Rent Control Supply Destruction
Cities facing housing affordability crises implement rent control to protect tenants from rising costs. The policy delivers immediate relief to current renters. But it simultaneously destroys the economic incentive to build new housing, maintain existing units, or enter the rental market. Over 5-15 years, the housing supply shrinks, quality deteriorates, and the affordability crisis deepens for everyone not already locked into a controlled unit.
What people believe
“Rent control makes housing more affordable and protects tenants from displacement.”
| Metric | Before | After | Delta |
|---|---|---|---|
| Rent for controlled tenants | Market rate | -15-25% | -20% |
| Rental housing supply | Baseline | -15% over 10 years | -15% |
| Market-rate rents (uncontrolled units) | Baseline | +5-7% above trend | +6% |
| Housing quality (controlled units) | Adequate | Declining | -25% |
Don't If
- •Your city already has a housing supply shortage
- •You're implementing rent control as a substitute for building more housing
If You Must
- 1.Pair rent control with aggressive supply-side incentives (zoning reform, tax breaks for builders)
- 2.Include vacancy decontrol so units reset to market rate between tenants
- 3.Exempt new construction for 15-20 years to avoid chilling development
- 4.Fund maintenance requirements with landlord tax credits
Alternatives
- Upzoning and density bonuses — Increase supply by allowing more housing to be built — addresses root cause
- Housing vouchers — Subsidize tenants directly without distorting the rental market
- Community land trusts — Remove land from speculative market while maintaining housing quality
This analysis is wrong if:
- Cities with rent control show equal or greater rental housing supply growth compared to similar cities without it over 10+ years
- Housing quality in rent-controlled units remains comparable to market-rate units over 15+ years
- Market-rate rents in cities with rent control grow at the same rate as comparable cities without it
- 1.Stanford: The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality
San Francisco rent control reduced rental supply by 15% and increased rents for non-controlled units by 5.1%
- 2.Brookings: What Does Economic Evidence Tell Us About Rent Control?
Comprehensive review finding rent control reduces supply and misallocates housing
- 3.IGM Forum: Rent Control Survey of Economists
81% of economists agree rent control reduces housing quantity and quality over time
- 4.NBER: Housing Market Spillovers from Rent Control
Rent control causes landlords to convert rentals to condos, reducing rental supply
This is a mirror — it shows what's already true.
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