{"id":160785,"date":"2023-10-16T14:50:38","date_gmt":"2023-10-16T20:50:38","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=160785"},"modified":"2024-02-28T11:17:31","modified_gmt":"2024-02-28T18:17:31","slug":"rent-control-does-not-work-but-the-government-keeps-doing-it","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/rent-control-does-not-work-but-the-government-keeps-doing-it","title":{"rendered":"Rent Control Does Not Work\u2014So Why Does the Government Insist on Making Landlords Follow It?"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC2795399195\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">It\u2019s no secret that housing has gotten extremely expensive in the United States, both in terms of buying and renting.&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/fred.stlouisfed.org\/series\/CUUR0000SEHA#0\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">This chart<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;should make that clear as day:<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"685\" height=\"468\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/10\/image1.jpeg\" alt=\"CPI: Rent of Primary Residence vs. Case-Shiller Index - St. Louis Federal Reserve\" class=\"wp-image-160790\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/10\/image1.jpeg 685w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/10\/image1-300x205.jpeg 300w\" sizes=\"auto, (max-width: 685px) 100vw, 685px\" \/><figcaption class=\"wp-element-caption\"><em>CPI: Rent of Primary Residence vs. Case-Shiller Index (2000 &#8211; 2023) &#8211; <a class=\"editor-rtfLink\" href=\"https:\/\/fred.stlouisfed.org\/series\/CUUR0000SEHA#0\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">St. Louis Federal Reserve<\/span><\/a><\/em><\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Indeed, the same trend has taken place&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.ips-journal.eu\/topics\/future-of-social-democracy\/europes-housing-nightmare-6926\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">throughout the Western world<\/span><\/a><span data-preserver-spaces=\"true\">.&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/on-the-market-145\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Housing affordability<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;has become one of the greatest challenges facing governments worldwide. And it\u2019s perfectly understandable that people find this issue important and want it addressed.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">To address the affordability of housing, many restrictions have been passed throughout the United States on landlords, most of which either won\u2019t help or will actually make the problem worse. Unfortunately, one of the proposed solutions is one that has been proven to fail time and time again: rent control.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">A History of Rent Control<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Rent control is a pretty basic idea. It simply caps the amount landlords can charge in rent or the amount they can increase rent each year. And indeed, some form of rent control has existed for a long time.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">John Willis&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/core.ac.uk\/download\/pdf\/216744708.pdf\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">has followed the history of rent control<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;in the&nbsp;<\/span><em><span data-preserver-spaces=\"true\">Cornell Law Review<\/span><\/em><span data-preserver-spaces=\"true\">&nbsp;and even found some unverifiable references to it from Ancient Rome. In the early fourth century,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/mises.org\/library\/edict-diocletian-case-study-price-controls-and-inflation#:~:text=It%20was%20generally%20agreed%20that,maximum%20wages%20for%20all%20occupations.\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Roman Emperor Diocletian put price controls<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;on all sorts of things, so it wouldn\u2019t be surprising if housing was included, but any documentation to prove that has been lost in the sands of time.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">As for documented cases, Willis finds the first such things in 15th-century Florence and 17th-century France. He notes that in the past, it was rarely some well-thought-out government policy to improve the welfare of its people but an ad hoc solution to a major dislocation, saying:&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em><span data-preserver-spaces=\"true\">\u201c[In] almost every instance, the hand of the legislator has been forced by some calamitous event or situation which has upset the normal state of affairs\u2014war, depression, earthquake, fire, plague, or some other vagary of history which either destroys the balance of supply and demand, thereby creating a housing shortage, or makes it impossible for tenants to continue to pay their contractual rents.\u201d<\/span><\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">One could also argue that the Catholic idea of the&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/en.wikipedia.org\/wiki\/Just_price\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">just price<\/span><\/a><span data-preserver-spaces=\"true\">, a particularly influential idea establishing fairness in pricing during the Middle Ages, provided a theological instead of a legal implementation of various price controls. However, in a time when accurate information about the going rate of various items wasn\u2019t always available and geographical challenges made it impossible to find alternative sellers, putting theological and moral restrictions to prevent sellers (or landlords) from exploiting their customers was a very good idea.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">And, of course, it still is today. You absolutely should not rip anyone off by overcharging them. That said, at the time, many peasants weren\u2019t renters but&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/en.wikipedia.org\/wiki\/Serfdom\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">serfs<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;who were bound to their lord\u2019s land and allowed to work on it in exchange for a portion of their harvest.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">As for modern rent control,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.urban.org\/sites\/default\/files\/publication\/99646\/rent_control._what_does_the_research_tell_us_about_the_effectiveness_of_local_action_1.pdf\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">the first such laws<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;in the United States were passed in the 1920s and became more widespread throughout the United States and Europe over the next few decades, particularly in New York.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">New York makes sense for being the focal point of rent control. Between 1900 and 1940,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/en.wikipedia.org\/wiki\/Demographic_history_of_New_York_City\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">the population more than doubled<\/span><\/a><span data-preserver-spaces=\"true\">. Much of the new housing was subpar, and the dilapidated tenements were immortalized at the turn of the century in&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.icp.org\/browse\/archive\/constituents\/jacob-riis?all\/all\/all\/all\/0\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Jacob Riis\u2019 famous (or perhaps infamous?) photography<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;and book&nbsp;<\/span><em><span data-preserver-spaces=\"true\">How the Other Half Lives<\/span><\/em><span data-preserver-spaces=\"true\">.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">While the housing was of poor quality and there was severe overcrowding, the increased demand from its growing population kept pushing rents and home prices higher. Thus, it\u2019s understandable that rent control was put in place, even though it did not end up working.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The Urban Institute&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.urban.org\/sites\/default\/files\/publication\/99646\/rent_control._what_does_the_research_tell_us_about_the_effectiveness_of_local_action_1.pdf\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">points out<\/span><\/a><span data-preserver-spaces=\"true\">, \u201cDuring the postwar 1950s housing boom, most cities abandoned this strict version of rent control, commonly known as first-generation rent control.\u201d But then, in the 1970s, as popular sentiment leaned toward more government intervention in the economy, another round of rent control kicked off.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The Urban Institute says:&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em><span data-preserver-spaces=\"true\">\u201c[T]hese second-generation policies were more moderate than the previous efforts. Unlike first-generation rent control, newer policies that allowed periodic rent increases tended to apply only to certain building types rather than to all tenant-occupied housing within a city. These second-generation rent-control laws, often referred to as \u2018rent stabilization\u2019 to distinguish them from stricter first-generation policies, were introduced in several large or growing coastal cities, especially in the Northeast and in California&#8230; Cities with relatively fixed housing stocks viewed rent control as an easy, available solution to immediately address affordability concerns. Policymakers wanted to ensure rent control laws benefited vulnerable tenants without reducing the quantity or quality of housing supply.\u201d<\/span><\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">That last bit is key because it became apparent quite quickly that rent control discouraged new construction and renovation. And the reason for this is good ol\u2019 supply and demand.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Why Rent Control Does Not, Nor Ever Did, Work<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">In a typical market, supply and demand looks like the chart, where the amount of supply and the corresponding amount of demand for any given good determines its price.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"665\" height=\"481\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/10\/image3.jpeg\" alt=\"supply and demand chart for rental housing\" class=\"wp-image-160792\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/10\/image3.jpeg 665w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/10\/image3-300x217.jpeg 300w\" sizes=\"auto, (max-width: 665px) 100vw, 665px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">But when an artificial ceiling is put in place, it reduces the incentives businesses have to produce that product because there is obviously less money to be made in doing so. This means they pull back production and supply is decreased, even though demand has increased given the artificial ceiling on prices. Prices fall out of equilibrium.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">It looks like this:&nbsp;<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"653\" height=\"476\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/10\/image2.jpeg\" alt=\"supply and demand chart for rental housing with rent control\" class=\"wp-image-160791\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/10\/image2.jpeg 653w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/10\/image2-300x219.jpeg 300w\" sizes=\"auto, (max-width: 653px) 100vw, 653px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The part in green is the reduction in supply the artificial ceiling creates. But it also creates artificial demand, as demand is higher at the controlled price than the market price. Thus, when price controls are put in place, there are almost always shortages and waiting lines. And this happens for housing in the same way it happens for any other product.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">One good example of this effect in action is a study from the Brookings Institute, which&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.brookings.edu\/articles\/what-does-economic-evidence-tell-us-about-the-effects-of-rent-control\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">found that<\/span><\/a><span data-preserver-spaces=\"true\">:<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em><span data-preserver-spaces=\"true\">\u201cWhile rent control appears to help current tenants in the short run, in the long run, it decreases affordability, fuels gentrification, and creates negative spillovers on the surrounding neighborhood.\u201d<\/span><\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Specifically, the Brookings Institute looked at Cambridge, Massachusetts, where rent control was in place between 1970 and 1994 before the city rescinded it. The results were quite elucidating:<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em><span data-preserver-spaces=\"true\">\u201cThe economic magnitude of the effect of rent control removal on the value of Cambridge\u2019s housing stock is large, boosting property values by $2 billion between 1994 and 2004. Of this total effect, only $300 million is accounted for by the direct effect of decontrol on formerly controlled units, while $1.7 billion is due to the indirect effect. These estimates imply that more than half of the capitalized cost of rent control was borne by owners of never-controlled properties. Rent-controlled properties create substantial negative externalities on the nearby housing market, lowering the amenity value of these neighborhoods and making them less desirable places to live.&nbsp;<\/span><\/em><strong><em><span data-preserver-spaces=\"true\">In short, the policy imposed $2 billion in costs to local property owners, but only $300 million of that cost was transferred to renters in rent-controlled apartments.\u201d<\/span><\/em><\/strong><em><span data-preserver-spaces=\"true\">&nbsp;[Emphasis mine]<\/span><\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">That\u2019s quite the economic loss!<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">But the damage rent control does is even more apparent when it comes to new construction (although sometimes new builds are exempt from rent control). Putting caps on rents dissuades new construction in the first place, as it makes projects less economically viable.&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.nahb.org\/-\/media\/NAHB\/advocacy\/docs\/top-priorities\/housing-affordability\/rent-control-case-study-090820.pdf\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">A study<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;by the National Association of Home Builders found that rescinding rent control \u201ccontributed to faster supply growth in the ensuing years for rent-controlled communities.\u201d&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Another&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/web.stanford.edu\/~diamondr\/DMQ.pdf\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">2019 Stanford study<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;found rent control exacerbated San Francisco\u2019s housing shortage. Indeed, pretty much every study finds this same result.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Overall, there are very few things that economists on both the right and left agree on more than that rent control does not work. A 1990s survey of 1,350 economists asked them if \u201ca ceiling on rents reduces the quantity and quality of housing available.\u201d In the survey,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.weber.edu\/wsuimages\/AcademicAffairs\/ProvostItems\/global.pdf\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">93% said it did<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;(76.3% wholeheartedly and 16.6% \u201cwith provisions\u201d).&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The survey asked 40 other questions on all sorts of economic matters, and no other question had such a lopsided response.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">This survey asked about both the<\/span><em><span data-preserver-spaces=\"true\">&nbsp;quality<\/span><\/em><span data-preserver-spaces=\"true\">&nbsp;and&nbsp;<\/span><em><span data-preserver-spaces=\"true\">quantity<\/span><\/em><span data-preserver-spaces=\"true\">&nbsp;of housing\u2014because one way landlords can make properties economically viable with rent control is to skimp on repairs and upgrades. I remember walking into a friend\u2019s apartment in a wealthy part of San Francisco and was shocked by how dated everything was. Then it hit me: This apartment is under rent control. That\u2019s how the landlord makes it work financially.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">This point was made rather crudely&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.fraserinstitute.org\/sites\/default\/files\/RentControlMythsRealities.pdf\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">in a report<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;from the Frasier Institute, which analyzed six countries\u2019 experience with rent control and found the costs to be high and rewards dubious in each case. The crude part was a running joke throughout the report, which showed pictures of wrecked buildings and asked if it was \u201cbomb damage or rent control?\u201d<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">After all, if there\u2019s no money to be made with a property, there\u2019s no good reason to maintain it. Overall, the evidence is pretty clear.&nbsp;<\/span><strong><span data-preserver-spaces=\"true\">Rent control doesn\u2019t work.<\/span><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Raising a Policy Corpse<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Many activist groups have been pushing for a national renters bill of rights, and many states and municipalities have already passed such legislation. While laws are necessary to protect tenants from bad landlords, the things many of these groups want in these bills of rights are much more radical than that.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">One group, for example,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.fastcompany.com\/90400665\/this-radical-plan-would-see-the-u-s-build-12-million-new-units-of-social-housing?fbclid=IwAR0U2YsFrt0yNBzRfYGiZx1aNVhCk4p1GVy7iDro5pH7ZOGpPlbcGSQgCFQ\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">wants to make<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;a \u201cmajor intervention that takes housing off the market and decommodifies it.\u201d&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">I\u2019m not sure if that\u2019s a push to return to Cabrini-Green-style public housing projects or outright communism, but either way, that public housing project in Chicago ended in disaster.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">While I doubt things will go anywhere near that far, the Biden administration is proposing a blueprint for a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/biden-announces-renter-bill-of-rights\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Renters Bill of Rights<\/span><\/a><span data-preserver-spaces=\"true\">. Most of it involves things like \u201cclear and fair leases\u201d and \u201cresources to avoid eviction,\u201d but there are also some not-so-subtle pushes toward rent control.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The point in this proposal&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.usatoday.com\/story\/money\/personalfinance\/2023\/09\/05\/federal-rent-control-laws-debate\/70666376007\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">that garnered the most attention<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;was regarding the Federal Housing Finance Agency (FHFA) examining ways to cap \u201cegregious rent increases.\u201d 17 Senators&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/static.politico.com\/6f\/de\/3713f9814041ab2bf60cd225899c\/7-31-dems-fhfa-rfi.pdf?source=email\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">wrote a letter<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;to the FHFA asking them to limit rent increases on properties with Fannie Mae or Freddie Mac loans.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">This would be a financing-based form of rent control that, from what I understand, would be a completely new approach. But it would be quite an unfair one, as the rules of the game would have dramatically changed for only some property owners and not others. And the rules would have changed&nbsp;<\/span><em><span data-preserver-spaces=\"true\">after<\/span><\/em><span data-preserver-spaces=\"true\">&nbsp;they took out those loans\u2014loans they likely would not have gotten had they known these restrictions were coming.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">And, of course, this odd version of rent control being proposed should have the same sort of effects on the housing market as every other form of rent control or rent stabilization has had in the past.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">What Is the Solution?<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The solution to a housing shortage is quite simply to&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/on-the-market-138\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">build more housing<\/span><\/a><span data-preserver-spaces=\"true\">. You could also argue that immigration and general population growth will continue to exacerbate the issue indefinitely, but that\u2019s a different conversation. Either way, no long-term solution to a housing shortage is ever going to work unless you build enough housing to satisfy existing demand.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Rent control makes building (and renovating unlivable units) more costly and disincentives it. Thus, it actually works&nbsp;<\/span><em><span data-preserver-spaces=\"true\">against&nbsp;<\/span><\/em><span data-preserver-spaces=\"true\">solving the housing crisis by dissuading investors, developers, and even DIY homeowners with thoughts of&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/house-hacking-recession-proof-strategy\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">house hacking<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;from building new properties and renovating current housing stock.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Other factors like overly arduous building codes also need to be eased. After all, it shouldn\u2019t come as a surprise that California has one of the nation\u2019s worst housing crises and also some of&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.bizjournals.com\/sanfrancisco\/news\/2017\/02\/16\/housing-crisis-restrictive-building-laws.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">the most arduous building codes<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;at the same time.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">I think government-funded housing (such as&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.cato.org\/tax-budget-bulletin\/low-income-housing-tax-credit-costly-complex-corruption-prone\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">LIHTC<\/span><\/a><span data-preserver-spaces=\"true\">) tends to be more costly than market-funded properties. But given where interest rates are amid the rate hikes by the Federal Reserve, it\u2019s probably a good thing to help finance&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/home-builders-are-maxed-out-and-the-shortage-keeps-getting-worse\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">new construction<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;right now. Offering income support or rental assistance to struggling tenants or potential homebuyers could also help.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">But messing with supply and demand never works. And it especially doesn\u2019t work in housing. Hopefully, we won\u2019t have to learn that lesson again.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_63df2a96b4c9efa467d6bd4dbd2dfef1\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_055a6d631003ee2c2303f4b1c6f8c889\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size wp-block-paragraph\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color wp-block-paragraph\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<div id=button-custom-event-block_c51d164ee9b043df67b036b98e46c920 class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Lender Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/rent-control-does-not-work-but-the-government-keeps-doing-it&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color wp-block-paragraph\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/rent-control-does-not-work-but-the-government-keeps-doing-it&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Rent control has been around for a long time, and it still doesn&#8217;t work. Why are governments around the country so insistent on it, and why don&#8217;t we learn our lessons?<\/p>\n","protected":false},"author":1689,"featured_media":160788,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7384,7119],"tags":[],"class_list":["post-160785","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics-policy","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/160785","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/1689"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=160785"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/160785\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/160788"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=160785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=160785"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=160785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}