Rent control suppresses new housing creation by reducing returns on investment. Zoning is only one half of the equation: you also need developers willing to build housing. Price controls limiting rental rates reduce the return developers would make [1], thus disincentivizing new housing construction.

1. Arguing that rent control doesn't suppress development because it only affects rent increases is misleading. Developers are operating on a decades-long investment horizon, so the fact that long-term renters are going to be underpaying within a few years is definitely a factor taken into account.

If you tie rent increases to COL changes YoY then rent should stay relatively indexed to wages and other expenses, while preventing landlords from manipulating occupancy at the expense of renters.

I would have happily rented for forever if we had been able to get a great apartment that was rent stabilized and had good tenant protections. It was just the unpredictability of rentals in NYC that drove us to buy.

If you tie rent increases to the prices of other goods it still results in suppressed returns on development. If there's a housing shortage and rental prices rise faster than energy, food, etc. then people will be paying less than market rate (read: suppressed returns on development). Like in San Francisco: AFAIK food, energy, and other staples did not rise significantly faster than other areas. But housing shortages led to significant rent increases.

The only way rent control doesn't suppress returns on development is if the maximum rent increases are higher than what the rental increases would be absent rent control.

The thing is, that assumption that without rent controls, developers can finance more money on builds hinges on the fact that supply is constrained, and will continue to be constrained in the future such that rents will march past average wages. At which point you have to wonder who is being served by laws set up like that? Certainly not the city, which has a tacit interest in housing all the workers that generate its economic activity within its own borders just for tax base reasons to cover the infrastructure these workers use to work in said city. Certainly not the workers of the city, who would like to live a reasonable distance from their job for a reasonable proportion of their net pay. The only real benefactor from such a paradigm are those that stand to make profit hand over fist from this status quo, and these people are often not the central cogs of the regional economy that makes the place such a place to invest in the first place. They are more like a parasitic loss on the system versus serving any mutually beneficial function to the system. These beneficiaries may live outside of the system entirely, and basically serve to extract wages from the system which aren't replaced much like any other extractive industry.

Now, there is a solid argument that apartments have gotten too expensive due to regulation. Look at any apartment building and what do you often see? Its cladded in tiny 3 feet by 8 feet balconies that can scarcely hold a cafe table, it often has some big central mostly useless courtyard like area within the complex itself to check a box for some outdoor space requirement, and it has a parking garage that extends 100 feet into the earth. All of these things are also brought on by regulation that demands the developer to build these things if they are to see the build approved. These can also all be nixed, and in many cases they have been used pretty much to just serve as a vehicle for graft for city officials. Put a bag of popcorn in your microwave and then read about Jose Huizar if you want a brief of how these sorts of things function in large american cities.

That being said there is no rational reason to support advancing rents past wages. Why would there be? Its the snake eating itself; the race to the bottom is that you end up with only the high income sliver of your regional economy of workers living where the job activity takes place, which is pretty wholly terrible for the environment and also deprives most of the opportunities that present themselves from being able to live near a major job center. We should be doing anything we can to prevent this race to the bottom, just for our own climates sake if the mere wellbeing of your fellow worker isn't enough.

The city absolutely is being served. If there's no money to be made building housing, then nobody is going to build housing and there will be a shortage. The beneficiaries aren't just the developers making a profit: it's also the renters paying normal rents instead of suffering from a housing shortage.

There's also the political ramifications of rent control: people paying far below market rates have little incentive to support the construction of additional housing, and more frequently try to shut down developments. One of the most ardent anti-development activists in San Francisco turned out to be paying $740 a month in an apartment estimated to rent for $4,500 at market rate. Get rid of price controls, and I bet this person would stop being a NIMBY overnight.

> That being said there is no rational reason to support advancing rents past wages. Why would there be?

To spur the construction of new housing! If there's a food shortage, the last thing you want to do is cap the price of bread. No, you let the prices rise so that more farmers grow food. If people are struggling to buy food maybe subsidize it to make it affordable. If the price of food is capped, then there's nothing to drive greater food production.

The same dynamic exists with rent control: cap the price of housing and people end up paying less than market rate. Developers realize they won't be making a favorable return on investment when they build in a rent controlled city so they move elsewhere.

Rent control reduces supply of housing.

How? All it does is set the rate of rent increase to e.g. 4% a year, it does nothing about the zoning of the lot. For example, people always cite something like someone in greenwich village getting a deal on an apartment, and that is somehow constraining development, while ignoring that the neighborhood of greenwich village is built to over 90% of its zoned capacity, and you cant add very many more units there even if you could get away with renting them for a million dollars a month and had permission to level whatever building was on the lot previously. Plenty of cities actually saw significant downsizing to zoned capcity since the 1960s, when things were certainly more affordable by most accounts. Sometimes by factors of 4 or more fold reductions in zoned capacity when you account for population size. The city of LA itself for example is built to over 90% of its zoned capacity. 2.

1. http://furmancenter.org/files/sotc/SOC2009_State_of_New_York... 2. https://la.curbed.com/2015/4/8/9972362/everything-wrong-with...

> How?

Two ways:

1. Some people will naturally want to move out of their rent-controlled apartment, for example to be closer to a new job or to get more space for a newborn. Those people are disincentivized to move because rent control means they are currently paying below-market rent.

Incidentally, that also increases traffic congestion because nobody wants to move across town to be closer to work. So you commute to where I live and I commute to where you live, instead of us both living within walking distance of work.

2. Rent control normally does not include an adjustment for inflation. And, when it does, the rule is usually "rent can increase by x% of rent or y% of CPI, whichever is lower ". That means that over decades, rent falls in real-dollar terms.

Since potential landlords can do math (they have that technology) they can see that the ROI of an apartment building (measured in decades) is lower in places with rent control. That disincentivizes them to buying or building apartments.

Lastly, it seems like you're really trying to hang your hat on zoned capacity. The thing is that zoning can change. If the ROI looks right, landlords will lobby the city for a zoning variance to increase capacity. If it doesn't, they won't.