Oregon expected to enact first state-wide rent control law

What do you mean by vacancy controls leading to reduced rental stock and lowering property values?

If high rent is the issue, vacant units should be pushed to the market instead of artificially limiting supply. Cities and residents would mutually benefit from a vacancy tax like Vancouver or similar, where international speculators are not using the units for anything useful to anyone in the city.

There's a whole article which we are commenting about a rent-control policy being passed. Why don't you consider the reasons stated for its passage in the article, instead of asking people here to restate them for you? Sealioning isn't a good way to have friendly discussions.

Economists also universally agree that free trade creates the most wealth. But this assumes that distribution and dislocation effects are ameliorated with wealth transfers on the side.

Nobody disagrees that rent control increases the average rent. The question is whether it's a worthwhile trade-off. I tend to see it as a tax on the young for the benefit of families and the elderly. In a city like San Francisco a worthwhile trade-off.

In reality, turnover tends to be relatively high in cities, and especially in San Francisco. For large apartment buildings the marginal increase in rents induced by rent control are very small. For smaller apartment buildings the risk to the landlord is greater (potentially less turnover, fewer opportunities to reset baseline to market prices). This is why I think that rent control should go hand-in-hand with density.

Rent control also increases the appeal of renting relative to purchasing as it provides the same ongoing expenditure stability. If we get rid of rent control we should simultaneously remove all incentives for home ownership. But we all know that the latter is politically infeasible. Why should we expect rent control to be any less politically infeasible? Because we tend to perceive the proponents and beneficiaries of rent control as starry-eyed liberals?

In a city like San Francisco the biggest culprit of high rents, aside from sheer demand, is zoning and the arduous approval process. All this finger wagging over rent control is counterproductive and tone deaf. If we remove rent control the biggest problems will remain. If we address the biggest problems then the "problem" of rent control will largely recede.

The same logic applies to Georgist Land Value Taxes. Conceptually they're the best way to maximize efficient use of land. But we know that they're politically infeasible. No Georgist LVT system has ever survived without exceptions and loopholes making the system honored only in the breach. We cannot underestimate the social value of price stability for something as important as housing. If you ignore the fundamental need, bad things will happen like Proposition 13.

While it’s true that rent control is Econ 101, what’s being proposed now a days is not a strict price cap.

It allows for increases above and beyond inflation, and generally above the kind of returns one could get on the stock market (in Oregon’s case it’s 7% plus CPI).

There’s also a carve out for new construction. That incentivizes capital to go to increasing supply, as opposed to the current situation where flippers add a new coat of paint, buy some stainless steel appliances and then jack up the rent.

I can easily explain this.

Two buildings are for sale. They are identical in rental income, quality, etc.. and cost the same.

The only difference between the two buildings is that one has enormous restrictions on how you own and operate the building. You as a landlord will have a cap on your potential upside in rent, but NO cap in the downside.

Which building will you buy, all other facts equal? Unless you are insane, it will be the non rent-controlled building. As such, the price of the rent-controlled building will have to be lowered to compete for a sale. Hence lower prices.