Thirty dollars an hour. That is the minimum salary needed for a Nevadan to afford to pay their rent, according to the Nevada Housing Coalition. And with Clark County wages at least $5,000 lower than the national average, according to the U.S. Census Bureau, it's no wonder families are hurting.

Many policy makers looking for solutions to our housing crisis hastily jump on the “rent control” bandwagon. However, advocates of rent regulation often overlook the fundamental economic principles that govern housing markets and instead treat privately owned, operated and developed rental housing as if it were a public entity. This approach ultimately harms not only housing providers but also the consumers they are aiming to protect. Rent control leads to a decrease in rental options and ultimately drives up costs even further. Historical evidence from cities that have implemented rent control illustrates these adverse effects.

Take San Francisco, for example. After the city enacted rent control in 1994, landlords began converting rental units into condos for sale or demolishing existing structures to build new ones. This shift led to a 6 percent reduction in the rental market, while rents increased by 5.1 percent citywide, as documented in a study published in the American Economic Review. The study showed that landlords’ substitution toward owner-occupied units not only lowered the supply of rental housing in the city, it also drove up the city’s overall housing supply toward less affordable types of housing that damaged housing affordability, contrary to intentions.

Santa Monica faced similar challenges. Following the implementation of rent control laws in 1979, over 900 apartment units were demolished. This trend highlights a pattern where rent control measures reduce the availability of rental properties.

Rent control makes it harder to find an apartment and degrades the quality of its beneficiaries’ housing. This is why states and local jurisdictions from Massachusetts to California have banned or greatly restricted the ability to impose rent control policies. 

Recent data from the National Apartment Association further underscores these concerns. According to its study, 54 percent of housing providers in jurisdictions with rent control expect or would consider selling their assets. This potential sell-off would lead to fewer housing options and a deteriorating rental market. The association also found that landlords are cutting back on investing in improvements and nonessential maintenance, as they struggle to absorb the costs of essential maintenance under rent control policies. 

Because of this, renters in markets with rent control suffer. Several economic studies have shown that rent control reduces landlords’ incentives to maintain and rehabilitate their units. This isn’t the only negative impact.

A lower number of units with lower rent receipts decreases a city’s tax revenues, negatively impacting a jurisdiction’s ability to provide quality parks, schools and essential services that impact residents’ daily lives. The assessed value of rent-controlled properties, which lowers property tax revenue, had detrimental effects on Cambridge and New York City after those jurisdictions enacted rent control-policies. Cambridge saw a 20 percent increase in costs of services and New York City more than doubled its spending on parks and recreation.  In Minneapolis, home values dropped by 6 percent to 7 percent for a total value loss of $1.6 billion, requiring local governments to look for alternative revenue sources or increased taxes.

Nevada can’t afford to implement failed California, Minneapolis and New York policies. 

While rent control aims to make housing more affordable, it inadvertently exacerbates the problem by reducing the supply of rental units and reducing quality of life. Policymakers must consider these unintended consequences and explore alternative solutions that truly address the housing crisis without harming the rental market.

Industry leaders and community partners agree that supply-side solutions such as increasing land, streamlining the permitting process and addressing local land use and zoning policies are proven to reduce housing costs that are burdening Nevada families. 

Donnie Gibson is president of Civil Werx, and an active member of the Nevada Contractors Association, Associated Builders and Contractors, and the Southern Nevada Home Builders Association.

The Nevada Independent welcomes informed, cogent rebuttals to opinion pieces such as this. Send them to [email protected].