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NEW YORK—Rent control has become a highly-charged issue in manycities and states. Oregon and New York have passed measures placingcaps on rent increases; California is considering a similar measureto name a few examples.

Indeed, housing affordability is a serious issue but rentcontrol may not be the best way to address this concern, concludesan analysis by Real Capital Analytics. Already, writes JimCostello, new demands for rent control are repricing assets in away that may lead to loan defaults and lower housing availabilityover the long run. Namely, he writes, "Investors and lenders arerepricing assets in markets where rent control exists or is beingintroduced."

Costello examined 58 US markets and found that in the 10 out ofthe 12 cities where some form of rent control has been introduced,apartment cap rates have increased over the last year: an 83%share. In the remaining markets, only 19 out of 46 markets haveseen cap rate increases: a 41% share.