Eva Jöcker
In many of the United States’ largest cities, like New York and San Francisco, it is becoming increasingly difficult for individuals to find affordable rental housing. According to the Joint Center for Housing Studies of Harvard University, “nearly 39 million households live in housing they cannot afford.” Governments across the United States have made attempts at alleviating the monstrous costs by limiting the rent that can be charged by landlords. In theory, rent control seems like a good idea; however, in reality, there are very few benefits. Ideally, rent control protects low income tenants from becoming homeless due to expensive housing markets, when rent controls actually harm those who need it.Rent controls cap the amount a landlord can charge their tenants in rent. So, if a landlord can’t charge market price, they will try very hard to do very little; they have no incentive to supply quality housing at such a low price. For the landlords, the units under rent regulation are less profitable, therefore they will attempt to eliminate as many costs as possible. Under rent regulations, the tenant is “protected” from rent prices that are too high, but they are exposed to improper maintenance and lack of repairs. In other words, as the monetary cost for the landlord may decrease, so does the quality of life of the tenants as they are forced to live in less-than-ideal conditions.
Unfortunately, there are some low-income individuals that don’t even have access to poorly maintained, rent-controlled apartments. In fact, many privileged, wealthy individuals are the ones seizing the cheaper rent designed for those who can’t afford it. These affluent renters, especially in Manhattan, have the upper-hand when it comes to the housing market as they have greater job stability, as well as connections and influence within the market itself.With poorly maintained properties and often insufficient access to affordable options, rent control is not a sustainable, long-term solution to affordable housing. So, how should we go about fixing the flawed rental housing market? How can we provide rent-affordability alternatives to low-income renters? Getting rid of rent controls cold-turkey is not a viable solution, as allowing prices to follow the free market would completely price out low-income tenants. In the short term, some tenants could be grandfathered under rent control; at the same time, we should prevent negligent landlords from providing substandard living conditions. Government subsidies could be extended to landlords if they agree to maintain their properties. Such financial aid could be used to cover the costs of apartment upkeep, property taxes, utility bills, and more. Ultimately, this would provide an incentive for landlords to maintain their properties and subsequently provide suitable housing for low-income tenants. Over time, rent control could be phased out and replaced with government subsidies provided to renters to be able to afford the competitive free market pricing.
For additional information: www.youtube.com/watch?v=oJvTTGOHFkU
Works Cited
Block, Walter, et al. “Rent Control.” Econlib, www.econlib.org/library/Enc/RentControl.html.Housing Challenges. Joint Center for Housing Studies of Harvard University, 2017, www.jchs.harvard.edu/sites/default/files/harvard_jchs_state_of_the_nations_housing_2017_chap6.pdf.
Large, At. “Rent Control in California: Seven Myths and Seven Solutions for Protecting Tenants.” San Diego Free Press, 7 Mar. 2018, sandiegofreepress.org/2018/03/rent-control-in-california-seven-myths-and-seven-solutions-for-protecting-tenants/#.XZKrepNKjBI.
PragerU. “Why Rent Control Hurts Renters.” YouTube, YouTube, 12 Jan. 2014, www.youtube.com/watch?v=oJvTTGOHFkU.
Salins, Peter D. “Does Rent Control Help the Poor?” City Journal, 26 Jan. 2016, www.city-journal.org/html/does-rent-control-help-poor-12772.html.
Images:
http://freedomandprosperity.org/2019/blog/big-government/the-folly-of-rent-control/
https://www.comstocksmag.com/commentary/counterpoint-rent-control-would-do-major-harm-sacramentos-future
Personally, while I know there can be some benefits to rent control, I do not see how the benefits outweigh the costs. Imposing a price ceiling in the housing market causes sub-par living conditions, and the distribution of housing is abnormal since the wealthy people gain access to the cheaper housing which was intended for those with lower income. I think your proposed solution is a great idea to try, as it doesn't just eliminate the rent control all at once which could cause a lot of chaos in the market. Overall, I agree that there are many different options which could be more successful than rent control.
ReplyDeleteFirst of all, I think you had a great paper, it was a clearly well researched and an understood topic. Great job! I am, though, going to play devils advocate and politely disagree with some of the things you mentioned, because nothing stimulates a conversation like an argument. I think that to fix the problem of the inefficiencies of the price ceiling in place is to go cold turkey and eliminate it all together. Your idea with subsidies would help eliminate the sub-par living conditions, but it would not solve the problem of the shortage of apartments. The amount of taxes that would need to be raised to supply the necessary subsidies for the supply curve to shift out, would also drastically lower the purchasing power of those trying to buy the apartments in the first place, leaving us in a catch 22. This is why I politely disagree with your subsidies statement.
DeleteTo begin, you did a very well job covering a topic that is very difficult to conceptualize for many people, considering we all likely live in houses valued above the average house price in the United State and therefore haven't really seen an adverse living situation at its peak. I agree with you, as well with the potential of subsidies being necessary, although I agree with Ian in saying that they may not be completely viable. I think an example such as this, having to deal with the housing market, is perfect in trying to create tangible explanations for WHY things are the way that they are in this world. For example, probably without meaning to, you showed a pretty clear link between the lack of affordable, sustainable housing and poverty, and ultimately, I think that is what Econ is all about.
ReplyDeleteThis is clearly a problem with many sides to it, and many other problems are presented with any potential solutions. I agree with Ian that there is still the issue of the shortages that needs to be addressed, however that said, I think you did a great job covering all the issues that come with the price ceiling in your paper and showing all the different issues that come up with it.
ReplyDeleteAt first, I thought that rent control would be a good thing to read about. Helping those low-income families find affordable housing? A great idea! Yet as I thought about it more and read more, I realized that it’s definitely going to be a market in which the landlords will try to cut as many costs as possible. I personally think that the government should get involved in this situation, much more than they currently are. If we want housing to be available for low income families, we need to increase the regulations for the housing, otherwise landlords will constantly try to spend the least amount of money possible and create horrible housing conditions for those who can’t afford a high price. No person deserves to live in such conditions, but landlords tend to be looking mainly for money and if they don’t get that, there’s no point in keeping conditions up in those apartments. If providing subsidies would work, I definitely think that would be the next step, hopefully in the right direction. There’s no guarantee that this will work, or even that it will work right away, but it’s a good first step.
ReplyDeleteafter reading this I found that I don't know much about renting out housing. This made me realize that i will have to one day rent an apartment and have to keep an eye out for the signs of poorly managed rent control. While the idea behind rent control had good intention, it clearly isn't working. The idea needs to be imagined in order to insure that the ability to maintain a good living environment is achievable.
ReplyDeleteWith the problems of rent control, how can the situation be solved going either cold-turkey or slowly moving out of the price ceiling. It would make sense to add more details to the rent control policies and ensure that the quality of goods have to pass a certain livable standard. Or there can be tax quotas on who can live in that particular apartment complex. However, that would also bring a lot of controversy on how much the government can structure the market. Could it even work if the price ceiling is lowered a bit more, so that renters could afford to pay for maintenance services of their own (keeping in mind the quota of who can live in the rent controlled building)?
ReplyDeleteThis is a very interesting topic and there really doesn't seem to be a perfect solution. However, what I was thinking about while reading this is that you get the quality that you pay for. If these apartments become "too cheap" then the quality is going to plummet potentially to the point where some of them aren't even livable. Maybe the solution isn't with removing all of the price ceilings, but rather with regulating the conditions of the apartments. If both of these variables are regulated then that leaves landlords in a position where they are going to have to maintain the apartments if they want to get money for them.
ReplyDeleteI think this is a really good topic to choose to write about, as your audience of primarily high-school students probably have not had a chance to learn much about the independent housing issues that we'll all be facing in a few years. Personally, this article made me realize that I don't know much about how rent prices are decided, or what happens when you can't pay it. I think this post is interesting because there really is not one clear answer to the problem. Like you said, rent control seems like the perfect option, but it has its own downsides. For example, I never really thought about how forcing landlords to lower rent would probably also lower their motivation to provide quality housing. This blog post definitely brings to light the complexity of the issue and the need for some sort of financial aid.
ReplyDelete