A new study by economists at MetroSight, sponsored by the National Apartment Association (NAA) and the National Multifamily Housing Council (NMHC), finds that housing regulations significantly increase operating costs, discourage new construction, and ultimately limit the availability and affordability of rental housing in the U.S.
“As housing continues to be a topic of discussion amongst state, local, and federal lawmakers, this study importantly quantifies how regulations ultimately increase costs for housing providers and renters alike,” said NAA President and CEO Bob Pinnegar. “At a time that demands bold action on housing affordability, policymakers must reject damaging regulations and instead turn to sustainable solutions that lower costs and increase housing supply.”
The study analyzed the impact of various housing regulations, including source-of-income laws, right-to-counsel statutes, just cause eviction laws, and restrictions on criminal and resident screening. Key findings include:
• Source-of-income laws increase operational costs, such as vacancy losses, by more than 10%, likely due to the complex leasing process associated with Housing Choice Vouchers.
• Just cause eviction laws and right-to-counsel statutes increase collection losses by over 37%, possibly due to prolonged eviction processes.
• Restrictions on criminal and resident screening raise capital expenditure costs by more than 17%, as housing providers invest in property upgrades and raise rents to offset compliance costs.
“The debate over housing policy and affordability has never been more important than it is today,” said NMHC President Sharon Wilson Géno. “This research will help inform the discussion and educate lawmakers at all levels of government on how policies they propose may have unintended consequences.”
The study utilized data from NAA’s annual Survey of Operating Income and Expenses in Rental Apartment Communities covering 600,000 to 850,000 units nationwide between 2004 and 2021.
“Balancing the need to protect renters with the need to control costs and maintain operational viability is difficult,” said MetroSight Economist and Founder Issi Romem, Ph.D. “The data provided by the NAA offers a rare opportunity to evaluate how policy decisions shape housing outcomes.”
The headline for this piece may as well have been “Dog Bites Man.”
Regulation increases costs. Duh,
It may seem obvious, but we operate as though it weren’t
So when you paint the landlord as the bad guy, and make their job harder, more time consuming, more risky, and more expensive — in the guise of helping tenants many of whom would otherwise not qualify — the landlords — all of them collectively and necessarily — raise the rent to offset the cost of doing business, making housing more expensive for everyone, when instead rent could have just been lower for everyone. What a concept.
The regulations in this article are not defined, but appear to be those that are intended to protect tenants (and the government’s interest in their own Section 8 program).
As a result, I cannot fully determine if these are the type of regulations that YIMBYs and Trump would have a problem with. Probably though, since the type of organizations who created this study are on that same side as well.
(Trump would probably prefer to eliminate Section 8 altogether.)
In other words, tenants themselves would probably be supportive of these type of regulations, despite the claimed “concern” emanating from the business interests who created this study. (Especially tenants who receive Section 8 vouchers.)
But one thing I’ve increasingly learned (mostly by reading the Vanguard) is that numbers presented by self-interested groups should not be taken at face value. That’s also how we got an undefined “housing crisis”, a grossly-distorted “count” of the number of homeless who are from a given locale, etc.
It would be better to question how the presenters came up with numbers/percentages, but that’s not as easy to do as simply screaming “crisis”. (And if you repeat it enough times, people forget to even ask how numbers/percentages were derived.)
This summary is somewhat deceptive because it highlights how much added costs increase, not how much rents increase. 37% of a very small number is still a very small number. Looking at Figure 1 on p. 7, this is in fact the case. All of the cost increases added up only increase rents by 8%. And there’s no analysis of offsetting benefits to tenants such as increased accessibility for those closed out of these markets without these regulations, or even left homeless. Rents have much more than 8% so we need to focus elsewhere first to solve the bigger problem.