Release: New Brookings Institute Report: Rent Control “Decreases Affordability, Fuels Gentrification, and Creates Negative Spillovers on the Surrounding Neighborhood”, October 19, 2018

California Author of Respected D.C. Think-Tank Says Policies Allowed by Prop 10 Cause More Harm Than Good

SACRAMENTO – In the long run, rent control “decreases affordability, fuels gentrification, and creates negative spillovers on the surrounding neighborhood.”

That is the conclusion of a research review published today by the respected Washington, D.C.-based Brookings Institution titled “What Does the Economic Evidence Tell Us About The Effects of Rent Control.” It is authored by Rebecca Diamond, Association Professor of Economics for the Stanford Graduate School of Business.

The reviews examines on the San Francisco housing market, as well as national studies, in reaching its conclusion. It notes that:

“Rent controlled properties create substantial negative externalities on the nearby housing market, lowering the amenity value of these neighborhoods and making them less desirable places to live”;

“Rent control can also lead to decay of the rental housing stock; landlords may not invest in maintenance because they can’t recoup these investments by raising rents”; and

Rent control can “lead to empty-nest households living in family-sized apartments and young families crammed into small studios” because tenants in rent-controlled apartments do not move to keep their rental costs low.

The Brookings article is the latest research that has notes that the policies allowed by Proposition 10 will harm California renters and homeowners alike. A New York Times article last week noted “Economists have an almost universally dim view of rent control laws, and a number have supported the landlords’ contention that Proposition 10 could make California’s housing problems worse.”