Boston’s housing crisis won’t be solved by our city or state government stepping in to set rent prices.
The high costs of housing are caused by a lack of housing production. Rent control does nothing to solve the root of the problem and, in fact, will only deepen our crisis. It will have an adverse impact on our seniors, the disabled, those on a fixed income, and our citizens of color who own property and provide housing in their communities.
Boston needs to build 5,000 new apartment homes each year to meet demand. A recent industry study shows that rent control would cut the number of apartments built each year by more than 700, cut apartment property values by $262 million, and cut property taxes to the city of Boston by $2.3 million. Today, Boston is among the most restrictive and costly cities in which to build new apartments, falling only behind the island city of Honolulu in terms of difficulty.
In 2021, new apartment deliveries of ground-up construction in the Boston metropolitan area were the lowest since 2016 and fell below 7,500 for just the second time in seven years. A number of issues caused this disruption in the market, including labor shortages, fewer permits processed, material costs, and supply chain concerns. While the inventory of higher end apartments has caught up significantly over the last decade, a shortage of starter homes, market rate, and mixed income homes remains.
Housing providers large and small – especially those based in our neighborhoods – need an incentive to move beyond the Seaport, Back Bay, and Cambridge, and into the communities that need more housing choices for their residents. They will certainly be reluctant to invest in Boston if rent control is adopted.
Here are some facts: The total number of rental units in Cambridge and Brookline dropped by 8 percent and 12 percent, respectively, in the 1980s following the passage of rent control in large part because development stagnated. Over the long-term, rent control results in fewer apartments because there are fewer incentives for owners to invest in new housing.
The still-new Housing Choice Act rewards communities that produce new housing and adopt best practices around housing production. It is a landmark law supported by leaders on both sides of the aisle. It should be supported and given time to work, particularly since many communities have already begun acting on these incentives. Passing rent control now would undermine the promise of this important state law.
Massachusetts apartments and their residents contribute $61.4 billion to the state economy every year and support 268,200 jobs. The economic impact of rent control in Massachusetts would be staggering, decreasing apartment property values by more than $800 million and decreasing apartment rental income by more than $30 million each year. Perhaps more importantly to the cities and towns throughout Massachusetts, it would decrease property tax revenue by more than $7 million a year.
Sixty-five percent of Massachusetts apartments were built before 1980, 36 percent of those were built before 1959. These apartment owners are our neighbors, many of them small business owners who rely on this rent to support their families, to pay their mortgages, and to earn their livings. They take care of their properties and the people in them.
During our last failed experience with rent control, owners who don’t have the ability to even marginally increase rents to keep up with costs or cover repairs will be either forced to sell their properties to developers or allow them to fall into a state of disrepair. That hurts communities.
Adding to the confusion, the proposals at the State House are need blind – meaning that rents would be limited for the needy and wealthy alike.
Even if the occupant’s income and assets exceed those of the owners, the occupants’ rent would still be subject to limited increases, forcing the owner to subsidize their tenant’s housing costs regardless of their ability to pay.
These are challenging times. Rent control, sadly, is an easy policy talking point for a problem that will require far more complex solutions.
Economists and housing policy experts agree rent control doesn’t work. It results in fewer affordable options while reducing the quality of the housing we have. Rebranding it as stabilization or tenant protection is just that: a rebrand for a tired, failed policy idea.
Melvin A. Viera, Jr. has been a Realtor for more than 30 years, currently with RE/MAX Destiny in Boston. He serves as volunteer president of the Greater Boston Association of Realtors.