Counterpoint: On rent control, calmly weigh the benefits as well as the costs
Like too many popular discussions of public policy, the debate over rent stabilization is generally motivated by fear and half-truths more than reasoned assessments of the evidence. This is the case in conversations across the country, and now in the Twin Cities (âLet’s Not Relive the Rent Control Nightmare Others Endured,â Opinion Exchange, October 5).
But stabilizing rents is too important an issue to be left to heated rhetoric; he deserves a lucid and calm civic conversation.
As researchers, we try to examine real data rather than exaggerated narratives. In our reports on the topic of rent stabilization, we find little support for the dire narratives of housing shortages predicted by simplified economic theory and opponents of rent stabilization. We find significant evidence of the social benefits of residential stability brought about by limiting rent increases, with minor issues that developers must address as well.
Our research draws on studies of rent stabilization in locations ranging from Cambridge, Mass., To San Francisco, California, to a variety of cities in New Jersey. Overall, such orders do little harm. In addition, accompanying regulations can address unintended consequences that sometimes arise, such as reduced cosmetic maintenance by landlords and landlords who withdraw their units from the rental market through condo conversion or demolition. .
In general, there is little or no mixed evidence that stabilizing rents deflates property values, lowers the rate of new home construction, or negatively affects âmom and popâ homeowners.
Some might argue that the draft ordinance debated in Saint-Paul is different because it would also apply to new apartment buildings. This is a derogation from many other ordinances, and the proposed rent stabilization measure will keep income and profit trajectories at specified levels.
But investors are constantly buying financial instruments with a fixed return, including treasury bills, municipal bonds, etc. such financial modeling is not new to discerning investors.
It is also unclear how closely related future constraints would be. In our Minneapolis Rent Stabilization Study, we found that if there had been such an order, there would have actually been little impact except on the more egregious side of the rental market; fundamentally, it would have limited only the most extreme rent increases, which were only ever a small part of the market.
It is also useful that the regional discussion on rent stabilization includes the potential benefits, which are often overlooked or underestimated. For example, in our research, we found that the biggest beneficiaries of rent stabilization in Minneapolis would have been the lowest income tenants and tenants of color – particularly black tenants.
This is a finding of some significance given the region’s extreme racial disparities in well-being: In our work with PolicyLink, we have found that the Minneapolis subway is among the most prosperous of the 150 America’s largest metropolitan areas (ranked six out of 150), but also has higher racial disparities than 148 other metropolitan areas.
The value of residential stability is also underestimated. In our research, Rent Matters, we found that moving is detrimental to tenants. Moving for financial reasons causes poor health, anxiety and even depression with greater impacts on women. Given the barriers women of color face for economic self-determination, this means women of color are hit hardest by forced relocations. Children’s learning and social support are also affected, with lasting impacts on their well-being.
It’s also true that money spent on rent doesn’t always help support local businesses. The National Equity Atlas, a project of PolicyLink and one of our research centers, shows that if St. Paul’s tenants weren’t overburdened – if they paid only 30% or less of their gross income in rent – their collective purchasing power would increase by $ 142 million. The comparable figure for Minneapolis is $ 248 million. They could invest in themselves, their children and their hometowns. Who doesn’t want to live in this place?
Our main message: breathe, calm down, and have a balanced, evidence-based civic discussion. If cities are to take a new direction that values ââresidential stability and centers racial equity, this ordinance deserves thoughtful debate and careful consideration.
Edward G. Goetz is Professor and Director, Center for Urban and Regional Affairs, University of Minnesota. Manuel Pastor is professor and director of the Equity Research Institute at the University of Southern California.