Policy Gripes: Rent Freezes
We're not angry, just disappointed
Policy Gripes is a series that combines our two highest forms of expertise: economic policy and complaining.
New York City just enacted a two-year rent freeze for roughly one-million rent-controlled apartments, so if you hear a low rumbling sound, it’s 98% of economists and housing experts groaning in unison.
Jason Furman, chair of Obama’s Council of Economic Advisers, sums it up nicely: “Rent control has been about as disgraced as any economic policy in the tool kit.”
His colleagues agree. The University of Chicago asked 41 distinguished economists if they agree with the statement:
Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.
And here are their responses:
Here are a few of the comments they offer with those responses:
Rent controlled units do not end up in the hands of low income people. Rent control discourages landlords from creating modest priced units.
Unless all the textbooks are wrong, this is wrong.
The planets are lined up here: theory and evidence point in the same direction.
Next question: does the sun revolve around the earth.
What’s so bad about a rent freeze? It leads to less residential mobility, fewer available units, fewer new units, higher rents on non-controlled units, and less upkeep of rent controlled units.
We won’t belabor the point. We’re far from the only ones complaining about this, and the best griping on the subject actually comes from Arpit Gupta, an NYU professor and the one member of the NYC Rent Guidelines Board to vote against the freeze.
What’s Next?
We’ll cover Thursday’s jobs report and maybe even get a construction post out during this holiday-shortened week.
Then it’s Week in Review, our every-Friday post that gives you everything you need to know about the economy in a breezy, five-minute read. Week in Review is just for paying subscribers. If that’s not you and you want it to be, just click the button below: