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Housing Supply and Regulation: A Study of the Rental Housing Market

Department of Sociology, University of Calfornia, Santa Barbara, California 93106

John I. Gilderbloom

Urban Studies-Department, University of Wisconsin, Green Bay, Wisconsin 54302

The country is currently experiencing a severe crisis in rental housing, characterized by chronic shortages of units that are available at prices affordable to most renters. Rapidly rising rents, declining construction of new units, and conversion of existing units to nonrental uses are all indicators of this crisis. In this paper we explore three approaches to the problem, finding difficulties with each. Rent control, advocated by tenant groups, is at best a stop-gap measure that eliminates large increases in rents; it fails, however, to provide additional housing. Public sector programs, including both housing allowances and public housing, are especially costly during inflationary periods and therefore are being severely curtailed. Finally, the private sector approach-summed up as "build more housing"-is examined in detail, in light of data obtainedfrom 115 self-contained U.S. housing markets in 1970. It is found that contrary to the predictions of supply-side theorists, housing markets characterized by a large amount of new rental housing construction do not have lower rents. Nor is vacancy rate, another indicator of relative supply, found to be associated with rent levels. These findings seriously question the wisdom of housing policies that callfor an end to local land-use and building regulations, under the false belief that such regulations are responsible for artificially restricted supply and hence higher prices and rents. We conclude with some policy suggestions of our own, including the development of such nonmarketplace alternatives to rental housing as limited-equity cooperatives and public utility housing.

The Journal of Applied Behavioral Science, Vol. 19, No. 1, 1-18 (1983)
DOI: 10.1177/002188638301900102


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