Page 59 - AAGLA-NOV2021
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                 Featured Story
Continued from page 57
Rent control is meant to create or preserve housing units with below-market rents without direct government subsidies to tenants. It is presented as a solution to greedy landlords taking advantage of pinched renters in static housing markets. Its proponents argue for lowering a landlord’s profits by limiting rents in order to ration a constrained housing supply. The problem with rent control is that it addresses a problem rooted in regulations with more regulations. Housing cannot become more affordable without becoming more available.
Rent regulations “solve” America’s affordability crisis for a few people, for a short time, at great cost to everyone else. Tenants in controlled units do often see lower rents.15 But those who are not in controlled units experience higher costs as the available housing supply shrinks. The result is a tale of two cities, divided between the rent-controlled and the non-rent-controlled—the housing winners and the housing losers. Ultimately, rent control’s restrictions on housing harm low-income, minority, and immigrant Americans most of all.
Rent Control Makes It Harder to Find an Apartment
After San Francisco’s 1994 rent-control initiative, controlled buildings experienced a 15% decline in tenants and a 25% decline in those living in controlled units. Property owners were converting rental apartments into condominiums
and replacing structures with new buildings, resulting in a decline in housing supply and making rent increases likelier over the long run. True to form, rental housing overall shrank by 6%, resulting in a 5.1% increase in rents across San Francisco.16 A study of New York City’s 1968 rental market found that rents in noncontrolled units were 22%-to-25% higher than they would have been without the presence of price controls.17 Meanwhile, two years after the adoption of rent control in Los Angeles, noncontrolled rents were rising at three times the rate of controlled units—because of limits in housing supply and rent control’s basic market distortions.18 Even for rent-controlled units, landlords could set initial rents for vacant apartments higher than market rates to compensate for lower future earnings, meaning that these units could become pricey.19
Rent control tends to discourage the construction of new rental housing. Even if price controls do not apply to new developments, property investors may fear future policy changes that would diminish their financial incentive to build.20 Edward Glaeser, a senior fellow at the Manhattan Institute, noticed this effect in 2002 when comparing non- rent-controlled Chicago with New York City: “Chicago’s lakefront is dotted with apartment buildings built after WorldWarIIforrentalpurposes. NewYork’sUpperEastSide is filled with one-time rental buildings that were gradually turned into cooperatives and lacks new rental buildings
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  AAGLA Members are invited to join us for:
A monthly Virtual Cocktail Party about real estate and how to navigate the “New Now”
*Join us the First Thursday of every month on Zoom*
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Text: 323-559-0856 or email: for the Zoom link
  Upcoming Guest Speakers:
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Executive Director AAGLA
Hosted by:
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