A proposed ballot question for November 2026 could bring statewide rent control to Massachusetts. That’s after rent control was banned for more than three decades by lawmakers on Beacon Hill. If voters give the measure the go-ahead, annual rent increases would be capped at 5% across the state. The latest polling on that question showed more than half of people polled would vote “yes.” To take deeper look impacts of rent control, GBH’s Morning Edition host Mark Herz spoke with MIT economics professor, Jonathan Gruber.
Mark Herz: Statewide rent control was once a thing in Massachusetts and it was banned by voters in a ballot question in 1994. Tell us about that.
Jonathan Gruber: Yeah, so let’s step back. You can understand the appeal of rent control. Rents are very high. They’re rising very rapidly. This is not unique to Boston or Massachusetts. This is happening all over the major coastal economic centers. And basically, you can understand the appeal of saying, “Look, we don’t want prices to go up.” And that’s why rent control has been popular in the past. In 1994, the state, in its wisdom — and I will argue that was in its wisdom — decided to not allow cities to impose rent control.
Herz: So, now there’s a groundswell of support to do this. It has some guardrails on it, but I take it you still think it’s wrong-headed then.
Gruber: It’s against basic economics, and basic economics says that there’s supply and demand. We’ve all heard those terms. And when price is too high, either you need to lower demand or raise supply. We don’t want to lower the demand. We want people living in Massachusetts. In fact, the big problem is people are leaving. What we need to do is raise supply, and we need to build more housing. When the price is too high, you build more. Capping the price doesn’t solve the problem. It simply allows the existing set of people to have their prices not increase at the expense of other people who might benefit from living in Massachusetts.
That’s the one problem, but then it goes further, and this is based on a fascinating study that was done by a woman named Rebecca Diamond, who studied rent control in San Francisco. San Francisco rent-controlled some buildings and not others. So it’s a wonderful, what we call a natural experiment, to study rent control. Her findings are that rent control backfired in two ways that you might not have anticipated. One way that economists anticipated, but most people might not have, is that it lowered the supply of rental apartments, because if you’re a landlord and you can’t raise your rents, then you will want to stop being a landlord. So, as soon as people moved out, landlords took their apartments off the market and put them for sale, not for rental, making them unavailable and further increasing the problem of high rents. The second problem is maybe not anticipated and really fundamental, which is rent control is pitched as redistributive. That it’s going to help low income people afford to stay in Massachusetts. And that’s wrong because rent control only benefits you as long as you stay in the apartment. As soon as you need to leave, you lose the benefit of rent control. It turns out that low-income people move more than higher-income people. They’re looking for better jobs. They’re trying to find ways to improve their life. High income people already have a good job, they’re pretty settled. So what happened over time was the rent control apartments started being held by higher and higher income people. And in fact, it went backwards in terms of redistribution. Rent control benefited the rich, not the poor, because the poor couldn’t stay and take advantage of it. They had to move. The rich were the ones who could stay in place and take advantage of. It really was a bad idea, and it continues to be a bad idea.
Herz: Well, a lot of politicians are attracted to it, some are not, and I think part of the attraction is people are like, ‘we’re really hurting now, can we do anything?’
Gruber: We are really hurting now, and housing is really difficult to afford. And we can do something, which is that we can make it easier to build more housing. Once again, standard economics tells us that when something is too expensive, you want more of it. The market is screaming out for more housing. What is getting in the way is regulatory barriers that make it hard to build housing. Those are two types: one type — the type that we know a lot about — is zoning, the notion that Cambridge, for example, has said that in Cambridgeport, there are limits on how tall you can build buildings. And I understand why that’s appealing to neighbors. They don’t want to look at big buildings. On the other hand, it means that there’s all this valuable airspace not being used in Cambridge when there are thousands and thousands of people who love to move into Cambridge, live there and take advantage of the opportunities Cambridge offers. The land is already packed. There’s no more land space. There is a lot of airspace.
The second — and I have a recent research project on this — is the permitting process, which is, even conditional on being able to build something, you have to go through a lengthy permitting process. We studied this in [Las Angeles], which is a very similar housing market to Boston. In LA, the typical multifamily project takes four years from the time you apply to the time it’s built. In places like Nashville or other places like that, it’s two years. The difference is extra steps of the permitting process. What’s interesting about LA, the reason we wrote that paper, is there’s actually a bunch of specialists who specialized in buying land, doing all the permitting and then reselling it. What’s cool about that is you could say, “Okay, that tells you how costly permitting is and it’s literally half the price of the land. Literally the land that’s bought with the permitting done sells for twice as much as the lands bought without the permitting done. That is a sign of the market saying this is incredibly expensive. The delays, the extra two years in LA relative to other housing markets is doubling the price of raw land in that city. So if we want to deal with high housing prices in the commonwealth, we need to reduce the zoning restrictions, lower the permitting process. The problem is, that’s easy in theory for some egghead economists like me to say. In practice, I don’t want a tall building next to me. I want to make sure there’s good environmental checks to make sure that you’re not building on an environmentally sensitive site. I totally agree that these are a bunch of legitimate concerns. The problem is it’s death by a thousand cuts, which is that you add these concerns together and we end up massively undersupplying housing.
Herz: Okay, but how do you go explain it to some of the local politicians and the local renters who are saying, again, ”I’m in pain now, this would put me out of some of the pain,“ because I think the timeline is different, right? If you could institute rent control, that’s on a much shorter timeline, I think, than the timeline you’re talking about with actually trying to build out more and then seeing the economic effects of that on rent.
Gruber: But let’s remember, like I just described, the timeline is a choice. The timeline right now is four to five years. The timeline could be two years. If we want to address this in the near term, we can. We need to take on the regulatory barriers that are getting in the way. Now remember, this is coming from a democratic economist. Usually you hear Democrats talking about regulatory barriers, but this is really something where the center left has really coalesced with the center right on this. This is just barriers which are inefficiently getting in way of making people’s lives better.
That said, two years is still two years. Rent control will be on the ballot right away. What can we do? I think there are steps we can take. If the state really wants to do this, then what about saying to the voters, instead of rent control, we are going to pair a two-year time-limited tax credit that’s income-based for renters, in return for which we will support the kind of permitting reform that in two years allows us to get in place the housing stock that we need to bring rents under control.
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