Economists working on rent control are forced to adopt an attitude of weary resignation. The studies on it are so universally negative, the lamentable results so consistent, that reiterating them can feel both necessary and tiresome.
Yet rent control endures. The presidential campaigns of Joe Biden and then Kamala Harris both advocated it, and now Zohran Mamdani has made freezing rents a centerpiece of his New York City mayoral campaign. Rent control remains the great rejoinder to all of those who cherish the belief that evidence and experience can sway policy. The question is why rent control remains so popular despite its profoundly negative effects. The reason lies in the strange aspects of housing that make it different from every other good in America.
Some argue that low prices are always popular, but even radical politicians in America don’t advocate for price controls on sofas or cars. Mamdani bemoaned high food prices in addition to high rents, but he did not propose price limits on halal cart meals. Politicians treat housing differently.
One reason rent control seems attractive to politicians is that housing is big and immobile. If price controls are imposed on pita, a pita black market can open up or pita manufacturers can ship their wares elsewhere. It’s not easy either to hide a house or ship it to more appealing business climes.
But rental housing is less immobile than many rent-control advocates think. For one, the owner of a house or an apartment does not have to rent it out. During World War II, the American homeownership rate rose a shocking 10 percentage points, accounting for about half of the increase in homeownership in the entire twentieth century. According to one research paper, a major explanation of that shift is that rent control during the war forced landlords to transfer their units to buyers. Similarly, when San Francisco expanded rent control to some small houses and multifamily units in 1994, researchers found a 25-point reduction in renters living in them. Time and again, the reduction in the number of apartments made rents in the nonregulated units go up.
