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As Economics Professor Dr. Jack Steiber used to pound home. The big “P” in the sky, PRICE is where supply meets demand. Rent control is not the answer to the housing shortage. If the rent is too damn high, the answer is to build more housing. That is where we will find the pricing equilibrium, AKA The big “P” in the sky. Californians decisively rejected Proposition 33, with 62 percent voting against it. The proposal aimed to expand rent control by repealing the Costa-Hawkins Rental Housing Act of 1995, which restricts rent control on single-family homes and housing built after that year. This defeat marks the third unsuccessful attempt to repeal Costa-Hawkins, a law that landlords and property owners argue incentivizes development by limiting regulation. Opponents of Prop 33, led largely by property owners, claimed the measure would hinder new housing construction, worsening California's ongoing affordable housing crisis.
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2moIt's important to recognize that while the principles of supply and demand are foundational in economics, the application to real-world issues like housing can be more complex. The argument against rent control often hinges on the idea that limiting rent increases discourages new development and exacerbates housing shortages. However, relying solely on market forces without addressing underlying constraints might not adequately solve the crisis. In New York City, rent control has historically been a tool to provide immediate relief for tenants amid rising rents. While critics argue it discourages new development, the city has simultaneously pursued policies to incentivize affordable housing construction. For instance, the 421-a program offered tax incentives to developers building affordable units, balancing tenant protection with increased housing supply. This dual approach acknowledges the complexity of using market mechanisms alone to address housing shortages, illustrating how immediate tenant protections can coexist with long-term development strategies.