UC Berkeley report defends rent control in California cities

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An upcoming ballot measure has renewed debate around California over the merits of rent control and the ability of local lawmakers to address the state’s severe shortage of affordable housing.

Less than a month after UC Berkeley economist Kenneth Rosen published a paper arguing, among other things, that rent control policies have worsened the state’s housing shortage, a separate group of researchers from the school’s Haas Institute released a policy brief today arguing that rent control can be a useful tool cities can use to “address the immediate needs of California’s renters.”

In his paper, Rosen argues explicitly against Proposition 10, which would repeal the Costa Hawkins Rental Housing Act and give California cities the ability to cap rent increases on condos, single-family homes, and apartments built after 1995 (though cities would not be required to do any of these things).

The Haas Institute policy brief, on the other hand, does not mention Proposition 10 and represents a broader defense of rent control policies.

The study was written by Haas researcherNicole Montojo, former Berkeley housing director Stephen Barton, and Eli Moore, who leads the California Community Partnerships Program at the Haas Institute.

The authors dispute the common argument that rent regulations constrain the supply of housing in cities by discouraging new development—making prices higher in the long run.

They point out that, since 2000, development of new apartments in the largest California cities with rent control—Los Angeles, San Jose, San Francisco, and Oakland—has outpaced the rate of construction in surrounding areas. (All four cities, however, are lagging behind their housing production goals, according to the California Department of Housing and Community Development).

“Can we protect overburdened renters from exorbitant rents and displacement while also increasing the needed supply of housing?” they write. “We believe the answer is ‘yes.’”

With or without rent control, increasing the needed housing supply won’t be easy. According to the sate’s housing department, California needs 1.8 million new units of housing by 2025 to meet projected population growth. Even more will be needed to meaningfully drive down housing costs.

In Los Angeles alone, the Southern California Association of Nonprofit Housing estimates that 568,255 units of affordable housing are needed to satisfy demand from residents.

Proponents and critics of rent control policies generally agree that California’s affordability crisis is severe. The question is whether regulating rent increases will create more problems than it solves.

Given how much time it will take for developers to build all that new housing, the study’s authors argue cities should take immediate action to protect existing residents. Even if rent control does come with some negative consequences (like lower tax revenue for cities), they maintain that it’s a worthwhile tradeoff to ensure lower-income renters are able to stay in their homes.

“Housing production and tenant protections are needed, but only rent control will provide a near-term solution for renters,” they write.

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