On the other hand, most studies show that even though rent control is great for tenants who get it, the policies can lead to higher rents and fewer units over all.
Is that why economists say rent control can make housing problems worse?
Yes. That said, nuance is something you’re unlikely to hear in either side’s political commercials. One of the more frequently cited studies is a Stanford analysis that found that rent control accelerated the gentrification of San Francisco’s Mission District by encouraging landlords to convert rental housing into higher-end condominiums and cooperatives. The study also concluded, however, that rent control lived up to the promise of reducing the displacement of lower-income tenants and older people.
Economists have three main criticisms of rent control. They say it helps renters today at the expense of renters tomorrow. They also see it as a blunt instrument: While helping to stem economic displacement in the short term, it leads to long-run problems by encouraging landlords to exit the rental business, and future landlords to not enter. And it can divert resources from low-income renters to those with moderate and even high incomes. In a 2002 study, San Francisco found that about a quarter of its rent-controlled units were occupied by households with incomes over $100,000. That number has to be much higher today.
What do some economists think cities should do instead?
Build more housing. California is one of the nation’s most heavily regulated building markets, and has underproduced housing for decades. The state ranks 49th of 50 (above Utah) in the number of housing units per capita. Fewer homes = higher prices.
Of course, this won’t do much for renters who are struggling now. To that end, a number of economists have suggested subsidies or tax credits as an alternative to rent control, because they can shield renters from big price increases while being tailored to people who need the most help.
“When people need health care, we give them Medicaid, and when they need food, we give them food stamps,” said Christopher Palmer, an economist at the Massachusetts Institute of Technology. “But for housing, another basic human need, we tell people to get on a list and maybe in 10 years they’ll get a voucher for an apartment. That doesn’t match up with the immediacy of the need.”
Article source: https://www.nytimes.com/2018/10/12/business/economy/rent-control-explained.html?partner=rss&emc=rss
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