{"id":2199,"date":"2025-12-01T10:15:00","date_gmt":"2025-12-01T10:15:00","guid":{"rendered":"https:\/\/cmpa.us\/?p=2199"},"modified":"2026-03-11T16:06:54","modified_gmt":"2026-03-11T16:06:54","slug":"rent-control-the-zombie-idea-that-never-dies","status":"publish","type":"post","link":"https:\/\/cmpa.us\/index.php\/2025\/12\/01\/rent-control-the-zombie-idea-that-never-dies\/","title":{"rendered":"RENT CONTROL: The zombie idea that never dies.\u00a0"},"content":{"rendered":"\n<p>Original article by Sergio Martinez<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img fetchpriority=\"high\" decoding=\"async\" width=\"768\" height=\"432\" src=\"https:\/\/cmpa.us\/wp-content\/uploads\/2025\/12\/120125-RENT-CONTROL-The-zombie-idea-that-never-dies.-.jpg\" alt=\"\" class=\"wp-image-2201\" style=\"width:358px;height:auto\" srcset=\"https:\/\/cmpa.us\/wp-content\/uploads\/2025\/12\/120125-RENT-CONTROL-The-zombie-idea-that-never-dies.-.jpg 768w, https:\/\/cmpa.us\/wp-content\/uploads\/2025\/12\/120125-RENT-CONTROL-The-zombie-idea-that-never-dies.--300x169.jpg 300w\" sizes=\"(max-width: 768px) 100vw, 768px\" \/><\/figure>\n\n\n\n<p>As 2026 looms, it brings with it an anniversary worth noticing: eighty years since Milton\u00a0Friedman and George Stigler published Roofs or Ceilings?, the very first pamphlet of the newly\u00a0founded Foundation for Economic Education (FEE). The year was 1946. World War II had just\u00a0ended, America faced rapidly shifting housing markets, and policymakers embraced rent control\u00a0as a supposedly necessary intervention to protect tenants from rising prices.\u00a0<\/p>\n\n\n\n<p>Eighty years later, rent control is back.&nbsp;<\/p>\n\n\n\n<p>Across the world\u2014from New York to Berlin, Barcelona, and Mexico City\u2014politicians have\u00a0resurrected the idea in response to the anxieties of younger generations priced out of their\u00a0neighborhoods. Campaigns like \u201cFreeze the Rent,\u201d championed in places like New York by\u00a0figures such as Zohran Mamdani, have made rent control fashionable again in political discourse.\u00a0But if the idea has been resurrected, then one of its earliest and most powerful refutations\u00a0deserves resurrection, too.\u00a0<\/p>\n\n\n\n<p>In Roofs or Ceilings?, Friedman and Stigler famously contrasted two episodes in the history of\u00a0San Francisco:\u00a0<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>In 1906, after the earthquake and fires destroyed half the city\u2019s housing stock, rents were\u00a0allowed to rise. No lasting shortage developed.\u00a0<\/li>\n\n\n\n<li>In 1946, with only a modest increase in housing demand after WWII, the city suffered a\u00a0severe housing shortage, precisely because rent controls prevented prices from adjusting.\u00a0<\/li>\n<\/ul>\n\n\n\n<p>The lesson they drew was clear. Price controls paralyze the mechanism that allocates scarce\u00a0resources.\u00a0<\/p>\n\n\n\n<p>Rent control is a subset of price controls. While its supposed goal is sympathetic\u2014the desire to make housing affordable\u2014it fails for a simple reason: it prevents prices from doing the job they\u00a0exist to do.\u00a0<\/p>\n\n\n\n<p>Prices are signals. They convey information about scarcity, preferences, and trade-offs. A rising\u00a0rent is not merely a burden on tenants. It also sends a message to everyone involved in the\u00a0housing market. To builders, it says, \u201cBuild more\u2014devote more land, labor, and capital to\u00a0housing.\u201d To tenants and prospective tenants, it says, \u201cHousing is becoming scarce\u2014adjust,\u00a0economize, take in more roommates, move to a smaller apartment, or consider alternative\u00a0locations.\u201d\u00a0<\/p>\n\n\n\n<p>When rents are capped artificially below equilibrium:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Landlords want to supply fewer units at the controlled price.\u00a0<\/li>\n\n\n\n<li>Tenants want to rent more units at that price.\u00a0<\/li>\n\n\n\n<li>The gap between quantity demanded and quantity supplied becomes a shortage.\u00a0<\/li>\n<\/ul>\n\n\n\n<p>If the price system is a communication network, rent control turns down the volume and adds\u00a0static. The result is miscommunication, misallocation, and frustration on both sides of the\u00a0market.\u00a0<\/p>\n\n\n\n<p>The empirical literature on rent control is large and points in the same direction. Kholodilin\u00a0(2024) reviewed more than a hundred studies and found consistent patterns across cities and\u00a0decades. Rent control reduces the supply of rental housing, distorts the allocation of space, and\u00a0leads to visible deterioration in building quality. Rents in uncontrolled units rise as demand shifts\u00a0toward the parts of the market still available. Residential construction slows, and mobility\u00a0declines as tenants hold on to regulated units. Rent control transfers wealth to a group of\u00a0incumbent tenants who happen to hold onto their regulated units, but the gains to these lucky\u00a0occupants do not offset the costs imposed on those who search for housing and find nothing\u00a0available.\u00a0<\/p>\n\n\n\n<p>An influential study on rent control is the paper by Diamond, McQuade, and Qian (2019), which\u00a0exploits a quasi-experimental expansion of rent regulation in San Francisco. They find that the\u00a0policy triggered a substantial withdrawal of rental units from the market: landlords responded by\u00a0converting roughly 15% of the newly controlled units into condominiums, redeveloping them, or\u00a0occupying them themselves. This contraction in the regulated segment of the market had\u00a0consequences far beyond those units. As supply shrank, displaced demand shifted toward the\u00a0uncontrolled part of the housing stock. The result was a citywide increase in rents of about 5%\u2014an effect that only makes sense when we step outside a narrow, partial-equilibrium perspective\u00a0and consider the housing market as an interconnected system. When rent control makes one\u00a0segment less attractive to landlords, demand spills over into other segments, driving up prices for\u00a0everyone else. Meanwhile, the tenants who remained in regulated units became significantly\u00a0more stationary: the study finds that turnover fell by 10 to 20%, as households stayed put to\u00a0preserve the benefits of their below-market rent.\u00a0<\/p>\n\n\n\n<p><em>Seinfeld<\/em> even captured this distortion: the characters scan obituaries hoping to find a newly\u00a0vacated rent-controlled apartment\u2014a point highlighted by economist Alex Tabarrok in the video\u00a0below:<\/p>\n\n\n\n<p>Rent control eliminates price competition\u2014but competition itself does not disappear. It merely\u00a0shifts to non-price dimensions. Glaeser and Luttmer (2003) show the scale of the misallocation\u00a0created by this shift: they estimate that \u201c21% of New York renters live in units with more or\u00a0fewer rooms than they would occupy in a free-market city.\u201d And as Alchian and Allen\u00a0(2018) emphasize, once prices are prevented from performing their allocative role, landlords\u00a0inevitably fall back on nonmoney criteria such as \u201cgender, marital status, age, creed, color, pet\u00a0ownership, eating and drinking habits, personalities, and so forth.\u201d Shortages increase\u00a0undesirable types of discrimination. Minorities and outsiders lose the ability to counteract a\u00a0landlord\u2019s bias by offering a higher rent. When prices cannot adjust, personal characteristics take\u00a0on a larger role in determining who gains access to scarce housing.\u00a0<\/p>\n\n\n\n<p>Rent control discourages repairs and maintenance, effects that remain invisible in the short term\u00a0but accumulate as time passes. Quality declines as landlords lack incentives to fix problems in\u00a0their buildings. A new coat of paint or a roof repair can be costly, and these costs cannot be\u00a0recovered when rents are capped. Investment in improvements pays only when prospective\u00a0tenants are able to reward those improvements through higher bids. The policy acts like a slow-moving bacterium that spreads through the market and rots housing from the inside.\u00a0<\/p>\n\n\n\n<p>The long-term answer to housing scarcity is an increase in supply. Cities need more homes, more\u00a0density, and more opportunities for private builders to respond to demand. Zoning laws should\u00a0be eased because they restrict alternatives for housing with no clear social benefit. Long\u00a0permitting processes slow down projects that could lower rents for thousands of people. Bryan\u00a0Caplan\u2019s recent book Build, Baby, Build develops the YIMBY position: building more housing is\u00a0the way to make housing affordable in the long run.\u00a0<\/p>\n\n\n\n<p>Housing abundance requires investment, legal room to build, and a regulatory framework that\u00a0allows supply to adapt. Affordable cities are produced through construction and the free market,\u00a0not through price ceilings.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Original article by Sergio Martinez As 2026 looms, it brings with it an anniversary worth noticing: eighty years since Milton\u00a0Friedman and George Stigler published Roofs or Ceilings?, the very first pamphlet of the newly\u00a0founded Foundation for Economic Education (FEE). The year was 1946. World War II had just\u00a0ended, America faced rapidly shifting housing markets, and&hellip;&nbsp;<a href=\"https:\/\/cmpa.us\/index.php\/2025\/12\/01\/rent-control-the-zombie-idea-that-never-dies\/\" rel=\"bookmark\"><span class=\"screen-reader-text\">RENT CONTROL: The zombie idea that never dies.\u00a0<\/span><\/a><\/p>\n","protected":false},"author":5,"featured_media":2201,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[16],"tags":[],"class_list":["post-2199","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-housing-crisis"],"_links":{"self":[{"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/posts\/2199","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/comments?post=2199"}],"version-history":[{"count":2,"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/posts\/2199\/revisions"}],"predecessor-version":[{"id":2202,"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/posts\/2199\/revisions\/2202"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/media\/2201"}],"wp:attachment":[{"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/media?parent=2199"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/categories?post=2199"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/tags?post=2199"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}