Rent control is not the answer

Instead of offsetting distortions with more distortions, we need plentiful housing

Last week, the Biden administration announced an exciting set of federal housing supply reforms focused not on land use regulation (which the executive branch can’t do much about unilaterally), but on land itself. This involves directing the Bureau of Land Management, the US Forest Service (USFS), and the US Postal Service to make parcels of land available for residential development, as well as interim guidance from the Department of Transportation clarifying transit agencies’ authority to build housing on land that they own. The Departments of Housing and Urban Development and of Health and Human Services, along with the General Services Administration, are also going to make unused federal buildings available at no cost to develop supportive housing for the homeless.

These reforms are all modest in scope, though I do think the post office one in particular has serious long-term potential.

The BLM and USFS ideas seem particularly powerful to me, though, because of the politics. I know that across multiple federal agencies, the Biden administration has tons of personnel who understand the housing supply-side issues very well and are pushing for ways to make it better. But they are always worried, reasonably, about the possibility for backfire and polarization. Opening up western land to housing is a pretty right-coded idea (Utah Senator Mike Lee has a bill about this) and seems like something you could roll out with bipartisan support as a way of showing that Biden is a pragmatic problem-solver who’s committed to prioritizing issues that matter to people (like housing supply) over rigid ideology.

Unfortunately, they stepped on their own good policy announcement by pairing it with some nonsense about taking on “corporate landlords” with a rather meaningless rent control proposal.

I don’t know exactly how this idea came together, but looking at the outputs, it seems like the kind of thing that happens when someone says, “Let’s do rent control!” and then a bunch of people who know that rent control is a bad idea craft a policy that is so limited across so many dimensions that it won’t actually do any harm. But this then leaves you with the question of why the White House would want to court the impression that their housing policy is being designed by leftist ideologues, when in fact it’s run by smart supply-siders. They made the announcement in tandem with Rep. Steven Horsford, an important player in the Biden renomination sweepstakes and one of the few African-American members in a swing seat. Horsford seems very excited about the populist aspects of this plan, while the administration staff I’ve spoken to are supply-siders. That said, the people who talk to me know who they’re talking to, so it’s possible rent control maniacs are lurking somewhere in the administration.

The larger issue here, as my friend Kriston Capps writes, is that people in the housing industry are worried not so much about this proposal, but that this proposal will legitimize and boost state-level rent control efforts in blue states. So it’s worth being clear: Rent control is a bad idea. If I were a state legislator, I wouldn’t be dogmatically opposed to including some rent control provisions in a broader housing package along with supply-side reforms. But we want a world of abundant housing, and you get that by making it easier to build more housing, not by making it less profitable.

Biden’s nothingburger proposal

Here is the Biden administration’s rent control proposal: