Rent control, moving, and the limitations of cash assistance

I heard quite a bit of concern this month about President Biden’s mention of rent control in speeches and at his ill-fated debate. I asked the question, “Biden Is Out, But Will His Rent Control Proposals Outlast Him?” The simple answer is, “of course.” Price controls, including for rent, have been popular since at least the Roman Empire. Although typically associated with Democratic politicians, President Nixon imposed them in 1971 on food and wages. The federal government doesn’t have much leverage over rent, though don’t expect the rent control to disappear from the campaign trail, even with recent personnel changes.

We’re big proponents of cash solutions for housing. Flushing cash into the economy is inflationary for sure, but it is far more efficient and less inflationary than massive building programs. But a recent analysis of cash-for-rent programs indicates that there needs to be both patience in implementation and nuance in evaluation. Dylan Matthews at Vox cites several studies and recommends that we “shouldn’t be to generate clickable headline results that show how great cash is. The point should be to detail what cash can and can’t do, and build better programs that take into account those limitations.” I agree.

Moving is terrible. Rich or poor, almost nobody enjoys picking up and moving, even when moving to a better place. When I saw that Angi had conducted a poll on moving, I wondered about the impact of moving on people with less money. It should come as no surprise that people with less money tend to move themselves and don’t hire movers. I think there is a relationship to the sense of “crisis” in the housing discussion that correlates to more moves, but that idea needs more research. 

In the last decade, Austin has often been at the top of the list of cities experiencing massive growth, demand for housing, and thus rising prices. The price pressures inspired a successful effort late last year to allow three houses on single-family lots. While this was a positive move, I pointed out it was necessary but not sufficient to solve demand because other regulations still make housing expensive to build and thus price to buy and rent. Now an outward trend in migration from Austin is now affecting prices there; this will certainly dampen demand for triplexes.

Finally, this month I asked a private investor, “How do you project housing demand?” I’m talking with legislators in New Mexico who are looking to improve housing in their state. One idea is to require multivariable analysis of housing demand in economic incentive deals supported by the state’s Local Economic Development Act. Today, private companies like Netflix and Amazon can get great deals on infrastructure and other incentives for creating jobs. But they don’t have to even ask the question, “How will those jobs affect demand for housing?” let alone, “What will we do about it?” While the proposed analysis won’t require an answer, it will at least provide the kind of information that the private sector uses when it invests millions of dollars to buy or build new housing.