Regulation Increases Housing Costs, New Study Finds

New research conducted by economists from MetroSight – sponsored by the National Apartment Association (NAA) and the National Multifamily Housing Council (NMHC) – reveals that overregulation could negatively impact rental housing affordability by increasing operating costs and are expected to discourage new construction, increasing the cost of housing and limiting its accessibility and availability for Americans.

“As housing continues to be a topic of discussion amongst state, local and federal lawmakers, this study importantly quantifies how regulations ultimately increase costs for housing providers and renters alike,” said NAA President and CEO Bob Pinnegar. “At a time that demands bold action on housing affordability, policymakers must reject damaging regulations and instead turn to sustainable solutions that lower costs and increase housing supply. We are proud to have worked with NMHC to identify the impact of these regulations and rather focus on advocating for real policy solutions.”

“The debate over housing policy and affordability has never been more important than it is today. It is a kitchen table issue affecting individuals and families throughout the country,” said NMHC President Sharon Wilson Géno. “This new research on how regulations can drive up housing costs, discourage investment needed to build housing and ultimately negatively affect housing affordability and opportunity will help inform the discussion and educate lawmakers at all levels of government on how policies they propose may have unintended consequences. Working closely with our partners at NAA, we hope these results encourage policymakers to consider policy solutions that increase housing supply and lower costs.”

The research analyzed the impacts of source-of-income laws, right-to-counsel statutes and just cause eviction laws, criminal and resident screening restrictions and state-level preemption laws on housing costs. Some of the report’s key findings include:

• Source-of-income laws increase operational costs such as vacancy losses by more than 10% likely because of the Housing Choice Voucher’s complex and duplicative leasing process.
• Just cause eviction laws and right-to-counsel statutes increase collection losses by more than 37% probably as a result of a prolonged eviction process.
• Restrictions on criminal and resident screening increase capital expenditure costs by more than 17% likely as housing providers upgrade properties and increase rents to mitigate compliance costs associated with resident screening laws.

The econometric study used NAA’s Survey of Operating Income and Expenses in Rental Apartment Communities, conducted annually from 2004 until 2021, to examine data from between 600,000 to 850,000 units nationwide.

“Balancing the need to protect renters with the need to control costs and maintain operational viability is difficult, and despite the urgency of addressing housing affordability, there is limited rigorous research to measure the effects of such legislation. The data provided by the NAA offers a rare opportunity to look under the hood at housing providers’ operations and evaluate how policy decisions shape the housing outcomes that matter to people,” said MetroSight Economist and Founder, Issi Romem, Ph.D. To learn more about the research, view the full report.

For more than 27 years, the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA) have partnered on behalf of America's apartment industry. Drawing on the knowledge and policy expertise of staff in Washington, D.C., as well as the advocacy power of 141 NAA state and local affiliated associations, NAA and NMHC provide a single voice for developers, owners and operators of multifamily rental housing. One-third of all Americans rent their housing, and 40 million of them live in an apartment home.

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