Do Rent Increases Reduce the Housing Supply Under Rent Control? Evidence from Evictions in San Francisco
66 Pages Posted: 20 Apr 2018 Last revised: 20 Jul 2018
Date Written: July 8, 2018
Rent control tries to balance tenancy security and landlord profitability, but landlords may try to circumvent rent control by exiting the controlled market via no-fault evictions. If rent increases incentivize these no-fault evictions, then the existence of the controlled housing stock may be threatened, because many cities and states ban imposing controls on new construction. I test for no-fault economic evictions using an identification strategy that proxies for rent increases via the transit amenity generated by privately-provided commuter shuttle systems, and instrument for shuttle stop location endogeneity with exogenous placement constraints. Shuttle-induced rent increases increased the monthly no-fault probability by 0.04%, or an extra 13 no-fault evictions per month, with further evidence that this probability rises as price pressures increase. Additional results show that policies raising barriers to market withdrawals/no-fault evictions cause controlled landlords to respond by turning over their tenants at higher rates via at-fault evictions.
Keywords: Rent Control, Evictions, Private Transportation, LASSO
JEL Classification: R31, R32, R52, K11
Suggested Citation: Suggested Citation