Why can’t the private sector address the “crying need” for affordable, decent housing? The short answer is that it isn’t a private sector phenomenon but rather that regulation and restriction are in large part responsible: Ed Stringham and Ben Powell of San Jose State University have shown that housing market interventions in California that were supposed to increase the supply of low-income housing have actually made housing less affordable.
“Safety regulations” are also an issue. I came home yesterday to find that our back door lock had been replaced with the explanation that the city of Saint Louis doesn’t allow double cylinder locks. Inspections and new locks alone don’t add much to our rent, but a pile of small costs can turn into large costs rather quickly. Many municipalities also have occupancy restrictions that regulate the number of unrelated people who can share a house or apartment.
In sum, building codes and housing regulations act as a tax on occupancy. A real solution would be to scale back the extent to which governments intervene in housing markets, but that may never happen. Since it has worked so well everywhere it has been tried, why don’t we bring back rent control?
