Think Tank: Policies Allowed by Prop. 10 Cause More Harm Than Good

In the long run, rent control “decreases affordability, fuels gentrification, and creates negative spillovers on the surrounding neighborhood,” according to a recent report published by the Brookings Institution.

The research review, ” What Does the Economic Evidence Tell Us About The Effects of Rent Control,” is authored by Rebecca Diamond, associate professor of economics at the Stanford Graduate School of Business.

The review examines the San Francisco housing market, as well as national studies, in reaching its conclusion. It notes that:

  • “Rent controlled properties create substantial negative externalities on the nearby housing market, lowering the amenity value of these neighborhoods and making them less desirable places to live”;
  • “Rent control can also lead to decay of the rental housing stock; landlords may not invest in maintenance because they can’t recoup these investments by raising rents”; and
  • Rent control can “lead to empty-nest households living in family-sized apartments and young families crammed into small studios” because tenants in rent-controlled apartments keep their rental costs low by not moving.

The Brookings article is the latest research to point out that the policies allowed by Proposition 10 will harm California renters and homeowners alike.

A New York Times article recently noted: “Economists have an almost universally dim view of rent control laws, and a number have supported the landlords’ contention that Proposition 10 could make California’s housing problems worse.”

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