A Hoary Debate

April, 2018 rent control demonstration (Chron photo)

Rent control is back on the table in the legislature after Proposition 10, which would have allowed municipalities to impose rent control, was defeated last November.

The real estate boom, which in the Bay Area has more than doubled house prices in the past 10 years, has passed through to rents. Stories abound about the poor and elderly being forced to leave their apartments so that landlords can charge higher rents or convert their buildings to salable condos. It's hard not to feel sorry for these tenants.

As a matter of public policy, though, rent control is a bad idea. It's been around for nearly a hundred years, so we can observe its effects on the supply of housing and who actually gets the benefits of below-market rents.

Even the San Francisco Chronicle is opposed to rent control: [bold added]

Perhaps the voters understood that despite its populist appeal, rent control is the wrong answer to the state’s housing crisis. The policy benefits only those tenants who occupy controlled units, who are not necessarily the most vulnerable, at the expense not only of landlords but also of other renters.

Moreover, rent control diminishes the supply and maintenance of rental housing, exacerbating the shortages that drive up rents. That’s why economists broadly reject the approach. (Sample response to a poll of economists asking whether rent control improves the quality and quantity of rental housing: “Next question: Does the sun revolve around the Earth?”) A Stanford study of San Francisco’s 1994 expansion of rent control to smaller multifamily buildings found that it saved affected renters nearly $3 billion through 2012 — and cost the city’s other tenants about as much. Meanwhile, landlords took rental units off the market en masse, reducing the supply by 15 percent.

The people, as well as the experts, are in agreement. Eventually the bill will be defeated, especially since the impetus is toward encouraging investment in more housing supply. (Rent control is anathema to potential investors.)

The only group that stands to win from this hoary debate are the legislators who will receive "contributions" from both sides to rule in their favor. Why is that not surprising?