On Tuesday, the Santa Barbara City Council will (potentially) decide how to increase rents and decrease the availability of apartments through a “rent stabilization” program.
As has been well-documented by virtually all economists — including me — across the globe and political spectrum, controlling rents or their growth ultimately leads to exactly the opposite of what the proponents of such controls are hoping to achieve.
At the May 21 UCSB Economic Forecast Project Summit at The Granada Theatre, I suggested a solution that actually works!
It sounds … and is remarkably simple: Increase the SUPPLY of apartments through thoughtful permitting, zoning and removing onerous regulations, such as requiring any units being built to set aside a large percentage of so-called affordable units.
One example presented at the EFP event was Austin, Texas.
Rents in Texas’ capital city were growing the fastest of any major metropolitan area in the United States. In September 2021, Austin rents grew about 25% since the previous September, according to Realtor.com research.
Since the implementation of supply-side incentives, however, Austin rents fell the fastest of any major metro.
The efforts worked, From 2015 to 2024, Austin added 120,000 units to its housing stock — an increase of 30%, more than three times the overall rate of growth in the United States (9%).
Due to the increased supply, rents fell. In December 2021, Austin’s median rent was $1,546, near its highest level ever and 15% higher than the U.S. median of $1,346.
By January 2026, Austin’s median rent had fallen to $1,296, 4% lower than that of the United States overall ($1,353).
This decline occurred even though the city population grew by 18,000 residents from 2022 to 2024.
In apartment buildings with 50 or more units, rents fell 7% from 2023 to 2024 alone — the steepest decline recorded in any large metropolitan area.
Rents declined about 11% in older nonluxury buildings that cater to lower-income renters, known as Class C buildings, according to Pew Research.
It is unfortunate that “rent control” seemingly appeals to both our policymakers and the general public as a way to keep rents low and availability high.
Nothing could be further from the truth.
It is time for policymakers to be honest about helping achieve affordable housing. The fact that some of our incumbent city council members ran on a rent control (or stabilization) platform has likely caused them to keep pushing that line.
It is time for them to say that the policies that achieve affordable housing are not the policies they have embraced.
If the newer rent stabilization policies being bandied about are put in place, be willing to accept the dire consequences of those policies.
Think Austin. Admit to your constituents that there is a better way … through increasing supply.
