These States Are Turning To Rent Control: How It Affects Affordable Housing

With Meghna Chakrabarti

Remember rent control? Across the country, there are new efforts to bring it back. Why now?

Guests

Shemia Fagan, Democratic state senator for East Portland, Oregon. Sponsor of Oregon’s statewide rent control bill that Gov. Kate Brown signed into law in February. (@ShemiaFagan)

Stijn Van Nieuwerburgh, professor of real estate and finance at Columbia University’s Graduate School of Business. Co-author of the study “Affordable Housing and City Welfare.” (@SVNieuwerburgh)

Christopher Palmer, professor of finance at the MIT Sloan School of Management (@MITSloan). Author of the study “Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts.”

From The Reading List

Washington Post: “Opinion: The one issue every economist can agree is bad: Rent control” — “There aren’t that many things you can get economists to agree on. Fiscal stimulus, minimum wages, monetary policy, health care, bank regulation — on almost all the major issues of the day, you can find a respected economist to argue for either side.

“But there are a few questions where there’s near unanimity, and rent control is one of them. Pretty much every economist agrees that rent controls are bad. And in the last decades of the 20th century, economists had some success persuading state and local governments to curb these policies.

“Now the policy appears to be making a comeback. Two rent-control bills have cleared the housing committee in California’s state legislature, and New York state looks like it’s about to stiffen New York City’s rent-stabilization regime and offer other cities the option to copy it. City governments may have to relearn why their predecessors pruned back rent-control policies.

“Rent control is supposed to protect poor, deserving tenants from the depredations of greedy landlords. And it does, up to a point. Research on rent control shows that many of the beneficiaries are low-income, and that controlling their rents makes it more likely that they’ll stay in their apartments for a good long time.

“The problem is that rent control doesn’t do anything about the reason that rents are rising, which is that there are more people who want to live in desirable areas than there are homes for them to live in. Housing follows the same basic laws of economics as other goods that consumers need: When the demand for a product consistently exceeds the supply, prices will rise until the quantity demanded is equal to the amount that suppliers have available.”

New York Times: “Why Rent Control Is a Lightning Rod” — “A supply of housing sufficient to meet urban needs in California will not be built for decades, if ever, and right now building doesn’t seem to be helping much. Many of the newer rental buildings carry high-end prices, while stock of affordable housing is actually falling.

“Given that, rent control is an easy and off-the-shelf policy tool that many people are familiar with — one that does help some renters and doesn’t appear to cost taxpayers money. ‘It is the best anti-displacement tool around,’ said Stephen Barton, co-author of a recent report that called rent control a key measure toward stabilizing California’s housing market.

“And yet economists from both the right and the left are in almost universal agreement that rent control makes housing problems worse in the long run. Here’s what’s behind their thinking and the nuances of the debate.”

Bloomberg: “New York Adopts Sweeping Tenant Protections on Rents, Evictions” — “New Yorkers won historic rental protections from the Democrat-controlled state legislature over the objections of landlords who warned the changes would make it impossible to maintain their properties.

“The massive rewrite of rent rules — covering about 2.4 million residents of the city’s 1 million regulated apartments — aims to preserve affordable housing by eliminating most of the tools that landlords used to remove units from regulation. The package also abolishes a ‘vacancy bonus’ that allowed property owners to raise rents 20% when a tenant departed.

“Senators passed the bill by a vote to 36 to 26, with the Assembly voting 95 to 41. The legislation is intended to be permanent.

“The vote came shortly before the current laws were set to expire. Governor Andrew Cuomo signed the legislation immediately after passage.

“‘At the beginning of this legislative session, I called for the most sweeping, aggressive tenant protections in state history,’ Cuomo said. ‘I’m confident the measure passed today is the strongest possible set of reforms that the Legislature was able to pass and are a major step forward for tenants across New York.’ ”

Sydney Wertheim and Anna Bauman produced this hour for broadcast.

This article was originally published on WBUR.org. [Copyright 2019 NPR]