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Comparative Analysis of NYC & San Francisco 

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Comparative Analysis of NYC & San Francisco 

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New York City: Maximum Base Rent System (MBR)

Sets a ceiling on rent but allows periodic increases.

Adjusts for inflation, property taxes, and maintenance costs.

Aims to balance tenant protection with landlord profitability.

Encourages landlords to maintain properties due to built-in adjustments.

San Francisco: Strict Rent Control

Caps annual rent increases.

Applies mostly to buildings built before 1980.

Focused on tenant stability & affordability.

No adjustment for rising costs disincentivizes landlords from investing in their properties.

New constructions often exempt, creating a divide in housing markets.

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Discourages new construction.

Discourages renovations and maintenance.

Landlords convert rentals to condos or commercial spaces according to a Stanford Study in 2019.

Artificially low rents = Increased demand

Reduced supply = Housing shortages

Creates a misallocation of housing.

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Cost Benefit: Individuals will only move forward with something if the benefits outweigh the costs

Opportunity Cost: When choosing to live in a city like New York, you are choosing to spend your money on rent rather than something, which describes the scarcity of money.

Price Ceilings: The highest price a seller can charge for a product or service

Inelasticity of Demand: Low income individuals represent a very inelastic demand, meaning that even if rent rises drastically, they are more willing to pay higher prices

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Summary of the Policy:

NYC rent control aims to improve housing affordability.

Over time, it has led to housing shortages and reduced investment.

While well-intentioned, the long-term market effects are negative.

Descriptive Analysis (What happens):

Acts as a binding price ceiling → demand increases, supply decreases.

Results in unit conversions, reduced maintenance, and shrinking rental stock.

Current tenants benefit from lower rent; future tenants face fewer options.

Normative Analysis (What should happen):

Policy fails to promote long-term equity and efficiency.

Market distortion harms future renters, landlords, and the housing ecosystem.

Better outcomes come from policies that support both access and supply.

Final Recommendation:

Wisconsin should avoid strict rent ceilings.

Instead, focus on:

Housing vouchers

Tax incentives for developers

Zoning reforms to increase density and supply

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Winners:

Current tenants (especially low-income) benefit from below-market rents

Short-term affordability improves, but long-term quality declines

Losers:

Landlords: Reduced profits lead to deferred maintenance or condo conversions

Future renters: Face shortages, long waitlists, and poorer-quality housing

Society: Deadweight loss, reduced labor mobility, and intergenerational inequality

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1) Housing vouchers

Direct aid to low-income tenants

Preserves market prices while ensuring affordability

2) Tax incentives for developers

Encourages new construction (counteracts rent control’s supply reduction)

3) Zoning reforms

Legalize higher-density housing to address scarcity

Prevents NYC-style shortages without price controls

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Topic: Rent Control in NYC-The Government Intervention

What is it: Rent Control is a housing policy based on the Maximum Base Rent(MBR) system, aiming to protect tenants in buildings constructed before 1947 by limiting the maximum rent landlord can charge.

How does it work: MBR system renew every 2 years, reflecting changes like maintenance and taxes costs.

Advantages: The rent increase rate is usually around 7.5% or less, making sure the housing is affordable for tenants and financially stable for

landlords.

Disadvantages: Rent control leads to housing shortage, reduced property maintenance, and distorted market behaviors.

Our Focus: Economic context(including supply&demand, price ceilings, opportunity cost)The application of equilibrium model through graph, real world example of NYC and San Francisco, unintended consequences, Stakeholder analysis and policy recommendations.

Through these analyzation, we hope to reveal the story behind rent control through economic view, providing recommendations for other states like WI.