Jul 14, 2015
1 comment

A proposal to implement rent control in Richmond was criticized by an economist and research fellow at the Mercatus Center at George Mason University as a “bad policy that just won’t die.”

“Trying to find an economist who doesn’t think that rent control is a bad idea is like trying to find a cheap apartment in a city with rent control; it can be done, but you have to spend a lot of time looking,” Adam Millsap wrote in his Mercatus Center blog Monday.

On July 21, Richmond City Council is set to discuss whether to implement rigorous versions of rent control — an annual cap on the amount landlords can increase rental rates — and just cause eviction policies in the city. The policies are being pushed by tenants advocates and the three Richmond Progressive Alliance (RPA) members on the seven-member City Council (Gayle Mclaughlin, Eduardo Martinez and Jovanka Beckles). The RPA currently has a majority vote on the proposals as they have support from Councilmember Jael Myrick.

Mayor Tom Butt and Councilmembers Nat Bates and Vinay Pimple oppose the policies.

RPA members say rising rents brought on by the Bay Area’s economic boom are displacing low-income residents, who need protections. They cite several studies, one of which shows that asking prices for monthly rents in Richmond have gone up more than 24-percent in the last four years.

But Millsap says economists have proven time and again that rent control policies are misguided and only exacerbate housing problems.

“Unfortunately, rent control will not solve the problem of too little housing, which is the ultimate cause of high prices,” he said, using diagrams to illustrate his points.

When searching for housing in a rent-controlled market, Millsap said, “some people will find a place to rent at the old, lower rental price…but more people will want to rent at that price than there are units available, and since the price cannot rise due to the price control, the available apartments will have to be allocated some other way. This means longer wait times for vacant apartments and higher search costs.”

It also means lower quality apartments, Millsap said.

“Since the owners know there are more people who want an apartment than available apartments, they don’t have an incentive to maintain the apartment at the same level as they would if they had to attract customers,” he said.

This warning has been repeated by Mayor Butt, who believes the city should continue to focus on increasing housing supply.

Butt has often pointed to cities like San Francisco, Berkeley and Oakland, where rent control policies have not stopped rates from skyrocketing. When a tenant moves from a rent-controlled unit, a landlord’s incentive is to set the new price as high as possible, the mayor points out. That reduces the number of affordable rental units each year as more people move, and contributes to the increase in rental rates in cities with rent control policies, he says. On Monday, the San Francisco Chronicle posted an article entitled, “SF rent-controlled apartments lost as fast as new ones are built.”

Additionally, the mayor says, with rent control, low-income tenants end up iced out of the housing market, as landlords seeking to maximize rates after tenants move out “will select only the most creditworthy tenants with the best references.”

Pimple has additionally argued that studies show rent control policies have led to segregation in cities.

With all the evidence against rent control, Millsap says he’s puzzled cities continue to consider the policy.

“Yet despite basic economic theory, the agreement among experts, and the empirical evidence (see here, here, and here) rent control remains in some places and is often brought up as a viable policy for increasing the amount of affordable housing,” he wrote. “This is truly a shame since what places like Richmond need is more housing, not less housing with artificially low prices.”

Butt says the city is “aggressively seeking to increase the supply,” using as an example a recent $5.1 million award to build the 80-unit Miraflores Senior Housing Project.


  1. Trying to find a rent control “advocate” that has actually picked up a hammer or pulled a building permit is an even smaller sample size.

    Ron DuBois | Jul 14th, 2015

About the Author

Mike Aldax is the editor of the Richmond Standard. He has 13 years of journalism experience, most recently as a reporter for the San Francisco Examiner. He previously held roles as reporter and editor at Bay City News, Napa Valley Register, Garden Island Newspaper in Kaua’i, and the Queens Courier in New York City.