An 80-year-old monograph explains why rent ceilings lead to housing shortages.
An 80-year-old monograph explains why rent ceilings lead to housing shortages.
L andlords who own 100 rent-controlled apartments in New York City filed suit earlier this summer against the city’s Rent Guidelines Board in the Staten Island Supreme Courthouse. The board’s 7–1 approval of Mayor Zohran Mamdani’s rent freeze in one- and two-year leases signed between October 1, 2026, and September 30, 2027, sparked the litigation.
The suit in part argues that the rent freeze amounts to “takings” — government seizure of private property — without recompense. “Freezing the rent does not freeze my mortgage, property taxes, insurance, water and sewer bills, utility costs or the cost of repairs,” plaintiff Violet Zharku explained.
Whether the lawsuit succeeds or not, Mamdani’s rent-control scheme will not. A monograph published a few miles up the Hudson 80 years ago this month tells us why.
“As long as the shortage created by rent ceilings remains, there will be a clamor for continued rent controls,” George Stigler and Milton Friedman, two future Nobel Memorial Prize-winning economists, wrote in the Foundation for Economic Education’s (FEE) Roofs or Ceilings? The Current Housing Problem. “This is perhaps the strongest indictment of ceilings on rents. They, and the accompanying shortage of dwellings to rent, perpetuate themselves, and the progeny are even less attractive than the parents.”
The duo counted 73 properties for sale for every one place for rent in the San Francisco Chronicle want-ads, which seemed a strong indication that rent-controlled policies perversely incentivized landlords to remove properties from the rental market. Even a natural disaster proved less disastrous for San Francisco tenants than the manmade disaster of rent control. “In 1906, after the earthquake,” they pointed out, “when rents were free to rise, there was one ‘wanted to rent’ for every 10 ‘houses or apartments for rent’; in 1946, there were more than 37 ‘wanted for rent’ for every one ‘for rent.’”
Friedman credited Stigler — earlier that year rejected for a University of Chicago position that ultimately went to Friedman — for the pamphlet’s catchy title. Friedman described this as his first taste of public controversy, which he seemed to relish over the next 60 years of his life. An American Economic Review article cited a “worsening inequality” as the likely outcome of Stigler and Friedman’s ideas.
The fireworks involved friends as well as critics. The pamphlet’s reliance on arguments based more on pragmatism than principle led to a FEE editorial disclaimer that resulted in a period of estrangement between Leonard Read and Friedman. The National Association of Real Estate Boards regarded Roofs or Ceilings? so highly that it distributed a half-million copies in condensed form. Its popularity stemmed from touching upon one of the day’s most widely debated issues that directly affected millions of Americans.
Rent controls had exacerbated a postwar housing shortage created by the return of veterans to the homeland, the related baby boom, and pent-up prosperity after years of depression and wartime privation.
“No industry had suffered more than housing during the Depression and World War Two; housing starts fell from one million a year to fewer than 100,000,” David Halberstam wrote in The Fifties. “But during the same period the marriage rate and, not surprisingly, the birthrate increased sharply, the latter reaching 22 per 1,000 in 1943 — the highest it had been in two decades. As everyone returned from the war, the housing situation was not merely tight — it was a crisis.”
National rent controls ended with the help of Roofs or Ceilings? in 1949. Friedman noted their persistence in New York City in a Newsweek column a quarter century after the publication of his and Stigler’s famous broadside. Friedman pointed in 1971 to the urban blight fostered by landlord abandonment of buildings not worth the cost to maintain and wannabe tenants who scanned obituaries in hopes of finding a vacant apartment.
“Would you like to see a shortage of grapefruit in New York that will get worse with every day?” Friedman asked in 1971. “Let New York impose and effectively enforce a ceiling price on grapefruit below the market price.”
This phenomenon of results not matching rent-control intentions particularly afflicts Manhattan in 2026. In June, the median monthly rent surged to a record $5,295, and the 5,260 active for-rent listings for the month represented a 16 percent drop from the previous June. Massive demand for too few units results in higher rents. Rather than take steps to increase the housing supply, the mayor pushed a price-control measure sure to worsen shortages by further disincentivizing construction of new homes.
As Stigler and Friedman explained in 1946, “The selling prices of houses is rising as the large and increasing demand encounters the relatively fixed supply. Consequently, many a landlord is deciding that it is better to sell at the inflated market price than to rent at a fixed ceiling price.” Or, as they put it more succinctly elsewhere in their powerful pamphlet, “The legal ceilings on rents are the reason there are so few places for rent.”
Alas, the best persuasion for Mamdani to allow for a free market for rent comes from neither Stigler nor Friedman. The most effective rebuttal to rent control unleashed by rent control sprouted up a year after Friedman and Stigler’s Roofs or Ceilings? and about 15 miles from the limits of the city Mayor Mamdani governs. If Levittown can change his thinking, it likely does so not by acting as a functional monument to the stupidity of rent control, but through the words of its namesake. “No man who owns his own house and lot can be a Communist,” Bill Levitt observed. “He has too much to do.”