Perverse Logic of Rent Control

-edited

Everywhere rent control has been tried, it's been a failure. Nonetheless, Illinois politicians want their turn.

Rent control and housing shortages go hand in hand. Why build if the government gets to set prices for you?

Mark Glennon at Wirepoints hits the nail squarely with his piece Rent Control Would Intensify Housing Crisis.

A Chicago Democratic lawmaker's second attempt at eliminating Illinois' rent-control ban would predictably worsen the state's housing crisis – or solve it in a negative way – the founder of an online news outlet said during a recent interview.

"If you want to see the supply of housing plummet, pass rent control laws," Wirepoints founder and executive editor Mark Glennon said in an email interview with Chicago City Wire. "Ironically, maybe there's some perverted logic to that. We won't be needing much housing in Illinois if crazy ideas like this continue to drive people out of Illinois."

Glennon's comments followed Rep. Will Guzzardi's (D-Chicago) introduction last month of House Bill 255 to repeal the the Illinois Rent Control Preemption Act of 1997. As its name implies, the state's rent-control ban bars the state's municipalities from enacting laws to control rent on residential or commercial property.

Why Not?

Illinois is so totally screwed already. Why not let socialists put on the finishing touches?

Mike "Mish" Shedlock

Comments
No. 1-20
Valzape
Valzape

Thats is actually not true. Here in Sweden we have both; rent control for govermental housing ( some people choose to rent even if they can buy) and you can purchase your flat ( but if you rent it out you cant charge market value only cover your costs plus 30% on top of that). Rent control has worked pretty well the only thing that happen was that the politicians ( shortsighteed as bankers are risk averse when they get a fat bonus) did not investing in new housing since 1980 that let to a shortage of housing. The execution of the plan was bad. But it does work. Reg from Sweden

Advancingtime
Advancingtime

Several trends point to the reality we should expect rents to edge higher in the future. While many economy watchers tout the line any economic crisis will result in massive defaults and deflation hidden forces may prove them very wrong. Over the last few decades, a great amount of wealth flowing into paper promises rather than tangible assets has masked true inflation but it is everywhere. One place it is most obvious is apparent in the replacement cost of buildings and infrastructure destroyed or damaged by natures fury.

ReadyKilowatt
ReadyKilowatt

The other side of rent control is that it frees up uncontrolled units to charge whatever they wish. In Aspen Colorado they have very strict rules for low income housing, but they aren't at all interested in increasing supply because that might have a negative effect on all the investment/vacation homes, many of which sit empty for most of the year. Many of these homes are sited on enough land to build a multi-family building, but because it might detract from the "charm" of the city they are strictly verboten from making any changes. Of course the real reason is because the neighborhood might evolve, and the last thing you want when you have a $10 million investment is any sort of risk.

themonosynaptic
themonosynaptic

Housing is a fd market. In SF there is onlt rent control in parts of the downtown - that parts where all the fwits point to and say "yuck isn't SF horrible". The same fwits whine about the fact that a one bedroom appt costs $4k/month or more.

House/Rent prices are more a reflection of the quality/speed/cost of transportation than availability of housing stock and too many people denigrate high quality, high speed public transport.

WildBull
WildBull

Carlos, Mish thinks that if housing were left to the market, supply would grow and costs would remain affordable. After rent controls, no one will build because it will be impossible to make money. In that case, maybe the city elders should consider building nice gray poured concrete buildings like those now abandoned in Warsaw.