Evidence on Rent Control
Economists generally agree that rent control is a bad idea. In a 2012 survey on whether rent control measures have had a positive impact in the last three decades on the quality and quantity of housing supply in the cities that used them, 81 percent disagreed, and only 2 percent agreed. Research evidence is also clear that rent control is bad policy.
Certainly, proposals being currently considered differ from the strict first generation rent
control policies that froze rents and allowed no increase. Research shows, however, that even current moderate forms of rent control are equally disastrous.
When San Francisco enacted an ordinance that capped rent hikes at 7 percent per year, total
rental housing supply was reduced by 15 percent. Furthermore, landlords converted building into luxury condos and new construction forcing housing stock under rent control to decline by 25 percent. Rental prices went up by 5.1 percent citywide as excess demand flowed into the unregulated sector.
Similar results have been observed in other cities that have had moderate forms of rent control like Cambridge, Brookline, Boston, Los Angeles, Berkeley, Santa Monica, Berlin, Ontario, and Stockholm.
The Twin Cities will face similar, if not more disastrous results if rent control is enacted, especially considering that St. Paul’s proposed ordinance would be one of the strictest in the nation.
High and rising housing prices in the Twin Cities are a symptom of demand for housing outpacing supply. In recent years, housing construction has not kept up with population growth. Between 2010 and 2017, for instance, the Twin Cities added 83,091 households and only 63,604 new housing units — a shortfall of 19,487 units. Rent control will not solve this problem.
To tackle the housing crisis, lawmakers should focus on removing impediments to housing construction, namely excessive fees and regulations.
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