How We Know California’s New Rent Control Law Will Make Its Housing Shortage Worse

Rent controls propose using government regulation to solve the symptom—high prices—of a problem—a shortage of housing—which government regulation created in the first place.

By John Phelan


When you see a headline that begins with “Florida man…,” you know it’s more likely to be about some guy trying to take down a tornado with his Colt Python than it is that a resident of the Sunshine State has cracked cold fusion. In public policy circles, the words “California policymakers…” appearing in a headline are attaining a similar status.

The latest ill-conceived policy from California is a statewide rent cap. As the New York Times reported this week:

The bill limits annual rent increases to 5 percent after inflation and offers new barriers to eviction, providing a bit of housing security in a state with the nation’s highest housing prices and a swelling homeless population.

Economists are a famously fractious bunch. Fiscal policy or monetary policy? Stimulus or austerity? Such debates play out among the profession with a level of bitterness that amazes the layman.

So it is always worth paying attention when you get something like consensus. But that is pretty much what we have on the issue of rent control. In 2012, economists were polled with the following question:

Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.

Read the rest of the story on Foundation of Economic Education

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