The evidence against rent control is numerous and continues to mount. The most recent example comes from Argentina.

In 2020, Argentina faced rapidly rising rental costs, as is currently the case in many parts of the United States, including southern Nevada. The South American country imposed rent control. The government required that contracts last at least three years. Authorities capped annual rent increases at the weighted average of wage growth and inflation. They limited the amount of security deposit landlords could charge and required that rent be paid in pesos. Landlords had tried to protect themselves from inflation by charging rent in a foreign currency, such as the U.S. dollar.

Many progressive Americans, including Democrats in Nevada, want similar government intervention in the domestic real estate market.

The appeal of rent control is obvious when rents soar. Current tenants benefit when the government distorts the market to their advantage.

But the downside of rent control is just as obvious when you ask a simple question. What happens then? The supply of rental units decreases. Landlords rent out their properties less often. With their returns artificially capped, investors build fewer homes and apartment complexes. Existing units become houses or condos for sale. Landlords spend less on maintenance and upkeep because they lack the financial incentive to make improvements. Their tenants won’t move out because they’re paying less than market rate. Run-down apartments and houses lower the value of neighboring properties.

When the supply of rental housing decreases, prices rise. Thus, rent control ultimately achieves the opposite of what it promises.

That’s exactly what happened in Argentina. After the government imposed rent control, 45 percent of landlords decided to sell their properties. Others offered them on short-term rental sites. In Buenos Aires, the number of Airbnb properties almost tripled from 2019 to 2023.

Not surprisingly, rents have soared. In Buenos Aires, the cost of a two-bedroom apartment rose from 18,000 pesos per month in 2019 to over 330,000 pesos in January. If rent had simply kept pace with inflation, it would have been 210,000 pesos.

Last November, Javier Milei won the election for President of Argentina. He is a brilliant defender of economic freedom. He did not govern passively, but proactively implemented free-market ideas. This included the abolition of rent controls. As a result, the rental price in Buenos Aires has almost doubled. In March, The Telegraph reported that rents had fallen by 20 percent.

The free market works. Rent control does not.