Rent controls are a price ceiling intended to protect residents from high housing prices. Rent controls are currently in place in many U.S. cities, including New York, Washington, D.C., Newark, New Jersey, and San Jose, California. Most of these measures were enacted during either World War I1 or the 1970s, when inflation was high. Rent controls peaked in the mid-1980s. At that time, more than 200 cities, encompassing about 20 percent of the nation’s population, imposed rent controls.
Because rent controls push the price of rental housing below the equilibrium level, the amount of rental housing demanded by consumers will exceed the amount landlords will make available. Initially, if the mandated price is only slightly below equilibrium, the impact of rent controls may be barely noticeable. Over time, however, the effects will worsen. Inevitably, rent controls will lead to the following results.