As tired and counter productive Rent Control policies begin to rear its ugly head throughout California, a Stanford Study on the effects of rent control in San Francisco was released in October. The study compared and tracked data from previously exempted rent controlled buildings in the City which came under price controls in 1994 with buildings that had been under rent control since the inception of rent control policies in the late 1970’s.
It showed unequivocally that in the long term, rent control policies bring about a decrease in the housing supply which has lead to an increase in rental rates in the City. The report reaffirms virtually every study conducted on the subject.
The report found “impacted landlords reduced the available rental housing by 15 percent. Consistent with this evidence [they] find there was a 20 percent decline in the number of renters living in impacted buildings…” and the study found “that 6% decrease in housing supply led to 7% increase in rental prices. These caused an aggregate welfare loss to renters of $5 Billion. This is almost as large as the benefits accrued by the lucky beneficiaries of rent control.”
The study shows that although there are benefits to those that receive the direct subsidy from their housing provider, rent control as a whole is more crippling to society. Capital is invested elsewhere and supply is reduced.The report goes as far to say that rent control policies actually fueled gentrification in the City of San Francisco, resulting in the direct opposite of the desired goals.
California is in a severe housing shortage, there are not enough units available for those that want to live here. Rent control does not create a single new unit to help alleviate that fact but the evidence shows it reduces the quantity of housing.
No matter what mental gymnastics extremists try to engage in, it is clear; Rent Control policies are a net negative housing policy. Don’t take our word for it, read it for yourself HERE