Rent control: another bad idea out of Salem

“Next to bombing, rent control is the most effective technique so far known for destroying cities.”   Assar Lindbeck, Professor of Economics

 

Four Civilians Killed by US Airstrikes in Syria's Deir Ezzor

“We have to keep people in their homes.”

That’s what Felisa Haggis, political director of Service Employees International Union Local 49, told Willamette Week in an argument for rent control.

That’s exactly what will happen, more people will stay in their homes longer, if Oregon’s Legislature approves a proposal by the Democrat leadership that would set an annual rent increase cap of 7 percent plus inflation.

A Working Paper just released by the Stanford Graduate School of Business backs up this statement.

But that’s not necessarily a good thing.

Using new data tracking individuals’ migration in San Francisco, researchers found that rent control “increased renters’ probabilities of staying at their addresses by nearly 20%.” That meant apartment turnover went down. People with changing circumstances who would normally seek out other housing stayed where they were. That reduced the availability of their apartments to prospective new tenants.

This was particularly the case with older households and households that had been living in their rent-controlled apartment for a number of years.

Howard Husock, vice president for research and publications at the Manhattan Institute, recently told Pew Trusts  that older people who live in rent-stabilized apartments have no incentive to leave.

“As a result, you’ve got a lot of young people in New York City doubled and tripled up,” Husock said. “And you’ve got affluent old people living in large [rent-stabilized] apartments with empty bedrooms where their kids once lived.”

“Longtime renters who have been living in rent-controlled units benefit greatly from rent control, while newcomers end up paying higher rents because the supply of available units is constricted,” the Working Paper said.

The Stanford researchers also found that landlords subject to rent control reduced rental housing supply by 15%, actually causing city-wide rent increases.

“As a result, you’ve got a lot of young people in New York City doubled and tripled up,” Husock said. “And you’ve got affluent old people living in large [rent-stabilized] apartments with empty bedrooms where their kids once lived.”

The Working Paper explained that landlords facing rent control regulations are more likely to convert units into condos or redevelop buildings to circumvent regulations, such as by demolishing their old housing and building new rental housing exempt from rent control.

This further reduces rental stock and drives up rents. Rent-controlled buildings were almost 10% more likely to convert to a condo or a Tenancy in Common, the researchers found.

Supporters argue rent control is the quickest and easiest way to provide relief to renters in danger of being priced out of their home, but the fact is it just makes the problem worse

In other words, rent control advocates in Salem are actually working against the best interests of a lot of the people they say they want to help.

 

 

 

 

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