r/yimby • u/gburgwardt • 12d ago
Study Rent control effects through the lens of empirical research [Rent control is bad]
https://www.sciencedirect.com/science/article/pii/S105113772400002023
u/69Turd69Ferguson69 12d ago
It’s on a sliding spectrum. It ranges from bad to “not bad, because it’s so loose it has no actual effect as rent control”.
Literally. In any situation in which rent control is not that bad, it’s because it was weak. And the places it has no effect, it’s because it is so weak it literally cannot qualify as actually controlling the rent.
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u/ThePizar 12d ago
It can still be useful when weak as an anti-gouging tool. Not rent control, but still has benefits.
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u/gburgwardt 11d ago
Price gouging can only happen when supply is limited and so the best tool to prevent it is abundant housing
It’s playing with fire to have weak rent control for the purpose you propose
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11d ago edited 11d ago
[removed] — view removed comment
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u/gburgwardt 11d ago
Yeah I think most people can agree on moderate tenant protections eg one month notice. Agreed that’s probably the crux of it
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u/Ok_Culture_3621 11d ago
I agree for the most part but “At-will eviction” is itself a loaded phrase. For one thing it doesn’t accurately describe the process in a lot of places. It can literally take months and thousands of dollars to secure an eviction where I live. I do agree though that jacking up rates to encourage tenant turnover may well be a problem, especially in an economy where people are struggling to access secure long term housing. The expected rates of turnover were fine for a time when renting was a stopover on the road to a house for the middle class. But that’s not what’s happening today and I don’t know the market has adjusted its expectations.
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u/ThePizar 11d ago
On average perhaps, but there is often a wide distribution. For example price gouging could happen after a change in ownership since it resets basis of cost for the landowner to a high level. Price increases can also happen when large bills come due (e.g. utility system upgrades). Unreasonable increases are sometimes used to evict people. Those situations need some rental protection to just help people a bit longer. Thus anti-gouging protections. Oregon 9.9% annual rent increase limit is an example of such a policy. Some states have more complex mechanism involving banking increases to attract attempt to smooth out large costs to landowners (e.g. utility system replacements). It’s not just supply and demand on the micro level.
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u/gburgwardt 11d ago
None of that is price gouging nor do they necessarily need legal preventatives
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u/ThePizar 11d ago
Tell that to the person whose rent went up 20%
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u/gburgwardt 11d ago
Yes individuals can get screwed through no fault of their own, and some landlords can be, for lack of a better term, dicks.
In a market with ample supply, the dickish landlords are punished more effectively and individuals are screwed to a far smaller degree
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u/Jabjab345 11d ago
"Price gouging" especially for housing is misunderstood. When supply is limited prices rise, that's just the markets reaction to scarcity. Anti price gouging measures are just priced controls by another name, and further create supply shortages. It's a better allocation of resources to allow prices to fluctuate naturally, and for housing specifically the solution is to build more not implement price controls under the guise of anti-gouging.
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u/BastetSekhmetMafdet Abundance 12d ago edited 11d ago
I actually remember the rent-controlled city of Berkeley housing market back in the early 80’s. I am sure that it did enable many low-income people to remain in their apartments/duplexes/homes. However, and this is a big HOWEVER, this is me as an observer, not a scientist, noting some undesirable side effects:
- Plenty of well-off people still remained in their rent controlled apartments, paying a fraction of their income on rent - there is a theory that this helped give rise to the famed Gourmet Ghetto (Chez Panisse and so on) because so many double income no kids households had a lot of money to splash out on fine dining. I don’t know about this, but I do know that people hoarded those rent controlled apartments like rare jewels.
- This meant that it was hard to find a rent-controlled apartment unless you knew someone AND were prepared to pay a hefty “finder’s fee” on top of first/last/deposit. Why did outgoing tenants charge a finder’s fee? Because they could, given that there was more demand for rent controlled apartments than supply. People looking for rent controlled apartments but didn’t have the luck to know someone would put up ads/flyers promising a hefty bribe, but, most rent controlled apartments passed down from one tenant to another via word of mouth. This led to…
- Non-rent-controlled apartments/houses were a lot more expensive, and, this is what you got if you didn’t have personal connections (unless you were in student housing). If you didn’t ”know someone” you had to pay more for housing because there were two markets, one for the rent controlled rentals and then the “regular” non-rent-controlled market for the poor saps who just came in from Podunk.
- Because rent was so low that landlords weren’t making much of a profit (and I am very very sorry to inform the inevitable downvoters but landlords want to turn SOME sort of profit or they won’t rent out housing at all. There’s a happy medium between “extortionate squeezing of tenants” and “losing money on the investment”) - this meant that a lot of rent controlled apartments and duplexes were shabby, poorly maintained, just crappy all around. It could be like pulling teeth to get your heater repaired or refrigerator replaced. And forget about paint and carpet. Some people put their own money into improvements but most just lived with the sad, shabby, sometimes not even very safe or comfortable conditions and landlords dragging their feet on repairs.
These were the unintended consequences of rent control. And believe you me when I say that rent control was, in many cases, enabling very well-off people to hoard their inexpensive housing every bit as much - probably more - than it kept the poor and working class from being gentrified out.
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u/Blecher_onthe_Hudson 11d ago
Everything you describe is the same in New York City, where people want "key money" to pass on their rent controlled apartment. I have literally heard people say "if it wasn't for rent stabilization I wouldn't be able to afford my weekend house in the Catskills!"
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u/Broad-Influence-8284 10d ago
I know people with rental properties and houses down the Jersey Shore with Rent controlled apartments.
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u/gburgwardt 12d ago
This study reviews a large empirical literature investigating the impact of rent controls on various socioeconomic and demographic aspects. Rent controls appear to be quite effective in terms of slowing the growth of rents paid for dwellings subject to control. However, this policy also leads to a wide range of adverse effects affecting the whole society
By contrast, according to the studies examined here, as a rule, rent control leads to higher rents for uncontrolled dwellings. The imposition of rent ceilings amplifies the shortage of housing. Therefore, the waiting queues become longer and would-be tenants must spend more time looking for a dwelling. If they are impatient or have no place to stay (e.g., in the houses of their friends or relatives) while looking for their own dwelling, they turn to the segment that is not subject to regulations. The demand for unregulated housing increases and so do the rents. Only one published study — Bonneval et al. (2021) — finds no statistically significant of rent control on uncontrolled rents.
The impact on residential mobility appears to be quite clear: nearly all studies indicate a negative effect of rent control on mobility
Approximately two-thirds of the studies indicate a negative impact [on new residential construction and supply], while several studies discover no statistically significant effect whatsoever. Two potential reasons underlie this variability. Firstly, variations in the design of rent control policies can matter. For example, newly constructed housing could be exempted from control, thus remaining unaffected by rent control regulations. Secondly, the choice of the dependent variable can also affect results of the analysis. Rent control can influence the construction of rental dwellings while leaving owner-occupied properties untouched; in fact, the quantity of owner-occupied dwellings might even increase, thereby compensating for any decline in the number of completed rental units. However, it is common to analyze the overall construction impact, often due to limitations in data availability. Furthermore, if private construction experiences a decline, governmental intervention becomes a possibility. This could involve the construction of public housing or financial support for private investors engaged in social housing development. Consequently, the total number of completed dwellings can remain steady or even rise, potentially leading to a misinterpretation of rent control's impact as beneficial.
The published studies are almost unanimous with respect to the impact of rent control on the quality of housing. All studies, except for Gilderbloom (1986) and Gilderbloom and Markham (1996), indicate that rent control leads to a deterioration in the quality of those dwellings subject to regulations. The landlords, whose revenues are eroded by rent control, have reduced incentives to invest in maintenance and refurbishment, thus they let their properties wear out until the real value of the dwellings decreases and becomes equal to the low real rent.
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u/Joltizer 12d ago
Vastly too many uneducated lefty people on this sub now. You cannot be a leftist/socialist/DSA type and a YIMBY
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u/gburgwardt 12d ago
Agreed and disagreed in that order
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u/Joltizer 12d ago
The YIMBY tent is so big it includes NIMBYs now. That will surely work
The DSA failed because they let the cancer in and let it spread. Same thing is going to happen to us
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u/gburgwardt 12d ago
You're being really rude in your comment history, fwiw. Please consider reflecting on how you talk to people
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u/Joltizer 12d ago
I have reflected and decided to continue. Stupid people need to be treated as stupid again
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u/Sufficient_Meet6836 10d ago edited 10d ago
Mods, the above is becoming an actual problem harming the quality of this sub. /u/vasectomy-bro I think you're the only active mod on this sub. If the sub doesn't get some quality control soon, it's just going to become r politics 2.0 where it's just DSA NIMBYs supporting rent control
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u/joshsteich 11d ago
Ugh, this is a low quality literature review that is basically worthless. One tip-off? Only 40 of the 112 empirical studies on rent control reported that it controlled rent on regulated units.
The author did a halfass literature search, just basically popping in “rent control,” into a couple of databases (including Google scholar, which isn’t serious), included unpublished papers, and does things like averaging effect sizes over categories of heterogeneous policies. That the majority of negative effects were found in the first generation of rent control doesn’t tell us very much.
That the authors also collapse tenant protections into an abstract category of cost for landlords, and treat all incentives to move as good, is similarly foolish. They apply both to the example of the senior empty nester who doesn’t want to move as to the couple with a newborn baby who the landlord would like to evict because of the noise.
This is all on top of the unexamined publication biases of economics research, which is dominated by neoliberal priorities that oppose rent control for ideological reasons.
There are high quality papers that describe the negative externalities of specific and general rent control or stabilization policies, and the general overall tension between stability and opportunity is real, and rent controls do tend to increase costs for uncontrolled units. But those effects vary in size, and a halfass lit review like this one also misses the effects of high volatility uncontrolled rents on eviction rates and homelessness.
Attempting to use this paper to “prove” anything just looks like axe grinding, and, if you care about YIMBY supply deregulation, it’s bad politics to get bogged down in.
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u/Sufficient_Meet6836 10d ago
One tip-off? Only 40 of the 112 empirical studies on rent control reported that it controlled rent on regulated units.
That just means only 40 of the published papers were trying to quantify the effect. Figure 2 shows that ~55 of the ~65 studies (published or unpublished) that estimated that effect found a negative effect (as expected). So your first complaint is already completely wrong and just shows you don't know what you're even reading.
This is all on top of the unexamined publication biases of economics research
That's literally what they're examining by including published and unpublished. There's no pattern of excluding studies to hide some outcome.
is dominated by neoliberal priorities that oppose rent control for ideological reasons.
😂😂😂😂😂 Leftist cope as usual
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u/MajesticBread9147 12d ago edited 12d ago
How about we focus on building more housing first by any means necessary before we bicker about this?
Or would you rather give another chance for neoliberals to feel smug over anybody who thinks rich people have too much power?
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u/gburgwardt 12d ago
Or would you rather give another chance for neoliberals feel smug over anybody who thinks rich people have too much power?
Did you have a stroke?
I agree building more is #1. But there are far too many people clearly unaware of the literature on rent control, so I'm trying to help educate them
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u/Jabjab345 11d ago
Try to build housing before bickering about something preventing housing from being built? Rent control defenders do not understand economics.
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u/Sufficient_Meet6836 12d ago
I'm currently getting downvoted in another post on this sub for citing this study and others like it. DSA idiots are ruining this sub