THIS BLOG IS A TRANSCRIPT OF THE ABOVE VIDEO. IT IS INTENDED TO BE WATCHED RATHER THAN READ.
Rent control is a perfect example of the bad consequences that can come from ostensibly well-intentioned policy making.
In a recent economic analysis of rent control by the highly regarded Center for Real Estate at Portland State University, three major failings of government manipulation are evident.
First, the increasing costs and burden of anti-landlord regulations is impacting the supply of multi-family development, defeating the central positive goal of misguided policy makers: providing more housing.
Similarly, these same costs and regulations are driving owners of single-family residences to sell their rental properties, often to owner-occupiers. Again, this has the net effect of reducing the inventory of rental housing.
Second, like most efforts by the government to manipulate the free market, rent control distorts normal freedom of movement and decision making. In particular, rent control primarily benefits only those people who are willing to stay put in their apartment. The flipside of that effect is the inherent disincentive to move, to seek better housing or to buy a home.
Meanwhile, rent control represents a systemic bias against renters who move frequently in pursuit of upward mobility.
Third, rent control forces landlords to defer maintenance and forego capital expenditures. Limited margins on rental housing, especially in the low-cap-rate cities where rent controls are most prominent, cannot justify capital outlays that cannot be recovered from rental increases. This inevitably leads to less desirable and neglected properties.
Declaring war on mom-and-pop landlords is not a recipe for providing more and better rental housing for families in the lower half of income brackets.
To the contrary, the recent wave of rules and regulations will serve only to decrease rental housing inventory, hinder renter mobility and cause a long, steady decline in the quality of existing units.
Center for Real Estate Quarterly Report, Volume 14, Number 3 | Summer 2020
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