New Meta-Analysis Confirms Rent Control Causes Way More Harm Than Good

Housing prices continue to spiral out of control in the United States. Last January, Harvard University's Joint Center for Housing Studies released a report showing, amongst other findings, that about half of renters in the U.S. pay 30 percent or more of their income to rent. This price spiral contributes to at least 60 percent of U.S. citizens living from paycheck to paycheck. One idea to deal with the rising costs is rent control. 

Rent control is a government-imposed price ceiling that imposes a limit as to how much a landlord can charge a tenant for rent. The states of Carolina and Oregon have rent control, whereas such states as New York and Maryland have some local jurisdictions with rent control. Rent control might sound like it has good intentions because it is supposed to, as proponents argue, "stop landlords from exploiting tenants." However, a recent meta-analysis in the Journal of Housing Economics shows a brutal picture of the economic realities of rent control (Kholodilin, 2024). After looking at 100 empirical reports and examining 26 potential effects, what did the author find? 

Analysis from the libertarian Cato Institute had the following to say on the study: 

The research near consistently finds that rent control leads to less mobility (not least, because people don't want to give up their rent-controlled properties), more people living in properties unsuited to their needs, and higher rents for uncontrolled units. The vast majority of studies examining each find that rent control leads to a lower supply of rental accommodation, less new rental housing construction, and a fall in the quality of rental housing too. 

These findings confirm mainstream microeconomic theory on the matter. I first analyzed the topic of rent control in 2014 and again in 2022. As the supply-demand graph shows below, rent control constricts housing supply while making non-rent control housing more expensive. It also disincentivizes property upkeep, which also lowers property value. Rent control makes quality of life more miserable for those living in rent control units, as well as bringing down the entire neighborhood. If cities with rent control want to get their housing prices under control, do not maintain rent control policy. If you are thinking about rent control, steer clear from a policy whose negative effects are both predictable and well-documented. Bringing housing prices down has a multi-faceted solution, but one of those facets needs to be that rent control is non-existent in the municipality.