Housing Affordability vs Rent Control
In today's polarized world, a common theme I experience is noticing smart people ignoring the possibility of unintended consequences. People get so focused on one potential solution to a problem - say rent control keeping some units affordable - that they fail to even consider that it might do more harm than good - for instance rent control causing people to take rentable units off the market. In relation to the rent control debate, one question I ask is does rent control actually make housing more affordable overall? Based on some recent reading, I think the answer is generally no, when you look at the macro affect it has on housing markets.
"Rent control appears to help affordability in the short run for current tenants, but in the long-run decreases affordability, fuels gentrification, and creates negative externalities on the surrounding neighborhood. These results highlight that forcing landlords to provide insurance to tenants against rent increases can ultimately be counterproductive. If society desires to provide social insurance against rent increases, it may be less distortionary to offer this subsidy in the form of a government subsidy or tax credit. This would remove landlords’ incentives to decrease the housing supply and could provide households with the insurance they desire."
Quote is from this article from the Brookings Institute:
I'm not convinced that rent control is helpful. It may provide short term relief, but over the long haul it disincentivizes the creation of new housing, while forcing up the rent of other market rate rental units. It also causes property owners to consider other options than renting out their units - condoization of apartment buildings for example. In doing so, rent control limits people's choice and flexibility on where to live, and overall drives up the cost of housing.