As the graphical Supply/Demand analysis above of rent control illustrates very clearly, rent control laws that artificially force the rental price of housing (P1 above) below the market-clearing equilibrium price (P0) are guaranteed to create a housing shortage by: a) increasing the number of rental units demanded at the artificially low rents (QD) and b) decreasing the number of rental units supplied to the market (QS). You can artificially restrict the amount of rent a landlord can legally charge for a rental unit, but you can’t force developers, builders, and landlords to build or supply more rental housing in the future. And the supply of rental housing in markets with rent control is guaranteed to decline.
If a perverse public policy goal was, in fact, to guarantee that there would a continued and worsening supply of rental housing, there would be no more effective way to ensure that outcome that a government rent control law. And despite the best of intentions on behalf of policymakers to promote more affordable housing with rent control laws as a way to combat high housing prices, the reality is that those very laws are guaranteed, with 100% certainty, to do the opposite by making affordable housing as scarce as possible. Price controls aren’t the answer. Building more housing is the only real solution to increase the supply of affordable housing.