Rent control is an example of a price ceiling. Price ceilings keep prices low for consumers. We

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Question:

Rent control is an example of a price ceiling. Price ceilings keep prices low for consumers. We can clearly see that sellers (landlords in this case) are worse off. Consider if there is an argument to be made that consumers are worse off, too.

a) After watching the Seinfeld video clip, discuss how some consumers are made better off and some are not in a rent-control situation.

b) What kinds of rationing mechanisms would develop to help allocate the few apartments that are available?

c) In your opinion, do the benefits of rent control outweigh the costs?

Post:

Holdcroft

Some consumers are made better off in a rent-control situation while others are not for a variety of reasons. According to the article 29 Major Pros & Cons Of Rent Control published by Environmental Conscience, rent control is a measure that aims to limit rents in a specific area to a certain maximum amount. The idea of rent control is meant to keep housing affordable. Other pro-rent control talking points include fewer people have to live on the streets, more money to spend on other things, may lead to better health insurance, important to ensure social stability, more money for retirement age, higher efficiency in the overall use of housing space, tenants are able to plan their future in a more secure manner, tenants may take better care of the property, tenants may stay in rented homes longer, and the reason I personally agree with, rent control is especially important for people with a low income. According to the same article, disadvantages of rent control include the right to freedom may be violated, it might not be necessary in some areas, rent control may lead to the deterioration of buildings, landlords may just ignore the rent regulations, and owners may find loopholes.

Kinds of rationing mechanisms would be developed to help allocate the few apartments that are available? As we saw in the Stossel clip, apartments in rent-controlled areas are hard to come by, especially if you have a limited budget. I would say instead of a first-come, first-serve method like the one that has been used for decades, maybe we should try stronger background checks (like what we need for gun purchases but lawmakers refuse to pass despite an overwhelming majority of Americans approve of), income checks, and a waiting list that prioritizes those in the greatest need of housing.

To be completely honest, after researching the topic of affordable housing for this week's discussion post, I feel that we need to have a better understanding of what blanket rent control really does in terms of benefits and costs. We have a housing crisis here in the United States. According to a report three months ago from the online progressive news outlet The Young Turks, private equity firm Blackstone Group has become the country's number one landlord, owning more homes than any other firm or mom-and-pop rental place in the United States, with Blackstone's main focus being on poor communities. Highlighting a report by Shandel Menezes, a journalist for the San Diego, California NBC Affiliate station, TYT anchor Ana Kasparian notes that "San Deigo County, where private equity firm Blackstone purchased 5,600 naturally occurring affordable housing units in 2021 and how, as units become vacant, the company has raised rents in some units between 43-64% in just two years." The report by Shandel Manezes as sited by The Young Turks might be focused on the San Diego area, but it highlights a much larger problem in the country. In addition to equity companies like Blackstone preying on the vulnerable, the price of rent continues to rise. According to the CNBC article Rent prices will keep going up in 2023here's what to expect, by Mike Winters, "Year-over-year rental price growth will rise from 5.8%, as of June 2022, to 8.4% as of May 2023, according to a Federal Reserve Bank of Dallas forecast that uses data from the federal government's consumer price index." I fear that this problem will only get worse unless the federal government stops with the culture war nonsense and actually work for us, the American people, instead of their wealthy donors.

References:

Madariaga, B. (2009). Economics for Life: 101 Lessons You Can Use Every Day! (3rd ed.). Cengage Learning US. https://reader2.yuzu.com/books/9780357903834

29 Major Pros & Cons Of Rent Control (Environmental Conscience), 2023. https://environmental-conscience.com/rent-control-pros-cons/#:~:text=Advantages%20of%20Rent%20Control%201%20Housing%20becomes%20more,in%20a%20more%20secure%20manner%20...%20More%20items

Winters, Mike. Rent prices will keep going up in 2023here's what to expect. (CNBC). 2022. https://www.cnbc.com/2022/09/28/how-much-higher-rent-will-go-in-2023-according-to-experts.html

Uygur, Cenk; Kasparian, Ana. How America's Largest Landlord Is SCREWING Renters & How To STOP Them (TYT Network) March 29, 2023. https://www.youtube.com/watch?v=jyUoHlfu-8E

Menezes, Shandel. New Report Claims Blackstone Group is Buying San Diego's Affordable Housing, Hiking Up Rent Prices (NBC San Diego). March 25, 2023. https://www.nbcsandiego.com/news/local/new-report-claims-blackstone-group-is-buying-san-diegos-affordable-housing-hiking-up-rent-prices/3195265/

Private Equity Stakeholder Project Report. Blackstone Comes to Collect: How America's Largest Landlord and Wall Street's Highest Paid CEO Are Jacking Up Rents and Ramping Up Evictions (March 25, 2023) https://pestakeholder.org/reports/blackstone-comes-to-collect-how-americas-largest-landlord-and-wall-streets-highest-paid-ceo-are-jacking-up-rents-and-ramping-up-evictions/