effects-of-rent-control/ https://www.brookings.edu/research/what-does-economic-eviden... [2] http://freakonomics.com/podcast/rent-control/ http://freakonomics.com/podcast/rent-control/ [3] https://www.city-journal.org/html/does-rent-control-help-poor-12772.html https://www.city-journal.org/html/does-rent-control-help-poo...