A: No! Despite common fears, decades of evidence shows that rent regulation doesn’t restrict housing supply and quality.
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A: No! Despite common fears, decades of evidence shows that rent regulation doesn’t restrict housing supply and quality.
Feel free to print and distribute! Click on the image above to download a PDF of The Answer.
Two words: South Bronx
Rent control destroyed the South Bronx, once a peaceful prosperous neighborhood. Rent control in New York in the 1970s, one must remember, was imposed in a time of unbridled inflation. Interest rates exceeded 15%. Prices rose year after year throughout the decade.
The price of gold increased from $40 in 1970 to $800 by 1980. Freezing rents in place meant rising costs of maintenance, insurance, property tax, and utilities far outstripped the revenue from rent payment. Apartment buildings were transformed from income producing assets into savings consuming liabilities. Their market value collapsed – except in the case of fire where insurers still had to pay out the full insured value stipulated in the policy. One by one apartment buildings burned down. Block after block was reduced to rubble. The exceptions were where landlords sold their apartment buildings to criminals – who had no compunction about forcibly evicting tenants living in rent controlled apartments and replacing them with new ones willing to pay market rate. Economist Walter Block writes on this subject extensively.