The effects of selective decontrol in the NYC rental housing market

Abstract

During the past decade, over 200 cities in the United States have imposed rent control [Baird, t980, pp. 54-7]. Although most likely a response to the accelerating inflation of the 1970's, this second generation of rent control has been justified on the grounds of the existence of a housing crisis. In different locales the crises are described variously as arising from a housing shortage, low vacancy rates, rent increases, tenant hardship, housing deterioration, lack of new construction, or environmental necessity [Baar and Keating, 1975, p. 490]. Invariably, newly enacted rent control ordinances are presented as temporary measures. Presumably, policymakers view the imposition of rent control and its concomitant effects as reversible after the housing crisis, however defined, has passed. But is this assumption correct? Does decontrol restore market rents, maintenance levels, optimal crowding, and tenant mobility? Or are housing units permanently altered by virtue of their having been under rent controls? These are important issues in evaluating rent control as a feature of local housing policy. Surprisingly little empirical work has been done on the relationship between rent control and housing quality, crowding, and tenant turnover. Furthermore, the authors have found no empirical studies dealing with decontrol. The purpose of this paper is to make a modest contribution to understanding the efficacy of decontrol by exploring the effects of selective decontrol in New York City (NYC). The data used in this study are taken from the 1968 Special NYC Housing