^{Wealth & Poverty Review} A Majority of Americans Say They Favor Rent Caps, but the Results Say They Shouldn’t

According to a recent survey commissioned by Redfin Real Estate, the majority of U.S. residents are in favor of caps on rent increases. When presented with the statement, “there should be caps on the amount landlords are allowed to increase rent,” 82% of respondents agreed. This significant majority holds regardless of political party or homeownership, though Democrats and renters were about 7% more likely to favor rent caps than Republicans or homeowners.

What are “rent caps”? A more familiar term for the government regulation of rent increases is “rent control.” According to the National Apartment Association (NAA), only seven states, in addition to the District of Columbia, have enacted rent control policies locally or statewide.

Interestingly, an online poll from the NAA revealed that respondents living in states with rent control policies are less likely to support rent control. The Washington State legislature should keep that in mind. They nearly passed a rent control bill in 2024 and will likely make another attempt in 2025.

The Washington bill referred to the proposed 5% cap on rent increases as “rent stabilization,” whose goal is to prevent “continued harm for millions of residents” caused by “excessive rent increases.”

However, while the cost of renting is increasing, so is the cost to provide rental housing. This is why economists routinely reject rent control policies. As Redfin’s economic researcher Chen Zhao says, “if rent increases are capped below the amount developers would need to make a profit, they have little incentive to build more apartments and homes.” In the long term, a growing supply of housing is the best way to keep rent prices down.

In Washington D.C., rent-controlled units comprise about 57% of all apartment units and 25% of the total housing stock. For 2024, housing providers were prohibited from increasing rents by more than 4.9%. In the last few years, costs of operating rental housing in the city have increased significantly. Taxes have increased by 10%, electricity costs by 28.2%, property insurance by 26%, water and sewer by 34%, gas by 19%, and financing costs by more than 100%. You don’t have to be an economist to wager that when costs increase by double-digit percentages, but revenue increases are capped at single-digit percentages, something must give.

As a result, a provider of 22,000 rent-controlled housing units in D.C. announced it was shutting down several months ago thanks to an unprofitable environment. “The whole industry could collapse,” said another D.C. housing provider. Now, thousands face the loss of their homes. This is why the NAA says that rent control “hurts the very community it purports to help.” The organization takes the position that rent control “act[s] as a deterrent and disincentive to develop rental housing.” Most economists agree. The Washington Policy Center notes in a recent report that rent control, even moderated by exemptions, discourages new development and “decimates affordability.”  

The Washington State rent control bill states upfront that “homes cannot be built fast enough to meet the urgent need,” and yet proceeds to outline legislation that would dampen incentives to develop and operate housing. According to modeling by ECONorthwest, rent control implementation in Washington could lead to the loss of 26,000 units in a span of ten years. Washington State Senator Mark Mullett said the rent control bill could decrease the projected housing supply by 10,000 units per year. As the Washington Policy Center argued, “there is no amendment or adjustment” that can ameliorate the flaws of proposed rent control legislation. Rather, it’s time to “end government policies that restrict supply.”

Housing advocates in Washington D.C. described the collapse of one of its largest housing providers as “the canary in a coal mine.” Perhaps D.C. itself is the canary, and residents and legislators of Washington State would do well to heed its warning and firmly reject rent control before it’s too late.