Happy Tuesday, and welcome to another installment of Rent Free. This week, two narratives unfold about the resurgence of rent regulation.

Amid San Francisco’s AI surge, Mayor Daniel Lurie and the Board of Supervisors are proposing a string of measures to tighten the city’s rent-control regime and curb evictions.

Meanwhile, in Providence, Rhode Island, sitting Mayor Brett Smiley—who previously vetoed a rent-control ordinance—was defeated in the Democratic primary by pro–rent-control state representative David Morales.

By all accounts, Lurie and Smiley might be viewed as moderate liberal mayors steering very blue metros.

Yet it is striking that neither has managed to halt the leftward trajectory of housing policy in their realms.

In the jaws of a cost-of-living crisis, Lurie leans into further price controls in a city already replete with rent restrictions. Smiley attempted to maintain prudent policy by vetoing a rent-control bill, and voters rewarded him by removing him from office.

Other liberal city officials who are undecided about backing the next round of rent controls may take a somber lesson from these two cases.

It may seem wiser to back the price controls that the majority of urban voters appear to want, even if that choice comes with dire consequences for housing supply and quality.

San Francisco’s Leader Declares a Rent-Related Emergency

Recent headlines about San Francisco’s housing scene have highlighted the pressure exerted by the AI boom on rents and property values. The San Francisco Chronicle notes a 26 percent rise in median rents. High earners are finding it difficult to locate a substantial residence. 

In response, Lurie has proclaimed a rent emergency and, with the City Supervisors, unveiled a suite of measures designed to curb evictions and abrupt rent hikes. 

“We have weathered booms before—this time, we can lay the groundwork for a broad-based and enduring recovery, enabling San Franciscans to settle down and share in our city’s success,” the mayor said in a statement on Thursday announcing his rent-emergency reforms.

On paper, San Francisco already harbors a substantial array of rules aimed at quelling sudden rent surges.

Some 170,000 units (roughly 76 percent of the city’s rental housing) built before 1980 fall under the city’s rent-control regime, which typically caps yearly rent increases at about 2 percent.

A state policy limiting rents to 10 percent for units older than 15 years covers another roughly 33,000 units, or 15 percent of the rental stock.

That leaves a little under 10 percent of rental units where tenants might see rents rise to meet market levels.

Additionally, in 2024, San Francisco became the first jurisdiction in the U.S. to bar landlords from using algorithmic pricing when setting rents and occupancy limits, on the premise that landlords used such tools to hoard vacancies and push prices higher.

Apparently, none of these moves has sufficed to restrain prices during the latest urban rebound.

To push rents down further, the mayor is backing a broad slate of new measures.

He backs bills that would raise relocation costs owed to tenants when a landlord removes a unit from the rental market. For rent-controlled units, he would also cap “banked” rent increases (the increases saved up by landlords for future collection) at 10 percent annually.

Moreover, Lurie intends to allocate another $3 million toward legal aid for tenants facing eviction and supports a proposal by socialist Supervisor Jackie Fielder to bar nonpayment evictions when a tenant owes less than a month’s rent.

Overall, these are fairly modest adjustments to the city’s extensive framework of tenant protections and price controls.

The fact that existing protections and rent-control measures do not sufficiently curb today’s rent spike suggests that a slight tightening of those rules might not be the solution.

In fact, it could backfire.

Conventional economic theory holds that rent control can raise the price of market-rate units by increasing demand and encouraging tenants to hold onto below-market rentals.

In San Francisco, the small 10 percent portion of units without rent control must shoulder most of the price pressure created by the AI-driven boom.

That has already produced double-digit rises in median rents. If Lurie’s reforms manage to curb evictions that return units to the market, slow the rent hikes at controlled properties, or spur new market-rate condos, an even smaller slice of housing would have to absorb the surge in demand fueled by AI.

A longer-term, more sustainable approach to housing affordability would be to remove regulatory obstacles to new construction. Rising rents should ideally signal builders to add more units in the city.

Under Lurie, San Francisco has adopted several pro-supply reforms. The city reduced the required share of affordable units in new developments and approved a citywide upzoning plan.

Even so, these deregulatory steps have done little to accelerate construction. The number of completed homes in the city remains in the low hundreds this year.

Pro-supply housing advocates have pressed Lurie to push even further on boosting new construction. Some have challenged his rezoning plan in court, claiming it does not go far enough to satisfy state laws mandating urban housing planning.

Certainly, expecting a few hundred extra units a year to counter a rent spike driven by a major economic expansion is optimistic. Nor will the current roster of proposals in the mayor’s rent-emergency package likely deliver significant relief.

Vetoing Rent Control Doesn’t Shield a Mayor from a Pro–Rent Control Challenge

When Smiley vetoed a 4 percent annual rent cap approved by Providence’s city council, he did so on the grounds that the policy would undermine housing supply.

His stance was that the key to affordable living in Providence lay in building more housing, not in imposing stricter price controls.

“Rent control doesn’t lower anyone’s rent,” Smiley told the August debate against his pro–rent-control Democratic primary challenger Morales. “The real problem is a housing shortage.”

In that debate, he pointed to Saint Paul’s failed rent-control experiment, where restrictive rules deterred developers and stalled construction. He warned Providence could face a similar fate.

That argument did not win the day. On election night, Morales earned more than 52 percent of the vote and pledged to revive the city council’s rent-control proposal.

Read my full take on the election and the contrasting debates over rent control here.

Quick Links 

• In New Hampshire, tenants of Concord Housing and Redevelopment Authority, a federally funded affordable-housing provider, have sued to challenge the agency’s use of technology that can monitor for cigarette smoke, noise, and even occupancy levels in units. 
• Mortgage rates rise to a two-year high of 7.17 percent. 
• Airbnb is investing in housing construction now.
• Boston Mayor Michelle Wu is proposing tax abatements for already-approved developments whose construction has stalled. How many more projects are not being proposed because of those same taxes?
• A new study on the massive disparities in construction timelines among cities.