The persistent housing shortage is a recurring issue in legislative discussions, with demand consistently outpacing supply. One proposed solution is rent control, aimed at making housing more affordable. However, while well-intentioned, rent control often exacerbates the very problem it seeks to solve. By limiting rental income, it discourages investment in property maintenance and improvements, leading to a decline in housing quality.
Additionally, rent control can create a mismatch between demand and supply. Artificially low rents attract tenants but also prompt landlords to withdraw properties from the market or convert them to other uses, reducing available rental units. This increases competition for the remaining homes, driving up prices in the uncontrolled market.
Economists across the political spectrum consistently argue that rent control discourages investment in housing. When landlords are restricted in how much they can charge, there is less incentive to maintain or improve their properties. Over time, this leads to a deterioration in housing quality. As properties age and repairs are neglected, tenants are left with fewer safe and livable options.
Rent control also discourages new construction, as developers, wary of future rent restrictions, may focus on luxury or commercial projects instead, further reducing housing supply. Moreover, rent control often benefits wealthier, long-term tenants while making it more difficult for newcomers, particularly lower-income individuals, to find affordable housing.
Rent control policies are the exact opposite of what we need in New Mexico right now. What we do need is incentives and programs for developers to see New Mexico as a business-friendly market and to encourage them to help us alleviate the housing shortages.
Instead of rent control, more effective solutions include increasing housing supply, incentivizing new construction, and addressing underlying issues like zoning restrictions and scarcity. What New Mexico needs is a business-friendly environment that encourages developers to help solve the housing crisis, not policies that hinder progress.
Clay Azar, CCIM, is Qualifying Broker at Metro Commercial Realty, Inc.
