Where You’ve Heard It
“Cap the rent and people can afford to live here again. It’s not complicated.”
“[QUOTE FROM A PUBLIC FIGURE’S CAMPAIGN STATEMENT ON RENT CONTROL]”
Why People Believe It
For the family in a covered flat, it works: the rent stays low and predictable, and they can stay near work and school. That benefit is visible and immediate. The homes that never get built are invisible, so the trade-off is easy to miss.
Tenants in covered buildings did gain, as the San Francisco study below finds. Source 1What the Evidence Shows
In 1994 San Francisco extended rent control to small buildings built before 1980. That created a natural experiment: similar buildings, some covered and some not.1
Landlords of covered buildings converted flats to condos or rebuilt them, taking rentals off the market. Tenants who already lived there were more likely to stay, but the shrinking supply raised rents for newcomers.1
The reverse test points the same way. When Cambridge, Massachusetts, ended rent control in 1995, investment returned and property values rose, including for homes that had never been controlled.2 Surveys of economists find broad agreement on the direction of the effect.34
Strong method: both compare similar homes with and without controls, over many years.
Limit: two cities with expensive housing; the size of the effect may differ elsewhere.
The better question
How do we get more homes built where people want to live, and help the families at risk while we do?
Venture Lab challengeCut the time it takes to approve a new homeLesson · 6 minPrice Ceilings and ShortagesTest yourself
3 questions on rent control+10 XP eachStart quizSources
- 1The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco · Rebecca Diamond, Tim McQuade and Franklin Qian, American Economic Review, 2019 · Study
- 2Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts · David Autor, Christopher Palmer and Parag Pathak, Journal of Political Economy, 2014 · Study
- 3Rent Control · IGM Forum, Economic Experts Panel, University of Chicago Booth, 2012 · Survey
- 4Rent Control: Do Economists Agree? · Blair Jenkins, Econ Journal Watch, 2009 · Paper
Discussion
64 comments · Best sourced firstPriya Nair· 1 d
Worth noting which buildings were covered. San Francisco’s expansion hit older small buildings, and that is where landlords pulled units off the market.
Cites: American Economic Review · Study · 2019 · Well sourced 31