Oil Boom Housing Shortage Sparks Calls For Rent Control

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Written By:
Rob Port

Jun 5, 2012
9:23am

Last year in Minot, a city that at the time was dealing with a housing crunched caused both by the oil boom and epic flooding which destroyed thousands of homes, a member of the city council said he was going to demand rent control from the state legislature. Spiking demand for housing was causing spiking prices, and he wanted a legislative fix.

He later backed off that demand (hopefully realizing what a disaster rent control is) but now a legal advocacy group is saying they want the legislature to cap rent growth in the oil patch:

“The situation is only going to get worse,” said Fitzsimmons, whose office tries to assist tenants. “Once in a while, lawyers can win on a technicality in court, but the real issue needs to be resolved by the Legislature.”

Fitzsimmons said he would like to see legislators consider putting percentage caps on annual rent increases in areas impacted by the oil boom.

This would be the worst sort of knee-jerk policy. Not only is it about as anti-free market as you can get – government has no more business telling land lords what they can charge than telling grocery stores what they can charge for milk and bread – but it will actually exacerbate housing problems in the west. Rent control tends to drive affordable housing out of the market.

Profits are the best driver for the development of more housing. The more we allow developers to maximize their housing the more housing they’ll build until the market equalizes. Capping rents means capping development, which doesn’t help anybody.

We’re talking about putting permanent policy in place to solve a problem in the west that is temporary.

Local political leaders should get some blame for making these problems worse. The bans/moratoriums on so-called “man camps” (temporary housing built by the oil industry for workers) is spiking demand for traditional housing, and efforts by cities like Williston to outlaw temporary measures such as living in RV’s (outside of RV parks) don’t help either.

To be sure, the housing problem is being caused by the rapid economic growth spurred by the oil boom. There’s no denying that. But the solution isn’t to try and hamstring that growth. The solution is to unshackle the private sector to grow along with it.

Regulations and moratoriums and rent control won’t help, and nor will government competition with private developers which only serves to dampen the market as well.

You can’t solve a problem made worse through regulations and red tape with more regulations and red tape.

In Dickinson the city (over objections from the hotel industry) just approved a 3,000-unit “man camp.” That sort of leadership, rather than rent controls, is what western ND needs.