Rich Robledo
Imagine this. Your city passes rent control. You expect to get immediate relief on your monthly rent. You use those dollars to invest in yourself.
You get a job offer, but it would require you to move. Do you take the new job with a higher salary, or do you stay in your rent-controlled unit? One of the most significant ways rent control reduces mobility is by discouraging tenants from moving.
When rent-controlled units are priced below market rates, tenants have a strong incentive to stay put, even when their housing needs change. A growing family may remain in a small apartment instead of seeking a larger home, while an empty nester may hold onto a spacious unit that would be better suited for a family.
This leads to housing shortages and reduced availability for new renters searching for available and affordable rentals. Analysis has shown countless times that rent control restricts both economic opportunities and the ability to relocate.
An American Economic Association study analyzing San Francisco’s 1994 rent control policies shows that tenants in rent-controlled units were 10% to 20% more likely to remain in that same unit a decade later.
Rent control in San Francisco and its subsequent decreased mobility reduced the rental housing supply by 15% and increased city-wide rent by 7%. Similar effects were also felt abroad.
A comprehensive review by the U.K.’s Institute of Economic Affairs found that 25 of 26 studies report a reduction in residential mobility due to rent control and tenants occupying units that don’t match their housing needs.
Additionally, rent control limits workers’ ability to move for better job opportunities. In a healthy housing market, employees can relocate to areas with better wages or career prospects.
However, in cities with rent control, the difference between a tenant’s-controlled rent and market-rate alternatives can be so extreme that moving becomes financially unfeasible – upward of 20% in some studies.
Workers become trapped in their current location, unable to take advantage of job growth in other cities or even different neighborhoods within the same city. This lack of mobility hurts both workers and employers, as businesses struggle to attract talent when housing availability is artificially restricted.
Even more, this can lead incoming new businesses to look elsewhere – to cities without rent control constraints where their employees can easily and affordably find housing. Beyond individuals, rent control discourages new housing development.
Landlords faced with strict regulations are less likely to invest in maintaining or improving their properties, leading to a gradual decline in housing quality.
Meanwhile, developers steer clear of cities with rent caps, further limiting the construction of much-needed housing stock. As the supply dwindles, affordability worsens for those new to the market.
Rent control policies, often promoted as a solution to the nationwide housing affordability crisis, come with significant unintended consequences.
While rent control can offer immediate rent stability for existing tenants, the constrained rental market over time is the exact opposite of what the Silver State needs.
Expanding housing supply, rather than imposing price controls, is the only sustainable path to long-term affordability and mobility for Nevada’s workforce and families.
Rich Robledo is the team lead at The Robledo Group, a real estate firm. He also serves on the board of several community nonprofit organizations.