Clark County’s housing crunch has inspired numerous ideas for increasing construction, helping to keep people in their homes, and balancing relief for renters with the financial needs of landlords.
One of those ideas is rent control, a proposal that should be rejected because it ignores market realities.
“Rent control appears to help affordability in the short run for current tenants, but in the long-run decreases affordability, fuels gentrification, and creates negative externalities on the surrounding neighborhood,” Rebecca Diamond, a Stanford University professor and founder of the school’s Cities, Housing and Society Lab, writes. “If society desires to provide social insurance against rent increases, it may be less distortionary to offer this subsidy in the form of a government subsidy or tax credit.”
In the simplest terms, rent control limits how much landlords may increase rates for tenants. In Washington, it is illegal for municipalities to impose such limits; landlords are allowed to raise rent as dictated by the market.
For many renters that is problematic, particularly in a tight market. High demand and low supply allows for sharp price increases and often leaves renters with few options for moving; the situation has contributed mightily to the homeless crisis seen in West Coast cities.
Because of that, advocates are pushing for control measures to help struggling renters remain in their homes. “It’s not going to be this magic wand, but we need rent control,” Violet Lavatai, executive director of Washington’s Tenants Union, recently told The Columbian. “It’s going to help a lot of people, mostly the low-income and elderly.”
That would be true in the short run; but studies of long-term effects do not argue in favor of government influence on rental prices. As Assar Lindbeck, a famed Swedish economist, reputedly said: “In many cases rent control appears to be the most efficient technique presently known to destroy a city — except for bombing.”
That might sound like hyperbole. But a study of San Francisco’s rent control policies from 1980 to 2016 found that landlords were incentivized to either convert rental units into condominiums or tear down old buildings and construct new ones. Either way, existing tenants were forced to move; meanwhile, the supply of rental units declined by 15 percent.
Economists also note that rent control on some properties – typically older ones, so as not to remove incentives for new construction – impacts the broader urban area. With a percentage of units removed from competition, landlords of uncontrolled properties can increase rent more than they would in a free market.
All of this unnecessarily complicates the housing market and creates deleterious impacts. Because of that, the Legislature should be cautious.
A bill last year would have required landlords to provide six months’ notice before increasing rent above a specific amount, but did not make it out of committee. “There was a lot of pressure put on from the landlord lobby to kill the bill, and unfortunately they were successful,” said Rep. Strom Peterson, D-Edmonds. “But we’ll be back.”
So, too, will additional legislation that places restrictions on landlords.
While the hope of protecting residents from stifling rent increases is understandable, in the long run it doesn’t address the underlying problem – more residents than housing because Washington is a desirable place to live. That is the issue that should draw attention from lawmakers.
