AI transcript
0:00:02 (upbeat music)
0:00:05 – Hey there, it’s Stephen Dubner.
0:00:07 And yes, we are busting into your
0:00:10 Freakonomics Radio feed with a bonus episode.
0:00:12 In 2019, we put out an episode
0:00:15 about a problem and a possible solution.
0:00:18 The problem was rising rents,
0:00:20 particularly in coastal cities.
0:00:23 The proposed solution was rent control,
0:00:27 laws that put a limit on what landlords can charge.
0:00:28 You can see why that might seem
0:00:30 to be a sensible solution,
0:00:33 but nearly all economists agree,
0:00:35 based on volumes of research,
0:00:37 that rent control does more harm than good.
0:00:39 Since we made that episode,
0:00:41 the problem has gotten worse.
0:00:42 According to a report from
0:00:45 Harvard’s Joint Center for Housing Studies,
0:00:48 rents have risen 26% nationally
0:00:50 and even more in cities like New York,
0:00:54 which has become the poster child for the rent crisis.
0:00:56 And so once again,
0:00:59 policymakers have returned to the idea of rent control.
0:01:00 Just this month,
0:01:03 the Biden administration pushed Congress
0:01:05 to pass legislation that would force landlords
0:01:07 with more than 50 units
0:01:10 to cap annual rent increases at 5%
0:01:13 or risk losing federal tax breaks.
0:01:16 So we thought it was a good time to revisit
0:01:19 that 2019 episode about rent control
0:01:21 and why it does not work.
0:01:24 We have updated facts and figures where necessary.
0:01:26 As always, thanks for listening.
0:01:34 I’m sure you know this already,
0:01:36 but let me say it anyway.
0:01:39 Cities have become really popular all over the world.
0:01:43 An ever larger share of the U.S. and global population
0:01:44 lives in cities
0:01:47 and that large share is expected to get even larger.
0:01:50 As demand for city living grows,
0:01:53 the supply of housing often can’t keep up,
0:01:56 which results in, and you know this too,
0:01:58 a rise in prices.
0:02:01 In the U.S., median rent has doubled since the 1990s,
0:02:04 outpacing inflation by quite a bit.
0:02:06 In many cities, this makes it hard for people
0:02:08 who already live there to stay
0:02:11 and hard for people who’d like to move there.
0:02:12 I’m sure you’ve heard the horror stories
0:02:16 about rents in cities like London and Hong Kong,
0:02:19 Seattle and San Francisco.
0:02:21 The problem is so bad in New York City
0:02:24 that it inspired a new political party.
0:02:27 I represent the rent. It’s too damn high-party.
0:02:29 People are working eight hours a day and 40 hours a week
0:02:31 in summer third job.
0:02:32 New York, like many cities,
0:02:34 has over time put in place
0:02:37 various affordable housing policies.
0:02:40 One time-honored tradition is some form of rent control.
0:02:42 That might mean setting a price cap
0:02:43 on what a landlord can charge
0:02:46 or limiting the amount the rent can be raised.
0:02:49 Here’s the Stanford economist Rebecca Diamond.
0:02:51 From an economics point of view,
0:02:53 it provides insurance
0:02:56 against getting priced out of your neighborhood.
0:02:59 And rent control seems to be having a moment.
0:03:01 It already exists in a number of places.
0:03:05 The most expensive cities in the U.S.,
0:03:07 they almost all have rent control.
0:03:09 And the appetite is spreading.
0:03:13 You see rent control popping up politically
0:03:16 when housing prices and rents are going up.
0:03:19 Today on Freakinomics Radio,
0:03:22 how well does rent control work?
0:03:25 As with many complicated issues
0:03:28 that have multiple actors and crossed incentives,
0:03:31 the answer depends on whom you ask.
0:03:34 Well, I’m in favor of residential rent control
0:03:35 and rent regulations.
0:03:37 If you were starting from scratch
0:03:38 and you were designing
0:03:42 the most efficient rent regulation system,
0:03:44 what would that look like?
0:03:46 The sort of bombing I know of no way to destroy a city
0:03:48 that was more effective than rent control.
0:04:07 This is Freakinomics Radio,
0:04:11 the podcast that explores the hidden side of everything,
0:04:13 with your host, Stephen Dubner.
0:04:23 Oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh.
0:04:27 Most economists say that rent control is a bad idea,
0:04:29 as is just about any form of price control.
0:04:31 They believe that markets work best
0:04:33 when supply and demand are allowed
0:04:35 to find a natural equilibrium
0:04:39 with price acting as the referee.
0:04:40 Here’s one such economist.
0:04:42 My name is Ed Glazer,
0:04:44 and I am the Fred and Eleanor Glimp
0:04:46 Professor of Economics at Harvard,
0:04:48 where I teach both microeconomic theory
0:04:49 and the economics of cities.
0:04:52 Ed, you have one minute to convince someone
0:04:55 that rent control is a terrible idea. Go.
0:05:02 All right, so they’ve already squandered five of my seconds.
0:05:03 It’s not particularly fair.
0:05:07 It’s not a good way of allocating scarce space.
0:05:09 It’s not a good way of helping the downtrodden.
0:05:13 It’s a way that freezes a city
0:05:15 and stops it from adjusting to changes.
0:05:17 It’s a way that freezes people in apartments
0:05:20 and stops the motion that is inherent in cities.
0:05:24 So that’s a baseline economic take, at least.
0:05:26 Let’s try to unravel this issue,
0:05:28 starting with a brief history of rent control.
0:05:32 Rent controls really became ubiquitous in World War II.
0:05:36 And the idea here was the nation was laying down its life
0:05:39 to try and bring freedom to the world.
0:05:42 And it seemed wrong that some people
0:05:45 who were well-placed should earn some form of extra bonuses
0:05:47 by being able to raise up rents
0:05:50 on people maybe whose sons and daughters
0:05:53 were off fighting for the U.S. elsewhere.
0:05:55 And rent control was seen as being a way
0:05:56 of somehow trying to keep America
0:05:59 being a bit fairer during World War II.
0:06:02 Now, lots of places introduced rent control during this period.
0:06:04 After the war, most of them got rid of it
0:06:07 because that cause seemed to be a little bit less pressing.
0:06:10 But some cities kept it, and New York, of course,
0:06:12 is the most famous place that still has it.
0:06:15 Glazer himself grew up in New York.
0:06:17 And, you know, I lived in a rent-stabilized unit
0:06:19 for the first 10 years of my life.
0:06:23 I mean, something like 72, 74% of New York City’s
0:06:25 households were renters in those days.
0:06:27 And indeed, you know, the mid-1970s
0:06:29 was an era in which New York’s housing didn’t,
0:06:31 you know, didn’t seem that expensive.
0:06:33 And so affordability just wasn’t the same issue
0:06:34 that it was today.
0:06:37 Now, flash forward 30 years.
0:06:38 The cities have been enormously successful.
0:06:41 They haven’t built enough to accommodate the new demand.
0:06:43 They risk becoming boutique towns
0:06:45 affordable only to the wealthy.
0:06:47 And people are desperate to see that those cities
0:06:49 don’t, you know, push out every poor resident,
0:06:51 that they don’t become monocultures
0:06:53 built around the privileged and the rich.
0:06:57 And rent control appears to be at least one avenue
0:06:58 for doing it.
0:06:59 But it’s a very blunt instrument.
0:07:02 Just how blunt?
0:07:05 There are decades worth of economic research
0:07:08 describing the downsides of rent control.
0:07:10 The first major paper was written in 1946
0:07:13 by Milton Friedman and George Stigler.
0:07:13 Here’s Friedman.
0:07:17 Rent control is a law that supposedly has passed
0:07:20 to help the people who are in housing.
0:07:23 And it does help those who are in current housing.
0:07:26 But the effect of rent control is to create scarcity
0:07:31 and to make it difficult for other people to get housing.
0:07:32 Where did the scarcity come from?
0:07:35 For one, developers had less incentive
0:07:37 to build new housing if there was a ceiling
0:07:39 placed on what they could charge.
0:07:41 Friedman also argued that rent control
0:07:45 created a haphazard and arbitrary allocation of space.
0:07:50 This was echoed in a 1972 paper by Edgar Olson,
0:07:53 which found that rent control led to what economists
0:07:56 call an overconsumption of housing.
0:08:01 Let’s say you rented an apartment in New York in 1955.
0:08:02 You had three small kids.
0:08:03 You rented a three-bedroom.
0:08:06 It was perfectly matched for the needs of you
0:08:08 with your kids growing up.
0:08:11 They moved out of the house in the early ’70s.
0:08:14 By the late ’80s, maybe your husband or wife actually died
0:08:16 and you’re living on your own in a three-bedroom apartment
0:08:17 in New York.
0:08:19 But my goodness, would you ever move out?
0:08:22 Your rent is a fraction of what the market rent is.
0:08:24 One of my favorite stories about this,
0:08:25 and this is quoted by Ken Oledas,
0:08:27 the streets were paved with gold.
0:08:29 He cites Nat Sherman,
0:08:30 the famous tobacconist to the world
0:08:32 by this big shop on Fifth Avenue,
0:08:35 who said that he pays, I forget what it was.
0:08:41 $355 a month for a six-room apartment, it says here.
0:08:42 Isn’t that amazing?
0:08:43 Keep in mind, it’s a few decades ago,
0:08:45 but it’s an unbelievable deal.
0:08:47 Now, what’s outrageous about this
0:08:49 is he then says, “I think it’s fair
0:08:51 because I use it so rarely,”
0:08:54 which means that he’s not getting very much value out of it.
0:08:56 But the crazy thing about this is there were lots of New Yorkers
0:08:57 who would love to have that apartment
0:08:59 and who would get a lot more value out of it.
0:09:03 In 1997, Ed Glazer did his own analysis
0:09:04 of rent control in New York City,
0:09:08 trying to determine just how economically inefficient it was.
0:09:12 He and his co-author, Erzo Lutmer, found that, quote,
0:09:16 “This misallocation of bedrooms leads to a loss in welfare,
0:09:19 which could be well over $500 million annually
0:09:21 to the consumers of New York,
0:09:24 before we even consider the social losses
0:09:26 due to under supply of housing.”
0:09:30 Glazer’s work has also inspired a new generation of economists
0:09:33 to further the literature on rent control.
0:09:36 Historically, people relied much more in theory
0:09:38 in making their arguments about rent control.
0:09:41 That’s Rebecca Diamond again.
0:09:43 She’s a former student of Ed Glazer’s.
0:09:46 Because even without a lot of data,
0:09:49 you can make some pretty simple theoretical predictions
0:09:53 about what rent control might do to a housing market.
0:09:56 But there are some things that fury alone cannot tell you.
0:10:02 One of the biggest open questions in the literature of rent control
0:10:06 is what happens to those tenants that get rent control?
0:10:08 Really, how much are the renters benefiting?
0:10:11 Because they’re the potential big winners of rent control.
0:10:15 And to measure that, you really need to have data
0:10:21 on where everybody lives, who gets access to rent control,
0:10:24 and whether they decide to stay in that rent control department
0:10:26 or go somewhere else.
0:10:30 And traditional data sources that economists work with
0:10:36 very rarely track migration of an individual.
0:10:42 So you recently co-authored with Tim McQuade and Franklin Qian
0:10:45 a paper called The Effects of Rent Control Expansion
0:10:49 on Tenants, Landlords, and Inequality Evidence from San Francisco.
0:10:51 First, if you would talk about the data.
0:10:54 So yeah, we have some really cool data.
0:10:58 So traditional data sets, you can get things on the distribution
0:11:00 of earnings and income, things like that,
0:11:02 but you won’t also see their migration.
0:11:07 So we have this, you could call administrative data,
0:11:09 which tracks people’s address histories.
0:11:11 And where did these migratory data come from?
0:11:14 We bought them from a company called InfoTour.
0:11:19 They are a company that works in identity management.
0:11:23 So they have this history of addresses for everyone,
0:11:26 which they collect from a number of different sources
0:11:27 and stitch them together,
0:11:30 which is very useful for the private sector
0:11:33 and firms that need to keep track of up-to-date addresses.
0:11:36 But from a research perspective, it’s super exciting data
0:11:40 because it’s so big and so detailed.
0:11:47 Armed with this super exciting data on individual tenants,
0:11:50 Diamond and her fellow researchers set out to measure
0:11:54 some of the long-term effects of rent control in San Francisco.
0:11:58 They made particular use of a change in the city’s rent laws.
0:11:59 San Francisco had rent control,
0:12:03 but it didn’t apply to many of the city’s smaller apartment buildings.
0:12:06 And the exemption was basically thought of as, well,
0:12:08 these are mom and pop landlords.
0:12:10 They don’t have market power.
0:12:15 They’re not corporations, so we don’t need to regulate their rents.
0:12:20 And then newspapers reported that those smaller multi-family buildings
0:12:24 were increasingly purchased by corporate entities
0:12:26 because that’s really where you could make your money
0:12:27 in the housing market.
0:12:31 And that led to a vote in 1994
0:12:33 where everyone in the city got to vote
0:12:38 about whether we could remove this small multi-family exemption.
0:12:40 And that would then expand rent control
0:12:42 not just to the large multi-family housing stock,
0:12:44 but also the small multi-family housing stock.
0:12:47 And that indeed passed.
0:12:50 So you’ve got this awesome new law,
0:12:53 awesome for you guys at least as researchers,
0:12:55 that lets you mark before and after.
0:12:59 It’s a perfect little natural experiment with a control group.
0:13:03 And then you’ve got these wonderful data sets.
0:13:07 And then you mash up all of these data together and analyze it.
0:13:10 And you find the following.
0:13:14 Your paper concludes that among many things,
0:13:18 quote, rent control limits renters mobility by 20%
0:13:21 and lowers displacement from San Francisco,
0:13:23 especially for minorities.
0:13:25 So let’s start with this.
0:13:27 What does it mean exactly that renters mobility
0:13:30 is lowered by 20% and why is that important?
0:13:35 So we look at whether the renters who get access to rent control
0:13:39 choose to remain in their newly rent control department.
0:13:43 So we find that they’re 20% more likely to remain there
0:13:46 relative to our control group renters
0:13:48 who don’t get access to rent control.
0:13:50 So that seems totally unsurprising, yes?
0:13:54 Yes. I more see that result is a validation
0:13:56 that our data is good and high quality
0:13:58 and we have something to work with here.
0:14:02 Okay. Further, you write that rent control
0:14:05 lowers displacement from San Francisco.
0:14:06 What does that mean exactly?
0:14:10 So we can look at not just whether you remain
0:14:12 in the actual apartment you lived in
0:14:14 when you got access to rent control,
0:14:18 but whether you remain in San Francisco as a whole.
0:14:21 We find rent control has a dramatic impact
0:14:25 on whether you actually live in San Francisco or not.
0:14:29 So it prevents those renters from leaving the city as a whole,
0:14:32 which I think from a policy perspective
0:14:34 of rent control advocates,
0:14:37 that’s one of the goals they talk about
0:14:39 as preventing displacement from the city.
0:14:41 And then you write that especially
0:14:44 from minorities that displacement is lowered.
0:14:47 Right. So when you look at that first cohort
0:14:49 of renters that already lived in the city
0:14:50 at the time of rent control,
0:14:55 it is definitely helping minorities more.
0:14:58 It’s preventing displacement of them especially.
0:15:01 Furthermore, you write that landlords
0:15:03 who are susceptible to rent control
0:15:07 “reduce rental housing supplies by 15%
0:15:09 either by converting to condos,
0:15:12 selling to owner occupants, or redeveloping buildings.”
0:15:17 So now it starts to get a little more complicated.
0:15:20 Can you talk about who’s now starting to win here
0:15:21 and who’s starting to lose here?
0:15:25 So obviously when the landlord is first notified
0:15:28 about rent control, he or she can quickly deduce
0:15:31 that his or her rental stream is going to be
0:15:34 lower than previously expected.
0:15:39 And just like any other business owner,
0:15:43 they might think about changing their business strategy.
0:15:46 So if renting out their apartments
0:15:47 is no longer very profitable,
0:15:50 now they may decide, oh, maybe it’s worthwhile
0:15:54 to convert to condos and sell off the apartments
0:15:55 to owner occupants.
0:15:57 And that would be a way to recover
0:15:58 some of this loss income.
0:16:01 Or another thing they could do is say
0:16:03 knock down their old building
0:16:04 and build some new construction
0:16:06 and either sell those as condos
0:16:08 or rent them out as apartments.
0:16:11 Both of those options would avoid them
0:16:13 having to pay this tax of rent control,
0:16:16 help recruit some of their losses,
0:16:18 which is good for the landlords,
0:16:21 but is going to undermine the goals of rent control
0:16:23 because now we’re going to have less rental housing
0:16:26 out there available for rent control.
0:16:32 So you can start to see how rent control
0:16:35 may be accomplishing a narrow short-term goal,
0:16:37 making existing housing more affordable
0:16:39 for a select group of people
0:16:41 at the expense of the long-term goal
0:16:43 of making a city more affordable generally.
0:16:45 When you pass rent control,
0:16:49 the landlords of the property suddenly getting covered
0:16:50 by rent control are losing so much money.
0:16:54 They no longer really want to rent their apartments
0:16:57 out at the prevailing new prices,
0:17:01 so they decrease their supply of rental housing
0:17:03 to the market and if there’s less supply,
0:17:05 that’s going to drive up prices.
0:17:08 Okay, so let me just make sure I have it pretty straight.
0:17:09 You find evidence that rent control
0:17:12 increases gentrification,
0:17:14 one component of which is the displacement
0:17:16 of low-income tenants.
0:17:18 On the other hand, you also find evidence
0:17:20 that low-income people, including minorities,
0:17:24 at least those who are in rent control units already,
0:17:27 they’re likely to disproportionately benefit
0:17:28 from rent control.
0:17:30 So if I’m an affordable housing advocate,
0:17:33 I might say, oh, fine, fancy Stanford professor
0:17:35 who I’m sure has some kind of great
0:17:39 income and/or housing subsidy and/or situation.
0:17:44 I don’t care that some landlords are suffering.
0:17:48 I don’t care that the policy is having
0:17:51 some downstream effects that you don’t like.
0:17:53 I need to make sure that low-income people
0:17:57 aren’t going to get a rent increase of 50% overnight.
0:18:00 So how do you respond to that argument?
0:18:04 So when you think about those initial tenants,
0:18:06 that’s the best bet you’re going to get
0:18:08 for the benefits of rent control to low-income tenants,
0:18:10 the people that are already in the housing.
0:18:14 But even though we find that those tenants
0:18:16 are much more likely to stay in their apartment,
0:18:19 when we look 10, 15 years later,
0:18:23 the share of those 1994 residents that are still there
0:18:26 is down to, you know, 10% or so.
0:18:31 So 90% of them no longer live in that initial apartment.
0:18:34 And it’s that next low-income tenant
0:18:36 that wants to live in the city.
0:18:39 That low-income tenant is going to have a very hard time
0:18:40 finding an affordable option
0:18:42 because now there’s going to be less rental housing.
0:18:44 The prices that that low-income tenant
0:18:46 are going to face when they want to initially move in
0:18:48 are going to be higher
0:18:50 than they would have been absent rent control.
0:18:59 I’m curious how generalizable you think your findings
0:19:02 from San Francisco are for other cities.
0:19:08 I would suspect that the actual quantitative loss
0:19:10 of rental supply or benefits to the tenant
0:19:12 will depend a little bit city to city.
0:19:15 But I think the qualitative takeaway
0:19:18 that landlords are savvy
0:19:20 and are going to work hard to not lose money
0:19:22 on their investments,
0:19:23 I think is a very general point.
0:19:29 For economists who already felt confident
0:19:31 in the theoretical arguments against rent control,
0:19:34 research like diamonds provides empirical evidence
0:19:36 that essentially tells the same story.
0:19:39 Yes, there are some winners in rent control,
0:19:42 but the losing is more widespread and longer term.
0:19:46 But how about empirical evidence from a reverse angle?
0:19:51 That is not when a city adds or expands rent control
0:19:53 like San Francisco did, but when it gets rid of it.
0:19:57 So there’s other work by David Otter and co-authors
0:19:59 that looks at the removal of rent control
0:20:02 in Cambridge, Massachusetts in 1994.
0:20:05 By the early 1990s, Cambridge was one of the few
0:20:08 remaining rent control strongholds in Massachusetts.
0:20:11 Landlords have been trying to get rid of it for years,
0:20:14 but there are a lot fewer landlords than there are tenants.
0:20:18 So any attempt to change the local law was voted down.
0:20:23 Finally, the rent control opponents had a winning idea.
0:20:26 Put the issue up on a statewide referendum
0:20:27 where there might be less empathy
0:20:30 for all those city dwellers with below market rents.
0:20:32 When the referendum was held,
0:20:37 nearly 60% of the voters in Cambridge were opposed,
0:20:38 but statewide it passed.
0:20:42 And so Cambridge began to deregulate its rents.
0:20:45 Years later, a trio of MIT economists
0:20:48 examined the effects of removing rent control.
0:20:51 Okay, so the classic paper on this has been written
0:20:53 by David Otter, Parik Pathak, and Chris Palmer.
0:20:55 Ed Glazer again.
0:20:59 It showed that when units were brought out of rent control,
0:21:00 their owners invested in them.
0:21:03 So they upped the quality of the units.
0:21:06 There was more of a supply of higher-end housing.
0:21:11 They find that the rent control departments experience
0:21:12 a lot of renovation.
0:21:14 The landlords renovate a lot,
0:21:17 and that drives up the desirability
0:21:18 of living in those apartments.
0:21:21 Also, they find that that creates spillovers
0:21:24 onto the nearby apartment buildings
0:21:26 that they themselves weren’t rent controlled.
0:21:28 So neighboring apartments became more valued
0:21:31 as a result of the end of rent control.
0:21:33 And the most recent paper has shown that crime has gone down,
0:21:35 particularly street crime has gone down.
0:21:39 Right after the elimination of rent control in Cambridge.
0:21:40 So it looked like rent control had
0:21:43 negative externalities on the neighborhood.
0:21:51 So what does economic research tell us about rent control?
0:21:54 There are at least two conclusions,
0:21:55 which if I’m reading it right,
0:21:57 sort of work against each other.
0:21:59 The first conclusion is that rent control
0:22:01 doesn’t help many people for very long,
0:22:04 in part because it constrains the supply
0:22:06 of affordable housing.
0:22:09 The second conclusion is that just getting rid
0:22:11 of rent control does not in and of itself
0:22:13 lead to more affordable housing.
0:22:16 In fact, a deregulated housing market
0:22:18 can easily lead to less affordable housing.
0:22:21 The Boston Cambridge area is one of many places
0:22:23 experiencing a steep shortage
0:22:24 in not just affordable housing,
0:22:25 but housing overall.
0:22:28 So even if you accept that rent control
0:22:31 is a big contributor to the affordable housing problem,
0:22:35 getting rid of it isn’t necessarily a solution.
0:22:38 You can see why politicians and policymakers
0:22:39 are confused.
0:22:42 In some states, rent control legislation has failed.
0:22:45 Advocates in Massachusetts, for instance,
0:22:48 have dropped their push for statewide rent control.
0:22:50 But other states are doubling down.
0:22:54 California now caps rent increases at 5% plus inflation
0:22:56 with a maximum increase of 10%.
0:22:59 And this November, California voters
0:23:01 will decide on Proposition 33,
0:23:03 which would give local jurisdictions
0:23:05 more power to control rents.
0:23:08 Rebecca Diamond has an experience
0:23:09 with seeing her research used
0:23:12 in these rent control debates.
0:23:16 It was interesting to see how our results were
0:23:19 used by policymakers and the media
0:23:22 on both sides of the fight,
0:23:23 because indeed some of our results
0:23:25 are like rent control are good,
0:23:26 other ones make them look bad.
0:23:28 You got to read the whole paper
0:23:30 and take it all into account to make a decision,
0:23:32 but it was a very policy relevant paper
0:23:34 for that discussion.
0:23:36 I’m curious what you can tell us
0:23:39 about the political dimensions of rent control.
0:23:41 I may be wrong, but I believe that rent control
0:23:43 is generally supported by Democrats
0:23:45 and generally opposed by Republicans.
0:23:47 I think it’s a simplification to say
0:23:48 all Democrats support rent control.
0:23:52 But I think in the short run,
0:23:55 you can see the benefits of rent control,
0:23:57 like the tenants right away benefit.
0:23:59 What’s much harder to see
0:24:02 are these indirect effects that take a long time
0:24:05 and it’s harder to put your finger on that.
0:24:10 The losses are spread everywhere a little bit
0:24:13 and harder to see walking down the street
0:24:15 or talking to your constituents.
0:24:18 There certainly are some poor people
0:24:21 who can benefit and it’s a very tangible benefit, right?
0:24:23 It’s not some complicated thing
0:24:24 which requires you to trust in the market.
0:24:26 It’s just sort of very clear.
0:24:28 And if you think that people on the left,
0:24:31 many of them just don’t trust markets to begin with,
0:24:32 then saying there’s going to be
0:24:34 some negative market effect to them,
0:24:35 that sounds like capitalist hocus pocus.
0:24:37 Whereas what they can see right now
0:24:39 is that Mrs. Ray’s rents won’t go up
0:24:40 because of their regulation.
0:24:48 Economists tend to believe their models
0:24:52 and say, you know, end of story and believe me, right?
0:24:57 That is Vicky Bean.
0:25:01 But communities don’t necessarily have to believe economists
0:25:03 and so economists need to do a better job
0:25:07 of responding to the very real fears that communities have.
0:25:09 Bean used to be commissioner
0:25:10 of the New York City Department
0:25:13 of Housing Preservation and Development.
0:25:15 Now she’s a law professor at New York University
0:25:17 and she directs the Furman Center
0:25:19 for Real Estate and Urban Policy.
0:25:22 The Furman Center has embarked on a project
0:25:25 that we call Not Your Grandmother’s Rent Control
0:25:28 to try to figure out if you were starting from scratch
0:25:33 and you were designing the most efficient rent regulation system,
0:25:34 what would that look like?
0:25:41 Coming up after the break, what would that look like?
0:25:44 You really need to have a holistic look.
0:25:47 And what about rent regulation for commercial properties,
0:25:50 like all those empty storefronts in New York?
0:25:52 First and foremost, I’m an angry New Yorker.
0:25:54 [Music]
0:26:12 As we’ve been hearing, economists are generally opposed
0:26:13 to rent control.
0:26:16 It rewards some people, but fairly arbitrarily.
0:26:18 It punishes many others
0:26:19 and generally doesn’t do much
0:26:22 to improve overall access to housing.
0:26:27 That said, most people don’t think like economists
0:26:31 or even believe them, which is why many politicians
0:26:35 and members of the public think rent control is a great idea.
0:26:38 Well, I’m in favor of residential rent control
0:26:39 and rent regulations.
0:26:41 That is David Eisenbach.
0:26:43 He teaches history at Columbia University
0:26:47 and back in 2019, he ran for citywide office
0:26:51 during a New York special election for public advocate.
0:26:56 There are in New York City about 3.4 million apartment units,
0:27:00 nearly one million of which are rent stabilized.
0:27:04 And New York’s rental market is incredibly expensive,
0:27:06 as it is in many other cities
0:27:08 with regulated rents like San Francisco.
0:27:12 Economists argue that overall high prices
0:27:16 are a direct consequence of rent regulation.
0:27:18 What does Eisenbach think?
0:27:20 I disagree.
0:27:24 I mean, there are a lot of reasons why real estate
0:27:26 in San Francisco and real estate in New York are high.
0:27:31 Blaming it on rent stabilization is definitely not it.
0:27:34 The consequences of getting rid of either rent control
0:27:39 and/or rent stabilization would be the immediate displacement
0:27:43 of a big portion of the population.
0:27:45 And that would just be cruel at this point.
0:27:50 I don’t know how anybody could justify even somebody
0:27:52 looking at it purely in economic terms,
0:27:55 how anybody could justify that in just in human terms.
0:27:58 You’re going to blame the high rents on rent control?
0:27:58 Come on.
0:28:02 Okay, so Eisenbach does not believe
0:28:04 the economic research on rent control.
0:28:05 What does he believe in?
0:28:09 Well, first and foremost, I’m an angry New Yorker
0:28:12 who walks around the streets of New York
0:28:16 and sees empty storefront after empty storefront
0:28:18 and just feels like my city is dying.
0:28:21 Some commercial rents in New York have spiked
0:28:22 along with residential rents.
0:28:24 Still, in some parts of Manhattan,
0:28:27 as much as 20 percent of retail space
0:28:30 is either vacant or soon to be vacant.
0:28:31 And I found out that there is this bill
0:28:33 called the Small Business Job Survival Act.
0:28:37 It was initially submitted back in the 1980s
0:28:41 and I figured why don’t I run for office pushing this bill
0:28:44 and so I ran for public advocate on the platform.
0:28:45 We’re going to pass this bill.
0:28:47 It’s going to save small business in New York City.
0:28:51 We should say that Eisenbach did not win the election.
0:28:53 He came in 13th in a field of 17,
0:28:55 but he did get a fair amount of attention
0:28:58 for talking about all those empty storefronts,
0:29:00 which have upset a lot of people.
0:29:01 There are two major provisions
0:29:03 of the Small Business Job Survival Act.
0:29:06 One, it guarantees a 10-year lease renewal offer
0:29:08 from the landlord to the tenant
0:29:11 for any tenant with a commercial lease in New York City.
0:29:13 Number two, if the landlord and tenant
0:29:15 cannot come to an agreement,
0:29:17 they go to legally binding arbitration.
0:29:22 And that arbitrator then will pick a fair market rent,
0:29:25 which will then be charged in the next 10-year lease renewal.
0:29:30 Opponents of this proposal call it commercial rent control.
0:29:33 But this bill, the Small Business Job Survival Act,
0:29:35 is absolutely not rent control.
0:29:38 It doesn’t put a limit on how much rent can be charged,
0:29:40 which is the very definition of rent control.
0:29:43 It’s legally binding arbitration.
0:29:44 Much different.
0:29:45 Are there other cities that have
0:29:48 this kind of Small Business Jobs Protection
0:29:50 on the real estate front that works well?
0:29:51 It’s going to be unique.
0:29:57 Eisenbach lost his election,
0:30:01 but the city council has continued to debate legislation
0:30:02 that would rein in commercial rents.
0:30:05 I was interested to know what the economists
0:30:06 we’ve been speaking with,
0:30:09 Rebecca Diamond of Stanford and Ed Glazer of Harvard,
0:30:12 what they thought about commercial rent regulation.
0:30:14 So I’m also very interested in that,
0:30:16 and I also know almost nothing about it.
0:30:19 I’ve never seen any work on it.
0:30:21 You could easily tell a story where the threat
0:30:22 of some form of rent control
0:30:25 makes the vacancy problem worse in the short run.
0:30:28 So for example, I don’t want to rent right now
0:30:30 to a lower-end tenant who could fill my space
0:30:33 because I’ll be locked in by the rent control law,
0:30:34 and I’ve got that tenant forever.
0:30:36 So that means I’m going to really hold out
0:30:39 for a blue-chip tenant because I have this threat of this law
0:30:40 over my shoulder.
0:30:42 So do I think vacant empty storefronts are a problem?
0:30:42 Sure.
0:30:44 I mean, we can talk about it from a perspective
0:30:45 of merely as an urbanist,
0:30:48 where we think it’s unattractive to have these things.
0:30:50 But I’m also disturbed by it as an economist,
0:30:53 because someone’s got space to sell.
0:30:55 There are people who want to buy that space.
0:30:57 Why isn’t the transaction happening?
0:31:00 It’s sort of the market is going awry.
0:31:02 And the answer to that,
0:31:04 of why the market is going awry,
0:31:06 is not immediately obvious.
0:31:07 There are, of course, plenty of theories
0:31:11 as to why so many storefronts in New York are vacant.
0:31:12 Here, again, is Vicki Bean,
0:31:14 the former housing official
0:31:16 who studies the real estate market at NYU.
0:31:17 I think there are a lot of questions
0:31:20 about how commercial rent regulation would work
0:31:26 and how it might interfere with an efficient market.
0:31:28 One concern that I would have right now
0:31:32 is we seem to be in the middle of an upset
0:31:36 of a transition in retail in general,
0:31:39 because of the availability of internet retail.
0:31:41 A lot is in flux.
0:31:44 But there are two points of evidence against that,
0:31:45 one of which is that many of these storefronts
0:31:47 formerly held services,
0:31:49 and I don’t think a nail salon
0:31:52 has been made obsolete by Amazon just yet.
0:31:54 And secondly, the rents, the asking rents,
0:31:56 at least according to the most recent
0:31:58 real estate board of New York report,
0:32:00 in many of these areas are still sky high.
0:32:02 It’s not like there’s no demand for areas
0:32:05 where you’re charging $300, $400 per square foot
0:32:07 to rent these areas.
0:32:09 In the long term, all of the economic push
0:32:11 for both the landlords and the tenants
0:32:13 is to get those units occupied
0:32:16 and get the rent payments again flowing to the landlord.
0:32:19 Landlords, whether small or large,
0:32:21 are often left out of public discussions
0:32:23 about property markets.
0:32:24 And if they’re not left out,
0:32:26 they’re usually drawn as villains.
0:32:29 Vicky Bean, in thinking about the project
0:32:31 that she calls “not your grandmother’s rent control,”
0:32:33 she’s trying to change that.
0:32:37 I think the thing that you really need to focus on is,
0:32:41 how can I ensure that the landlord
0:32:44 is getting a reasonable return,
0:32:46 because otherwise people will take their money
0:32:48 and put it elsewhere and you won’t get building?
0:32:51 And how can we, at the same time,
0:32:55 try to close some of these avenues
0:32:58 that landlords could use to try to escape rent regulation
0:33:04 without it becoming a system that’s so weighed down
0:33:07 with so many different enforcement challenges
0:33:12 that it kind of collapses of its own weight, right?
0:33:16 You need to pay attention to the different ways
0:33:21 in which property owners are making money on the property.
0:33:24 So you really need to have a holistic look.
0:33:28 At the same time, you need to have very open eyes
0:33:33 view of the kinds of costs that we’re imposing on them.
0:33:36 There’s one huge cost that drives real estate prices,
0:33:39 whether we’re talking about rentals or sales,
0:33:41 for both commercial and residential buildings.
0:33:44 So in New York City, for example,
0:33:48 a very high percentage of rent goes for property taxes.
0:33:52 So we can’t be saying to landlords,
0:33:54 “Hey, keep prices down,”
0:33:57 but by the way, your property tax just went up by 10%.
0:34:03 So we have to recognize that we, as a tax-paying body,
0:34:06 have an obligation to understand the effect
0:34:09 that those increases may have on rents,
0:34:13 and we can’t just turn around and say to the landlord,
0:34:16 “You absorb them. Don’t pass them on to the tenant,”
0:34:19 because that’s an unsustainable system.
0:34:21 So it’s certainly true that renters implicitly
0:34:23 have to pay for property taxes.
0:34:24 And it’s not obvious that that’s wrong,
0:34:26 because the idea of property taxes
0:34:29 is the paying for city services and renters use city services too.
0:34:31 That’s obviously not wrong.
0:34:33 So here’s a big question that I really hope you can answer,
0:34:35 because I’ve wondered this for a long time.
0:34:40 Some of the biggest property owners in a city like New York,
0:34:42 and some of the wealthiest property holders generally,
0:34:46 are universities, religious institutions,
0:34:49 hospitals, and other not-for-profit institutions,
0:34:52 which makes them either partially or wholly exempt
0:34:53 from paying property taxes.
0:34:57 So I’m curious, how does that exemption affect, A,
0:34:59 the taxes paid by everyone else,
0:35:04 and how does that, B, ultimately affect housing prices for everyone?
0:35:06 First of all, clearly you’re right.
0:35:09 The government has decided to subsidize certain institutions
0:35:12 by enabling them not to pay property taxes.
0:35:16 And from a purely accounting point of view,
0:35:18 those taxes need to come from somewhere else.
0:35:21 On the other hand, it is also true that at least
0:35:24 some of the institutions that you’re talking about
0:35:27 have proven to be extraordinarily important
0:35:28 for the economic health of the area.
0:35:31 We’re subsidizing the university student.
0:35:34 We’re making it cheaper for them to rent than it would be otherwise.
0:35:35 Is that fair?
0:35:37 Well, we thought that somehow or other,
0:35:39 it was a good idea to subsidize educational institutions
0:35:40 at one point in time.
0:35:42 We thought there might be some spillovers from that,
0:35:44 some benefits from encouraging people to become educated.
0:35:46 But we should be open to reinvestigating that.
0:35:48 And anyway, you shouldn’t take my word for it,
0:35:50 because after all, I’m the employee of an educational institution.
0:35:52 So, you know.
0:36:02 We can ask whether or not the blanket property tax exemption
0:36:05 that we’ve given to religious institutions
0:36:07 and educational institutions is appropriate.
0:36:10 I mean, that seems like a reasonable question to ask.
0:36:11 In the case of religious institutions,
0:36:14 it in some sense goes back to fundamental issues
0:36:15 about separation of church and state in the US,
0:36:17 but we can still ask this question.
0:36:22 I would be surprised if we think that changing those tax rates
0:36:25 is the number one step to take to promote affordability
0:36:26 in New York City, though,
0:36:30 relative to, you know, bringing more space on market
0:36:33 that you can actually build on changing the regulations.
0:36:35 I mean, it seems like that’s not likely to be the case,
0:36:38 but it is true that, you know, you move stuff
0:36:41 to a religious area in educational use.
0:36:43 In many cases, you’re moving it away from an owner
0:36:45 who would actually build on it.
0:36:46 And that’s also correct.
0:36:49 (upbeat music)
0:36:51 Coming up after the break,
0:36:54 a lot of regular people who aren’t institutions
0:36:57 would also like a break on their rent.
0:36:58 Rent control sounds like a dream, man.
0:37:01 I’m Stephen Dubner.
0:37:02 You were listening to a bonus episode
0:37:05 of Freakonomics Radio, and we will be right back.
0:37:17 So what have we learned about housing,
0:37:18 especially affordable housing,
0:37:20 especially in the most desirable cities?
0:37:24 For starters, we’ve learned that it’s complicated.
0:37:28 Property taxes play a large under-appreciated role
0:37:30 in driving up costs,
0:37:33 and the tax burden isn’t necessarily spread so equitably.
0:37:35 Rent regulations, meanwhile,
0:37:38 appeal to the public and politicians,
0:37:40 but they also create perverse incentives
0:37:43 that in the long run work against affordable housing.
0:37:46 How about housing vouchers?
0:37:49 Aren’t they a more flexible way to subsidize housing?
0:37:52 The advantage of a voucher is you can go through
0:37:55 all of those eligibility requirements
0:37:58 and really target the voucher to the families
0:37:59 that you think are most in need.
0:38:04 And we, in New York and in many other major cities,
0:38:08 we have prohibitions against a landlord refusing a tenant
0:38:11 because they’re using a voucher rather than earned income.
0:38:17 But we’re still getting enormous resistance from landlords
0:38:21 because if you have a federal government that shuts down
0:38:23 and isn’t paying its voucher payments,
0:38:26 and there the landlord is stuck with that, right?
0:38:30 Or if you have a city like New York City did
0:38:33 that issued vouchers and then changed its mind and said,
0:38:35 “Oops, that program is over,”
0:38:38 then the landlord has a tenant in place
0:38:39 who no longer can pay the rent
0:38:42 and the landlord has to take them to court
0:38:43 and bear the cost of that.
0:38:47 Meanwhile, the market price of housing in a place like Manhattan
0:38:50 lies somewhere between punitive and prohibitive.
0:38:54 Here’s what we heard when we took our microphones outside
0:38:56 to Bryant Park in Midtown Manhattan.
0:38:59 Manhattan rent, onerous.
0:39:00 Astronomically high.
0:39:02 That’s too expensive, way too expensive.
0:39:03 That’s why I live in New Jersey.
0:39:07 And what do these people think about regulated rents?
0:39:10 Rent control sounds like a dream, man.
0:39:11 Rent control sounds good.
0:39:14 It’s really key to find all those stabilized rent buildings.
0:39:15 If you do, I think it’s golden.
0:39:16 If not, it sucks.
0:39:19 Pull disclosure, I did do economics, so market failure.
0:39:27 So if rent control isn’t a viable tool
0:39:29 in the fight for affordable housing, what is?
0:39:33 The most natural tool towards affordability is supply
0:39:36 and to make sure that we are making it easy enough
0:39:41 to build moderate cost rental apartment buildings in these cities.
0:39:42 Ed Glazer again.
0:39:46 We’ve used regulations to so restrict our ability
0:39:48 to provide affordable housing units
0:39:52 that now we’re at this restricted frozen and amber form.
0:39:55 In the case of New York, gosh, New York is New York.
0:39:57 It’s hard to imagine how much housing
0:39:59 you’d really need to say to man for New York.
0:40:01 What about Boston where you live?
0:40:04 Boston is facing what it calls a historic housing shortage.
0:40:07 The city is growing, not enough housing to match.
0:40:09 What do you suggest Boston do to accommodate that surge
0:40:12 other than let the market work its famous magic?
0:40:15 Look, drive around Boston.
0:40:18 It doesn’t look overcrowded to me,
0:40:20 and I don’t think it should look overcrowded to anyone else.
0:40:22 There’s a lot of vacant industrial space
0:40:25 that could easily house tens of thousands of units.
0:40:26 If you’ve made it easy enough to build,
0:40:31 I’ve got to think that this is a doable problem,
0:40:34 at least from an engineering and economics point of view.
0:40:36 The politics, of course, are more difficult.
0:40:38 What specifically would need to be done to change it?
0:40:42 The big answer is you need as of right zoning
0:40:44 that enables fairly high density levels
0:40:47 over a fair amount of space.
0:40:50 Currently, Boston’s zoning plan is highly antiquated.
0:40:53 Every project is handled on an ad hoc basis.
0:40:55 Usually, it involves variances that are quite high
0:40:56 from the original plan,
0:41:00 which means that they are highly subject to a judicial challenge.
0:41:03 All of that is a recipe for uncertainty and delay
0:41:04 in endless community meetings.
0:41:06 The thing that works best
0:41:08 is when you have something where you’ve decided in advance,
0:41:09 this is how much we’re going to allow to build.
0:41:12 There are a couple of simple rules that you’ve got to follow.
0:41:14 Come here, bring your units, and make it happen.
0:41:15 And that’s what’s needed.
0:41:16 That’s what actually works.
0:41:18 It’s not something that involves a 10-year negotiation process,
0:41:21 but something that says, here are the rules up front.
0:41:22 Go to it.
0:41:28 It should be noted that not all U.S. cities
0:41:30 impose the same level of red tape you see
0:41:33 in Boston and New York and San Francisco.
0:41:35 If you want to look for affordability,
0:41:37 the American Sun Belt is pretty great.
0:41:41 The Atlantas, the Houston’s, the Dallas’s,
0:41:44 the places that just have made it very easy to build
0:41:45 over the last 40 years.
0:41:48 You want to ask why Atlanta, Dallas, Houston, Phoenix,
0:41:50 each added a million people between 2000 and 2010
0:41:51 as metro areas.
0:41:52 It’s because they make it astonishingly easy to build.
0:41:55 And you can go and you can buy a great-looking house
0:41:57 for a fraction of what you’d pay in New York in these places.
0:42:00 And, you know, we don’t have an affordable housing crisis
0:42:02 in the U.S. nationally.
0:42:03 We have lots of affordable housing in places
0:42:06 with names like Atlanta, but just not in New York City.
0:42:10 Many European cities, meanwhile, are more like New York,
0:42:12 in fact, exaggerated versions of New York.
0:42:15 Much of Europe is quite restrictive in your cities,
0:42:18 but I am much more comfortable about the idea
0:42:20 that much of central Paris is, you know,
0:42:22 patrimony of the world and needs to be protected.
0:42:25 While policies vary from city to city and country to country,
0:42:29 almost all major European cities have rent control.
0:42:33 Sweden, of course, is the place where Acer Lindback,
0:42:34 the famous economist.
0:42:36 And although he was market-oriented,
0:42:37 he certainly skewed to the left.
0:42:40 Acer famously said that short of bombing,
0:42:42 I know of no way to destroy a city
0:42:44 that was more effective than rent control.
0:42:47 And he certainly had stock home in mind.
0:42:54 Right now, there are around 10 million people
0:42:55 living in Sweden.
0:43:01 Around 550,000 of these people were standing in a queue
0:43:03 waiting for an apartment in Stockholm.
0:43:05 That is 5% of the Swedish population.
0:43:08 That’s the economist Tommy Anderson.
0:43:11 I am a professor at Lund University,
0:43:13 which is located in the south of Sweden.
0:43:17 I focus on an area called market design.
0:43:20 Since we spoke with Anderson back in 2019,
0:43:22 the number of people waiting for an apartment in stock home
0:43:24 has grown to over 800,000.
0:43:27 Sweden has nationwide rent control.
0:43:31 The rental system in Sweden is based on collective bargaining.
0:43:34 So according to the Swedish law,
0:43:37 there is a union called the Swedish Union of Tenants.
0:43:42 And their job is essentially to negotiate the rents for tenants.
0:43:47 And it’s based on something which is called the utility value,
0:43:54 which essentially means that if you have two comparable apartments,
0:43:55 they should have the same rents.
0:43:57 Another objective that they have
0:44:00 is that they should keep the rents low.
0:44:03 The rents cannot be increased by too much.
0:44:06 If you’ve been listening closely,
0:44:08 it may not surprise you to learn that this system
0:44:10 has led to a housing shortage.
0:44:13 Because people will not invest in new buildings
0:44:15 unless they can get good returns.
0:44:19 So if you look at this report written by this
0:44:22 National Board of Housing, Building and Planning from 2016,
0:44:30 they estimated that Sweden needs around 440,000 new homes before 2020.
0:44:35 This shortage is what can lead to long lines to get an apartment,
0:44:36 especially in the more desirable places.
0:44:39 How long do you have to wait in stock home?
0:44:43 You have to wait for 10 or 20 or even 30 years
0:44:46 to get an apartment right now if you would sign up today.
0:44:51 What if you don’t want to wait 10 or 20 or 30 years for an apartment?
0:44:56 So there are no official figures because it’s a black market,
0:44:59 but it’s clear that there exists a black market.
0:45:02 You can get an apartment in several different ways.
0:45:07 So one of them is essentially to buy a contract with black money.
0:45:13 You can also bribe someone in charge of allocating available apartments
0:45:15 to get a better position in the queue.
0:45:19 And another thing which is kind of popular is these fake swaps.
0:45:25 You’re allowed by law to swap apartments with other persons.
0:45:28 So you’re just pretending that you’re swapping apartments,
0:45:30 but essentially you are not.
0:45:33 In the old days what I’ve heard and I must stress that
0:45:35 I don’t have any scientific evidence on this,
0:45:41 but apparently a black contract used to cost around 10% of the market value.
0:45:47 But in recent years it has actually grown to say 20% of the market value of the apartment.
0:45:50 So it’s kind of expensive to buy a black contract.
0:45:53 And you know it’s always a risk to be involved in this business
0:45:56 because even if you pay the money it’s not clear that you will get the apartment.
0:46:00 Simply because I mean there are criminal gangs involved in this as well.
0:46:07 That does not sound like what the designers of the Swedish rental system were going for.
0:46:10 But the housing market in Stockholm is so bad
0:46:13 that even business leaders there have risen up in protest.
0:46:17 The CEO and the founder of Spotify in 2016,
0:46:20 he wrote an open letter to the people of Sweden saying that
0:46:25 unless you know you solve this housing situation in Stockholm,
0:46:29 Spotify may consider moving its headquarters out of Stockholm
0:46:33 simply because we cannot find housing for our future employees.
0:46:39 If policymakers can’t figure out smarter ways to encourage more affordable housing,
0:46:44 you can expect to see this kind of scenario playing out in cities all over the world.
0:46:49 What’s your experience with rent control or your opinion?
0:46:53 Let us know. Our email is radio@freakonomics.com.
0:46:55 Also please spread the word about our show.
0:46:58 That is the best way to support it.
0:47:01 You can also leave a rating or review on your podcast app.
0:47:03 Thanks for that.
0:47:07 We will be back very soon with another new episode of Freakonomics Radio.
0:47:11 Until then, take care of yourself and if you can, someone else too.
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0:47:58 How’s things?
0:48:00 Great. Yeah, things are nice.
0:48:01 Got some rain here in California.
0:48:04 Good. Congratulations. That’s important, I guess, yeah?
0:48:06 Thank you.
0:48:13 The Freakonomics Radio Network, the hidden side of everything.
0:48:18 Stitcher.
0:48:20 you
0:48:30 [BLANK_AUDIO]
0:00:05 – Hey there, it’s Stephen Dubner.
0:00:07 And yes, we are busting into your
0:00:10 Freakonomics Radio feed with a bonus episode.
0:00:12 In 2019, we put out an episode
0:00:15 about a problem and a possible solution.
0:00:18 The problem was rising rents,
0:00:20 particularly in coastal cities.
0:00:23 The proposed solution was rent control,
0:00:27 laws that put a limit on what landlords can charge.
0:00:28 You can see why that might seem
0:00:30 to be a sensible solution,
0:00:33 but nearly all economists agree,
0:00:35 based on volumes of research,
0:00:37 that rent control does more harm than good.
0:00:39 Since we made that episode,
0:00:41 the problem has gotten worse.
0:00:42 According to a report from
0:00:45 Harvard’s Joint Center for Housing Studies,
0:00:48 rents have risen 26% nationally
0:00:50 and even more in cities like New York,
0:00:54 which has become the poster child for the rent crisis.
0:00:56 And so once again,
0:00:59 policymakers have returned to the idea of rent control.
0:01:00 Just this month,
0:01:03 the Biden administration pushed Congress
0:01:05 to pass legislation that would force landlords
0:01:07 with more than 50 units
0:01:10 to cap annual rent increases at 5%
0:01:13 or risk losing federal tax breaks.
0:01:16 So we thought it was a good time to revisit
0:01:19 that 2019 episode about rent control
0:01:21 and why it does not work.
0:01:24 We have updated facts and figures where necessary.
0:01:26 As always, thanks for listening.
0:01:34 I’m sure you know this already,
0:01:36 but let me say it anyway.
0:01:39 Cities have become really popular all over the world.
0:01:43 An ever larger share of the U.S. and global population
0:01:44 lives in cities
0:01:47 and that large share is expected to get even larger.
0:01:50 As demand for city living grows,
0:01:53 the supply of housing often can’t keep up,
0:01:56 which results in, and you know this too,
0:01:58 a rise in prices.
0:02:01 In the U.S., median rent has doubled since the 1990s,
0:02:04 outpacing inflation by quite a bit.
0:02:06 In many cities, this makes it hard for people
0:02:08 who already live there to stay
0:02:11 and hard for people who’d like to move there.
0:02:12 I’m sure you’ve heard the horror stories
0:02:16 about rents in cities like London and Hong Kong,
0:02:19 Seattle and San Francisco.
0:02:21 The problem is so bad in New York City
0:02:24 that it inspired a new political party.
0:02:27 I represent the rent. It’s too damn high-party.
0:02:29 People are working eight hours a day and 40 hours a week
0:02:31 in summer third job.
0:02:32 New York, like many cities,
0:02:34 has over time put in place
0:02:37 various affordable housing policies.
0:02:40 One time-honored tradition is some form of rent control.
0:02:42 That might mean setting a price cap
0:02:43 on what a landlord can charge
0:02:46 or limiting the amount the rent can be raised.
0:02:49 Here’s the Stanford economist Rebecca Diamond.
0:02:51 From an economics point of view,
0:02:53 it provides insurance
0:02:56 against getting priced out of your neighborhood.
0:02:59 And rent control seems to be having a moment.
0:03:01 It already exists in a number of places.
0:03:05 The most expensive cities in the U.S.,
0:03:07 they almost all have rent control.
0:03:09 And the appetite is spreading.
0:03:13 You see rent control popping up politically
0:03:16 when housing prices and rents are going up.
0:03:19 Today on Freakinomics Radio,
0:03:22 how well does rent control work?
0:03:25 As with many complicated issues
0:03:28 that have multiple actors and crossed incentives,
0:03:31 the answer depends on whom you ask.
0:03:34 Well, I’m in favor of residential rent control
0:03:35 and rent regulations.
0:03:37 If you were starting from scratch
0:03:38 and you were designing
0:03:42 the most efficient rent regulation system,
0:03:44 what would that look like?
0:03:46 The sort of bombing I know of no way to destroy a city
0:03:48 that was more effective than rent control.
0:04:07 This is Freakinomics Radio,
0:04:11 the podcast that explores the hidden side of everything,
0:04:13 with your host, Stephen Dubner.
0:04:23 Oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh.
0:04:27 Most economists say that rent control is a bad idea,
0:04:29 as is just about any form of price control.
0:04:31 They believe that markets work best
0:04:33 when supply and demand are allowed
0:04:35 to find a natural equilibrium
0:04:39 with price acting as the referee.
0:04:40 Here’s one such economist.
0:04:42 My name is Ed Glazer,
0:04:44 and I am the Fred and Eleanor Glimp
0:04:46 Professor of Economics at Harvard,
0:04:48 where I teach both microeconomic theory
0:04:49 and the economics of cities.
0:04:52 Ed, you have one minute to convince someone
0:04:55 that rent control is a terrible idea. Go.
0:05:02 All right, so they’ve already squandered five of my seconds.
0:05:03 It’s not particularly fair.
0:05:07 It’s not a good way of allocating scarce space.
0:05:09 It’s not a good way of helping the downtrodden.
0:05:13 It’s a way that freezes a city
0:05:15 and stops it from adjusting to changes.
0:05:17 It’s a way that freezes people in apartments
0:05:20 and stops the motion that is inherent in cities.
0:05:24 So that’s a baseline economic take, at least.
0:05:26 Let’s try to unravel this issue,
0:05:28 starting with a brief history of rent control.
0:05:32 Rent controls really became ubiquitous in World War II.
0:05:36 And the idea here was the nation was laying down its life
0:05:39 to try and bring freedom to the world.
0:05:42 And it seemed wrong that some people
0:05:45 who were well-placed should earn some form of extra bonuses
0:05:47 by being able to raise up rents
0:05:50 on people maybe whose sons and daughters
0:05:53 were off fighting for the U.S. elsewhere.
0:05:55 And rent control was seen as being a way
0:05:56 of somehow trying to keep America
0:05:59 being a bit fairer during World War II.
0:06:02 Now, lots of places introduced rent control during this period.
0:06:04 After the war, most of them got rid of it
0:06:07 because that cause seemed to be a little bit less pressing.
0:06:10 But some cities kept it, and New York, of course,
0:06:12 is the most famous place that still has it.
0:06:15 Glazer himself grew up in New York.
0:06:17 And, you know, I lived in a rent-stabilized unit
0:06:19 for the first 10 years of my life.
0:06:23 I mean, something like 72, 74% of New York City’s
0:06:25 households were renters in those days.
0:06:27 And indeed, you know, the mid-1970s
0:06:29 was an era in which New York’s housing didn’t,
0:06:31 you know, didn’t seem that expensive.
0:06:33 And so affordability just wasn’t the same issue
0:06:34 that it was today.
0:06:37 Now, flash forward 30 years.
0:06:38 The cities have been enormously successful.
0:06:41 They haven’t built enough to accommodate the new demand.
0:06:43 They risk becoming boutique towns
0:06:45 affordable only to the wealthy.
0:06:47 And people are desperate to see that those cities
0:06:49 don’t, you know, push out every poor resident,
0:06:51 that they don’t become monocultures
0:06:53 built around the privileged and the rich.
0:06:57 And rent control appears to be at least one avenue
0:06:58 for doing it.
0:06:59 But it’s a very blunt instrument.
0:07:02 Just how blunt?
0:07:05 There are decades worth of economic research
0:07:08 describing the downsides of rent control.
0:07:10 The first major paper was written in 1946
0:07:13 by Milton Friedman and George Stigler.
0:07:13 Here’s Friedman.
0:07:17 Rent control is a law that supposedly has passed
0:07:20 to help the people who are in housing.
0:07:23 And it does help those who are in current housing.
0:07:26 But the effect of rent control is to create scarcity
0:07:31 and to make it difficult for other people to get housing.
0:07:32 Where did the scarcity come from?
0:07:35 For one, developers had less incentive
0:07:37 to build new housing if there was a ceiling
0:07:39 placed on what they could charge.
0:07:41 Friedman also argued that rent control
0:07:45 created a haphazard and arbitrary allocation of space.
0:07:50 This was echoed in a 1972 paper by Edgar Olson,
0:07:53 which found that rent control led to what economists
0:07:56 call an overconsumption of housing.
0:08:01 Let’s say you rented an apartment in New York in 1955.
0:08:02 You had three small kids.
0:08:03 You rented a three-bedroom.
0:08:06 It was perfectly matched for the needs of you
0:08:08 with your kids growing up.
0:08:11 They moved out of the house in the early ’70s.
0:08:14 By the late ’80s, maybe your husband or wife actually died
0:08:16 and you’re living on your own in a three-bedroom apartment
0:08:17 in New York.
0:08:19 But my goodness, would you ever move out?
0:08:22 Your rent is a fraction of what the market rent is.
0:08:24 One of my favorite stories about this,
0:08:25 and this is quoted by Ken Oledas,
0:08:27 the streets were paved with gold.
0:08:29 He cites Nat Sherman,
0:08:30 the famous tobacconist to the world
0:08:32 by this big shop on Fifth Avenue,
0:08:35 who said that he pays, I forget what it was.
0:08:41 $355 a month for a six-room apartment, it says here.
0:08:42 Isn’t that amazing?
0:08:43 Keep in mind, it’s a few decades ago,
0:08:45 but it’s an unbelievable deal.
0:08:47 Now, what’s outrageous about this
0:08:49 is he then says, “I think it’s fair
0:08:51 because I use it so rarely,”
0:08:54 which means that he’s not getting very much value out of it.
0:08:56 But the crazy thing about this is there were lots of New Yorkers
0:08:57 who would love to have that apartment
0:08:59 and who would get a lot more value out of it.
0:09:03 In 1997, Ed Glazer did his own analysis
0:09:04 of rent control in New York City,
0:09:08 trying to determine just how economically inefficient it was.
0:09:12 He and his co-author, Erzo Lutmer, found that, quote,
0:09:16 “This misallocation of bedrooms leads to a loss in welfare,
0:09:19 which could be well over $500 million annually
0:09:21 to the consumers of New York,
0:09:24 before we even consider the social losses
0:09:26 due to under supply of housing.”
0:09:30 Glazer’s work has also inspired a new generation of economists
0:09:33 to further the literature on rent control.
0:09:36 Historically, people relied much more in theory
0:09:38 in making their arguments about rent control.
0:09:41 That’s Rebecca Diamond again.
0:09:43 She’s a former student of Ed Glazer’s.
0:09:46 Because even without a lot of data,
0:09:49 you can make some pretty simple theoretical predictions
0:09:53 about what rent control might do to a housing market.
0:09:56 But there are some things that fury alone cannot tell you.
0:10:02 One of the biggest open questions in the literature of rent control
0:10:06 is what happens to those tenants that get rent control?
0:10:08 Really, how much are the renters benefiting?
0:10:11 Because they’re the potential big winners of rent control.
0:10:15 And to measure that, you really need to have data
0:10:21 on where everybody lives, who gets access to rent control,
0:10:24 and whether they decide to stay in that rent control department
0:10:26 or go somewhere else.
0:10:30 And traditional data sources that economists work with
0:10:36 very rarely track migration of an individual.
0:10:42 So you recently co-authored with Tim McQuade and Franklin Qian
0:10:45 a paper called The Effects of Rent Control Expansion
0:10:49 on Tenants, Landlords, and Inequality Evidence from San Francisco.
0:10:51 First, if you would talk about the data.
0:10:54 So yeah, we have some really cool data.
0:10:58 So traditional data sets, you can get things on the distribution
0:11:00 of earnings and income, things like that,
0:11:02 but you won’t also see their migration.
0:11:07 So we have this, you could call administrative data,
0:11:09 which tracks people’s address histories.
0:11:11 And where did these migratory data come from?
0:11:14 We bought them from a company called InfoTour.
0:11:19 They are a company that works in identity management.
0:11:23 So they have this history of addresses for everyone,
0:11:26 which they collect from a number of different sources
0:11:27 and stitch them together,
0:11:30 which is very useful for the private sector
0:11:33 and firms that need to keep track of up-to-date addresses.
0:11:36 But from a research perspective, it’s super exciting data
0:11:40 because it’s so big and so detailed.
0:11:47 Armed with this super exciting data on individual tenants,
0:11:50 Diamond and her fellow researchers set out to measure
0:11:54 some of the long-term effects of rent control in San Francisco.
0:11:58 They made particular use of a change in the city’s rent laws.
0:11:59 San Francisco had rent control,
0:12:03 but it didn’t apply to many of the city’s smaller apartment buildings.
0:12:06 And the exemption was basically thought of as, well,
0:12:08 these are mom and pop landlords.
0:12:10 They don’t have market power.
0:12:15 They’re not corporations, so we don’t need to regulate their rents.
0:12:20 And then newspapers reported that those smaller multi-family buildings
0:12:24 were increasingly purchased by corporate entities
0:12:26 because that’s really where you could make your money
0:12:27 in the housing market.
0:12:31 And that led to a vote in 1994
0:12:33 where everyone in the city got to vote
0:12:38 about whether we could remove this small multi-family exemption.
0:12:40 And that would then expand rent control
0:12:42 not just to the large multi-family housing stock,
0:12:44 but also the small multi-family housing stock.
0:12:47 And that indeed passed.
0:12:50 So you’ve got this awesome new law,
0:12:53 awesome for you guys at least as researchers,
0:12:55 that lets you mark before and after.
0:12:59 It’s a perfect little natural experiment with a control group.
0:13:03 And then you’ve got these wonderful data sets.
0:13:07 And then you mash up all of these data together and analyze it.
0:13:10 And you find the following.
0:13:14 Your paper concludes that among many things,
0:13:18 quote, rent control limits renters mobility by 20%
0:13:21 and lowers displacement from San Francisco,
0:13:23 especially for minorities.
0:13:25 So let’s start with this.
0:13:27 What does it mean exactly that renters mobility
0:13:30 is lowered by 20% and why is that important?
0:13:35 So we look at whether the renters who get access to rent control
0:13:39 choose to remain in their newly rent control department.
0:13:43 So we find that they’re 20% more likely to remain there
0:13:46 relative to our control group renters
0:13:48 who don’t get access to rent control.
0:13:50 So that seems totally unsurprising, yes?
0:13:54 Yes. I more see that result is a validation
0:13:56 that our data is good and high quality
0:13:58 and we have something to work with here.
0:14:02 Okay. Further, you write that rent control
0:14:05 lowers displacement from San Francisco.
0:14:06 What does that mean exactly?
0:14:10 So we can look at not just whether you remain
0:14:12 in the actual apartment you lived in
0:14:14 when you got access to rent control,
0:14:18 but whether you remain in San Francisco as a whole.
0:14:21 We find rent control has a dramatic impact
0:14:25 on whether you actually live in San Francisco or not.
0:14:29 So it prevents those renters from leaving the city as a whole,
0:14:32 which I think from a policy perspective
0:14:34 of rent control advocates,
0:14:37 that’s one of the goals they talk about
0:14:39 as preventing displacement from the city.
0:14:41 And then you write that especially
0:14:44 from minorities that displacement is lowered.
0:14:47 Right. So when you look at that first cohort
0:14:49 of renters that already lived in the city
0:14:50 at the time of rent control,
0:14:55 it is definitely helping minorities more.
0:14:58 It’s preventing displacement of them especially.
0:15:01 Furthermore, you write that landlords
0:15:03 who are susceptible to rent control
0:15:07 “reduce rental housing supplies by 15%
0:15:09 either by converting to condos,
0:15:12 selling to owner occupants, or redeveloping buildings.”
0:15:17 So now it starts to get a little more complicated.
0:15:20 Can you talk about who’s now starting to win here
0:15:21 and who’s starting to lose here?
0:15:25 So obviously when the landlord is first notified
0:15:28 about rent control, he or she can quickly deduce
0:15:31 that his or her rental stream is going to be
0:15:34 lower than previously expected.
0:15:39 And just like any other business owner,
0:15:43 they might think about changing their business strategy.
0:15:46 So if renting out their apartments
0:15:47 is no longer very profitable,
0:15:50 now they may decide, oh, maybe it’s worthwhile
0:15:54 to convert to condos and sell off the apartments
0:15:55 to owner occupants.
0:15:57 And that would be a way to recover
0:15:58 some of this loss income.
0:16:01 Or another thing they could do is say
0:16:03 knock down their old building
0:16:04 and build some new construction
0:16:06 and either sell those as condos
0:16:08 or rent them out as apartments.
0:16:11 Both of those options would avoid them
0:16:13 having to pay this tax of rent control,
0:16:16 help recruit some of their losses,
0:16:18 which is good for the landlords,
0:16:21 but is going to undermine the goals of rent control
0:16:23 because now we’re going to have less rental housing
0:16:26 out there available for rent control.
0:16:32 So you can start to see how rent control
0:16:35 may be accomplishing a narrow short-term goal,
0:16:37 making existing housing more affordable
0:16:39 for a select group of people
0:16:41 at the expense of the long-term goal
0:16:43 of making a city more affordable generally.
0:16:45 When you pass rent control,
0:16:49 the landlords of the property suddenly getting covered
0:16:50 by rent control are losing so much money.
0:16:54 They no longer really want to rent their apartments
0:16:57 out at the prevailing new prices,
0:17:01 so they decrease their supply of rental housing
0:17:03 to the market and if there’s less supply,
0:17:05 that’s going to drive up prices.
0:17:08 Okay, so let me just make sure I have it pretty straight.
0:17:09 You find evidence that rent control
0:17:12 increases gentrification,
0:17:14 one component of which is the displacement
0:17:16 of low-income tenants.
0:17:18 On the other hand, you also find evidence
0:17:20 that low-income people, including minorities,
0:17:24 at least those who are in rent control units already,
0:17:27 they’re likely to disproportionately benefit
0:17:28 from rent control.
0:17:30 So if I’m an affordable housing advocate,
0:17:33 I might say, oh, fine, fancy Stanford professor
0:17:35 who I’m sure has some kind of great
0:17:39 income and/or housing subsidy and/or situation.
0:17:44 I don’t care that some landlords are suffering.
0:17:48 I don’t care that the policy is having
0:17:51 some downstream effects that you don’t like.
0:17:53 I need to make sure that low-income people
0:17:57 aren’t going to get a rent increase of 50% overnight.
0:18:00 So how do you respond to that argument?
0:18:04 So when you think about those initial tenants,
0:18:06 that’s the best bet you’re going to get
0:18:08 for the benefits of rent control to low-income tenants,
0:18:10 the people that are already in the housing.
0:18:14 But even though we find that those tenants
0:18:16 are much more likely to stay in their apartment,
0:18:19 when we look 10, 15 years later,
0:18:23 the share of those 1994 residents that are still there
0:18:26 is down to, you know, 10% or so.
0:18:31 So 90% of them no longer live in that initial apartment.
0:18:34 And it’s that next low-income tenant
0:18:36 that wants to live in the city.
0:18:39 That low-income tenant is going to have a very hard time
0:18:40 finding an affordable option
0:18:42 because now there’s going to be less rental housing.
0:18:44 The prices that that low-income tenant
0:18:46 are going to face when they want to initially move in
0:18:48 are going to be higher
0:18:50 than they would have been absent rent control.
0:18:59 I’m curious how generalizable you think your findings
0:19:02 from San Francisco are for other cities.
0:19:08 I would suspect that the actual quantitative loss
0:19:10 of rental supply or benefits to the tenant
0:19:12 will depend a little bit city to city.
0:19:15 But I think the qualitative takeaway
0:19:18 that landlords are savvy
0:19:20 and are going to work hard to not lose money
0:19:22 on their investments,
0:19:23 I think is a very general point.
0:19:29 For economists who already felt confident
0:19:31 in the theoretical arguments against rent control,
0:19:34 research like diamonds provides empirical evidence
0:19:36 that essentially tells the same story.
0:19:39 Yes, there are some winners in rent control,
0:19:42 but the losing is more widespread and longer term.
0:19:46 But how about empirical evidence from a reverse angle?
0:19:51 That is not when a city adds or expands rent control
0:19:53 like San Francisco did, but when it gets rid of it.
0:19:57 So there’s other work by David Otter and co-authors
0:19:59 that looks at the removal of rent control
0:20:02 in Cambridge, Massachusetts in 1994.
0:20:05 By the early 1990s, Cambridge was one of the few
0:20:08 remaining rent control strongholds in Massachusetts.
0:20:11 Landlords have been trying to get rid of it for years,
0:20:14 but there are a lot fewer landlords than there are tenants.
0:20:18 So any attempt to change the local law was voted down.
0:20:23 Finally, the rent control opponents had a winning idea.
0:20:26 Put the issue up on a statewide referendum
0:20:27 where there might be less empathy
0:20:30 for all those city dwellers with below market rents.
0:20:32 When the referendum was held,
0:20:37 nearly 60% of the voters in Cambridge were opposed,
0:20:38 but statewide it passed.
0:20:42 And so Cambridge began to deregulate its rents.
0:20:45 Years later, a trio of MIT economists
0:20:48 examined the effects of removing rent control.
0:20:51 Okay, so the classic paper on this has been written
0:20:53 by David Otter, Parik Pathak, and Chris Palmer.
0:20:55 Ed Glazer again.
0:20:59 It showed that when units were brought out of rent control,
0:21:00 their owners invested in them.
0:21:03 So they upped the quality of the units.
0:21:06 There was more of a supply of higher-end housing.
0:21:11 They find that the rent control departments experience
0:21:12 a lot of renovation.
0:21:14 The landlords renovate a lot,
0:21:17 and that drives up the desirability
0:21:18 of living in those apartments.
0:21:21 Also, they find that that creates spillovers
0:21:24 onto the nearby apartment buildings
0:21:26 that they themselves weren’t rent controlled.
0:21:28 So neighboring apartments became more valued
0:21:31 as a result of the end of rent control.
0:21:33 And the most recent paper has shown that crime has gone down,
0:21:35 particularly street crime has gone down.
0:21:39 Right after the elimination of rent control in Cambridge.
0:21:40 So it looked like rent control had
0:21:43 negative externalities on the neighborhood.
0:21:51 So what does economic research tell us about rent control?
0:21:54 There are at least two conclusions,
0:21:55 which if I’m reading it right,
0:21:57 sort of work against each other.
0:21:59 The first conclusion is that rent control
0:22:01 doesn’t help many people for very long,
0:22:04 in part because it constrains the supply
0:22:06 of affordable housing.
0:22:09 The second conclusion is that just getting rid
0:22:11 of rent control does not in and of itself
0:22:13 lead to more affordable housing.
0:22:16 In fact, a deregulated housing market
0:22:18 can easily lead to less affordable housing.
0:22:21 The Boston Cambridge area is one of many places
0:22:23 experiencing a steep shortage
0:22:24 in not just affordable housing,
0:22:25 but housing overall.
0:22:28 So even if you accept that rent control
0:22:31 is a big contributor to the affordable housing problem,
0:22:35 getting rid of it isn’t necessarily a solution.
0:22:38 You can see why politicians and policymakers
0:22:39 are confused.
0:22:42 In some states, rent control legislation has failed.
0:22:45 Advocates in Massachusetts, for instance,
0:22:48 have dropped their push for statewide rent control.
0:22:50 But other states are doubling down.
0:22:54 California now caps rent increases at 5% plus inflation
0:22:56 with a maximum increase of 10%.
0:22:59 And this November, California voters
0:23:01 will decide on Proposition 33,
0:23:03 which would give local jurisdictions
0:23:05 more power to control rents.
0:23:08 Rebecca Diamond has an experience
0:23:09 with seeing her research used
0:23:12 in these rent control debates.
0:23:16 It was interesting to see how our results were
0:23:19 used by policymakers and the media
0:23:22 on both sides of the fight,
0:23:23 because indeed some of our results
0:23:25 are like rent control are good,
0:23:26 other ones make them look bad.
0:23:28 You got to read the whole paper
0:23:30 and take it all into account to make a decision,
0:23:32 but it was a very policy relevant paper
0:23:34 for that discussion.
0:23:36 I’m curious what you can tell us
0:23:39 about the political dimensions of rent control.
0:23:41 I may be wrong, but I believe that rent control
0:23:43 is generally supported by Democrats
0:23:45 and generally opposed by Republicans.
0:23:47 I think it’s a simplification to say
0:23:48 all Democrats support rent control.
0:23:52 But I think in the short run,
0:23:55 you can see the benefits of rent control,
0:23:57 like the tenants right away benefit.
0:23:59 What’s much harder to see
0:24:02 are these indirect effects that take a long time
0:24:05 and it’s harder to put your finger on that.
0:24:10 The losses are spread everywhere a little bit
0:24:13 and harder to see walking down the street
0:24:15 or talking to your constituents.
0:24:18 There certainly are some poor people
0:24:21 who can benefit and it’s a very tangible benefit, right?
0:24:23 It’s not some complicated thing
0:24:24 which requires you to trust in the market.
0:24:26 It’s just sort of very clear.
0:24:28 And if you think that people on the left,
0:24:31 many of them just don’t trust markets to begin with,
0:24:32 then saying there’s going to be
0:24:34 some negative market effect to them,
0:24:35 that sounds like capitalist hocus pocus.
0:24:37 Whereas what they can see right now
0:24:39 is that Mrs. Ray’s rents won’t go up
0:24:40 because of their regulation.
0:24:48 Economists tend to believe their models
0:24:52 and say, you know, end of story and believe me, right?
0:24:57 That is Vicky Bean.
0:25:01 But communities don’t necessarily have to believe economists
0:25:03 and so economists need to do a better job
0:25:07 of responding to the very real fears that communities have.
0:25:09 Bean used to be commissioner
0:25:10 of the New York City Department
0:25:13 of Housing Preservation and Development.
0:25:15 Now she’s a law professor at New York University
0:25:17 and she directs the Furman Center
0:25:19 for Real Estate and Urban Policy.
0:25:22 The Furman Center has embarked on a project
0:25:25 that we call Not Your Grandmother’s Rent Control
0:25:28 to try to figure out if you were starting from scratch
0:25:33 and you were designing the most efficient rent regulation system,
0:25:34 what would that look like?
0:25:41 Coming up after the break, what would that look like?
0:25:44 You really need to have a holistic look.
0:25:47 And what about rent regulation for commercial properties,
0:25:50 like all those empty storefronts in New York?
0:25:52 First and foremost, I’m an angry New Yorker.
0:25:54 [Music]
0:26:12 As we’ve been hearing, economists are generally opposed
0:26:13 to rent control.
0:26:16 It rewards some people, but fairly arbitrarily.
0:26:18 It punishes many others
0:26:19 and generally doesn’t do much
0:26:22 to improve overall access to housing.
0:26:27 That said, most people don’t think like economists
0:26:31 or even believe them, which is why many politicians
0:26:35 and members of the public think rent control is a great idea.
0:26:38 Well, I’m in favor of residential rent control
0:26:39 and rent regulations.
0:26:41 That is David Eisenbach.
0:26:43 He teaches history at Columbia University
0:26:47 and back in 2019, he ran for citywide office
0:26:51 during a New York special election for public advocate.
0:26:56 There are in New York City about 3.4 million apartment units,
0:27:00 nearly one million of which are rent stabilized.
0:27:04 And New York’s rental market is incredibly expensive,
0:27:06 as it is in many other cities
0:27:08 with regulated rents like San Francisco.
0:27:12 Economists argue that overall high prices
0:27:16 are a direct consequence of rent regulation.
0:27:18 What does Eisenbach think?
0:27:20 I disagree.
0:27:24 I mean, there are a lot of reasons why real estate
0:27:26 in San Francisco and real estate in New York are high.
0:27:31 Blaming it on rent stabilization is definitely not it.
0:27:34 The consequences of getting rid of either rent control
0:27:39 and/or rent stabilization would be the immediate displacement
0:27:43 of a big portion of the population.
0:27:45 And that would just be cruel at this point.
0:27:50 I don’t know how anybody could justify even somebody
0:27:52 looking at it purely in economic terms,
0:27:55 how anybody could justify that in just in human terms.
0:27:58 You’re going to blame the high rents on rent control?
0:27:58 Come on.
0:28:02 Okay, so Eisenbach does not believe
0:28:04 the economic research on rent control.
0:28:05 What does he believe in?
0:28:09 Well, first and foremost, I’m an angry New Yorker
0:28:12 who walks around the streets of New York
0:28:16 and sees empty storefront after empty storefront
0:28:18 and just feels like my city is dying.
0:28:21 Some commercial rents in New York have spiked
0:28:22 along with residential rents.
0:28:24 Still, in some parts of Manhattan,
0:28:27 as much as 20 percent of retail space
0:28:30 is either vacant or soon to be vacant.
0:28:31 And I found out that there is this bill
0:28:33 called the Small Business Job Survival Act.
0:28:37 It was initially submitted back in the 1980s
0:28:41 and I figured why don’t I run for office pushing this bill
0:28:44 and so I ran for public advocate on the platform.
0:28:45 We’re going to pass this bill.
0:28:47 It’s going to save small business in New York City.
0:28:51 We should say that Eisenbach did not win the election.
0:28:53 He came in 13th in a field of 17,
0:28:55 but he did get a fair amount of attention
0:28:58 for talking about all those empty storefronts,
0:29:00 which have upset a lot of people.
0:29:01 There are two major provisions
0:29:03 of the Small Business Job Survival Act.
0:29:06 One, it guarantees a 10-year lease renewal offer
0:29:08 from the landlord to the tenant
0:29:11 for any tenant with a commercial lease in New York City.
0:29:13 Number two, if the landlord and tenant
0:29:15 cannot come to an agreement,
0:29:17 they go to legally binding arbitration.
0:29:22 And that arbitrator then will pick a fair market rent,
0:29:25 which will then be charged in the next 10-year lease renewal.
0:29:30 Opponents of this proposal call it commercial rent control.
0:29:33 But this bill, the Small Business Job Survival Act,
0:29:35 is absolutely not rent control.
0:29:38 It doesn’t put a limit on how much rent can be charged,
0:29:40 which is the very definition of rent control.
0:29:43 It’s legally binding arbitration.
0:29:44 Much different.
0:29:45 Are there other cities that have
0:29:48 this kind of Small Business Jobs Protection
0:29:50 on the real estate front that works well?
0:29:51 It’s going to be unique.
0:29:57 Eisenbach lost his election,
0:30:01 but the city council has continued to debate legislation
0:30:02 that would rein in commercial rents.
0:30:05 I was interested to know what the economists
0:30:06 we’ve been speaking with,
0:30:09 Rebecca Diamond of Stanford and Ed Glazer of Harvard,
0:30:12 what they thought about commercial rent regulation.
0:30:14 So I’m also very interested in that,
0:30:16 and I also know almost nothing about it.
0:30:19 I’ve never seen any work on it.
0:30:21 You could easily tell a story where the threat
0:30:22 of some form of rent control
0:30:25 makes the vacancy problem worse in the short run.
0:30:28 So for example, I don’t want to rent right now
0:30:30 to a lower-end tenant who could fill my space
0:30:33 because I’ll be locked in by the rent control law,
0:30:34 and I’ve got that tenant forever.
0:30:36 So that means I’m going to really hold out
0:30:39 for a blue-chip tenant because I have this threat of this law
0:30:40 over my shoulder.
0:30:42 So do I think vacant empty storefronts are a problem?
0:30:42 Sure.
0:30:44 I mean, we can talk about it from a perspective
0:30:45 of merely as an urbanist,
0:30:48 where we think it’s unattractive to have these things.
0:30:50 But I’m also disturbed by it as an economist,
0:30:53 because someone’s got space to sell.
0:30:55 There are people who want to buy that space.
0:30:57 Why isn’t the transaction happening?
0:31:00 It’s sort of the market is going awry.
0:31:02 And the answer to that,
0:31:04 of why the market is going awry,
0:31:06 is not immediately obvious.
0:31:07 There are, of course, plenty of theories
0:31:11 as to why so many storefronts in New York are vacant.
0:31:12 Here, again, is Vicki Bean,
0:31:14 the former housing official
0:31:16 who studies the real estate market at NYU.
0:31:17 I think there are a lot of questions
0:31:20 about how commercial rent regulation would work
0:31:26 and how it might interfere with an efficient market.
0:31:28 One concern that I would have right now
0:31:32 is we seem to be in the middle of an upset
0:31:36 of a transition in retail in general,
0:31:39 because of the availability of internet retail.
0:31:41 A lot is in flux.
0:31:44 But there are two points of evidence against that,
0:31:45 one of which is that many of these storefronts
0:31:47 formerly held services,
0:31:49 and I don’t think a nail salon
0:31:52 has been made obsolete by Amazon just yet.
0:31:54 And secondly, the rents, the asking rents,
0:31:56 at least according to the most recent
0:31:58 real estate board of New York report,
0:32:00 in many of these areas are still sky high.
0:32:02 It’s not like there’s no demand for areas
0:32:05 where you’re charging $300, $400 per square foot
0:32:07 to rent these areas.
0:32:09 In the long term, all of the economic push
0:32:11 for both the landlords and the tenants
0:32:13 is to get those units occupied
0:32:16 and get the rent payments again flowing to the landlord.
0:32:19 Landlords, whether small or large,
0:32:21 are often left out of public discussions
0:32:23 about property markets.
0:32:24 And if they’re not left out,
0:32:26 they’re usually drawn as villains.
0:32:29 Vicky Bean, in thinking about the project
0:32:31 that she calls “not your grandmother’s rent control,”
0:32:33 she’s trying to change that.
0:32:37 I think the thing that you really need to focus on is,
0:32:41 how can I ensure that the landlord
0:32:44 is getting a reasonable return,
0:32:46 because otherwise people will take their money
0:32:48 and put it elsewhere and you won’t get building?
0:32:51 And how can we, at the same time,
0:32:55 try to close some of these avenues
0:32:58 that landlords could use to try to escape rent regulation
0:33:04 without it becoming a system that’s so weighed down
0:33:07 with so many different enforcement challenges
0:33:12 that it kind of collapses of its own weight, right?
0:33:16 You need to pay attention to the different ways
0:33:21 in which property owners are making money on the property.
0:33:24 So you really need to have a holistic look.
0:33:28 At the same time, you need to have very open eyes
0:33:33 view of the kinds of costs that we’re imposing on them.
0:33:36 There’s one huge cost that drives real estate prices,
0:33:39 whether we’re talking about rentals or sales,
0:33:41 for both commercial and residential buildings.
0:33:44 So in New York City, for example,
0:33:48 a very high percentage of rent goes for property taxes.
0:33:52 So we can’t be saying to landlords,
0:33:54 “Hey, keep prices down,”
0:33:57 but by the way, your property tax just went up by 10%.
0:34:03 So we have to recognize that we, as a tax-paying body,
0:34:06 have an obligation to understand the effect
0:34:09 that those increases may have on rents,
0:34:13 and we can’t just turn around and say to the landlord,
0:34:16 “You absorb them. Don’t pass them on to the tenant,”
0:34:19 because that’s an unsustainable system.
0:34:21 So it’s certainly true that renters implicitly
0:34:23 have to pay for property taxes.
0:34:24 And it’s not obvious that that’s wrong,
0:34:26 because the idea of property taxes
0:34:29 is the paying for city services and renters use city services too.
0:34:31 That’s obviously not wrong.
0:34:33 So here’s a big question that I really hope you can answer,
0:34:35 because I’ve wondered this for a long time.
0:34:40 Some of the biggest property owners in a city like New York,
0:34:42 and some of the wealthiest property holders generally,
0:34:46 are universities, religious institutions,
0:34:49 hospitals, and other not-for-profit institutions,
0:34:52 which makes them either partially or wholly exempt
0:34:53 from paying property taxes.
0:34:57 So I’m curious, how does that exemption affect, A,
0:34:59 the taxes paid by everyone else,
0:35:04 and how does that, B, ultimately affect housing prices for everyone?
0:35:06 First of all, clearly you’re right.
0:35:09 The government has decided to subsidize certain institutions
0:35:12 by enabling them not to pay property taxes.
0:35:16 And from a purely accounting point of view,
0:35:18 those taxes need to come from somewhere else.
0:35:21 On the other hand, it is also true that at least
0:35:24 some of the institutions that you’re talking about
0:35:27 have proven to be extraordinarily important
0:35:28 for the economic health of the area.
0:35:31 We’re subsidizing the university student.
0:35:34 We’re making it cheaper for them to rent than it would be otherwise.
0:35:35 Is that fair?
0:35:37 Well, we thought that somehow or other,
0:35:39 it was a good idea to subsidize educational institutions
0:35:40 at one point in time.
0:35:42 We thought there might be some spillovers from that,
0:35:44 some benefits from encouraging people to become educated.
0:35:46 But we should be open to reinvestigating that.
0:35:48 And anyway, you shouldn’t take my word for it,
0:35:50 because after all, I’m the employee of an educational institution.
0:35:52 So, you know.
0:36:02 We can ask whether or not the blanket property tax exemption
0:36:05 that we’ve given to religious institutions
0:36:07 and educational institutions is appropriate.
0:36:10 I mean, that seems like a reasonable question to ask.
0:36:11 In the case of religious institutions,
0:36:14 it in some sense goes back to fundamental issues
0:36:15 about separation of church and state in the US,
0:36:17 but we can still ask this question.
0:36:22 I would be surprised if we think that changing those tax rates
0:36:25 is the number one step to take to promote affordability
0:36:26 in New York City, though,
0:36:30 relative to, you know, bringing more space on market
0:36:33 that you can actually build on changing the regulations.
0:36:35 I mean, it seems like that’s not likely to be the case,
0:36:38 but it is true that, you know, you move stuff
0:36:41 to a religious area in educational use.
0:36:43 In many cases, you’re moving it away from an owner
0:36:45 who would actually build on it.
0:36:46 And that’s also correct.
0:36:49 (upbeat music)
0:36:51 Coming up after the break,
0:36:54 a lot of regular people who aren’t institutions
0:36:57 would also like a break on their rent.
0:36:58 Rent control sounds like a dream, man.
0:37:01 I’m Stephen Dubner.
0:37:02 You were listening to a bonus episode
0:37:05 of Freakonomics Radio, and we will be right back.
0:37:17 So what have we learned about housing,
0:37:18 especially affordable housing,
0:37:20 especially in the most desirable cities?
0:37:24 For starters, we’ve learned that it’s complicated.
0:37:28 Property taxes play a large under-appreciated role
0:37:30 in driving up costs,
0:37:33 and the tax burden isn’t necessarily spread so equitably.
0:37:35 Rent regulations, meanwhile,
0:37:38 appeal to the public and politicians,
0:37:40 but they also create perverse incentives
0:37:43 that in the long run work against affordable housing.
0:37:46 How about housing vouchers?
0:37:49 Aren’t they a more flexible way to subsidize housing?
0:37:52 The advantage of a voucher is you can go through
0:37:55 all of those eligibility requirements
0:37:58 and really target the voucher to the families
0:37:59 that you think are most in need.
0:38:04 And we, in New York and in many other major cities,
0:38:08 we have prohibitions against a landlord refusing a tenant
0:38:11 because they’re using a voucher rather than earned income.
0:38:17 But we’re still getting enormous resistance from landlords
0:38:21 because if you have a federal government that shuts down
0:38:23 and isn’t paying its voucher payments,
0:38:26 and there the landlord is stuck with that, right?
0:38:30 Or if you have a city like New York City did
0:38:33 that issued vouchers and then changed its mind and said,
0:38:35 “Oops, that program is over,”
0:38:38 then the landlord has a tenant in place
0:38:39 who no longer can pay the rent
0:38:42 and the landlord has to take them to court
0:38:43 and bear the cost of that.
0:38:47 Meanwhile, the market price of housing in a place like Manhattan
0:38:50 lies somewhere between punitive and prohibitive.
0:38:54 Here’s what we heard when we took our microphones outside
0:38:56 to Bryant Park in Midtown Manhattan.
0:38:59 Manhattan rent, onerous.
0:39:00 Astronomically high.
0:39:02 That’s too expensive, way too expensive.
0:39:03 That’s why I live in New Jersey.
0:39:07 And what do these people think about regulated rents?
0:39:10 Rent control sounds like a dream, man.
0:39:11 Rent control sounds good.
0:39:14 It’s really key to find all those stabilized rent buildings.
0:39:15 If you do, I think it’s golden.
0:39:16 If not, it sucks.
0:39:19 Pull disclosure, I did do economics, so market failure.
0:39:27 So if rent control isn’t a viable tool
0:39:29 in the fight for affordable housing, what is?
0:39:33 The most natural tool towards affordability is supply
0:39:36 and to make sure that we are making it easy enough
0:39:41 to build moderate cost rental apartment buildings in these cities.
0:39:42 Ed Glazer again.
0:39:46 We’ve used regulations to so restrict our ability
0:39:48 to provide affordable housing units
0:39:52 that now we’re at this restricted frozen and amber form.
0:39:55 In the case of New York, gosh, New York is New York.
0:39:57 It’s hard to imagine how much housing
0:39:59 you’d really need to say to man for New York.
0:40:01 What about Boston where you live?
0:40:04 Boston is facing what it calls a historic housing shortage.
0:40:07 The city is growing, not enough housing to match.
0:40:09 What do you suggest Boston do to accommodate that surge
0:40:12 other than let the market work its famous magic?
0:40:15 Look, drive around Boston.
0:40:18 It doesn’t look overcrowded to me,
0:40:20 and I don’t think it should look overcrowded to anyone else.
0:40:22 There’s a lot of vacant industrial space
0:40:25 that could easily house tens of thousands of units.
0:40:26 If you’ve made it easy enough to build,
0:40:31 I’ve got to think that this is a doable problem,
0:40:34 at least from an engineering and economics point of view.
0:40:36 The politics, of course, are more difficult.
0:40:38 What specifically would need to be done to change it?
0:40:42 The big answer is you need as of right zoning
0:40:44 that enables fairly high density levels
0:40:47 over a fair amount of space.
0:40:50 Currently, Boston’s zoning plan is highly antiquated.
0:40:53 Every project is handled on an ad hoc basis.
0:40:55 Usually, it involves variances that are quite high
0:40:56 from the original plan,
0:41:00 which means that they are highly subject to a judicial challenge.
0:41:03 All of that is a recipe for uncertainty and delay
0:41:04 in endless community meetings.
0:41:06 The thing that works best
0:41:08 is when you have something where you’ve decided in advance,
0:41:09 this is how much we’re going to allow to build.
0:41:12 There are a couple of simple rules that you’ve got to follow.
0:41:14 Come here, bring your units, and make it happen.
0:41:15 And that’s what’s needed.
0:41:16 That’s what actually works.
0:41:18 It’s not something that involves a 10-year negotiation process,
0:41:21 but something that says, here are the rules up front.
0:41:22 Go to it.
0:41:28 It should be noted that not all U.S. cities
0:41:30 impose the same level of red tape you see
0:41:33 in Boston and New York and San Francisco.
0:41:35 If you want to look for affordability,
0:41:37 the American Sun Belt is pretty great.
0:41:41 The Atlantas, the Houston’s, the Dallas’s,
0:41:44 the places that just have made it very easy to build
0:41:45 over the last 40 years.
0:41:48 You want to ask why Atlanta, Dallas, Houston, Phoenix,
0:41:50 each added a million people between 2000 and 2010
0:41:51 as metro areas.
0:41:52 It’s because they make it astonishingly easy to build.
0:41:55 And you can go and you can buy a great-looking house
0:41:57 for a fraction of what you’d pay in New York in these places.
0:42:00 And, you know, we don’t have an affordable housing crisis
0:42:02 in the U.S. nationally.
0:42:03 We have lots of affordable housing in places
0:42:06 with names like Atlanta, but just not in New York City.
0:42:10 Many European cities, meanwhile, are more like New York,
0:42:12 in fact, exaggerated versions of New York.
0:42:15 Much of Europe is quite restrictive in your cities,
0:42:18 but I am much more comfortable about the idea
0:42:20 that much of central Paris is, you know,
0:42:22 patrimony of the world and needs to be protected.
0:42:25 While policies vary from city to city and country to country,
0:42:29 almost all major European cities have rent control.
0:42:33 Sweden, of course, is the place where Acer Lindback,
0:42:34 the famous economist.
0:42:36 And although he was market-oriented,
0:42:37 he certainly skewed to the left.
0:42:40 Acer famously said that short of bombing,
0:42:42 I know of no way to destroy a city
0:42:44 that was more effective than rent control.
0:42:47 And he certainly had stock home in mind.
0:42:54 Right now, there are around 10 million people
0:42:55 living in Sweden.
0:43:01 Around 550,000 of these people were standing in a queue
0:43:03 waiting for an apartment in Stockholm.
0:43:05 That is 5% of the Swedish population.
0:43:08 That’s the economist Tommy Anderson.
0:43:11 I am a professor at Lund University,
0:43:13 which is located in the south of Sweden.
0:43:17 I focus on an area called market design.
0:43:20 Since we spoke with Anderson back in 2019,
0:43:22 the number of people waiting for an apartment in stock home
0:43:24 has grown to over 800,000.
0:43:27 Sweden has nationwide rent control.
0:43:31 The rental system in Sweden is based on collective bargaining.
0:43:34 So according to the Swedish law,
0:43:37 there is a union called the Swedish Union of Tenants.
0:43:42 And their job is essentially to negotiate the rents for tenants.
0:43:47 And it’s based on something which is called the utility value,
0:43:54 which essentially means that if you have two comparable apartments,
0:43:55 they should have the same rents.
0:43:57 Another objective that they have
0:44:00 is that they should keep the rents low.
0:44:03 The rents cannot be increased by too much.
0:44:06 If you’ve been listening closely,
0:44:08 it may not surprise you to learn that this system
0:44:10 has led to a housing shortage.
0:44:13 Because people will not invest in new buildings
0:44:15 unless they can get good returns.
0:44:19 So if you look at this report written by this
0:44:22 National Board of Housing, Building and Planning from 2016,
0:44:30 they estimated that Sweden needs around 440,000 new homes before 2020.
0:44:35 This shortage is what can lead to long lines to get an apartment,
0:44:36 especially in the more desirable places.
0:44:39 How long do you have to wait in stock home?
0:44:43 You have to wait for 10 or 20 or even 30 years
0:44:46 to get an apartment right now if you would sign up today.
0:44:51 What if you don’t want to wait 10 or 20 or 30 years for an apartment?
0:44:56 So there are no official figures because it’s a black market,
0:44:59 but it’s clear that there exists a black market.
0:45:02 You can get an apartment in several different ways.
0:45:07 So one of them is essentially to buy a contract with black money.
0:45:13 You can also bribe someone in charge of allocating available apartments
0:45:15 to get a better position in the queue.
0:45:19 And another thing which is kind of popular is these fake swaps.
0:45:25 You’re allowed by law to swap apartments with other persons.
0:45:28 So you’re just pretending that you’re swapping apartments,
0:45:30 but essentially you are not.
0:45:33 In the old days what I’ve heard and I must stress that
0:45:35 I don’t have any scientific evidence on this,
0:45:41 but apparently a black contract used to cost around 10% of the market value.
0:45:47 But in recent years it has actually grown to say 20% of the market value of the apartment.
0:45:50 So it’s kind of expensive to buy a black contract.
0:45:53 And you know it’s always a risk to be involved in this business
0:45:56 because even if you pay the money it’s not clear that you will get the apartment.
0:46:00 Simply because I mean there are criminal gangs involved in this as well.
0:46:07 That does not sound like what the designers of the Swedish rental system were going for.
0:46:10 But the housing market in Stockholm is so bad
0:46:13 that even business leaders there have risen up in protest.
0:46:17 The CEO and the founder of Spotify in 2016,
0:46:20 he wrote an open letter to the people of Sweden saying that
0:46:25 unless you know you solve this housing situation in Stockholm,
0:46:29 Spotify may consider moving its headquarters out of Stockholm
0:46:33 simply because we cannot find housing for our future employees.
0:46:39 If policymakers can’t figure out smarter ways to encourage more affordable housing,
0:46:44 you can expect to see this kind of scenario playing out in cities all over the world.
0:46:49 What’s your experience with rent control or your opinion?
0:46:53 Let us know. Our email is radio@freakonomics.com.
0:46:55 Also please spread the word about our show.
0:46:58 That is the best way to support it.
0:47:01 You can also leave a rating or review on your podcast app.
0:47:03 Thanks for that.
0:47:07 We will be back very soon with another new episode of Freakonomics Radio.
0:47:11 Until then, take care of yourself and if you can, someone else too.
0:47:18 Freakonomics Radio is produced by Stitcher and Renbud Radio.
0:47:21 You can find our entire archive on any podcast app
0:47:26 also at Freakonomics.com where we publish transcripts and show notes.
0:47:28 This episode was produced by Zach Lipinski.
0:47:31 Our staff also includes Alina Kulman, Augusta Chapman,
0:47:35 Delvin Abouage, Eleanor Osborne, Elsa Hernandez,
0:47:37 Gabriel Roth, Greg Rippin, Jasmine Klinger,
0:47:40 Jeremy Johnston, John Schnarrs, Julie Kanfer,
0:47:42 Mjörk Baudic, Morgan Levy, Neil Karuth,
0:47:46 Rebecca Lee Douglas, Sarah Lilly, and Theo Jacobs.
0:47:49 Our theme song is “Mr. Fortune” by the Hitchhikers.
0:47:51 Our composer is Luis Guerra.
0:47:53 As always, thanks for listening.
0:47:58 How’s things?
0:48:00 Great. Yeah, things are nice.
0:48:01 Got some rain here in California.
0:48:04 Good. Congratulations. That’s important, I guess, yeah?
0:48:06 Thank you.
0:48:13 The Freakonomics Radio Network, the hidden side of everything.
0:48:18 Stitcher.
0:48:20 you
0:48:30 [BLANK_AUDIO]
A new proposal from the Biden administration calls for a nationwide cap on rent increases. Economists think that’s a terrible idea. We revisit a 2019 episode to hear why.
- SOURCES:
- Tommy Andersson, professor of economics at Lund University.
- Vicki Been, professor of law at New York University and former deputy mayor for housing and economic development in New York City.
- Rebecca Diamond, professor of economics at Stanford Graduate School of Business.
- David Eisenbach, history lecturer at the Manhattan School of Music and Columbia University.
- Ed Glaeser, professor of economics at Harvard University.
- RESOURCES:
- “The State of the Nation’s Housing 2024,” by the Joint Center for Housing Studies of Harvard University (2024).
- “The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco,” by Rebecca Diamond, Tim McQuade, and Franklin Qian (American Economic Review, 2019).
- “Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts,” by David H. Autor, Christopher J. Palmer, and Parang A. Pathak (Journal of Political Economy, 2014).
- “An Econometric Analysis of Rent Control,” by Edgar O. Olsen (Journal of Political Economy, 1972).
- Roofs or Ceilings?: The Current Housing Problem, by Milton Friedman and George J. Stigler (1946).