Price Control Research Paper

Governments set price controls in an attempt to solve social problems such as income inequality leading to housing issues. Rent control is a law placing a maximum price, or a “rent ceiling,” on what landlords can charge their tenants for renting out their properties (Block, 2008). The maximum price is set so that there is affordable housing for lower income groups, meaning they are not priced out of the market. In addition, this control would attempt to correct market inefficiencies. Tenants could be pressured by landlords to accept rent increases as it is difficult and expensive to move, or because they have complained, for example (Cruz, 2009).

If the rent ceiling is established below the equilibrium level, then there will be an increase in demand for housing and can cause a housing shortage.

Many of the US state governments (majorly New York) have placed rent controls so as to make housing affordable to its citizens. Landlords rent their housing units to tenants at government-controlled prices. This is done by the introduction on price ceilings and price floors. Tenants are therefore enabled

There are several forms of rent control, however they all take the shape of legally imposed below-market rates for rental housing. Most rental ceilings came into being at the end of World War II (1939-1945) to help mitigate expected disruptions in the rental housing market due to the demand shock of veterans returning from overseas service in the war. (Rent Controls, 2008) Rent control can still be seen in larger municipalities, such as New York City, to make housing more affordable for low-income tenants. In the short run, the supply for apartments is inelastic and the quantity of buildings already supplied is constant. Rent control, in the long run, reduces the availability of apartments subsequently causing suppliers not to build more apartments due to not being able to make a profit from their rentals. Shortages of rental homes can lead landlords to discriminate against renters and even demand for renters to pay extra monthly payments under the table. Rent control deters new investments that would have gone to rental housing and has validated that it leads to housing deterioration, fewer repairs, and less maintenance. For In a 1990 poll of 464 economists published in the May 1992 issue of the American Economic Review, 93 percent of U.S. respondents agreed, either completely or with provisos, that “a ceiling on rents reduces the quantity and quality of housing

After World War I, the demand for rental housing in New York City threatened to drive rents higher. In order to keep rents from rising to their equilibrium levels, city officials imposed rent ceilings. Over time, the implementation of rent ceilings caused a market shortage to occur because the demand for rent controlled units exceeded the supply. According to the law of supply and demand when the price decreases below the equilibrium point there is a move to the right on the demand curve. Conversely, the decrease in price causes a move to the left on the supply curve. Customers demand more of an item, in this case, housing, when the price is lower; however, the suppliers are willing to supply less at the new lower price. This shift in New

The upward trend in condominiums ownership by individuals is seen in the numbers: in 1971 only 5% of all condominiums were occupied by private owners, whereas in 2001 this number reached 19%. In the same year two of every three apartments formed part of a condo. In 2001 condominiums accounted for 8% of all real estate in metropolitan cities, while they were only 1% of all real estate in smaller cities or in rural areas. There was a difference between the major metropolitan centers. Almost one fifth of privately owned real estate in Vancouver in 2001 were condominiums, 70% of which were apartments. In Quebec City and Montreal this number was 80%, whereas it was 50% in such cities as Edmonton, Calgary, and Ottawa dominated by “row houses” (Canada Mortgage and Housing Corporation, 2004).

The existence of rent control apartments affect the market for non-rent-control apartments negatively. Rent control forces landlords to lease apartments at a level below the equilibrium. “If the government disrupts this equilibrium by setting a ceiling far below the market-clearing price, then it creates a shortage; that is, more people want to rent apartment units than landlords want to provide.” (Murphy, 2014). Thus, in cities with rent control, it is extremely difficult to find a place to stay. In cities without rent control “…the equilibrium rental price occurs where supply equals demand, and the market rate for an apartment perfectly matches tenants with available units.” (Murphy, 2014). Also cities without rent control experience a healthy

Without rent control analysts believe places such as Manhattan would become occupied solely by middle class and rich people the poor would be priced out of living there and forced to move to something less desirable. ​

Answer: Potential tenants, who are willing to pay more than the rent-controlled price, and potential landlords, who are willing to rent at the higher prices, are deterred

The lure of rent control is the argument that it would make housing more affordable and would prevent rent hikes. The only seeming downside would be a revenue loss for landlords, who are perceived as “1

If the price set for rent control is set below the clearing market price causing a shortage to develop.Price ceiling are used to help halt rising real estate prices in certain areas with rapid growth. If the price is set too low there will be a market shortage because quantity demanded will be higher than quantity supplied. New York City uses rent control because real estate price in that area were higher than the government felt was just for the everyday man.

When rent control is introduced, potential investors seek out another market with a higher return and this has negative effects on the housing market as investment plummets. There is no incentive to build new housing developments in the short term or long term. In an unregulated market there is a potential to make a great return on a real estate investment that has been properly planned. In contrast, it becomes very difficult to profit from residential housing in a city with rent control. This is their livelihood and they need to be able to turn a profit for themselves and the other parties involved in their investment. As a result, developers will start building commercial structures instead of residential housing. As an article from The New

As time goes on, the city of Atlantis becomes more populated. The increase in population creates a void for middle-income families finding affordable housing. The increase in population without a large increase in housing caused the city of Atlantis decides to impose rent control to assist middle-income families in finding affordable housing. In the light of rent control, Goodlife decides to reduce their supply of apartment homes available to match the cost of operations. The reduction in supply creates a price and quantity equilibrium that works for

When the rental price is artificially maintained at a low level, it will no longer represent the function of rationalizing consumption, and in this way more "lucky" people will be willing and able to occupy much larger areas than if the price could free variables.

George ascertains targeting incentives of property speculation would depress property prices allowing for affordable housing to be more widely available. The demand for land incorporates both value in use and value in exchange accounting for the accommodation built on it and its