All Else Equal: Making Better Decisions Ep67 Real Talk on Rent Control: Its Pros and Cons
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Oct 29, 2025 As the New York City mayoral race heats up, rent control takes center stage. The hosts dissect the historical failures of rent control, comparing the housing crises in Chicago and San Francisco. They delve into how price caps can increase demand and reduce housing supply, leading to long-term negative effects on development and maintenance. The discussion also turns to the motives behind rent control and whether it truly benefits families or just distorts the market. Ultimately, they question if the benefits really justify the hefty costs.
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San Francisco vs Chicago Housing Story
- After the 1906 San Francisco earthquake half the housing stock was destroyed yet there was no housing shortage.
- Friedman and Stigler contrasted this with postwar Chicago, where rent control caused severe shortages.
Price Signals Clear Housing Markets
- Capping rents raises demand because people choose smaller or shared living arrangements rather than disappearing demand.
- After San Francisco's housing loss, price signals induced people to rent rooms and everyone found housing.
Rent Caps Reduce Supply And Quality
- Rent caps reduce supply incentives and degrade maintenance, shrinking effective housing quality.
- Landlords stop fixing units when tenants cannot be easily replaced at higher rents.
