Meditations and Learnings

Meditations and Learnings

Rent Control Creates Housing Shortages

Investment in producing a product is only worthwhile so long as it is an efficient use of the required resources. The price that the product can demand is how we measure whether it is worth the resources. Artificially lowering the price may make manufacturing the product no longer be profitable, reducing the quantity supplied. With something like housing, rent control will make maintenance of existing housing disadvantageous. Given time the house will eventually be uninhabitable further decreasing the available housing. During eight years of rent control in Washington during the 1970s, that city’s available rental housing stock declined from a little more than 199,000 units to under 176,000 units.