Opinion: National Housing Controls Would Shrink Supply of Affordable Housing
Heritage Foundation Fellow Joel Griffith breaks down why rent control will likely lead to a decline in affordable housing stock.
Many see rent control as a quick fix for a long-term problem. For the last 20 years, rental costs have increased at a greater pace than inflation. Nationally, rental costs increased 36% in just the last decade.
Some urban areas have experienced far steeper jumps in rent. For instance, rental costs in the Seattle metro area jumped 55% over the last decade. And rents in the largely rent-controlled San Francisco metro area soared 57% — both nearly triple the overall rate of inflation.
Stringent zoning restrictions, density limitations, and aggressive environmental regulation limit the supply of housing while increasing the costs of construction.
Regulations often account for more than 30% of the costs of rental housing construction, a reality that rental and ownership costs must reflect. Reforming land-use laws — in effect, increasing supply — would be a big step in the right direction. With increased supply, rental prices could plateau or even decline.
Rather than ease pressure, rent control compounds the problem of affordability. It does nothing to make housing less costly to build while having the perverse effect of shrinking future supply by deterring new construction and giving landlords fewer incentives to spend on upkeep and remodeling.