rent control metaanalysis

Impacts of Rent Control


Argument 1: Rent control and rent stabilization policies do a poor job at targeting benefits. While some low-income families do benefit from rent control, those most in need of housing assistance are not disproportionately the beneficiaries of rent control.

Synthesis: researchers point to increasing the number of federal housing vouchers and expanding the Low-Income Housing Tax Credit (LIHTC) program as more promising ways to create more affordable housing options. Getting rid of single family housing laws, abolishing the ban on condos and apartments across america, and getting rid of Euclidean Zoning are pretty based too.

(in the case of New York), there is no evidence to suggest that the program successfully targeted those most in need, benefits of rent control were also enjoyed by higher-income households. ( Gyourko and Linneman 1989)
 there was significant variation in the distribution of the benefits of rent control and New York City’s program was “a poorly focused redistribution device” (Olsen 1972)
At first, residents of rent-controlled apartments tended to be more likely minority and elderly—two groups a rent control policy could want to target. However, over time, they found that the benefit of the rent control subsidy in New York City was greater for higher-income households than for lower-income or minority households ( Ault and Saba 1990)
renters with similar needs or characteristics were very unlikely to receive similar levels of benefits under New York City’s rent control law, indicating that the program did a poor job of targeting assistance ( Ault and Saba 1990)
both the city’s (NY) rent control and rent stabilization programs were targeted haphazardly, benefitting some low-income households, particularly seniors, but generally doing a poor job at directing housing benefits to those most in need. (Linneman 1987)
 not only that rent control and rent stabilization in New York City were poorly targeted, but also that the city’s laws induced landlords to change the way they recruited tenants, giving preference to older and smaller households (Early 2000)
 This observation that older households (i.e., seniors) and smaller households (i.e., households without children) were preferred by landlords of rent-controlled properties was also made by Linneman (1987), Gyourko and Linneman (1989) and Ault and Saba (1990). How do we tailor policy that benefits low income minority families with, perhaps...single mothers?
lower-income households were not well served by rent control programs in New York (Sims 2007)
about a quarter (26 percent) of rent-controlled units were occupied by tenants with incomes in the bottom quartile while 30 percent of rent-controlled units were occupied by tenants in the top half of the income distribution. Navarro (1985) had come to a similar conclusion about rent control programs in the Boston area, examining data from the 1970s.
 D.C.’s rent control policy (2/3ds of stock under control) did not benefit renters efficiently or equitably. In particular, the policy benefited renters who remained in their units a long time (including affluent renters) and did not provide assistance to recent or frequent movers (including poor individuals and families at risk of homelessness) who were unable to pay the above-market rents landlords could charge upon a tenant’s departure (Turner 1990)
 In rising cost regions, such as those in California, rent control did increase lower-rent housing options; however, the occupants of rent-controlled units in California and the beneficiaries of living in higher-opportunity neighborhoods tended to be seniors rather than families with children
 A study in Massachusetts found that although Hispanics and AfricanAmericans accounted for a quarter of the population in cities with rent control, they made up just 12 percent of the population in rent-controlled units (Sims 2007)

Argument 2: rent control generally does not lead to more economically and/or racially integrated neighborhoods and may very well contribute to economic segregation and the continuation of cyclical poverty

 In New Jersey, where housing markets were on the decline,  rent control was actually associated with increased economic segregation in municipalities (NMHC Research Foundation)
 there was no impact on economic or racial integration in the community as a result of rent control. ( Levine, Grigsby and Heskin (1990)
 rent control appeared to increase the share of minority residents in the city, but it was associated with a decrease in the proportion of very low-income residents. Sims (2011) concluded that the modest impacts on racial integration in Cambridge were overshadowed by the increases in economic segregation in the community.
by creating an excess of demand over supply, rent control ensures that apartments will be allocated on the basis of landlord preferences, which may in fact be segregationist. Furthermore, when rent control induces poor renters to live in rich cities, those poor renters are generally older, long term renters, who are less likely to have young children living at home and are less likely to benefit most from integration. Empirically, rent control seems to have allowed some poorer (and older) tenants to live in expensive Manhattan, but rent control in the declining cities of New Jersey seems to have increased the isolation of the poor. Rent control is a very socially costly means of occasionally getting integration, and housing vouchers or supply-side policies seem likely to be much more effective (glaeser 2003, swedish policy review)
 A study in Massachusetts found that although Hispanics and AfricanAmericans accounted for a quarter of the population in cities with rent control, they made up just 12 percent of the population in rent-controlled units (Sims 2007)
Argument 3:  Rent control acts as a price control, which limits the overall supply of housing and does not allow units to be allocated to the residents who would benefit most since price cannot be used to sort renters into different units. Renters who gain access to rent-controlled apartments stay in those units longer than they would in a market-rate unit, even if the unit is no longer appropriate for their household (e.g., too big or too small, based on changes in household composition). Residents of rent-controlled units are less mobile than residents of uncontrolled housing units, and the benefit of living in a rent-controlled unit causes tenants to remain in their units longer than they would without rent control, leading to a mismatch in unit type or size and the need of the household and contributing to the case outlined in argument 2.

Studies on rent control and rent stabilization in New York City consistently demonstrate that these policies have been associated with reduced residential mobility and a significant “mismatch” between tenants’ housing needs and the characteristics of the units (NMHC Research Foundation)
 Gyourko and Linneman (1989) used 1968 data to examine the distributional consequences of rent control in New York City, demonstrating that New York City’s rent control policy led to longer tenures and lower likelihoods of homeownership among tenants in rent-controlled units
 Ault, Jackson and Saba (1994) also examined 1968 data and estimated that the typical rent control tenant remained in his or her unit about 18 years longer than an otherwise identical tenant in an uncontrolled unit.
Residents of strictly controlled rental units received significant rental subsidies that led to these renters remaining in their units significantly longer than they would otherwise be expected. There was no significant difference in the tenancy durations of residents of rent-stabilized units and uncontrolled units. (Linneman 1987)
tenants of rent-controlled units were, in fact, significantly less mobile than those living in rent-stabilized units (Nagy 1995)
Rappaport (1992)  found that compared to uncontrolled units, a rent-controlled apartment was about eight percent less likely to turn over in a three-year period.
Glaeser and Luttmer (2003) found that between 15 and 21 percent of New York City apartment renters lived in larger or smaller units than they would if they were living in a city without rent control or rent stabilization (with the range depending on whether unit size was measured by rooms or bedrooms). The authors cautioned that in New York City there is also a “housing misallocation” among both renters in uncontrolled buildings and owners when compared to other markets, suggesting that the New York City market may be generally inducing misallocation of units.