Democratic presidential contender Kamala Harris shored up her progressive bona fides this weekend by endorsing Oregon's first-in-the-nation statewide rent control policy, which became law last week.
"Earlier this week, [Oregon Gov. Kate Brown] made it easier for families to stay in their neighborhoods by enacting statewide rent control," Harris tweeted yesterday. "No one should ever have to choose between paying their rent each month or feeding their children," the California senator added.
Oregon's new law caps rent increases at 7 percent plus inflation per year, and it imposes new restrictions on landlords' ability to kick out tenants.
The law resembles the rent control system in San Francisco, where Harris was once district attorney. There, the price controls on rental properties resulted in exactly what most economists warn will happen: The supply of rental housing fell, and rents increased citywide.
That's according to a 2018 study from three Stanford economists who looked at an expansion of San Francisco's rent control in 1994. That year the city expanded its already existing rent regulations—which, as in Oregon, capped annual rent increases at 7 percent per year—to owner-occupied rental properties with four or fewer units, which had previously been exempted.
Because this expansion did not cover buildings that were constructed after 1980, the researchers were able to measure the effects of rent control by comparing very similar sets of housing in the same city. What they found vindicated a lot of standard critiques of rent control.
The Stanford study found that pre-1980 rent-controlled small apartment buildings saw a 25 percent decline in the number of tenants living in them compared to post-1980, non-rent-controlled buildings—often driven by landlords buying out or evicting their tenants and then converting formerly rent-controlled units to condos they're able to sell at a market price.
The same study found that tenants in rent-controlled housing were more likely to be living at the same address ten years later, and that they saved anywhere from $2,300 to $6,600 a year on rent, adding up to some $2.9 billion in savings during the period examined in the study. That sounds like fodder for rent-control fans—except that the $2.9 billion saved by tenants in rent-controlled units was matched by a 5.1 percent increase in citywide rents, which cost tenants in non-rent-controlled buildings $2.9 billion.
San Francisco today is one of the most expensive places in the country to rent, with the average one-bedroom rent going as high as $3,000 a month. It also has a persistent and worsening homelessness crisis.
Harris' enthusiastic endorsement of a policy that has failed so miserably in her own backyard is concerning, particularly as the senator has tried to present herself as a bold housing reformer.
Last summer, she introduced the Rent Relief Act, which promised refundable tax credits to folks earning as much as $125,000 per year and paying more than 30 percent of their monthly income in rent. As many pointed out at the time, this would if anything make housing more expensive by essentially subsidizing landlords for increasing rents without actually increasing the supply of rental housing.
There's a broad consensus that high housing costs in and around many of America's urban areas are the result of restrictions on new construction, and the best way of bringing prices down is to get rid of some of those restrictions. Instead, Harris is doubling down on counterproductive measures like poorly designed rent subsidies and price controls.
There's not a lot any president can do about local restrictions on new housing supply. Land use decisions are almost entirely the province of state and local governments. But there is a lot that the feds could do to make America's housing affordability problems worse. If a presidential candidate endorses statewide rent control, it's not a good sign.