SAN FRANCISCO IS famously America's most expensive city. That means there's all kinds of political agitation for rent regulations and other affordable housing mandates. But a new study from the National Bureau of Economic Research finds that the city's rent control laws help a certain set of haves while costing a larger set of have-nots.
In 1994, the City by the Bay imposed rent regulations via ballot initiative on "small multifamily housing built prior to 1980." This allowed Stanford researchers to compare units constructed before and after that year. As might be expected, rent control helped keep people where they already were, with "the beneficiaries of rent control... between 10 and 20 [percent] more likely to remain at their 1994 address relative to the control group." The longer you've been stationary and the older you are, the stronger that effect.
That's the sort of result fans want to see--keeping people in their homes!--but the economists also find that for shorter-term tenants, "the impact of rent control can be negative." Since the policy allows rents to reset to higher rates when people move out, many landlords have an incentive to do whatever they can to get rid of their residents. Rent-controlled buildings were 10 percent more likely to convert to condos or another legal form that allows for booting tenants.
Rent control in this case (and most cases) is politically appealing, as the winners are concentrated and visible, while the losers are widely dispersed and...