Portland has a housing problem. When there’s not enough houses to go around, even as more people flock to the city, rents skyrocket. Now, the state of Oregon thinks it has a solution: rent control. In the long run, that’s only going to make the problem worse.
The problem in Portland is one replicated in growing cities across the country. As new jobs in existing metropolitan centers attract new workers, existing housing supply can’t keep up. With higher demand, rents necessarily rise. Those higher rates leave renters unable to afford a place to live.
In Oregon, lawmakers are rightly worried about this, and there are plenty of heart-wrenching stories of looming and actual homeless to galvanize action.
But the understandable impulse of wanting to do something to help people doesn’t make any solution that lawmakers come up with a good one. Imposing rent control is a particularly bad remedy.
Of course, the proposed legislation, which has already been approved by the State Senate and has the support of Democratic Gov. Kate Brown, does have some winners: Those people already in existing units would likely see a short-term reduction in rent hikes. But those benefits come at the expense of everyone else and will leave many unable to find housing at all, exacerbating the city’s housing crunch.
Capping rents slashes the incentive to build more housing. If rents are high and landlords know this, then putting more units on the market is profitable. Ultimately, that means more units are available, which drives down prices as landlords compete to attract tenants. But by imposing rent controls, the state cuts off that market process, leading to fewer new units and an even worse long-term housing shortage.
But the problems don’t stop there. Capping rents also means that tenants are unlikely to ever move — after all, if you’re paying well below market rate for a unit, why would you ever give it up? That means there is little housing turnover and that even as people earn more they’ll stay in their unit, likely because there a few other options in a tight market. That limits the availability of more affordable housing.
For lawmakers serious about addressing Portland’s housing crisis, there is, of course, a solution: pushing for more housing. Although that might require re-thinking land use regulations and lacks the feel-good simplicity of promising lower rents, in the long term that is the only solution to a housing shortage which is the root cause of high rents.
[Also read: Poor people not allowed in AOC’s luxury apartment complex]