Saw this post on Instagram (https://www.instagram.com/reel/DAjCAJYusg6/?igsh=djRsOGh3ZzhyY2Zr ) which claims that the removal of rent control in Buenos Aires led to an increase in available housing and a decrease in housing prices which seems counter-intuitive to me.
Is the increase in availability due to landlords raising the rent and forcing existing renters out ( thus more availability)? But how then are the prices of these places somehow lower?
What am I missing?
In: Economics
There’s not a super simple explanation because it’s multiple things. The biggest tends to be construction: rent control laws slow down construction of new units (because why build a new apartment building if you can’t make much money) and that lack of new supply translates to higher costs, so remove the rent control and prices come down.
Another part is that over time rent controlled units tend to be bought and kept by the wealthiest residents of that area and often if rent is out in place some of them would rather just not rent to anyone at all.
The reason I said it’s not super simple to answer is because even though it’s all logical, we don’t know for sure until economists look at evidence and research. Every time research is done it shows the same thing: that rent control policies are terrible and do the opposite of what they intend. They are just one example of economic price controls failing, which is pretty well understood by economists at this point.
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