VICTOR JOECKS: Why Lombardo deserves credit for Las Vegas’ falling rents

It didn’t require rent control to drop prices in Las Vegas.

Nevada’s legislative Democrats have spent years attacking Gov. Joe Lombardo for vetoing rent control bills. Attorney General and Democratic gubernatorial candidate Aaron Ford has done so as well.

The political case for rent control is straightforward. For many, rapid rent increases are a major financial stress. They can even force families to move — a major life disruption. Rent control allows a politician to look like they’re doing something, earning the loyalty and votes of the people who benefit from the policy.

But there are two major downsides. The first is principled. It’s an attack on freedom. What right does the government have to tell landlords how much they can charge for renting out their own property?

The second is practical. Rent control provides tangible benefits to current renters at the expense of future renters, including current renters who later want to move. As rental properties become less lucrative, fewer get built. Landlords skimp on maintenance and properties fall into disrepair. Property owners turn apartments into condos.

All of these factors shrink the supply of rental units, while lower-than-market rents boost demand. The long-term result is shortages and higher prices of non-rent-controlled units.

This isn’t idle speculation. It’s one of the most well-established conclusions of economic researchers.

“Next to bombing, rent control seems in many cases to be the most efficient technique so far known for destroying cities,” Swedish economist Assar Lindbeck once noted.

If even that isn’t convincing, ask yourself why places that have had rent control for decades have such high prices. Hello, New York City.

Despite this, Ford hopes this issue will drive him to the governor’s mansion. He’s already attacked Lombardo repeatedly over cost-of-living issues.

“At a time when the cost of living is through the roof — we have to prioritize lowering costs for hard-working families,” Ford wrote on X Thursday. “As governor, I will prioritize making Nevada more affordable.”

That attack is less effective when prices are falling. And they are. As the Review-Journal reported recently, “Las Vegas rents are dropping faster than anywhere else in the country, report says.”

Rents have fallen 13.6 percent since August 2022. There are two reasons for this. One, fewer people are moving here. During the pandemic, remote-work options fueled a significant influx of people. That’s slowed down. President Donald Trump’s immigration policies have also reduced foreign migration.

Two, companies built new multifamily projects. That supply increase put downward pressure on prices.

But these lower prices weren’t inevitable. Over the past year, prices in the Las Vegas area have fallen by 4.6 percent. In New York City, prices increased year over year. In the Los Angeles area, they’re down only 1.3 percent.

If Lombardo had signed rent control bills, it’s almost certain there would have been less new construction. He didn’t. Supply increased and rents are dropping.

Even though the private sector built the new apartments and houses, Lombardo deserves credit for lower housing costs.

Victor Joecks’ column appears in the Opinion section each Sunday, Wednesday and Friday. Contact him at vjoecks@reviewjournal.com or 702-383-4698. Follow @victorjoecks on X.