Oregon recently passed rent control legislation, establishing what most economists would identify as an extremely flawed model for how to deal escalating housing costs. Still, it should be expected that other states would look to Salem and find inspiration. Governing magazine reports,
Oregon made history last week when Democratic Gov. Kate Brown signed rent control regulations for tenants across the entire state. It’s the first state to mandate this kind of policy, which is usually regulated at the local level….
Oregon is the first to adopt statewide rent controls, but it may not be the last. Support for some form of state-level rent control is building in Colorado, Illinois and New York.
The economic consensus (and economic consensus is hard to find) holds that rent control creates more problems than it solves – unintended consequences are not the same as unforeseeable consequences. As the Washington Research Council rent control report concluded, there are better ways to handle the problem.
New voices calling for increased govern- ment intervention in many sectors of the economy have added the quick fix of rent control as their solution to the growing problem of housing affordability. But rent control is a Band-Aid, not a solution. If the affordability problem is to be solved the increase in demand must be met by an increase in supply. As rent controls would discourage the construction of new rental housing, they would make the affordability problem worse in the longer term.
Policymakers, taking heed to the vast majority of economists and the basic nature of market behavior, have resisted the call for rent controls. They would be wise to look to policies that would remove unnecessary regulatory impediments to an increase in the supply of housing, to counter balance the demand pressures driving up rents and property values.
Governing reports uncommon restraint in two West Coast states.
…the research has made some voters and lawmakers hesitant. California voters rejected a November ballot measure that would have repealed a 23-year-old state law that limits the cities’ power to enact rent control. In Washington state, an effort to repeal the state’s ban on rent control died in committee last year.
Well done.
