Sunday, July 3, 2016

Economists have an almost universally dim view of rent control

See In Silicon Valley Suburbs, Calls to Limit the Soaring Rents by CONOR DOUGHERTY of the NY Times.
"Rent control is rare nationally, and it is generally left over from decades-old laws for urban areas of New York, California and New Jersey, as well as the District of Columbia. About half the states have laws prohibiting localities from regulating rent prices at all, according to the National Apartment Association, while others, including California, have imposed limits, such as making more recent buildings exempt.

Economists have an almost universally dim view of rent control because it does nothing to attack the underlying problem here, which is that more people want to live in the Bay Area and Silicon Valley than there are housing units to put them in.

Indeed, study after study has shown that while limits on rental increases may have helped a comparative handful of tenants stay in their apartments, they only added to a shortage of affordable housing and did little to stem the tide of higher costs.

Rent control also comes with unintended consequences. The supply of rental apartments can become tighter as landlords exit the business. The properties that remain can become shabbier as owners stop keeping up with maintenance.

“Rent control exists for a reason, and it’s because someone gains from it,” said Daniel Fetter, an economics professor at Wellesley College in Massachusetts. “The question is, ‘Is that really the best policy for achieving those ends?’”"

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