Friday, January 4, 2013

On Rent Control

It had to happen again.  It happens fairly regularly.  A review of the literature, showing that rent control is a really bad idea.  Yeah, most of the literature is produced and/or paid for by the real estate industry, but who cares?  And you'd think their would be at least some discussion of the necessary preconditions for a functioning free market.  I'm not going to spend much time of them, but the first and most obvious is that you have a necessitous buyer (tenant) and a non-necessitous seller (landlord).  A tenant has to have a place to live all the time, while a landlord can wait a month, two, three, for a desirable tenant.  In fact, a landlord can "live off the tax code" for a year without renting his property.  And we can work down from there...

But if rent control is not the solution, then what is?  Well, construction of affordable housing.  Okay, how much do we need?  A lot.  Twenty percent of the population shouldn't be in the private market at all, as they can't afford the operating costs on housing.  Compute how many units that is, and then provide the money to construct them.  Once you've gotten to, say, 80%, then come and talk to me about the evils of rent control.  I've been hearing about the need for affordable housing for 35 years now, and will note that the people who oppose rent control and advocate for someday producing more affordable housing are the same people who (a) want to limit government spending and (b) haven't done a bit of the math to figure out how much it would cost.  It's a variation of "you'll get pie in the sky when you die."

Rent control is a much better bet.

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