Forbes Columnist Roger Valdez outlines why rent control is the wrong answer to Chicago’s housing affordability crisis.
Chicago doesn’t need rent control. A headline from the Chicago Tribune from earlier this year tells the story: “Chicago rents fell 12% in 2020.” Where is the need for controlling rents when they are falling?
A closer look, however, shows a more complicated situation. Rents for high-end apartments fell, but rents for low-end units did not. As the New York Times pointed out, “small-scale rental properties, often older and with higher maintenance costs” are at greater risk, due to their narrow margins and lower capitalization. If costs rise faster than revenues, these homes would be most at risk of foreclosure or abandonment.
Rent control has a long history in the United States, but always and everywhere it has failed to control prices. Despite its rigorous rent control, San Francisco saw huge price increases in its rental market, as demand outpaced supply for many years prior to COVID.
According to the Apartment List study quoted by the Tribune, San Francisco prices have fallen from about $2,500 before the pandemic to about $2,000 for a one bedroom. Compare that with Chicago where the average one-bedroom apartment was renting for about $1,270 and now rents for about $1,135.
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