Even if California voters defeat Proposition 10 on Nov. 6, battles over rent control are likely to continue, I write in my new Cato post:
Though once favored in voter surveys, Proposition 10 has sagged lately, well behind in one poll and ahead in a second by only 41-38 with 21 percent undecided. But advocates of liberty (and all who prize the lessons of Economics 101) shouldn’t get complacent. …
It’s true that many California localities, the Bay Area especially, are experiencing skyrocketing housing costs. That has a lot to do with intense demand to live and work in places like Silicon Valley and San Francisco, and even more to do with the tight regulatory lid on new residential construction that artificially suppresses the supply of dwellings in the state generally and especially in desirable communities and near the coast. By shifting the blame for the resulting situation to owners of existing rental units, rent control would make it even less likely that Bay Area and coastal governments will take the one measure that would be effective against spiraling housing costs, namely legalizing much more new construction.
Whole thing here. Related: “What does economic evidence tell us about the effects of rent control?” [Rebecca Diamond, Brookings]
2 Comments
People who favor rent control think 1) prices for things are arbitrary and 2) landlords are rich and evil. In other words “unfair!!!”. They never stop to ask what they would do if they owned apartments or had money to invest. Prices for everything go up but you can’t raise what you charge–how long can you stay in business?
The root cause of course is NIMBYism as well as “smart growth” which prevents building on the outskirts of town.
There is another group who support rent control – people who can afford to live in one of the desirable locations and wish to exclude their social inferiors. Anyone with even a basic understanding of economics and business knows that rent control suppresses construction of new apartments and limits the profitability of existing apartments (inducing owners to cut corners on maintenance which makes them less attractive to live in, and motivates renters to live in other communities). The effect is close to that of Green Lining, while permitting those who espouse rent control to engage in preening virtue signaling.