Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect is a shortage (excess demand) of apartments, because the quantity of apartments demanded is greater than the quantity supplied at the regulated price.
When cities prevent landlords from charging market rents, which of the following are common long-run outcomes? Check all that apply.
1. The quality of rental housing units falls.
2. Landlords earn lower profits from renting housing units, but the rent charged has no effect on either the quantity or quality of rental units.
3. Black markets develop.
4. The future supply of rental housing units increases.