EXTRA: Why Rent Control Doesn’t Work (Update) | Freakonomics Radio

Affordability Crisis

The housing affordability crisis in major cities like New York and Boston is severe, with market prices often described as punitive and prohibitive. Stephen Dubner highlights that while rent control sounds appealing, it often leads to market failures and doesn't effectively address the issue. Ed Glaser argues that increasing the supply of moderate-cost rental apartments is a more viable solution.

What is the most natural tool towards affordability is supply. And to make sure that we are making it easy enough to build moderate cost rental apartment buildings in these cities.

--- Ed Glaser

The complexity of the crisis is further compounded by property taxes and the resistance from landlords to housing vouchers, which adds layers of difficulty to finding affordable housing 1 2.

   

Property Taxes

Property taxes play a significant role in driving up housing costs, especially in cities like New York. Dubner explains that a high percentage of rent goes towards property taxes, making it unsustainable to expect landlords to absorb these costs without passing them on to tenants. Ed Glaser notes that while renters do benefit from city services funded by these taxes, the exemptions granted to large property owners like universities and religious institutions shift the tax burden to others.

So in New York City, for example, a very high percentage of rent goes for property taxes. So we can't be saying to landlords, hey, keep prices down. But by the way, your property tax just went up by 10%.

--- Stephen Dubner

This tax structure creates a complex dynamic that impacts overall housing affordability, necessitating a holistic approach to reform 3 4.

   

Alternative Solutions

Exploring alternative solutions to the housing affordability crisis, Ed Glaser emphasizes the need for zoning reforms that allow higher density levels and streamline the building process. He points to cities like Atlanta and Houston, which have successfully maintained affordable housing by making it easy to build. Stephen Dubner adds that while housing vouchers offer flexibility, they face resistance from landlords and are not a panacea.

The thing that works best is when you have something where you've decided in advance. This is how much we're going to allow to build. There are a couple of simple rules that you've got to follow. Come here, bring your units and make it happen.

--- Ed Glaser

The discussion underscores the importance of a multifaceted approach, combining zoning reforms with other measures to effectively tackle the affordability crisis 5 2.