Since Matthew Brown outlined in my book Housing America, these harmful effects include”shortages of apartments for lease, reductions in quality and lack of upkeep, decreased construction of new flats, long waiting times and high search costs [to locate flats ], discrimination, homelessness, abandoned buildings, along with labor market inefficiencies.”
A 2009 article surveying the huge theoretical and empirical scholarly literature consented with an 1985 evaluation that”the economics profession has reached a rare consensus: Rent control creates many more problems than it solves.”
Rent control is an issue on which the econ-101 Faculties, the remarks of the great majority of economists, and the present scholarly study all point in the exact same direction. Back in 1982 economist Thomas Hazlett observed that”economists have been notoriously thorough in convincing themselves of their damaging effects of rent control and exceptionally inept at convincing anyone else.” For a while that the vast majority of policymakers had seemingly convinced nationwide. Unfortunately, insane politicians in Oregon and California seem to have forgotten exactly what everyone has learned.
Despite housing prices on the west coast, the political support for rent control is surprising. The amount of all rent-control ordinances has declined ever since. The most common laws concerning rents prohibit local authorities. Thirty-five states have such preemptions.
Assemblyman David Chiu, D-San Francisco, introduced rent increases to be limited by AB1482 over the speed of change in the consumer price index or a max of 10 percent, whichever is lower to 5 percent points.
Benjamin Powell is a senior fellow with the Independent Institute and a professor of economics and director of the Free Market Institute at Texas Tech University.
California is going to be the second state, following Oregon, to implement rent control, if this bill becomes law. Oregon recently approved an ordinance to limit rent increases to 7 percentage points above the rate of inflation.
California policymakers, in a bout of sanity, diminished local rental controls with all the Costa-Hawkins Act. The act makes it possible for landlords to reunite rents to market rates after a tenant is evicted or vacates, and eliminates rent controls for units and houses built after 1995.
Rent control will make the housing problems of California worse. They’d remove limitations that limit the housing supply and urban-growth boundaries if politicians wanted to market affordability. That would do more to encourage affordability than passing destructive rent-control laws.