High inflation. Threats of strikes. Volatile commodity prices. It often feels as if we are reliving the 1970s, not least because we see the long-debunked economic ideas of that decade re-rearing their ugly heads. One example is the renaissance of rent stabilization laws—the demands for which have grown louder still as unexpected inflation squeezes real pay.
The National Multifamily Housing Council’s Jim Lapides told NPR that 19 states had considered rent control proposals this year—nearly all to expand it. In recent midterm ballot initiatives, localities in Florida, Maine, and California jumped on the bandwagon, with voters opting to introduce, or tighten, laws governing rent increases.
As a form of price control, economists object to capping rent uplifts. Market prices are signals wrapped in incentives. Their movements are messages about changes to the relative scarcity of accommodation driven by shifts in demand and supply. Putting a binding ceiling on rents muffles that message when demand hugely exceeds supply. It produces rental housing shortages and inefficiency.
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