A recent report by the Urban Institute, Rent Control and the Supply of Affordable Housing, examines the relationship between rent regulation reforms and the supply of rental housing overall and across varying levels of affordability. While older forms of rent control involved imposing a ceiling on rents for protected units, many modern rent regulation reforms – known as “rent stabilization” measures – regulate annual rent increases and are accompanied by exceptions related to factors such as vacancy, hardship, and building characteristics. The report’s authors find that rent stabilization reforms are associated with reductions in the overall number of rental units within cities but increases in the number of units affordable to the lowest-income renters. While rent stabilization may be a useful tool to increase the supply of deeply affordable housing in the short term, more research is needed to understand its long-term effects.
The researchers developed two datasets to examine the relationship between rent stabilization reforms and housing supply. First, the authors used machine learning to analyze newspaper articles from over 7,000 news outlets covering news stories on rent stabilization reforms across 27 metro areas between 2000 and 2021 to create a cross-city panel of nine metropolitan areas where rent stabilization reforms were enacted. The authors then relied on census microdata from the Federal Statistical Research Data Center (RDC) to create a dataset of rental housing units affordable at different levels of area median income (AMI) for each metro area over the study period.
Analyzing the relationship between the implementation of rent stabilization reforms and subsequent changes in housing supply, the researchers found that rent stabilization was associated with a 9.9% reduction in the overall supply of rental housing. That reduction, however, was driven by a 38% reduction in the number of rental units affordable to renter households with incomes above 120% of AMI. At the same time, the researchers found that rent stabilization reforms were associated with a 42.1% increase in the number of units affordable to extremely low-income renters (renter households with incomes at or below 30% of AMI).
The researchers conclude that rent stabilization reforms may increase affordability for renters with the lowest incomes, though longer-term impacts remain unclear. They call for more research to understand the effects of rent stabilization over time, hypothesizing that decreases in overall supply could negatively impact the lowest-income renters in the long term. If higher-income renters begin to occupy rental units affordable to lower-income renters, for example, lower-income renters will have fewer affordable and available units from which to choose. The authors suggest that rent stabilization policies involve trade-offs and call for additional research to understand which rent stabilization measures best balance the need to increase affordability with the need to preserve the rental housing stock.
Read the report at: https://bit.ly/47fKSWy