Thread by Jerusalem Demsas
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- Dec 2, 2021
- #Economics #Politics
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New >> Swedish economist Assar Lindbeck once called rent control the best way to "destroy a city, other than bombing."
Well, here's how I learned to stop worrying and love the bomb.
www.vox.com/22789296/housing-crisis-rent-relief-control-supply
Well, here's how I learned to stop worrying and love the bomb.
www.vox.com/22789296/housing-crisis-rent-relief-control-supply
For a long time I was pretty easily convinced by the dominant economic consensus that rent control was bad. It's a price ceiling that pushes landlords to evict, convert to condos, and exacerbates the supply crisis by reducing the incentive to build homes. 
But while there's significant theoretical grounding for why rent control is bad, there's not actually that much empirical research on the effects of rent control in the US. 
This reminded me a lot of what happened with the minimum wage. Theory indicated that a min. wage should have drastic impacts on employment. But when we got empirical research on the question... economists just weren't finding that! (h/t @Noahpinion) noahpinion.substack.com/p/why-15-minimum-wage-is-pretty-safe
We do have some empirical research.
@rebeccardiamond, Tim McQuade, and @qian_franklin probably have the most well-known study and looked at San Francisco.
They found that rent control significantly increased the chances of beneficiaries being able to stay in their homes.
@rebeccardiamond, Tim McQuade, and @qian_franklin probably have the most well-known study and looked at San Francisco.
They found that rent control significantly increased the chances of beneficiaries being able to stay in their homes.
A review of the literature by @urbaninstitute concludes: "If rent control is judged on its ability to promote stability for people in rent-controlled units, evidence has generally found it to be successful.”
www.urban.org/sites/default/files/publication/99646/rent_control._what_does_the_research_tell_us_abou...
www.urban.org/sites/default/files/publication/99646/rent_control._what_does_the_research_tell_us_abou...
There are costs that researchers find as well -- the Stanford study shows that landlords turned to condo conversions and economist David Sims finds distributional pitfalls -- richer people are more likely to benefit from rent control in his paper. 
But in another paper, Sims finds that rent control did not have a significant effect on new construction. 
The biggest concern about rent control is whether fewer homes get built.
But, where housing is in extremely high-demand, I find it unbelievable that rent control would become the constraint on new supply, the constraints there are zoning/regulatory morass. (h/t @JWMason1)
But, where housing is in extremely high-demand, I find it unbelievable that rent control would become the constraint on new supply, the constraints there are zoning/regulatory morass. (h/t @JWMason1)
The devil is in the details with rent control, I explain in the article ways the policy can be designed well to avoid pitfalls (definitely exempt new construction!!)
But we **have** to figure out a way to make renting more stable for people in the near-term!
But we **have** to figure out a way to make renting more stable for people in the near-term!
If rent control is passed on its own and we continue to build millions fewer homes than we need to meet demand, then of course we will see an exacerbation of the housing crisis.
@arpitrage explained how current tenants could end up becoming the exploiters of such a system.
@arpitrage explained how current tenants could end up becoming the exploiters of such a system.
Rent control doesn't fix the housing supply crisis. It gives us a tool to help at-risk, low-income tenants stay in their communities as we take on the project of building millions of new homes. 
There's a lot more in the piece so read it before @-ing me!
www.vox.com/22789296/housing-crisis-rent-relief-control-supply
www.vox.com/22789296/housing-crisis-rent-relief-control-supply
