Rent Control Debate Won’t Go Away

Sometimes, when I hear current debates about housing in the United States, I feel like I’ve walked in on a heated argument whether the Earth is the center of the solar system; people are still arguing about rent control, for example. Rent control is not only in effect in over a hundred cities in the United States, but some people believe it should be applied everywhere. But rent control always fails to achieve its stated goal, making life easier for people with less money who struggle to pay for housing. Instead, price controls always create inflation, yet when prices rise, the temptation to cap prices can be irresistible. That’s why the debate goes on, and I was glad to be invited to discuss it again in an online forum hosted by the Bipartisan Policy Center (BPC).

In a functioning and healthy discourse about housing, the topic of rent control would never even be mentioned. Consider that that the five biggest cities with rent control in the United States are New York City, Los Angeles, San Francisco, Oakland, and Washington, D.C. and that according to one website, all five of those cities are among the top 10 most expensive cities for rent in the country. That list has San Francisco and New York at number 1 and 2, Oakland at the 4^th position, and Los Angeles and Washington DC at 7 and 8. The high end for an apartment is $3,500 in New York and the low end of the cities with rent control on the list is $2,260 in Washington DC.

Now supporters of rent control might fight over the list and the rents, but they can’t overcome the fact that in every major city with rent control, rents are persistently high and always have been. That should be enough to create doubt. Maybe if a city like New York that has had rent control for almost a century still is the most expensive place in the United States to rent, rent control isn’t working. Supporters of price controls for housing typically respond, those places don’t have enough rent control, the equivalent of saying, “the reason the fire won’t go out when you throw gas on it is because you’re not pouring on enough.”

The purpose of this post, however, isn’t to decisively to prove the rent control is a bad idea. That’s been done over and over again; you can read the most comprehensive explanation of why rent control not only fails to control prices but makes the problem worse at the Foundation for Research on Equal Opportunity (FREOPP). The simplest and most common-sense way to look at any economy is through the lens of supply and demand; prices go up when a product or service is scarce, and lowering prices is best achieved with more production. If one rejects this basic idea – price is really a measure of greed and exploitation, for example – then issuing a fiat setting price makes sense. It didn’t work for Roman Emperor Diocletian and it hasn’t worked since.

I am appreciative, however, of the BPC creating the opportunity to talk not just about rent control, but regulation of rental housing more broadly. And the discussion brought in a wide range of thinking and expertise, including from what I consider to be my foil on the issue, Tara Raghuveer, with the Kansas City Tenants Union and Director of the Homes Guarantee Campaign. Raghuveer presents her case well and without caveat or apology as do I. If you had to pick two of the ten speakers, you might choose she and I to get the opposite ends of the discussion.

As I have posted before, regulating prices and rental housing really isn’t about rent at all, but about political power. Activists seized the moment when they exploited the ignorance of elected officials, incuriosity of the media, and the resentment of the public when they exploited the calamity of Covid-19 not for cash assistance for people who couldn’t pay rent, but to get eviction bans imposed across the country. The subsequent instability and the outlier stories of tragedy and pain from people caught in the gears of Covid lockdowns, further served the purpose of illustrating the activist view that the private sector can’t provide housing; the government should do it. It accelerated our path toward a government takeover of private rental housing.

You can see the whole discussion at the BPC’s page, Ten Experts Answer FAQs on Rent Regulation. I’ve posted my answer to the first question as well as Raghuveer’s.

Question: What goals have recent rent regulations been adopted to advance? What are some of the inherent tradeoffs in furthering these goals that state and local governments should take into account when designing and implementing rent regulations?