Half of Americans, namely homeowners, already have rent control. It’s time to expand it to everyone.
Given that this is the argument that appears in almost every introductory economics text (with the notable exception of the CORE Econ open-access book, which I use), it should come as no surprise that the vast majority of professional economists credit it. According to a poll of economists at prominent universities conducted by the University of Chicago Booth School, a whopping 81 percent of respondents opposed rent control (while only 2 percent supported it). As the Tufts University economist Gilbert Metcalf said recently, “opposition to rent control is something like an oath of office for the profession.” [...]
There’s just one problem: This neoliberal conventional wisdom is wrong. As recent empirical work has shown, the neoclassical account’s core assumptions—one, that rent control restricts the supply of new housing; and two, that it misallocates existing housing, thereby causing an irrecoverable collective loss—fail to hold when it comes to the real world.
For example, there is abundant evidence that rent control does not constrain housing supply. One study of rent control in New Jersey—a state with a rich history of embracing rent control—found that, over three decades, rent control increased housing supply (though this was largely attributed to landlords slicing up larger units into smaller ones). Other studies have repeatedly confirmed that rent control doesn’t affect the overall supply of housing, though landlords may take advantage of poorly written rent control laws that allow them to convert existing rentals into condos to better capture price increases and skirt the intentions of rent control laws—loopholes that could easily be shut.
Researchers have also studied what happens when rent control laws are repealed. If neoclassical theory is correct, lifting regulations on rent should result in a boom in housing supply. However, researchers find that when rent control measures are undone, there has been no subsequent expansion of new housing.
As with constrained supply, so with the “misallocation” of housing stock. Although it is true that rent control creates “winners” (current tenants) and “losers” (landlords seeking to raise rents), this is no “deadweight loss”; rather, benefits that would have previously been fully captured by landlords—rents in the economic sense—are shared with existing tenants. For example, as a non-rent-controlled area grows in popularity, often due to that area’s current inhabitants, landlords are able to hike rents. This is a pure rent in the economic sense: The landlord didn’t invest in the building to realize a return; rather, the landlord simply benefited from owning a particular property at a particular time. Rent control changes the calculus by limiting the economic rents landlords can extract from tenants, thus more equitably sharing the benefits of local economic growth between landlords and tenants. [...]
[Pro-rent-control] policymakers are simply responding to their constituents. Polling conducted in 2019 by Data for Progress found that a majority of likely voters, including a majority of independents, support rent control, with just 1 in 5 opposing such a measure. More recent polling in Massachusetts found that 68 percent of likely voters want rent control, showing that people are fed up with the exorbitant and unjustified rent hikes that are making the working class collectively poorer.
For those still opposed to rent control, let’s look at the problem through the other end of the telescope, as it were. Some 67 percent of Americans live in owner-occupied homes—meaning they enjoy de facto rent control in the form of the 30-year mortgage. That style of mortgage was a creation of the federal government during the New Deal. Homeowners, who skew white and rich, benefit tremendously from the government’s rules, regulations, and subsidies that allow them to pay a fixed monthly sum for housing over 30 years. It’s high time for the government to extend these benefits—and the economic security that comes with them—by adopting rent control to cover all people in the United States.
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