Up Sucker Creek

Up Sucker Creek
Photo Courtesy of the Lake Oswego Library

Monday, July 17, 2017

Oh no! Not rent control!

Landlords dodged a bullet this year.  
But what about next year?
And the next? 
And the next?  

Let's face it.  Rents are not going to come down no matter what anyone does or what laws are passed.  Rent control severely stymie rent growth, but not enough to help landlords and probably too much for tenants.  Rent control and other dastardly regulations did not make it into law this year, but advocates in the state legislature are promising to bring it back next year.  It's a bone they won't give up.  

Rents are a factor of supply and demand.  

Along with other cities tat are experiencing economic growth, Portland is seeing an increasing demand for housing for new workers and other in-migration. A shortage of housing has created a sellers' market in both single family houses and rental units and predictably prices go up.  

High rents prompt developers to risk investment in creating new housing - new housing is always expensive to build, and when there is a building boom, there is a shortage of materials and labor that also pushes costs for new housing higher.  These new units will not be affordable to most renters.

This sets the stage for tenants to demand rent control.  Uninformed, timid and politically-driven politicians will not listen.  Landlords have been popular scapegoats for centuries, so willful ignorance overtakes common sense and pushes the political system toward predictable and destructive solutions for high housing costs.  Government cannot control the market, it can only distort it to absurd and undesirable results.  Hubris and political correctness are difficult to overcome with logic and facts.  

Note:  I am a landlord.  I own apartments and have been in the business for about 20 years.  While "rent control" strictly refers to price caps, many economists also use it to define any method of government control of rent pricing ("secondary" or "soft" rent control).  For landlords, other regulations can act like rent control because they severely limit a landlord's income (aka profit, or return on investment) - relocation fees and elimination of no-cause evictions are two.  If regulations are extreme, the same consequences will occur as for rent control.  

If you don't know much about rent control, and even if you think you know all about it, this video is for you. Call it Rent Control for Dummies, though one doesn't have to be dumb to be ignorant about an industry they only see from the outside.  93% of economists from all political spectrums agree that rent control measures do not work. (Should rent control supporters be called "Deniers?")  A simple search of the economic research on the subject will be informative.  Warning - news stories and statistics from any source other than the original research are suspect at best.

Below is a link to one of the best books on the subject.  No one should declare a position for rent control until they read this book.  The only supporters left would be socialists who believe government should control the economy and that capitalism and profit are bad.  

PDF Book of Economic Research 
(Book is out of print):  
Rent Control Myths and Realities 

If rent control and other stabilization laws do not work and cause harm to the people they are trying to help,

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