In case you didn’t catch it last weekend, Eileen Norcross wrote an excellent piece on rent control in New York. She touches on Charlie Rangel’s four rent control apartments scandal, some history of rent control in New York, the destructive results of rent control, vast inefficiencies caused by rent control, and moves to further subsidize low and middle income housing in New York.
I found this paragraph to be particularly startling, and I would bet that the vacancy rate for stabilized apartments is well below the overall vacancy rate:
New York has a city-wide vacancy rate of just 3% — and when good rent-stabilized apartments come on the market, you have to either know someone or pay someone (a broker, for example) to get it.
The result is that many renters who pay below-market rents are reluctant to move — because it’s too difficult to get as good a deal elsewhere in the city. Thus, economists Ed Glaeser and Erzo Luttmer estimate that 21% of the city’s renters live in apartments that are bigger or smaller than they would otherwise occupy. The controlled rents certainly don’t increase the number of affordable apartments.
This demonstrates the hoarding effect, which we can see hampers mobility and the ability of a location to adapt to market shifts.
Norcross agrees, ending the rent control regime will be a step towards solving New York’s housing shortages:
There is a better way to address the lack of reasonably priced housing in the city. If Rep. Rangel, Gov. Paterson and all the other well-to-do New Yorkers lost their rent-controlled or rent-stabilized apartments, there would be a loud public outcry to loosen regulation and allow more new construction.