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Why Rent Control Sucks

In his book Basic Economics: A Citizen’s Guide to the Economy, Thomas Sowell goes into great detail explaining how rent control, while on the surface appearing to be a good thing for consumers, actually creates housing shortages and increases the changes that buildings will be neglected or abandoned.  It is then with great amusement that I read this article in the New York Times.

While rents have continued to rise in many big cities on the coasts, including New York and Los Angeles, they are falling in more than 80 percent of metropolitan areas across the country. Low interest rates in recent years have persuaded many families to move out of rented apartments and buy their first homes at the same time that developers have been putting up thousands of new rental buildings, leaving many landlords desperate to fill apartments.

Now, what would you like to bet that the 80% of areas where housing costs are going down are also areas where there is no rent control, and the free market is left to determine the price?  Here in San Francisco we have massive rent control, and prices have either stayed the same or gone up since the tech boom ended.  The area just north of SF where I live does not have rent control, and my rent went down by $100 a few months ago.  It’s still insanely high, but it’s cheaper than it was.

The portion of apartments sitting vacant this summer rose to 9.9 percent, the highest level since the Census Bureau began keeping statistics in 1956.

“I’ve been doing this for 30 years, and this is the worst rental climate I’ve ever seen,” said Leonard Richman, president of the Sunshine Corporation, which manages almost 4,000 apartments in Memphis. “Rents have gone down to where they were about three or four years ago.”

The rent decreases and the enticements, which have proliferated in the last year, are helping many younger adults, who are more likely to rent than other groups and who have suffered in the hiring slump of the last three years. Between late 2001 and this summer, the average rent per square foot fell 4.8 percent across the country, according to the National Real Estate Index, which is published by Global Real Analytics, a research company.

You mean that the free market can help consumers, especially young and poor ones, without intervention from the nanny state?  Bestill my heart!  I guess that pesky old law of supply and demand still works, huh!

The biggest rent declines have occurred mostly in cities, like Memphis, where land is abundant but building regulations are not and where housing costs were already among the least expensive of the country’s urban areas. [Emphasis added]

How this must kill liberals, to see firsthand the devastating effect that their ridiculous rent control policies are having on the poor.  There is a critical housing shortage here in the Bay Area, and it’s in the areas where the rent control is the highest.

Funny how that works, isn’t it?

Posted by Lee on 11/29/03 at 09:14 PM in Politics • Permalink


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