In cities with rent control, why doesn’t it work overall to actually lower the price of housing?
In: Economics
Price controls almost always lead to shortages and ultimately higher prices.
As a city grows, it needs people to build new apartment complexes to house new people. If rent control keeps revenues so low a landlord can’t make a profit, those new rental units never get built, resulting in a shortage in housing. This often leads to a secondary market of unregulated subletting where people are paying market prices, only to a middleman instead of a landlord, affordable housing remaining unavailable to the people it rent control was meant to help.
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