OPINION: High rent is a serious problem. Rent control is never the solution

Caleb Garbuio, Opinion Editor

Boone is split into two groups: permanent residents and students. Yet, both groups struggle to find cheap affordable housing in a decent location.

According to 2017 U.S. Census Bureau statistics, the average household in Watauga County is 2.35 people; per capita income is $24,545; and the median income is $41,541. However, around 28.3% of Wataugans live in poverty, meaning 15,831 people live in a household earning between $16,910 and $21,310 based on the county’s average household, according to Data USA. 

This is problematic when analyzing the cost of a one-bedroom or two-bedroom apartment. According to Apartments.com, the cheapest one-bedroom apartments in Boone for non-students go for $890 per month, totaling $10,680 a year. The cheapest two-bedroom apartment for non-students is $625 per person a month, $1,250 total, $7,500 or $15,000 a year. This means that some residents are spending 50.12% to 70.39% of their annual income on rent, depending on their living conditions.

To add insult to injury, App State will grow to 20,000 students by 2020. This means the price of housing will rise, according to the economic Law of Demand. This influx of students may benefit some local businesses, but it is unlikely that the wages of workers will increase at a level of inflation brought on by the students. This means that lower-waged workers will make the same amount as before and deal with higher rent prices.

Clearly, something must be done to assist our community’s most vulnerable members. However, there are often unintended negative consequences to well-intended policies, economist Adam Smith said. Therefore, policies that sound good on paper may have negative consequences that can make problems worse.

Rent control, a mandated cap on the amount of money landlords are allowed to charge, is one example of a policy that sounds good in practice. However, based on any empirical metric, it does more harm than good because it operates as a price ceiling: restricting the number of houses available while damaging producer profit margins should it be placed below market equilibrium. Market equilibrium is the market efficiency. The number of houses available for rent will go down because producers will be unwilling or unable to increase the number of properties available for rent.

Herein lies the problem: housing is scarce because students and residents have to compete to find suitable housing. Imposing rent control would decrease the number of houses available for individuals to rent because it would result in more people looking for rent in relation to housing available. Furthermore, rent control would operate as a barrier to potential property rental development because potential producers would struggle to break even with their operating expenses.

This has real-world consequences: high rent in San Francisco forced city officials to impose rent control on landlords resulting in a shortage of rental property, according to Market Urbanism Reports. In essence, rent control is bad for both tenants and landlords because it restricts market forces from enabling prices return to a manageable level.

It is the duty of local government to protect vulnerable members of our community. Therefore, something needs to be done to alleviate the financial burden that rent puts on those members of society.

A solution to this problem could include government legislation and free market forces. Say, for instance, the government offers rent-controlled apartments to qualified individuals. This offering would subsidize the gap between the regular amount owed from non-assisted apartments while simultaneously drafting legislation to attract investors to invest in property rentals with tax incentives.

Should this result in a shift in the overall supply of apartment development on par with demand, the price will drop to more affordable levels, according to the Law of Supply. Once this level is reached, the amount of government assistance needed will decrease.