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Rent Control
Diversity goes up, not down!
Predictions of doom failed
The dire predictions about ending rent control (and the whole rationale for it in the first place) simply did not materialize. Without artificially low rents, low-income and minority households were supposedly going to get pushed out as rent burdens became heavy. Exactly the opposite happened.
Income levels declined. The new tenants who moved into vacated decontrolled units earned considerably less - $10,000 a year less — than the well-off tenants they replaced. As a result, the overall income level declined in the former rent-controlled housing stock — by about $4,000. Letting rents rise reduced tenant incomes and improved diversity, primarily because rich tenants no longer held a lock-grip on their cut-rate housing deals.
Minorities increased. A striking 25% of the tenants who moved into vacated decontrolled units were minorities. Rent control had, in fact, catered to white tenants. As a result of decontrol, the net proportion of minorities in the former rent-controlled housing stock rose to the proportion existing all along in market-rate housing.
Although it flies in the face of the self-serving rhetoric that justified rent control for 25 years, the fact is that decontrolling rents actually increased the racial and income “diversity” of Cambridge. As critics of rent control had said all along, it was a policy that gave housing “to the privileged, not the poor”
Rent burdens normalized. After two and a half years of decontrol, the average rent burden across the city was 27%, which means people on average spent 27% of their income on rent, a perfectly normal rent burden. (Federal guidelines set 30% as the limit for an “affordable” rent burden.) Before decontrol, the average rent burden was 23% for the lower-income rent — controlled tenants who ended up staying and 15% for the rich rent-controlled tenants who ended up moving out — light rent burdens in both cases. Rent control had simply lightened rent burdens for tenants who could have afforded to pay more rent.
Moderation with old tenants. The rents of tenants who stayed in their decontrolled units went, on average, from $500 to $700 a month over the two and a half years after rent control ended. Their resulting rent burden — 27% — was normal and exactly the same as market-rate tenants in the city. Their $700 average rent was, moreover, $200 lower than the average market-rate rent in Cambridge and the lowest of any renter group in the city. Owners simply could not, or would not, raise rents too sharply on tenants staying on.
Market rents slowed down. The end of rent control was a lesson in Economics 101: increased supply reduces prices. With the increased supply of market-rate apartments, market rents in Cambridge “increased more slowly than in comparable Boston neighborhoods and in the state as a whole.” During 1996, in fact, the average market rent in Cambridge declined by $4 a month. The city of Boston, ending rent control at the same time, also saw a slower increase in market rents than the Greater Boston area as a whole. These trends prove the point that rent control critics have always made: that rent control in a city affects the non-controlled housing market as well, pushing rents up in market-rate apartments by constricting the supply of available units.
Long-needed renovations. After 25 years of almost no improvements, deteriorating rent-controlled apartments finally got a new infusion of capital. Building permits for improvements to decontrolled properties rose by 68% form 1994 to 1996, while permits for market-rate properties increased just 13%. Confirming this trend, owners of former rent-controlled units (a sample of owners was also interviewed in the study) reported spending about $5,000 per unit to improve over half their units. Most of these improvements undoubtedly went into vacated units at turnover time. New tenants moving into these newly updated units paid accordingly. Their rents averaged $925 a month, the highest rent level among the various tenant groups. Nevertheless, their rent burdens — at 32% on average — were a little higher than normal but not excessive, just a couple of percentage points above the official federal guideline.
Roommates end over-housing. A large 39% of the new tenants moving into decontrolled units were roommates, compared to only 13% roommates among all former rent-controlled tenants. Doubling up, however, doesn’t mean crowding. It means a normal, economical use of housing similar to market-rate tenants. And it means an end to luxurious “over-housing” under rent control, where tenants had rented more space per person than normal because of cut-rate rents. Almost half (47%) of former rent-controlled tenants were single persons living alone in apartments often big enough for two or three persons — a sign of over-housing.
Students resume limited role. Nearly 30% of new tenants moving into decontrolled units were students. Mixing them in with the old tenants in decontrolled units (who were 10% students), the result is a population in the former rent-controlled stock that is now 17% students — still less than the 21% student population that has lived all along in market-rate housing. It seems that Cambridge could expect a stable renter population of about one-fifth students, the rest (80%) being a working population including families. A 20% or even 30% student component is not particularly large, given this city dominated by two big and famous universities.
Page Index:
Page 1: Those who moved out were the rich whites
Page 2: Predictions of doom failed
Page 3: Facts from the study
Page 4: They just won’t believe it