What Are Some Of The Unintended Effects Of Rent Control?

Just equally California voters might overturn the country's heavy-handed restrictions on new rent-command units, Stanford economists Rebecca Diamond and Tim McQuade presented a paper in October making the provocative argument that San Francisco rent command ultimately collection rents upwards citywide since 1995.

But the conclusion from their findings is not necessarily that rent command is bad. Instead, the findings are a flake more circuitous.

In the paper, snappily titled "The Effects of Rent Command Expansion on Tenants, Landlords, and Inequality: Bear witness from San Francisco," Diamond and McQuade used public and individual data to await at how often people moved out of rent-control units, how ofttimes landlords converted those units to new types of housing not covered nether rent command, and how median rents changed since the 1990s.

The pair singled out SF specifically to "exploit a unique rent control expansion in San Francisco in 1994 that suddenly provided rent control protections for small multifamily housing built prior to 1980" then that renters in mail service-1980 homes class a natural control grouping with which to compare.

Here are some of their conclusions:

Rent controlled tenants are of course more likely to stay in their current homes. "Rent control increased the probability a renter stayed at their accost past shut to 20 per centum," note Diamond and McQuade, with younger renters more likely to leave the roost anyhow than older ones.
And that in turn prevents flying from San Francisco itself. "We discover that absent rent control essentially all of those incentivized to stay in their apartments would accept otherwise moved out of San Francisco," note the economists. Yikes.

Notwithstanding, in some the priciest neighborhoods, tenant turnover in hire - controlled apartments was actually higher. "This evidence suggests that landlords actively try to remove their tenants in those areas where the reward for resetting to market rents is greatest," either by gamely buying out long term tenants or just evicting them.
L andlords of rent -c ontrolled homes were more likely to catechumen them to the types of buildings non covered by the provisions. "Landlords whose properties were exogenously covered past rent control reduced their supply of available rental housing by xv percent."
Particularly via the old TIC fox. "Hire-controlled buildings were nearly x percent more likely to convert to a condo or a Tenancy in Mutual (TIC) than buildings in the control grouping, representing a substantial reduction in the supply of rental housing."
Withal, rent control is definitely good for the tenants who get information technology, even with the added take a chance of landlord shenanigans. "Rent control offered large benefits to impacted tenants during the 1995-2012 period, averaging betwixt $2,300 and $vi,600 per person each year, with aggregate benefits totaling over $390 million annually."
But the loss of housing might drive upwardly rents elsewhere. "Nosotros find that six percent subtract in housing supply led to 7 percent increase in rental prices. These acquired an aggregate welfare loss to renters of $five Billion. This is about as big every bit the benefits accrued past the lucky beneficiaries of rent control."

What does it all mean? First, acquit in mind that just considering ii economists say so doesn't make it true. But fifty-fifty if we take Diamond and McQuade's findings as fact, different parties will draw different conclusions.

San Francisco Area Leads Nation In High Rents

For case, the newspaper says that the cost to general renters was "almost" as high equally the benefit to those in rent-controlled homes, but non quite. Is that trade off worth information technology? That may boil down to a judgment call.

Some also may respond to the findings by simply suggesting further regulation.

Jennifer Fieber, director of the San Francisco Tenants Spousal relationship, told the San Jose Mercury News that the city or state should just make it harder for landlords to shimmy out of rent-control arrangements via TIC conversion, for example.

On the other hand, those who take griped about rent-command laws all along will point to this research equally vindication.

Co-ordinate to the urban design think tank SPUR, nearly 45 percent of SF'south housing stock—roughly 172,000 units in 2014—are before long rent controlled, although the city itself keeps no official tally.