In an ode to solitude, Robert Frost muses that “good fences make good neighbors.”  This makes for droll poetry but lousy housing policy.  Too many communities seem more intent on creating isolation than on helping families find a place to sleep at night.  Towns with aggressive zoning rules put up legal barriers that discourage developers and landlords from building.  In California, for example, activists use the California Environmental Quality Act to sue, protest, or shut down nearly half of all proposals, including green projects.  No wonder California ranks 49th in housing units per resident, just above palmy Hawaii.

Unfortunately, instead of scrapping expensive restrictions, many politicians take an easier route: blaming landlords and imposing rent control, one of the few policies that almost all credible economists deplore.

Last July, the Biden-Harris administration proposed a nationwide 5% annual cap on rents, and this past week, Vice President Harris aggressively promoted it on the campaign trail.  This is worse than Robert Frost; it reminds me of Eddie Murphy’s Saturday Night Live parody poem from the 1980s: “Dark and lonely on the summer night, kill my landlord, kill my landlord.”  Although rent control doesn’t leave behind a corpse, it almost always harms neighborhoods and snatches opportunities away from families searching for an apartment.

How does rent control create shortages?  At artificially low prices, people demand housing, but the law convinces landlords to constrict supply.  Utopian legislators assume that landlords have no choice once they’ve erected an apartment building.  In fact, landlords can reduce supply.  They can scrimp on repairs.  Or they can convert rental units to condominiums, cooperatives, Airbnbs, or commercial office space.  A wrecking ball cares little for history or sunk costs.

In Santa Monica, California, which features one of the most stringent rent control regimes in the country, vacant lots are often worth more than built lots because landlords are so entangled with red tape from bureaucrats and yellow tape from law enforcement visits.  Go to Google Maps and compare Santa Monica to, for example, Fort Lauderdale, Florida.  You’ll see few new structures in the former and plenty in the latter.  Santa Monica is littered with aging “dingbats” —not an insult for a dopey person, but a nickname for the dinky apartment buildings constructed in the 1950s and 1960s.  As a result, home costs in Fort Lauderdale are 68 percent lower.

U.S. politicians are not alone in flailing around with rent control.  Stockholm, Sweden has compiled a waiting list for rent-controlled housing that boasts over eight hundred thousand people — more than half the population!  Once you sign up, you will wait between nine and twenty years for a phone call.  Spotify, which launched its music-streaming business in Stockholm, struggles to retain workers.  The company has been threatening to leave the city if the rules are not relaxed and if more housing is not encouraged.

Although the Biden-Harris administration has urged cities to loosen some zoning restrictions, its counterproductive cap on rents comes with a new intrusion: banning computer algorithms that help landlords decide how much to ask from tenants.  Such algorithms gather information on rents, demographics, and occupancy levels and then resell it to landlords, along with suggestions on how much to charge for their units.  But here’s the apparently scary part of the algorithm: the program is harnessed to A.I.  And that, for some progressives, automatically implies that it has been conjured up by computer wizzes from Hades.  Note that such algorithms do not set prices; they merely suggest prices.  Moreover, rental markets are quite diffuse.  Even famous landlords like Donald Trump controlled only a tiny portion of New York’s market.

But how wise are soothsaying property algorithms, anyway?  A few years ago, Zillow, equipped with vast databases, brainy programmers, and million-dollar-a-year executives, snatched up over 30,000 “undervalued” homes across the country, poised to flip them into profit.  The CEO predicted that his “iBuyer” program would earn $20 billion each year.  Instead, it lost nearly $1 billion in 2021, prompting Zillow to bolt the doors shut and dump homes at a loss.

Utopians seem to think that waving the government’s heavy hand and incanting “abracadabra” can make the housing stock go up and housing prices go down.  But too many examples over too many decades have shown that rent control is a poor way to help the poor and a very good way to ruin a town.

Todd G. Buchholz, a former White House director of economic policy under President George W. Bush and managing director of the Tiger hedge fund, was awarded the Ally Young Teaching Prize by the Harvard Department of Economics and is the author of New Ideas from Dead Economists and The Price of Prosperity and co-author of the musical Glory Ride.  @econTodd

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