Rent Control and the Housing Debate with Ash Navabi

Episode Summary

Executive Summary: Ash Navabi argues that Ontario’s rollback of rent control for new units is pro-consumer, not anti-tenant, because rent ceilings reduce housing supply, mobility, and labor-market flexibility. The discussion expands to show how zoning, vacancy constraints, and eviction rules make housing scarcer, raise rents, and push low-income people into worse outcomes than market-oriented reform would.

Main Topics: Ontario’s rent control reversal (Priority: 5/5): Navabi explains the old Ontario rent-control regime and the Ford government’s change exempting newly built or newly offered units after Nov. 15, 2018 from rent control. Why rent control reduces supply and mobility (Priority: 5/5): The core economic claim is that price ceilings lower turnover, discourage construction, and make both housing and labor markets less liquid. Low-income tenants and screening effects (Priority: 4/5): He argues rent control can make landlords more selective, increasing non-price screening like credit checks and references, which can hurt low-income and younger applicants. Zoning and the housing shortage (Priority: 5/5): The conversation broadens to land-use restrictions, single-family zoning, and local political capture that prevent higher-density housing from being built. Politics, incentives, and public choice (Priority: 4/5): They discuss how homeowners and incumbents use local government to impose costs on others at low or zero cost, versus voluntary contracting in market settings. Housing as a durable good and filtering (Priority: 4/5): Navabi emphasizes that housing markets work through quality tiers and turnover over time, with older units filtering down to lower-income households if enough new housing is built. International comparisons and density (Priority: 3/5): Tokyo/Japan are used as examples of places with much easier housing construction and smaller living spaces, contrasted with North American regulatory constraints.

Key Arguments: Rent control is a price ceiling, and economic theory predicts it will reduce supply, turnover, and availability just like price ceilings in other markets. Even a seemingly mild rent-control regime creates lock-in because tenants are less likely to move if they would lose their controlled rent. Reduced mobility harms the labor market by making it harder for workers to relocate for better jobs and making cities harder to staff. Landlords facing stronger tenant protections respond by requiring more screening, which can exclude low-income, young, or low-credit applicants. Zoning and land-use regulation are major drivers of housing scarcity because they restrict where and what kind of housing can be built. Building more housing, including luxury housing, can lower overall prices through competition and filtering rather than benefiting only the rich. Public opposition to development often reflects incumbent homeowners using political power to block competing land uses at others’ expense. The housing problem is not merely affordability but a structural shortage of units relative to demand. Voluntary covenants and market transactions can coordinate land use without coercive zoning, and at least force parties to bear the cost of their preferences. Difficult eviction rules can favor abusive tenants and raise the perceived risk of renting, further discouraging supply.

Data Points: Ontario rent control start: 1975 - Navabi says Ontario first introduced rent control in 1975. Post-1991 exemption: Housing built after 1991 was exempt from rent control - He describes the Conservative-era rule that only pre-1991 units were controlled. Fair Housing Plan points: 16 - Kathleen Wynne’s 2017 Fair Housing Plan included 16 policy changes. New exemption cutoff: November 15, 2018 - Doug Ford’s government exempted new units built or brought to market after this date. Toronto rental vacancy rate: 0.7% - He cites Toronto’s very low rental vacancy rate as evidence of scarcity. Toronto zoning restriction share: 40-50% - He claims roughly 40% to 50% of Toronto land is zoned for detached homes. Overtime comments on op-ed: 500+ - The CBC op-ed generated over 500 comments, mostly negative. Tokyo price comparison: ~$10,000 per square meter - The episode later notes Tokyo apartment/home prices in the city center are around this level in the cited stats. New York price comparison: ~$14,000 per square meter - Garrett’s correction cites New York city-center apartment prices at this level. San Francisco price comparison: ~$12,000 per square meter - Garrett’s correction cites San Francisco city-center apartment prices at this level.

Pivotal Quotes: "if you limit the supply or the price, you should expect the same outcomes in housing as you would in any other good" — Ash Navabi: Closing summary of the episode’s core economic logic. "you cannot divorce price from a quantity or quantity from price" — Ash Navabi: Navabi explains why price controls necessarily affect housing availability. "the most wasted resource in society is cubes of empty space hovering above our major cities" — Garrett: Garrett criticizes single-family zoning and underuse of vertically valuable urban land.

Implications: Listeners should expect rent control and restrictive zoning to worsen scarcity, reduce mobility, and exclude vulnerable renters. The episode argues housing reform should focus on liberalizing supply, density, and turnover rather than capping prices.