Bernie’s National Rent Control

He says Venezuela isn’t his model. You can’t tell by his housing policy.

WSJ editorial.

"Bernie Sanders this month unveiled a $2.5 trillion housing agenda, but the price tag isn’t the only shocker. “Under my plan,” he told union members in Las Vegas, “we will establish a national rent-control standard, capping annual rent increases throughout the country at no more than 1½ times the rate of inflation or 3%, whichever is higher.”

Oy. Economists of all stripes agree rent control doesn’t work. A mere 2% think it has positive effects, according to a 2012 survey by the IGM Forum. In other contexts Bernie might cite that statistic as proof of settled science. No less definitive are the in-depth studies. An analysis last year of San Francisco’s 1994 rent-control initiative found that the landlords it affected “reduced rental housing supply by 15%, causing a 5.1% city-wide rent increase.”

The Sanders plan would generously let landlords “apply for waivers if significant capital improvements are made”—as if this wouldn’t be a politicized process and a brake on investment. Ditto for Bernie’s proposed House Flipping Tax, a 25% levy on sellers who either didn’t live in the property or didn’t own it for five years. The predictable outcome: less development, less renovation, and fewer rentals.

The bulk of the plan’s money, about $1.5 trillion, would go to the National Affordable Housing Trust Fund. It would be spent to build and rehabilitate 7.4 million units that the plan promises would “remain affordable in perpetuity.” The trust fund would also administer two million new “social housing units,” constructed at a cost of $400 billion. But even all that wouldn’t be enough, given how Mr. Sanders’s proposal would crimp private building.

Housing prices do appear to be rising faster than wages. The cost to rent a primary residence is up about 3.7% year over year, per federal data. Not coincidentally, the vacancy rate for rentals, 6.8%, is at lows last seen in 1985. That gets to the real problem: It’s impossible to build denser housing in many places due to restrictive zoning and antigrowth activism by current homeowners.

Some sources say that 75% of residential land in Los Angeles is zoned for single-family homes. In San Diego a Lutheran church has been trying to build a couple of dozen affordable apartments in its underused parking lot. But the zoning rules specify that churches need one car spot for each 60 inches of pew space.

There are useful ways to attack such problems. This year Oregon passed a law that in some cities overrules local regulations to allow townhouses and quadplexes. Minneapolis has moved to repeal single-family zoning. Nationwide rent control would undermine these efforts.

It’s constitutionally dubious, too. What gives Washington the power to dictate rents in Cincinnati and Phoenix? In 2012 the Supreme Court balked at using the Commerce Clause to justify ObamaCare’s mandate to buy health insurance. It’s hard to imagine today’s Court giving federal rent control a friendlier reception.

Mr. Sanders says that his version of democratic socialism bears no relation to the kind practiced in Venezuela, yet his housing policy has all the earmarks: price controls that crimp supply and cause capital to flee, then government diktats and subsidies to counteract the damage from the controls. As in Venezuela, the poor would suffer the most."