The effects of deregulation

In case you think deregulation of housing will bring rental prices down by a general leveling of the market, here's what's actually happening as a result of deregulation (from Liz Peek, NY Sun, of all places):

"According to a report from the Harvard University Joint Center for Housing Studies, the stock of what is considered low-cost rentals in America fell by 1.2 million units between 1993 and 2003. For a variety of reasons, "affordable" rental units have been disappearing, causing prices for the remaining properties to rise. In 2005, according to the MacArthur Foundation, almost 9 million middle- and low-income Americans spent more than half of their income on housing, an all-time record.

"According to a study by the Furman Center for Real Estate & Urban Policy, median rents in New York have risen considerably faster than incomes. It says the number of rental units "affordable to low and moderate income households in the city fell significantly" between 2002 and 2005. During that period, the report says, the total number of rental units in New York grew by only 0.4%, while the number of condos and other owned units grew by 3.5%. Adding to the problems of low-income citizens, the new housing stock shifted significantly upmarket, with higher-priced units growing by almost 25%. These trends are also in place across the country."

http://www.nysun.com/article/68414?page_no=1

In other words, the effect of deregulation is not a leveling of the market. The effect is more upscale housing in the city, more of the labor force moving out of the city. No leveling, just up or out.

Same thing happened in Boston when they deregulated housing there: no leveling, just more upscaling and gentrification. Even the conservative Manhattan Institute's study couldn't find any beneficial effect on rents in Boston's deregulation.

Why do you think regulations were created in the first place?