The People's Republic and Rent Control

Pictured: Harvard Square; Image Credit: Chestnut Hill Realty 

While last week's post explored the idea of rent control as stalling to exodus of middle class urbanites from pricey neighborhoods, this week we're taking a closer look at the watershed rent control debate in Cambridge, MA- a city that prides itself as a scholarly place committed to diversity and equal opportunity (and also hometown to some of the best affordable housing research, thanks to Harvard and MIT economists and urban planners). The City of Cambridge first implemented rent control in 1970, limiting price caps to rental properties built before 1969. As a result of the City's decision, affected units in Cambridge rented for between 25 and 40% less than comparable noncontrolled apartments in Cambridge and surrounding cities. While rent control did provide opportunities for low-income residents and students to remain in Cambridge, price caps eventually led to quality issues, as landlords had no incentive to renovate or maintain their buildings. Habitability concerns comprised part of the campaign to end rent control. While the 1994 referendum to decontrol rent in three Massachusetts municipalities- Boston, Brookline, and Cambridge- narrowly passed statewide, the measure received robust support among Cambridge voters, with approximately 60% approval. See Mass. Ann. Laws ch. 40P, § 4 (West 2010). At the time, members of the Small Property Owners Association (SPOA) hailed the referendum as addressing concerns about the inequality of living conditions between noncontrolled and rent-controlled units.

Since rent-stabilization ended in Massachusetts on January 1, 1995, property values of formerly rent-controlled and non-controlled units in Cambridge rose, especially those in neighborhoods that once featured many rent-controlled buildings. Rising rents led to a spillover effect in a majority of other Cambridge neighborhoods and, by 2011, the median rent of a 2-bedroom apartment Cambridge was $1,537, well above the state average. Community activists claim that the lack of rent control has threatened Cambridge's identity as an economically diverse community, as more affluent residents have pushed moderate-income residents out of the area and magnified the income gap. What does the future hold for Cambridge, a city trying to reap the benefits of price controls without quality concerns? Urban planners and housing advocates have recently pushed for more sustainable affordable housing (both larger and smaller units) in mixed-used projects that combine commercial and residential tenants or the possibility of providing housing vouchers to low and moderate-income residents who would otherwise have occupied rent-controlled apartments. Such proposals seek to develop low-cost, high-quality housing and avoid the criticism that rent control sacrifices quality for affordability.