Economists from across the political spectrum agree that even modest rent controls would not help middle-income Americans. This consensus reflects decades of research and examples across the U.S. and around the world.
Survey Question: Rent Control Has Had a Positive Impact on the Amount and Quality of Housing
Note: The survey conducted among 41 leading economists across the political spectrum.
Question Text: Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.
Source: The Kent A. Clark Center’s 2012 Expert Survey on Rent Caps in the U.S.
Rent control consistently reduces affordable housing supply.
- Developers halt new construction.
- Existing rental units are converted from standard units into luxury or for-sale housing.
- Mobility declines, as tenants in rent-controlled apartments stay put, worsening displacement pressures.
These dynamics often benefit higher-income households, who are overrepresented in rent-controlled units, while lower-income renters face higher market rents and fewer options.
The Economic Costs Are Significant
Studies show that rent control can:
- Reduce supply and raise overall rents: Rent control in San Francisco caused impacted landlords to reduce housing supply by 15%, likely resulting in long run rent increases.
- Reduce the housing quality
- Depress employment and earnings
- Lower property values
- Increase homelessness
The bottom line: Housing unaffordability is caused by demand outpacing supply. Increasing housing supply is the key to unlocking lasting affordability.
Edward J. Pinto is a senior fellow and codirector of the AEI Housing Center at the American Enterprise Institute (AEI). A focus of his work continues to be the role of federal housing policy in the 2008 mortgage and financial crisis and how federal housing policy continues to create unwelcome distortions in the housing markets. More recently his research has focused on using light touch density to increase the supply of naturally affordable and inclusionary housing.
Tobias Peter is a senior fellow and the codirector of the American Enterprise Institute’s Housing Center, where he focuses on housing risk and mortgage markets. Working closely with Edward Pinto, codirector of the AEI Housing Center, Mr. Peter has coauthored a variety of reports on housing policy, specifically on the impact of federal policy on housing demand and homeownership, housing finance risks, and first-time home buyers. He has testified before Congress, and his pieces have been published in policy journals and in the popular press, including in the Wall Street Journal, American Banker, and Business Insider.
Reprinted with permission from AEI.org by Edward J. Pinto and Tobias Peter.
The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.