In cities with rent control, why doesn’t it work overall to actually lower the price of housing?
In: Economics
Because it does nothing too increase supply of housing. At the end of the day, housing costs are a function of supply and demand, so the best way to lower costs is to increase supply. Instead, rent controls give some people an artificial subsidy while actually removing housing stock from market — owner might choose to tear down and build condos or offices if he can’t get market rents. Empty nesters might hold on to a large apartment after kids move out, because why give up space and pay more? So rent controls actually reduce stock of available housing.
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