Massachusetts rent control repeal fallout in the 1990s a lesson for today

When Massachusetts last debated rent control in any meaningful way in the early 1990s, the parley broke two ways.

Opponents saw rent control as a source of distortion of the housing market and one that rewarded the lucky rather than truly aided the less affluent. Rent control took apartments out of general circulation, lowering supply, and thereby drove up market-rate rents further. It also disincentivized landlords to make upgrades.

Ditch rent control, these opponents said, and rents would drop as supply increased.

As for proponents, they saw rent control—which took on different forms depending on the municipality—as a way to aid tenants competing in a housing market that was one of the most expensive in the nation and one where landlords in general held the upper hand.

Ditch rent control, these proponents said, and watch rents rise even higher.

Who was right? It’s hard to say definitively, but it looks like the proponents were—though they lost at the ballot box in November 1994. Massachusetts residents voted 51 percent to 49 percent to croak rent control statewide, though it was only in effect still in Boston, Brookline, and Cambridge—majorities in each of which voted to retain it.

Here’s what happened in the years following repeal of rent control. The municipalities that had retained it found themselves scrambling to find ways to extend the tenant protections, as recounted in Matthew Schuerman’s new book Newcomers: Gentrification and Its Discontents. When that failed, Boston et al wound down the system gradually; and, as 1996 closed, rent control disappeared from Massachusetts.

Then the evictions and the rent increases came. As Schuerman notes, 5,000 of the approximately 60,000 rent-controlled households in Boston were evicted. “Suffolk County Housing Court,” Schuerman writes, “was seeing 400 cases a day, an increase of 29 percent over three years earlier and an all-time record.”

As for the rents, a 1998 survey of Cambridge showed that, far from reducing rents in general, the repeal of rent control drove leasing costs up for both formerly controlled apartments and un-controlled ones as well—40 percent higher in the case of the former and 13 percent in the latter.

“The findings refuted the commonly held belief that abolishing rent control would bring housing costs under control,” Schuerman writes.

He also notes, however, that given the strong economy of mid-1990s Cambridge—including the first real rumblings of the technology and biotechnology sectors that would animate much of the city in the coming decades—it’s hard to say if rent control repeal alone spurred the increases. But it does appear that decontrol spurred landlords to improve their formerly controlled properties and to raise rents afterward.

Whatever the causes, the fates of rent-controlled tenants and of general market-rate rents following repeal in the mid-1990s has resonance today as lawmakers, landlords, tenants, and assorted wonks debate bringing back a local option for rent control.

Similar arguments are heard today. Proponents of resurrecting rent control see it as a path to tenant protections, particularly in the Boston area, which is one of the most expensive rental markets in the world. Opponents say it will disincentivize those improvements and lead to even higher market-rate rents.

Representative Mike Connolly of Cambridge is one of two sponsors—along with Nika Elugardo of Boston—of the Tenant Protection Act, which would, in Connolly’s words, “enable flexible, local options to help stop displacement.”

The pending legislation would offer municipalities a veritable toolkit to choose from in enacting tenant protections, including rent boards to set limits on rent increases and regulations for strengthening the position of tenants when an apartment building goes condo. The legislation does not cover owner-occupied dwellings with three of fewer units—and municipalities would be free to opt out of any rent control system.

The state legislature’s Joint Committee on Housing is expected to hold a hearing on the Tenant Protection Act this winter, Connolly said. He said that he and Elugardo are still introducing it and gathering feedback.

“[B]ut judging by the fact that states like Oregon, California, and New York have passed similar bills to protect tenants this year,” Connolly said in an email, “I think it’s safe to say there’s a lot of potential here to bring people to the table to protect tenants and stop displacement in ways that make sense on the local level.”

Meanwhile, the fallout from the 1990s shadows the debate. Perhaps the biggest takeaway is a macroeconomic one. The repeal of rent control returned some 16,000 housing units to the general Cambridge market, a move that one might assume would lead to lower rents.

That’s treating housing like a commodity, though, as Matthew Schuerman writes, like corn or oil. “But housing isn’t exactly a commodity: its desirability is based on location, amenities, and other characteristics.” And Cambridge was increasingly an uber-desirable place to live by the time the last rent control debate peaked in 1994. It remained so afterward—and is so today, as is the Boston area at large.

“Just as producing a few thousand more Mercedes won’t substantially lower its price,” Schuerman notes, “deregulating a few thousand more housing units in Cambridge won’t bring rents down.”