When the Costs Change, Behavior of Landlords Change Tap to play or pause GIF Tap to play or pause GIF Tap to play or pause GIF Tap to play or pause GIF Price ceilings cause a drop in quality of housing. What is a price ceiling? :A price ceiling is a government-imposed price control or limit on how high a price is charged for a product.When rent control is put in place, the incentive to create a better living environment for the renters drops.This gives the land lords a good excuses to not take care of their homes.Lets pretend everyone reading this is a landlord:Price Controls are not letting you rent out your home for what you think is a fair price, so what are you going to start doing? You're going to not put as much effort into your home.This causes crappy living conditions for the renters.But can you blame the landlords? Rent Control Is Preventing New Housing Tap to play or pause GIF Tap to play or pause GIF Tap to play or pause GIF Tap to play or pause GIF Forcing rents to go below market price, it reduces the possibility of landlords making profit off of their housing. So lets all pretend we're landlords again:If we are renting out a house and not profiting off of it, then why would we want to rent it out? We would be better off not letting anyone live in our homes then renting it out. This is when shortage on housing takes place. If i'm a landlord not making money, i'm not going to want to build more housing either. Our economy is based off of selfishness, and it works. If a landlord is making money off of their own housing, and can profit from making more housing, then they do it. If they're not profiting, they wont. If i'm not getting something in return, I will not waste my time and money on it. Neither will landlords. A Grey Market In Rental Housing Tap to play or pause GIF Tap to play or pause GIF Tap to play or pause GIF Tap to play or pause GIF If the government does something, the people can find a way around it. If landlords have to charge a certain amount a month, they can still get around it.One way they can do that is by something called consumer entry costs:If the landlords are not getting what they feel they deserve they can add an entry cost.Renters must pay a huge finders fee to be able to start renting out the home they desire. Another way landlords can get the money they desire is by renting out other things:Landlords can offer their renters to rent out furniture from them. They can let them rent a few pieces of furniture a month for an extra thousand dollars. So whoever is willing to rent out the landlords furniture is more likely able to rent out the house and whoever is willing to pay the entry costs, are more likely to rent the house they want. Price ceilings have no significance on landlords who use this method to rent out their properties. Why even have price ceilings if people can get around it anyway? Maybe it's time to start letting the invisible hand do its work and get the government out of landlords business. Let The People Decide For Themselves Tap to play or pause GIF Tap to play or pause GIF Tap to play or pause GIF Tap to play or pause GIF Why were price ceilings created?To make sure people don't get ripped off by rent.Okay so that seems valid. Price ceilings are here to help people out. BUT...why can't people decide on their own if rent prices are too high. Lets say our friend Jimmy is looking for a reasonable house to rent:Jimmy: This is a great house! How much per month?Landlord: Five thousand dollars a month!Jimmy: No thank you!Jimmy then moves on to find a house for a different price and the landlord eventually finds someone who thinks the price is worth it, or lowers the rent price.Why is the government involved in this transaction? Instead of having price ceilings, just let the people sort it out. What Happens When You Get Rid Of Rent Control Tap to play or pause GIF Tap to play or pause GIF Tap to play or pause GIF Tap to play or pause GIF People respond to incentives:When landlords start to profit more off of their own property, they will start to take better care of it. Also landlords now have more money to build new homes and apartments. That creates more space for people to live in and creates a wider range of options for people to choose where they want to live. Eventually when there are more houses, market prices will be driven down to the market equilibrium. Everybody Wins!