Modeling the Impacts of Rent Control

Recent findings by the National Apartment Association (NAA) illustrate rent control’s potential and devastating effects on four major U.S. cities. NAA’s analysis shows that these policies decrease the housing supply, harm the condition of existing housing stock and lower property values, which leads to lower tax revenues. Ultimately these policies limit job growth and negatively impact local economies.

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With the passage of a statewide cap on rents in Oregon and California, as well as expanded rent regulations in New York and Washington, D.C., rent control policies are gaining traction across the United States.

Although there is no shortage of academic research on the negative effects of rent control, NAA engaged Capital Policy Analytics (CPA) to model its impacts on four metropolitan areas, all of which have had increasing calls for rent control during the past two years: Chicago, Denver, Seattle and Portland.

The rent growth cap in Oregon limits the increase in rent to 7 percent plus inflation as measured by the Consumer Price Index (which varies widely across years and regions of the country). Rent control has many possible forms, but CPA used the Oregon legislation as a likely precedent for other governments and chose to examine the imposition of a similar limit, excluding inflation, on the amount of annual growth in rental prices.