Rent Control in Worcester? NO THANKS Build More Housing
This past week the Worcester City councilors were asked what their thoughts were about the possibility of the state removing the ban on Rent Control in Massachusetts. Rent Control has been banned in the state since 1994. Lifting the ban would allow municipalities the ability to set their own parameters on what makes sense locally.
Here is the article from the T&G if you are not a subscriber.
First, I will start off that I simply do not think that government rent controls will benefit anyone long term. In the short term there may appear to be some benefits, but long term it will be a disaster.
That being said, this is a discussion that needs to take place, and it should take place in a public forum. I don't think that the Worcester City Council is going to determine what the state does, but it is insightful to see how the city councilors feel about rent control.
You will have to read the article to analyze their comments for yourself. But let's use some of their comments along with some additional reasons for each side of the argument:
FOR RENT CONTROL:
Rents are rising, and the government should control them and maintain the existing affordable housing.
Poor people need help.
Landlords are rich and greedy and should be stopped.
There is not enough low priced housing, so we have to keep prices low.
If there is rent control then tenants are more likely to complain to the code enforcement folks when there are problems with their units.
Rents are rising faster than wages so we need to control rents.
AGAINST RENT CONTROL:
Landlords won't invest in their properties.
No new units will be created.
People will pretend to live in rent controlled apartments when they actually live somewhere else and create artificial scarcity.
Renters won't be able to move as their rent will go up if they move to a different apartment.
We want to solve the issue of why prices are high and that is because there is not enough housing.
Take a look at the graph below. The numbers are illustrative not exact numbers.
Remember that the line with S is QUANTITY supplied and the line with D is QUANTITY demanded.
At $1200, no one wants to pay that price for housing and everyone wants to supply housing at that price.
You will see the equilibrium price is $600 and 300 homes provided; with a price ceiling, only 200 homes will be provided.
When prices rise, more housing is provided which is good. At some point there will be enough housing provided and the price will return to the equilibrium.
This is a great article that goes through in a methodical way why Rent control makes housing more expensive.
Read the article here - Essentially "Prices are not problems; they are signals of problems".
We need to increase the supply of housing in response to demand, not try to legislate how much someone can charge, or someone is willing to pay for housing.
Hopefully this will add to the discussion on housing prices and housing production.
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