The National Multifamily Housing Council (NMHC) recently refuted a letter from 32 economists to the Federal Housing Finance Agency, claiming to present empirical evidence that rent control is beneficial. NMHC pointed out that the academics cited by the economists actually concluded that rent control has had negative effects.
“These economists come from various disciplines, including political and labor economics; however, most appear to have limited or no experience as housing economists,” said NMHC. “We agree with the signatories of this letter that many households in our country are facing an affordability crisis when it comes to housing; however, we cannot let false information spread about decades of factual evidence showing how detrimental rent regulations can be.”
For instance, Rebecca Diamond’s 2019 study published in American Economic Review – which was also mentioned by these 32 economists – found “while rent control prevents displacement of existing tenants in short-term scenarios; it likely leads to increased market rents over time and ultimately defeats its own purpose”. Instead of relying on such regulations for assistance with rental costs , Diamond recommended government subsidies or tax credits as a more effective solution for providing insurance against rising rents .
