Rent regulation is winning. Outcry mounts as new projects stall

"Opponents of rent control and rent stabilization are dialing up their vocal opposition to the housing affordability tactic as an empty promise, even as more major U.S. cities move to strengthen tenant protections. Economists and investors increasingly argue that such policies tank new housing development and investment at the very moment concerns about affordability intensify. Their warnings come as rent regulations gain political electability momentum in some of the nation's largest and most expensive markets."

"Los Angeles recently tightened its rent stabilization. New York City elected a new mayor who promises to expand rent stabilization. Washington state passed a new law on rent control earlier this year, while Oregon strengthened its 2019 laws. Massachusetts has a 2026 ballot initiative to bring back statewide rent control. Critics, however, seize on new evidence showing a decline in new building permits in Montgomery County, MD, since rent stabilization took effect last year."

"Rent control and stabilization critics also jumped on a recent Wall Street Journal article highlighting the contrast in construction between St. Paul, which passed the country's strictest rent control in 2022, and Minneapolis, which chose to encourage building. St. Paul construction dried up while Minneapolis flourished. Reckoning with the negative impact of their rules on new residential development, St. Paul's city council walked back rent control by passing exemptions for new ground-up construction and any number of apartments built since 2004."

Opponents of rent control and rent stabilization argue that the policies undermine housing affordability by discouraging new development and investment. Economists and investors warn that rent limits reduce housing supply precisely when affordability concerns grow. Several major U.S. jurisdictions have recently tightened or proposed rent regulations, including Los Angeles, New York City, Washington State, Oregon, and a Massachusetts ballot initiative. Critics cite falling new-building permits in Montgomery County, MD after stabilization took effect and contrast construction declines in St. Paul with growth in neighboring Minneapolis. St. Paul later exempted new ground-up construction after development stalled.

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