Reality TV Star Jason Oppenheim Questions Rent Control Policy

Why does the government pay for food stamps but rely on landlords to provide rent-regulated housing?

Brokerage leader Jason Oppenheim, he of reality TV fame and 1.5 million Instagram followers, commented on a TRD Instagram post that the government treats hunger differently from housing.

Oppenheim asked why we impose rent control on apartments, although we don’t put price controls on food as a way to combat hunger.

He observed that SNAP benefits and rental vouchers are publicly funded, but rent control places the burden on landlords:

“We issue food stamps only, so why wouldn’t we issue rental vouchers only? If we want to help tenants, we should all have to pay — it should come from taxes … We shouldn’t be punishing a particular group of people like landlords.”

He added, “It seems obvious when we discuss food assistance but for some reason with rental assistance, we take the exact opposite approach and it is a totally failed and unfair approach.”

It’s an excellent way to frame the question. Oppenheim is correct that rent control is unsuccessful and unjust — especially in New York, where six-figure earners enjoy rent-stabilized units and homelessness is rampant. But there is a reason price controls were adopted for housing and not food.

It starts with the physical difference: Buildings last for decades, but food has a short shelf life. It is constantly consumed and replaced.

Therefore, slapping rent control on certain properties (in New York City, pre-1974 buildings with six or more units) doesn’t change the number of those buildings. Buildings are not used up and replaced the way food is.

Price controls on food would cause farmers and food manufacturers to produce less of it. Food shortages would be immediate and deadly. But rent-controlled buildings continue to house people for decades.

Rent control applied to old buildings also causes shortages: The vacancy rate of rent-stabilized housing in New York City is about 1 percent. The idea in New York was to keep old buildings affordable but exempt new ones from rent control, so developers would meet the city’s need for new supply.

This is why price controls for housing appeals to people more than price controls for something perishable, like food. But it’s still bad policy, for a host of reasons.

One is that buildings are perishable, in their own way. They become dated, then outdated, and eventually deteriorate, because why invest money that generates no return? Even crappy buildings fill up because the rents are low.

In some cases, the landlord has no money left for repairs and improvements after paying the utility bills, taxes, insurance and mortgage.

The result is low rent but terrible living conditions — and, ultimately, vacant units. The housing shortage gets worse.

Another risk of rent stabilization was that it would spread beyond pre-1974 buildings. That has happened.

Affordable housing rents are typically subject to Rent Guidelines Board increases, which have not kept up with operating expenses. So even some post-1974 buildings are in the red and racking up violations.

One more consequence of rent stabilization was that it made it extremely difficult to replace old apartment buildings with larger ones. This choked off new supply, pushing up market-rate rents.

Oppenheimer’s comment reminds me of a key difference between food stamps and rental vouchers.

SNAP has been found to generate more economic impact than any other subsidy, because recipients put the money right back into the local economy. Yet SNAP doesn’t drive up the price of groceries because food is so plentiful.

Cheap housing, however, is scarce, so rental vouchers do push up rents because they increase demand for homes. A voucher offers a chance to move out of your sister’s. But it can expire before you find a place.

SNAP won’t expire before you find groceries, because, as Oppenheimer noted, we don’t curb food production with price controls.

Rental vouchers are still good. They would be even better if housing were as plentiful as food.