Sue Frost: The Illusion of Rent Control

Sue Frost: The Illusion of Rent Control

By Sacramento County Supervisor Sue Frost

It is quite rare to see economists largely agree with each other on governmental policy.  While economists are supposed to be non-partisan and purely scientific, that’s not really how it works in practice.  Often times you can have well respected economists taking radically different positions on the same subject. So for an issue that has 0% of economists strongly supporting it, one would think that the concept of rent control would similarly have zero political support. Yet as you read this, efforts are underway to bring rent control to Rio Linda/Elverta.

Rent control can sound good on the surface – rent gets set at a fair price and can only be raised by modest percentages so renters aren’t priced out of their homes with huge rent increases that they cannot afford.  Proponents will argue that low income families don’t have enough options for where to live as it is, and that having to find a new home can be devastating (in some cases lead to to homelessness). But while these proponents are correct, their proposed solution to this growing issue unfortunately magnifies the problem.

The amount that property owners charge for rent is largely dependent on market forces.  If the demand for rooms is low and supply is high, then rents decrease to ensure that owners are able to keep vacancy rates as low as possible.  Conversely, if the demand for rooms is high and supply is low (as is the case currently) then the rents increase as more people compete for less units.  If the government imposes restrictions on property owners and forces them to offer lower rents than the market would otherwise dictate, we see two incredibly negative things immediately happen.

First, no new housing will be built and in some cases, housing will be torn down and be replaced with other uses (like commercial business).   By forcing rents below the market price, rent control reduces the profitability of rental housing, directing investment capital out of the rental market and into other more profitable markets. In a situation where there is already a lack of housing options, this is about the worst thing that can happen.  If the quantity of housing options does not keep pace with population increases, the problem is greatly exacerbated.

Second, due to diminishing profits for property owners and an increase in demand, they are no longer financially able to perform proper upkeep of the property or to quickly respond to requests for repair.  The quality of the properties quickly decline and that is not a positive thing for the renter, or for the community of Rio Linda/Elverta who has to live with deteriorating buildings in their neighborhood.

In places where there is demand for more housing, a more effective policy is to simply build more housing.  The challenge then becomes how to reduce the cost of construction, where to site the housing, and how to implement affordable housing programs in a way that works for the neighboring communities.  But in order to keep our housing affordable, we can’t create policies that sound good on paper but make the situation worse – we have to come up with long term solutions if we ever want to fix things.

Finally, I want to invite everyone to my next Rio Linda/Elverta community meeting on May 3rd at 6:00pm at our new location: The American Legion (6700 8th Street). This is an opportunity for you to get an update from me and to ask me any questions you may have. Thank you for reading – and as always, if you want to contact me, call me at 916-874-5491 or e-mail me at SupervisorFrost@saccounty.net.

Sue Frost represents the 4th District, which includes all or part of the communities of Citrus Heights, Folsom, Orangevale, Antelope, Rio Linda, Elverta, Gold River, Rancho Murieta, North Highlands, Carmichael, Foothill Farms and Fair Oaks.

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