Mamdani and others push rent control. Can it help a housing crisis?
Introductory economics courses often teach that rent control is bad policy. The argument goes that artificial price caps discourage production – in this case the creation and maintenance of apartments. This is leading to a housing shortage and rising rents across the market.
Yet the idea continues to gain traction and garner new attention in the United States.
Zohran Mamdani, who took office as mayor of New York on January 1, insists on freezing rents for some 2 million New Yorkers. On his first day in office, Mr. Mamdani also signed three housing-related executive orders: one strengthening the mayor’s office charged with protecting tenants and two others establishing task forces to accelerate housing construction.
Why we wrote this
Jurisdictions across the United States are seeking to regulate rents as housing costs continue to rise. But finding long-term solutions – including building millions more homes – will not be easy.
Nationwide, jurisdictions are seeking to regulate rents as housing costs have continued to rise, particularly in large cities. Los Angeles city councilors, for example, voted in November to reduce the annual rent increase cap for most apartments in the city from 8 percent to 4 percent. Washington state capped annual rent increases at up to 10% last spring. Washington, D.C., which already restricts rent increases, is considering a ballot initiative that would freeze rents entirely for two years. And later this year, Massachusetts residents will likely vote on an issue that would cap rent increases at the rate of inflation, up to a maximum of 5 percent.
Many cities have regulated rents for decades. But the recent wave of new initiatives has reignited the debate over the role of government in the free market. Supporters present rent regulation as a necessary measure to address an affordability crisis. Many economists remain skeptical, saying such tactics raise long-term costs, exacerbate shortages and lower housing quality.
Manuel Pastor, an economist and professor of sociology at the University of Southern California, reflects a different, more middle-of-the-road view among some housing policy experts.
“It’s one of those debates where the ideological heat doesn’t really match the empirical fire,” he says. “Rent stabilization is a tool… Why would you put this tool aside?
Why are advocates now pushing for rent control?
Those who advocate rent control argue that housing costs for working families have reached a level where the government must intervene to reduce them.
“Something has to give,” says Tara Raghuveer, who heads the Tenant Union Federation, a national organization that supports federal rent control. “The only urgent solution that makes sense on a large scale is rent control. »
By 2023, half of renters in the United States were considered “cost-burdened,” meaning they spent more than 30% of their income on housing. (About 27% spent half their income on housing). Most of these “overburdened” renters lived in one of the nation’s 50 largest cities.
Rent regulation is also popular with voters, which could motivate political action. In a 2024 Redfin survey, 82% of respondents supported limiting rent increases.
Researchers say such regulation arose historically against a backdrop of housing market constraint – beginning in the middle of World War I, when building materials were being siphoned off to support the war and housing construction was declining. Congress also froze rents on 80 percent of the nation’s rental stock during World War II.
By the mid-1970s, such strict freezes and caps gave way to “stabilization” policies, which allowed rents to vary, but with limits. Rent-stabilized cities include Washington, Los Angeles, and San Francisco, as well as New York, where approximately 1 million apartments are rent-stabilized and 69% of residents rent their homes.
Who opposes rent control and why?
Opponents argue that rent control is not a viable long-term solution, exacerbating shortages and increasing housing costs. They say it’s no mere coincidence that rent-controlled cities are high on the list of places experiencing a severe housing shortage.
“This just makes the housing crisis worse,” says Tamara Small, CEO of the Massachusetts chapter of the Commercial Real Estate Development Association. “This reduces the total number of units and reduces the quality of those units.”
Economists have long argued the same thing.
In a 2012 survey of economists by the University of Chicago, more than 80 percent opposed rent control. Only 2% supported it. In 2024, after Montgomery County, Maryland, implemented a rent stabilization program, investment in multifamily rental housing fell 13 percent, according to the Wall Street Journal.
Part of this decline concerns housing quality: With lower rents, landlords have less income to spend on repairs, which can increase the stock of undesirable housing in New York and elsewhere. To get back on the market, homes can require hundreds of thousands of dollars in repairs – repairs that landlords are unwilling to make because they fear rental income won’t cover the costs.
What does the research say?
Researchers generally agree that the regulations are effective in reducing rents for tenants in affected housing. A 2014 study estimated that rents in Cambridge, Massachusetts, where rent control was in effect from 1970 to 1994, were 44 percent lower in regulated housing compared to unregulated housing. In 2022, a review of 31 rent control studies found that 25 reported lower rents in rent-controlled housing.
These cost savings also tend to lead to longer residencies, and this stability can have social benefits for families. But longer rentals can lead to a mismatch between tenants’ needs and the housing they receive, some economists say. A family may choose to stay in rent-controlled housing even if it outgrows it, for example.
Rent control can also result in a net loss of rental housing. A 2019 study in San Francisco found that an expansion of rent control reduced the number of multifamily rental units by 15%, with some landlords attempting to recoup lost returns by converting their units into condominiums. The reduction in the supply of rental housing “likely increased rents in the long term,” the study concludes.
Carefully crafting new rent regulations could be key to preventing damage to the market, Professor Pastor believes. Unlike more rigid rent control measures, many modern rent stabilization policies allow some rent increases (helping landlords cover repair costs). And they exempt newly constructed units to mitigate the risk of reduced construction.
What are other ways to stabilize or lower property prices?
Proponents on all sides of the debate agree that to reduce rents in the long term, the United States must build more housing.
The price of any good tends to rise when demand exceeds supply, and housing construction has struggled to keep pace with population growth since the 2008 recession. A recent report from Goldman Sachs found that the United States needs to build between 3 and 4 million housing units to close the gap.
Changing zoning laws to streamline regulations and eliminate parking minimums could make it easier to build apartment buildings, as current requirements often add tens of thousands of dollars to construction costs.
But building millions of new homes will take time. It’s also likely to run up against NIMBYism – the idea that building certain types of additional housing degrades communities. Some advocates have also argued that rent control policies increase support for new housing.
A 2022 study found that residents of rent-controlled apartments were 37 percentage points more likely to support new housing construction in their neighborhood — perhaps because it makes occupants less worried about gentrification and displacement.
