COLUMBUS, Ga. — The topic of ‘rent control’ has recently been raised several times by city officials, leaving many economically-minded Columbusites starkly concerned for the city’s future.
Rent control is the enacting of an artificial price ceiling, through legislation, on the cost of rent for designated housing units. Its proven economic failure has increased poverty and directly caused other long-term economic woes in every city it has been implemented in since its experimental inception during the 1940s.
The notion of implementing it here in Columbus raises questions of the competency and experience of those who are elected or appointed to lead the city.
It is not a partisan issue. It is a mathematics and economics issue.
RISING RENT
The conversation of rent control here in Columbus recently began increasing as officials are now forced to face the reality of the increased cost of rent — particularly for studio apartments — as well as the doubling-rate of evictions over the course of the past two years from 2020-2022.
Earlier this week, we at the Muckraker independently analyzed and charted eight years of median rent data in Columbus to verify the phenomenon ourselves. The results showed a strong correlation between increased rent, increased evictions, and the city’s population.
What officials seem to miss, however, is that their own overdevelopment efforts are likely to blame.
By converting and constructing high-end loft apartments that rent for upwards of $1,500 per month in hopes of engineering an aMaZiNg Pollyanna of a gleaming river city, they have created a price floor — the opposite of a price ceiling — which also plays with the same proverbial fire of the supply-and-demand curve that rent control does. It is effectively the polar opposite of rent control, which circularly produces similar effects thereof. We are now experiencing those effects, as the cost of rent has gone up while evictions doubled alongside it.
THE BAND-AID PERPETUATOR
Instead of realizing that the city’s overdevelopment efforts have simply outpaced demand, officials appear to have reprieved themselves of responsibility by suggesting the band-aid symptom-treating farce of rent control.
Mayor Skip Henderson has rightfully made this point as recently as Jan.3, where he responsibly pointed out that the concept is a very dangerous one.
While it may be easy for officials to ignore the results of their own ambitions and simply say “we need rent control” instead, the reality is that it would quickly cause even more severe side effects that would perpetuate the city’s growing economic divide just as overdevelopment has. A YouTube video produced by PolicyEd does a great job explaining why using very simple language.
If you’re into a more science-based approach to the topic, another YouTube video by Jack Duffley provides a more detailed explanation by breaking down the economics behind rent control’s inevitably-flawed concept.
THE HARD SCIENCE
Housing markets, like any market of goods, must operate freely to find a balance that satisfies both the supply of housing units available and the quantity of demand for those housing units. Those two variables meet at what is called an “equilibrium price.” You can see this concept visually in the supply and demand chart shown earlier in this article.
When cities try to cheat the system by erroneously implementing rent control, they place an artificial ceiling price on that market.
Shortage Creation
Housing units that are controlled by artificial ceiling prices are then removed from the supply of housing units within the free market. As a result, the supply of competitive housing units decreases, while demand has remained the same.
When supply decreases but demand remains the same, it results in an increase in price. This is called a shortage. With a shortage of free-market housing, the prices of uncontrolled housing units skyrocket even more than they already were before the fallacious band-aid of rent control was implemented.
Stifling of Development
As free-market housing continues to spiral upwards, developers have no incentive to build new housing units in the area; new development ceases. As prices rise, supply continues to dwindle, and demand grows even further — though there are no developers building to meet that demand. As a result, the feedback loop continues, resulting in even higher rents for the entire market than before the band-aid of rent control was implemented in the first place. You become worse-off than when you started.
THE INEVITABLE RESULT
All-the-while, the rent-controlled housing remains at its artificially-fixed price ceiling, as the entire city’s free-market housing continues to spin out of control. Those super-high rents can then only be afforded by wealthier people. The cost of everyday items — the cost of living — naturally rises to meet that increase in geographical wealth.
The result is an enormous economic gap between those who live in rent-controlled apartments and those who live in uncontrolled free-market housing. That gap causes those in rent-controlled housing to pay the same cost-of-living expenses for everyday items as their wealthy counterparts, which in turn results in even greater poverty than when you started in the first place.
Twiddling the knobs to artificially adjust one variable causes undesired effects for many others. There is an entire field of science called system dynamics that pertains to this.
Let markets be markets. Develop people instead of buildings — provide leadership — and their own ingenuity might just surprise us.
Facts are stubborn things — and we’ll keep publishing them, whether city officials like them or not.
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