“Those who cannot remember the past are condemned to repeat it.” George Santayana 1863–1952
Socialism has never worked.
Rent controls, price controls or any government manipulated pricing will fail.
Most recent item for your thoughtful consideration is the debacle taking shape in NYC.
The folks in New York want to increase the supply of housing, so they want rent controls.
Economic theory predicts that rent control—capping rents below market rates—reduces the supply of rental housing over time. It discourages new construction (lower profits for developers), encourages landlords to convert rentals to condos/owner-occupied units or other uses, and reduces incentives for maintenance, leading some units to deteriorate or exit the market.
Empirical evidence shows this won’t happen under rent control, which should be obvious.
A small sampling to consider:
- San Francisco’s 1994 rent control expansion found that affected landlords reduced rental housing supply by 15%, primarily through conversions to condos and redevelopment. This caused a city-wide rent increase of about 5.1% due to the tighter overall supply
- St. Paul, Minnesota, voters passed a strict 3% annual rent cap in 2021 (initially with no exemptions for new construction). This led to a sharp drop in new multifamily building permits (around 79% in some reports), a decline in property values, and reduced investment.
- Just look a couple hundred miles away…
Live and learn, and if you are smart you learn from other people’s mistakes…
Grab some popcorn and enjoy the show!
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