Rent Stabilization in Rockville
Testimony before Mayor & Council from July 8, 2024
Good Evening
I’m here tonight to advocate in favor of Rockville’s efforts to address housing costs and stabilize rents. Public engagement on this topic in Rockville to-date has been very lopsided in favor of rent stabilization, but I believe some folks are advocating for the wrong approach to achieve this goal. The best approach to make renting more affordable is through increasing housing supply, rather than through caps on rent increases.
I am not minimizing the burden unexpected rent increases can put on lower-income families. I believe folks advocating for strict rent caps are well intentioned, and while capping rent increases may seem like an intuitive solution, in the long run rent control can do more harm than good for the people they are trying to help. A recent review of empirical research published in the Journal of Housing Economics found that while rent control can slow the growth of rents in controlled units, it decreases the quality of housing in those units because landlords invest less in maintenance. It also increases rents in uncontrolled units, incentivizes landlords to convert to condominiums, and reduces the overall supply of rental housing because developers will simply choose to build in other cities where it’s more profitable to do so. This hurts anyone, including folks with lower incomes, who wants to move here for economic opportunity by making it more expensive for them to do so. There is near-unanimous consensus among economists on this issue; to ignore them would be akin to ignoring the consensus among scientists that climate change is real.
These are not just theoretical concerns; housing development has drastically slowed in jurisdictions that have implemented strict rent control measures. In St. Paul, Minnesota, multi-family building permits were down by 82% after rent control was passed. Right in our backyard in Takoma Park, the supply of rental units has been shrinking for decades since rent control passed, and development in wider Montgomery County is already being negatively impacted by their new rent stabilization law. On the flip side, there are countless real world examples of how the solution to rising rents is increased housing supply. Cities like Minneapolis, Raleigh, and Austin, which have recently relaxed zoning and allowed substantial housing development, have had flat or declining rents despite strong population growth, while in most American cities rents have continued to skyrocket over the same time period.
The problem is not landlord greed; all businesses are always trying to maximize their profits. However, constraining housing supply forces renters here to compete with each other for limited apartments, which drives up rents, whereas we should be taking advantage of landlord greed by forcing more landlords to compete with each other to try to attract renters.
These policies will not affect me personally. I am not a landlord, and am also not currently a renter, but I am a resident of Rockville that is concerned about the many folks who are not as fortunate as I am and who struggle with the cost of housing. I therefore urge the mayor and council to carefully consider the long-term unintended consequences of strict rent control measures, and instead pursue supply-based policies which would be much more effective at making housing here more affordable.
Thank You for your time.
References and Resources:
Economic Literature Review on Rent Control: https://www.sciencedirect.com/science/article/pii/S1051137724000020
Real-World Examples of Increasing Housing Supply
Auckland, New Zealand: https://x.com/ArmandDoma/status/1723226101596791007
Raleigh, NC: https://www.axios.com/local/raleigh/2024/02/28/rents-fall-in-raleigh-as-new-apartments-open
Minneapolis, MN: https://www.seattletimes.com/business/first-american-city-to-tame-inflation-owes-success-to-affordable-housing/
Austin, TX: https://therealdeal.com/texas/2024/02/12/austin-multifamily-rent-prices-drop-by-12-5/
Real-World Examples of Rent Control:
Berlin, Germany: https://archive.ph/aMpJ4
St. Paul, MN:
Takoma Park, MD: https://montgomeryperspective.com/2023/03/24/city-report-reveals-devastating-toll-of-takoma-park-rent-control/
Perspectives on Rent Control in Montgomery County: