Rent control won’t solve the affordable housing program

Affordable rentals in Santa Barbara are really hard to find. I get it, but rent control will just make it that much harder to find them. What makes me say this? Three things. First, as an economist, I have read many studies on the impacts of rent controls, and this is what they show. Second, as someone who has lived in Berkeley and Santa Monica, I have seen firsthand how much rent control can harm those who don’t have the right connections or don’t fit the profile of a “good” tenant. And third, my partner and I own a single family rental in SB and don’t want to worry about rent control. If the city decides to go ahead, we will probably sell. I don’t think we will be the only ones to make this decision.

Economists have studied the impacts of rent controls for a long time – the first study I know of was published in 1946. Typical conclusions when rents are capped include (1) a reduction in housing available for rent; (2) a deterioration of the remaining rental housing stock; (3) economic gains for existing tenants; (4) economic losses for owners who continue to rent; and (5) a trend toward renting toward older, smaller households—a trend that becomes more pronounced over time. The impacts are mitigated by the lack of control over vacancies and adjustments in the cost of living, but they still exist.

These findings resonate with me because of my own experience. As an undergraduate at Berkeley, I “inherited” a rent-controlled apartment from a friend. But I lost that apartment soon after, because the owner converted the building into a condominium. When I got my first job out of grad school in Santa Monica, I looked for rent for more than a month. Finally, I found the perfect place: a rent-controlled apartment just two miles from my work. It was run by a small agency that a co-worker had heard about. It was not widely publicized and the application process required an in-person visit. The building was in good condition and the rent was about half of what I had seen advertised for similar places. In fact, the apartment was bigger than I really needed and the rent was less than I expected to pay.

I don’t remember much about who lived in that building except that they were white, single, and spoke English. Three years later, I moved to my partner’s house in SB, but kept the place in Santa Monica as a hangout for a night or two a week when I wasn’t traveling. I kept at it for another five years, until I finally decided it didn’t make sense for a two-bedroom rental apartment to be empty five days a week.

About 20 years later, my partner and I now own two homes in Santa Barbara, which was made possible because my partner’s mother left her home to us when she passed away. Initially we thought about selling one, but we reconsidered: Who passes up the opportunity to have two houses in SB? Well, the answer will probably be us, if the city introduces rent control. We are not professional landlords and do not have the time or money to deal with piles of paperwork or maintenance costs that are not covered by the rent. It will probably make more sense from an economic point of view, as well as for our mental health, to sell the rented house and invest the profits elsewhere.

In short – all those studies on rent control and its impacts? I believe them. It’s true that rent control helps existing renters. I should know, I benefited from this for eight years. But rent control will only reduce the overall number of affordable rentals. Fewer new units will be built and many existing units will be sold or given to family members or converted into condominiums – as I discovered in Berkeley. Other units will remain rented but will be underutilized because tenants won’t give them up even if they move out – like me, with my house in Santa Monica. And finally, for many people, the process of finding a rental unit will become even more difficult under rent control. Landlords will be more selective, because being stuck with a bad tenant will be very expensive. Over time, there is a real danger that SB neighborhoods will become even less diverse, less family-oriented, and less available to low-income earners. If we don’t want this for Santa Barbara, let’s look for other solutions to our affordable housing problem.