Rent Stability Is Economics, Not Election-Year Theater
Written by Gina Rodarte Quiroz
The debate over a rent freeze in Santa Barbara is being framed as politics versus sound policy. But when you strip away campaign narratives and ideological talking points, the real question is simple: In a severely supply-constrained housing market, should tenants bear 100% of the volatility risk?
That’s not a political question. It’s an economic one.
What the Evidence Actually Shows
A widely cited 2019 study in the American Economic Review examined rent control in San Francisco. Researchers found that tenants covered by rent regulation were 10–20% more likely to stay in their homes. Displacement fell significantly.
Yes, landlords adjusted over time. But the study did not conclude that rent stabilization “never works.” It concluded that tenant stability improved, while long-term supply effects depended on policy design. Stability has measurable economic value.
It reduces:
- School turnover
- Commute displacement
- Homelessness risk
- Public assistance strain
Housing instability is expensive — for families and for cities.
Modern Policies Are Not 1970s Rent Control
Opponents often invoke New York in the 1970s. But today’s policies look different. In New York City, more than one million apartments remain rent-stabilized alongside an active private market. New housing continues to be built. Investment continues.
Most modern rent caps:
- Are tied to inflation
- Exempt new construction
- Allow hardship petitions
- Exclude small owner-occupied properties
A temporary freeze during a housing crunch is not the same thing as permanent price controls across an entire market. Design matters.
The Supply Argument — And What It Misses
There is broad agreement among economists: the core driver of high rents in coastal California is supply restriction.
- Zoning limits.
- Lengthy permitting.
- High land costs.
- Construction expense.
Those are structural barriers. But here’s the key point: addressing supply constraints takes years. Rent spikes happen in months. Increasing housing production and protecting tenants from displacement are not opposing strategies. They operate on different timelines.
In tight markets like Santa Barbara — where vacancy rates are low and rents already consume a large share of income — short-term volatility can push households out faster than new housing can be built.
The Homelessness Data
Research from California Policy Lab and Zillow has found that in high-cost regions, rent increases correlate with measurable increases in homelessness.
When rents rise faster than wages and vacancy is scarce, the margin for error disappears.
Santa Barbara is not a balanced market. It is one of the most constrained housing environments in the state. In such markets, price flexibility does not produce equilibrium quickly — it produces displacement.
“Mom-and-Pop” Landlords
Small landlords face real cost pressures. Insurance, labor, and compliance costs have risen.
But stabilization policies typically include:
- Exemptions for small properties
- Capital improvement pass-throughs
- Time limitations
The choice is not between landlord survival and tenant protection. It is about distributing risk in an overheated market. And notably, corporate consolidation of rental housing has expanded most rapidly in states without rent control. Investor concentration is not uniquely caused by tenant protections.
The Real Trade-Off
Rent stabilization is not a magic solution. Economists generally agree:
- It reduces displacement
- It increases tenant predictability
- It can affect mobility
Poorly designed versions can discourage some supply. But “never works” is not supported by evidence. The reality is trade-offs — and policy design determines outcomes.
Politics Is Inevitable. Economics Still Matters.
Housing policy will always be political because housing is foundational to economic stability. But dismissing stabilization as mere election-year theater avoids the central issue: In a severely constrained market, should tenants absorb the full shock of rapid rent escalation?
A temporary rent freeze is not a revolution. It is a shock absorber. Long-term solutions require building more housing. But while that process unfolds, stability has value.
Santa Barbara’s debate should be grounded in evidence and design — not slogans from either side.
Op-Ed’s are written by community members, not representatives of edhat. The views and opinions expressed in Op-Ed articles are those of the author’s.
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A commentary based on real data, instead of whining by landlords and real estate investors. Very good!
Here is the actual abstract from the 2019 study.
Using a 1994 law change, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study its impacts on tenants and landlords. Leveraging new data tracking individuals’ migration, we find rent control limits renters’ mobility by 20 percent and lowers displacement from San Francisco. Landlords treated by rent control reduce rental housing supplies by 15 percent by selling to owner-occupants and redeveloping buildings. Thus, while rent control prevents displacement of incumbent renters in the short run, the lost rental housing supply likely drove up market rents in the long run, ultimately undermining the goals of the law.
Too bad Gina decided to only tell half of the story.
“we exploit quasi-experimental variation” says it all. Hypothetical propaganda.
Why do these analytics always fail to mention the removal of rental housing for residents from the market in favor of creating short term rental housing for tourists? No one is freezing air bnb type rents I think. As long as the licit and black market exist for this we will continue to have hedge funds and others with capital using that to buy up housing for that sort of use. Couple with rent stabilization should be an aggressive analysis of what is being removed from the competition, allowing exploitation to grow.
I agree with you.
STR has caused huge supply issues for full time renters.
In SF they are highly regulated, it must be your primary resident and it can be rented no more than 90 days a year. But not sure how enforced it is.
I am your typical mom-and-pop landlord. My wife and I are both 77. We have and have had small rentals here and other places. I would like to make an assumption, that hopefully, we can all agree on. Landlords are in the business of making money. Those of you who are employed are getting paid, and the businesses that you work for or own are making a profit. The landlord is no different. They have a significant investment in the equity of their properties and considerable costs supporting them. The landlord that is not making money will not stay in business. They will not supply housing.
What are the causes of the high cost and the scarcity of housing? There are several factors. Among them are:
Lack of new housing.
An ever-increasing population.
The high cost of building and construction.
Zoning.
High mortgage rates.
Onerous building codes and regulations.
Ever-rising costs of insurance, maintenance, government fees, taxes, utilities, etc.
Municipal, County, State, and Federal policy.
Adverse legislation.
And now criminal litigation.
Are Landlords, as a rule, the cause of these factors? Landlords want things to be as inexpensive as possible and they want profitable housing to invest in. There is not an ample supply of housing so rents increase. If there was an ample supply of housing, prices would stabilize.
Our legislatures have done little to correct the problems listed above or create additional housing. They have made small steps like allowing Granny-flat construction and modifying subdivision regulations (now tossed out by a lower court decision). The burden of mitigating the problem is placed on the landlord by legislation such as this (Rent Control) and other legislation. Currently, governmental laws and regulations are not only making investing in rentals unprofitable but they are also taking basic ownership rights away from property owners. Property owners no longer have control over who lives in their property or on what terms. On the whole, governmental actions and inaction are to blame and regulate the landlords instead of finding and correcting the root causes. These are complex, difficult issues that require complex and difficult solutions. To date, the government has not been up to the task. They are taking the easy way. They blame the landlord and make him pay for the inability of our government to do its job.
In the short run, rent control, legislation, and regulation, to date, have only been a short-term panacea. It will only create less housing and make the problem worse in the future. If the landlord cannot make a profit, he will stop investing in housing. Exacerbating this lack of profit is the increase in adverse legislation, loss of private property rights, and now the threat of prosecution. Under these conditions, landlords will only maintain their properties at a minimal level because they know they will not be reimbursed for any improvements. Landlords are now leaving units empty rather than letting tenants obtain rights over their property. The landlord can find other easier and less risky places to invest. If no one invests in housing there will be less housing. What is the alternative if the investor does not provide housing?
Obviously, you did not invest wisely, and should indeed seek less risk, since you didn’t bother to plan for it.