A, with the promise of expanding the freezing of rents, rekindled a recurring desire in large cities: to contain the increase of prices by decree.
The proposal has immediate appeal, especially where they rise faster than wages. But, as they show decades of economic research, there is no magic that supports a price ceiling in a market marked by scarcity. The intention is legitimate. The effect, almost always, does not meet these yearnings.
Freezing policies reduce housing supply, discourage the maintenance of real estate, and transfer pressure to unregulated neighborhoods and units, which aggravates urban inequalities. In San Francisco, for example, an expansion of control in the 1990s was analyzed by Diamond, McQuade and Qian. There was a 15% drop in the offer of rental real estate after the measure, as well as increased prices of the unstructured market and accelerated gentrification. Families with the highest income occupied the neighborhoods where the freezing existed, as the old tenants were being moved with the owners changing the use of the units to avoid the measurement.
In addition to the effects on supply and quality, freezing also compromises the efficient allocation of housing. Glaeser and Luttmer show that rent control tends to generate an inefficient distribution of real estate: small families occupying large apartments, elderly alone into large units, young people and migrants sharing tight spaces into distant neighborhoods. As in this scenario the incentives do not follow the logic of use, but of permanence in the benefit, the result is that the houses do not go to those who need or more would value them.
This diagnosis, however, does not mean that nothing can be done. However, there are better alternatives. In 2016, Auckland, Na, ended the exclusively single -family in much of the city. The measure led to the construction of 20,000 additional units in just five years and helped contain the discharge of rents, according to Greenaway-McGrevy and Phillips. Instead of punctual measures, the city changed the structure of scarcity by allowing more people living where there was already infrastructure. The biggest gains were among the lower income tenants.
Portland and Minneapolis also adopted zoning reforms that allowed small buildings (3 floors) in previously residential neighborhoods. In Portland, according to City Hall data, the “Middle Housing Units” already exceed the number of single -built unifamilial houses in the previously restricted areas. In Brazil, . Anagol, Ferreira and Reach show that this has increased significantly in the benefited courts. And unlike common fear, average prices fell slightly, even in a highly pressured market.
None of this implies abandoning. But you need to go beyond the protection of existing contracts and create new housing possibilities. Well -localized, supervised and integrated social interest is part of the solution, but it only works where there is land available and permission to build. Price freezes lock both.
The dispute between tenants and owners is, in the background, a dispute over the future of cities. The owner benefits from scarcity, the tenant needs more offer. I would also love a simple way to pay less rent. But it does not exist. What exists is work, political decision and an accumulation of evidence showing that freezing do not resolve. If we want more affordable cities, we need to build more houses.
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