How can rent controls cause a decrease in supply of housing? Do the landlords break down their buildings all because of rent control?

Expert Answers

An illustration of the letter 'A' in a speech bubbles

All economists agree that rent control does in fact decrease the supply of housing.  As I understand it, you're asking how this happens because you don't see how the supply will go down from what it already is.

The first thing to understand is that this analysis is talking in...

Unlock
This Answer Now

Start your 48-hour free trial to unlock this answer and thousands more. Enjoy eNotes ad-free and cancel anytime.

Start your 48-Hour Free Trial

All economists agree that rent control does in fact decrease the supply of housing.  As I understand it, you're asking how this happens because you don't see how the supply will go down from what it already is.

The first thing to understand is that this analysis is talking in part about the long term/the future.  If rent controls are imposed, people who were thinking about building apartment buildings won't because the profits won't be high enough.

The other thing that can happen is not that landlords tear down their buildings, but that they just stop keeping them up and maintaining them like they would have before.  This reduces the supply of decent housing because eventually the apartments deteriorate to being low-quality and eventually to being unlivable.

Approved by eNotes Editorial Team