The Turbulent Effects of Oregon’s Rent Control Law

Charlie Gers


Oregon became the first state in the nation to impose statewide limits on how much landlords can increase rates after Gov. Kate Brown signed rent control legislation last month. Brown’s latest move is an attempt to address the state’s housing crisis, which has experienced a population boom and skyrocketed rent. The housing crisis is indisputably a problem in Oregon, but implementing rent control, like any other government-mandated price control, is not the solution. 

Rent control is often seen as the almighty solution to preserve affordable housing and stop skyrocketing rent prices that are unaffordable for low and middle-income families. Akin to minimum wage laws, rent control is broadcasted by politicians pandering to voters as the heroes to save the day, protecting the most vulnerable from the wealthy. Nevertheless, those who advocate for these laws have ignored the basic laws of economics that govern our nation’s policies. 

“There is no single solution — not one entity, or one person — that can solve Oregon’s housing crisis,” Ms. Brown said in a statement last month. “This new legislation is one of many actions Oregon needs to take to address our housing crisis. While it will provide some immediate relief, we need to focus on building supply in order to address Oregon’s housing challenges for the long term.” 

While cities like New York, Washington, San Francisco, and Los Angeles have established rent control laws, there has never been a statewide rent control law. Gov. Brown’s move, an attempt to combat the low supply of affordable housing, might end up exuberating the same problems it was trying to solve. Not only will enforcing a statewide rent ceiling reduce the quality of available housing but also the quantity, further inflating the housing shortage crisis. In a market economy, where production and prices are established by the laws of supply and demand, rent ceilings can distort the market and discourage the construction of new housing. 

Economists have overwhelmingly concluded, time and time again, the collateral damage of rent controls. A 1990 poll of 446 economists published in the May 1992 issue of the American Economic Review said that 93 percent of U.S. respondents fully or partly agreed that rent ceiling decreases the quantity and quality of housing availability [1]. By forcing rents below the market value, a rent ceiling diminishes the profitability of rental housing which drives investment capital out of the rental market an in to more lucrative markets. In addition, due to the lack of investment and profitability in rental housing, the existing housing properties deteriorate through condominium/cooperative conversions or direct abandonment.

Just a few months ago, Californians headed to the polls to vote on Proposition 10, which would have given cities the ability to expand rent control. The ballot initiative was fortunately defeated by more than 2 million votes, but the fact that almost 5 million voters voted to promote rent control laws across the state is concerning. Supporters across the state demonstrated in cities like Sacramento with slogans chanting, “The rent is too damn high.” What proponent of this measure fail to understand, whether it be in California or any other state, is that the unseen consequences of the execution of rent ceiling is far more pernicious than the drive of any “greedy landlord.”

The financial strain on Oregon’s renters is alarming—yes, housing costs are steadily rising while wages remain stagnant. Yes, the massive influx of migrants to the state have caused a boom in housing demand, but implementing a statewide rent control law is only a band-aid solution to the state’s housing difficulty. The intentions of the policy might sound appeasing, but it is irresponsible and harmful to apply economic laws based on their intentions rather than their actual effect. Economics is a social science and it is fundamental that we study its role in our institutions by its actual effect, not by what our ears want to hear.