The Minneapolis Federal Reserve has started a regular zoom offering. Today’s event was part one in a rent stabilization series. Libby Starling from the Fed was the moderator. Edward Goetz, of the UMN and author of Clearing the Way, is known for favoring rent control. The two other panelists, Sophie House (NYU) and Jenny Schuetz (Brookings) offered new perspectives on the issue.
One objection stems from an efficiency issue. Creating an across-the-board rent control rule means that those who do not need a subsidy receive it anyway. Instead of targeted benefits to people in need of assistance, all renters benefit from an increased restriction. In fact, it is noted that all the rent-controlled apartments remaining in Manhattan are occupied by wealthy New Yorkers.
I like the image that a community has only so many dollars to devote to the financial support for people who can’t afford their housing. Worrying about the efficient allocation of this bundle of cash will keep the system tight and free(er) from fraud. Blanket rules mess with the market for rental housing. Targeting benefits while maintaining the natural flows in the shelter business will distribute resources based on priorities in an entire system.
Conjuring up a bag of cash marketed as subsidy housing money is one new framing. Another is to group types of consumers. The story of rental restrictions is always told as the battle between the poor and the horrible greedy landlord. These conversations seem more about taking money away from the investors (determining a *fair* appreciation) than trying to get people into the best housing situation. Mainstream buyers are not thinking about their seller’s finances when the make an offer on their home; they are thinking about the great kitchen and the short commute and the great schools for the kids.
When we’re trying to house the least advantaged, public dollars should be leveraged to put people in close proximity to the public services they need most. If they have kids, offer a subsidy to keep them in the same school district for the remainder of their children’s K-12 education. If they are a lower wage worker, see if the companies will participate in a subsidy which keeps the workers close-by. If the recipient of the subsidy is in need of regular medical care, have their stipend be tied to buildings close to significant medical facilities. Match the group of people the lowest rung of income to the neighborhoods which are best suited to notching them up and out of this social stratosphere.
There are some rotten landlords out there. And they need to be pursued for a higher level of service for any of the tenants who live in their buildings. But don’t tie up the bag of subsidy cash with buildings. This wastes social dollars and doesn’t get the intended recipients into the best match of housing supply.