For the third time in recent years, state voters are being asked to expand cities’ and counties’ power to control rent. Proposition 33, the latest such measure to make the ballot thanks to the deep pockets of its sponsors, the Los Angeles-based AIDS Healthcare Foundation, would repeal a state law that says local rent control laws can’t be used on single-family homes and on homes built since February 1995. It would also allow local laws to set requirements on what landlords can charge new renters, not just how much they can increase the monthly bill for individuals and families they are already renting to.
This will of course have a surface appeal to the millions of Californians hammered by the high cost of shelter. But the evidence is overwhelming that rent control is counterproductive. This view isn’t just held by free-market acolytes. Nobel Prize-winning economist Paul Krugman, the progressive columnist for The New York Times, has written that “rent control is among the best-understood issues in all of economics, and — among economists, anyway — one of the least controversial.”
Surveys have routinely shown that virtually all economists agree that “a ceiling on rents reduces the quality and quantity of housing,” as the American Economic Association noted in 1992. Since then, a Stanford study of rent control in San Francisco found it helped only a relative handful of people while decreasing supply in the short term as owners take rentals off the market.
It also encourages landlords to skimp on maintenance and repairs, and appears to accelerate the gentrification of lower-income neighborhoods. But the most significant and consistent conclusion of researchers is that incentives and disincentives matter — and that expanded rent control discourages new housing construction.
That, ultimately, is the best way to contain housing costs: having enough available so there is competition among landlords for renters.
Advocates routinely say all critics of their proposal — whether they are business groups, academics or families renting out a unit to help make ends meet — have been bought off by greedy billionaires. But what they don’t do — because they can’t — is cite independent, legit evidence that rent control is a smart way to address the cost of shelter. The San Diego Union-Tribune Editorial Board urges a “no” vote on Proposition 33.