I was taking the words "market rate" to mean "rate negotiated by people operating at arms length" as opposed to "rate dictated by government without any negotiations having taken place". But yes.
But why should anyone who already lives here care about that person?
They don't. And that's exactly the problem with rent controls: They benefit the current local residents at the expense of future residents, and hurt society as a whole. It's the same problem as property tax controls (current owners pay lower rates than future owners) and union seniority rules (current union members get paid more than future union members), which is why some states have laws prohibiting rent control in spite of the desire by local governments to impose it.
One man's problem is another man's social policy. I don't see this preference as anything more than a societal decision to give some value to social stability.
[0] To the knee-jerk downvoters: look up the demographic stats for those districts before you downvote. :)
So your argument is that the people who can't afford the asking price would move out, and the people who can afford that rate would take their place, and the net result would be that market rate would go down? Um.
What you mean to say is that market rate would go down for the average new arrival. But why should anyone who already lives here care about that person? Because they work for a startup?