Out of control: What can we learn from the end of Massachusetts rent control?

Abstract

This paper uses the sudden end of rent control in Massachusetts in 1995 to estimate the effects of rent control. I examine Boston MSA data from the American Housing Survey years 1985–1998 to determine how rent control affected the quantity, price and quality of rental housing. My results suggest rent control had little effect on the construction of new housing but did encourage owners to shift units away from rental status and reduced rents substantially. Rent control also led to deterioration in the quality of rental units, but these effects appear to have been concentrated in smaller items of physical damage. I also examine specifications that allow rent control to affect rent levels both directly through controlled status and indirectly through spillover effects from nearby rent controlled units. These estimates imply that rent control may have small effects on the price of the non-controlled rental housing stock.