Rent control laws could be contributing to shortage of affordable housing
The Peebles Corporation founder, Chairman and CEO Don Peebles predicts headwinds for the real estate market with high interest, mortgage rates and commercial building problems.
As the cost of housing in the U.S. has surged in recent years, movements have cropped up across the country seeking rent control measures in an effort to stabilize prices. However, such laws could be making the problem even worse.
Despite warnings from economists, rent control is becoming more and more popular in progressive strongholds. Oregon led the charge in 2019 when the state imposed a cap on older units, and California followed suit in 2020. Since then, municipalities in Illinois, Colorado, Massachusetts and elsewhere are considering similar moves.
Demonstrators march in Downtown Chicago during a protest in support of Illinois lifting the ban on rent control on March 20, 2021. (Max Herman/NurPhoto via Getty Images / Getty Images)
Many states had various forms of rent control in the 1970s, another time of high inflation. However, several banned rent control after that, when there was a consensus that price controls were destructive policies. Now, the trend has re-emerged.
Ryan Bourne, chair for the public understanding of economics at the Cato Institute's Center for Economic Studies, said economists overwhelmingly agree that imposing rent control tends to reduce the amount and quality of affordable housing and explained why in an interview with FOX Business.
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Bourne said that at a time when cost of living concerns are such a pressing issue, rent tends to be families' single greatest expense. So, it is natural for politicians to look at ways to make people's cost of living
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