As California debates the future of rent control in its municipalities, a group of Stanford economists have conducted research that connects San Francisco's existing policy with higher housing costs.
In San Francisco, writes Katy Murphy, existing rent control policy "has saved tenants in those units thousands of dollars per year. But it brought on a crippling side effect, according to a provocative new Stanford paper: Many landlords stopped renting out those coveted apartments."
"Since the policy took effect in 1995, the number of renters living in such units dropped by a staggering 30 percent as the rentals were rebuilt or converted to condominiums or single-family homes [...]" By converting to non-rental units, property owners could legally evade the requirement to control rents.
Tenants of rent-controlled units have clearly benefited, but has the city as a whole? "The same policy caused rents citywide to rise 7 percent, costing San Francisco renters $5 billion. A better way 'to provide social insurance against rent increases,' [the authors] suggest, could be to offer tax credits or government subsidies to renters."
Meanwhile in Sacramento, activists are seeking the repeal of 1995's controversial Costa-Hawkins Act, which limited the scope of local rent control throughout California.
Also see Reuben Duarte's analysis of Costa-Hawkins and California rent control policy.
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