International studies point to a pattern: rent control policies, intended to shield tenants in regulated units, often push up rents for those outside the system and shrink the pool of affordable housing. A meta-study by Konstantin A. Kholodilin of the German Institute for Economic Research (DIW Berlin) reviewed 1,077 empirical studies on government interventions in housing markets, including over 200 focused on rent control. In the rent-control subset, 89 out of 101 studies reported lower rents for tenants in regulated apartments, with an average reduction of about 9.4 percent. Yet most studies also flagged negative effects, such as higher rents in unregulated markets and less residential mobility. New construction and housing quality also declined. Kholodilin's review found that rent control typically led to higher rents for dwellings not covered by regulation, shifting price pressure rather than cutting costs across the board. These findings are further detailed in City A's summary of the DIW Berlin research and in previous coverage.
In the United States, a widely cited Stanford-affiliated study published in the American Economic Review examined the effects of San Francisco's rent-control expansion. The study found a 15% reduction in the availability of affected rental units after the expansion, as landlords responded by removing units from the rental market or redeveloping them. The same research projected a 5.1% increase in overall city rents, driven by these supply-side responses. These outcomes highlight the broader market effects that can arise when rent regulations are applied to only a segment of the housing stock.
Policy debate in California cities
Despite these findings, cities such as San Jose and other parts of Silicon Valley continue to pursue additional rent control measures. California's statewide Tenant Protection Act (AB 1482), which took effect on January 1, 2020, established annual rent increase limits for many covered rental properties. The statute generally caps annual rent increases at 5% plus the regional Consumer Price Index (CPI) change, up to a maximum of 10%. Certain properties, such as newer housing and other exempt categories, may fall outside the statewide limit. AB 1482 also includes "just cause" eviction protections for many tenants after they have occupied a covered property for the required period. Local ordinances can impose stricter controls, and in San Jose, the Apartment Rent Ordinance covers apartments with three or more units built before September 7, 1979, setting a 5% annual rent-increase limit for qualifying older apartments. The interaction between statewide and local rules means that the stricter applicable rule generally controls where local law applies. More details on California's rent cap can be found at FindLaw's summary of state rent increase laws.
The prevailing view among economists and academics remains that these policies, while providing immediate benefits to incumbent tenants in regulated units, can undermine affordability and limit the supply of quality housing for others. This ongoing debate echoes concerns raised in other California communities, as seen in the reported surge in eviction cases in San Francisco amid rising rents and housing pressures.
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