Rent control in the U.S. comes in two flavors: capping rent growth for market-rate units and keeping designated units at below-market rates. Both of these rent restrictions are controversial. Some cities like Minneapolis and Los Angeles recently adopted or expanded their rent control programs while many states, like Montana, Florida and Ohio, preemptively banned rent control. More than 300 cities and a handful of states have rent control policies in place as of 2026.

Rent control is controversial in part because research has shown positive, neutral and negative impacts from these policies. Importantly, most of the research has been constrained to individual MSAs and the idiosyncratic form of rent control in those cities. Depending on the specific outcome the research tested for, often-narrow findings were generalized into policy success or failure.

But now we know better. For the first time, researchers broadly examined different variants of rent control and measured the effect on total housing supply across different markets, finding that “rent control is associated with a 10.4% reduction in total number of units in a city.” ¹

The relative decrease in housing is not uniform across income brackets. Rent control policies on average increase the supply by more than 50% for households making less than 30% of an MSA’s median income (AMI). But there’s a 46% reduction in housing for high-income households, those making more than 120% of AMI. The net of those effects is a meaningful reduction in total housing. And those findings line up with the supply/demand thoughts you’re having right now: Prior research that shows rent control really does lower costs for tenants in the controlled units but increases rents for everyone else.

These are averages. The strongest effects happen in larger metros, places with fast population growth and places that were already seeing housing shortages.

How does higher-end housing supply disappear over time? Condo conversion is one reason, and the multi-year migraine required to get a conversion done starts to look more appealing if your high-end apartments become subject to a rent-growth cap. In addition, rent control policies limit the expected profits from a prospective rental development, considerably slowing the delivery of supply in an MSA.

It’s worth pointing out prior research measured at most “a few cities at a time,” but the current research used “machine-learning to identify 96 rent control and rent stabilization reforms across 27 US metropolitan areas between 2000 and… 2021. Our analysis covers [more than] 4,000 census places.”

The paper breaks down rent control reforms as more and less restrictive. More restrictive reforms increased costs and/or reduced revenue for landlords, like a city imposing a lower ceiling on allowable rent growth. Less restrictive policies are the opposite. They note Richmond, California, initiated a rent control regime in 2015 capping increases to local CPI; this was a “more restrictive reform.” San Francisco in 2001 gave landlords the right to require renters in regulated units to pay for capital projects that improved the building, which was a “less restrictive” reform.

Unsurprisingly, more restrictive rent control reforms lead to greater reductions in the total rental housing supply: There is “a 12.3% reduction in total rental supply in places enacting more restrictive rent control reforms.”

You can see in the chart below the increase after 2014 of restrictive rent control reforms in metropolitan regions, including Boston, LA, New York City, San Francisco and Washington, D.C., among others.

The researchers provide some color on their results, if not in their charts, touching on key points everyone should keep in mind when forming an opinion on these policies.

First, while there’s great evidence that with rent control, the lowest-income demographic sees an increase in units they can afford, it doesn’t mean people in this demographic actually get to live in those units. Rent control “protects incumbency,” meaning it helps people already living in rent controlled units, but in many jurisdictions those residents do not have to income-qualify to stay there. That is a meaningful design flaw. In fact there are studies that suggest rent control actually “benefits low, middle and high-income tenants equally.”

We also don’t know the quality of the new units that become affordable to the lowest-income households. The increase in lower-cost units doesn’t mean more affordable units are built ground-up; it may reflect landlords investing less in their apartment buildings given the diminished profit incentive, and those neglected units drift down the affordability ladder..

And finally, the researchers also identified an ongoing, nationwide imbalance between high housing demand and lower housing supply as a significant “long run” risk to low-income households generally, a risk that rent control likely can not fix. Adding context to that, the study period ended just as construction costs were spiking nationally - up 48% since July 2020, a headwind that makes new supply even harder to justify under a rent-controlled return profile.

None of this means rent control is purely good or purely bad. What the research shows is that it reshapes housing markets in predictable ways: It shifts units down the affordability ladder, it protects tenants already in place and - this is the “especially bad” part - it reduces the overall rental supply, especially at the higher end of the market. That trade-off might be acceptable depending on a city’s policy goals, but it's difficult to argue that less overall supply is healthy for a high-rent city. Stabilized rents for today's incumbents are a poor trade for the diminished incentives to build and maintain the housing supply. And in a country already struggling with a structural housing shortage, that tension is unlikely to resolve itself anytime soon. A structural housing shortage doesn't respond well to policies that make building less attractive.

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Americans are considerably less happy than they were before COVID, and the happiest among us pre-COVID fell the hardest.

According to our friend Aziz Sunderji’s Home Economics newsletter, “the single biggest drop was among top income earners: their “very happy” share dropped 19 points, from 49% to 30%.” Home owners and college grads also fell significantly. The most resilient demographic? People who see friends often. There’s a lesson in this…

Link: https://homeeconomics.substack.com/p/the-great-happiness-compression

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