5 ms·

every rental in the city would be renting for at least $3000 per bedroom per month No, because there aren't enough people who are willing to pay $3000. Rent c

every rental in the city would be renting for at least $3000 per bedroom per month No, because there aren't enough people who are willing to pay $3000. Rent controls push the average rent down temporarily (until supply drops to regain equilibrium), but it pushes the clearing price up because it means that instead of 1000 people chasing 900 units there's 150 people chasing 50 units.

jrochkind1 11y ago
> No, because there aren't enough people who are willing to pay $3000. In S.F. there might be. In Manhattan too.
- cperciva 11y ago
  If $3000 is the market-clearing price for people chasing 5% of SF's housing stock, I can guarantee you that the market-clearing price would be less than $3000 if 100% of SF's housing stock needed to be cleared.
  - jrochkind1 11y ago
    Demand changes too though, don't forget. There are people living in the S.F bay area who would be living in S.F. proper if the prices went down, there is surplus demand waiting in the wings. S.F. and Manhattan are both geographically limited ultra-high-price islands within larger metro areas (and of course people can move in and out of entire metro areas in response to price too), which, among other things, seems like it should make the market more complex than a simple supply-demand curve from a micro-economics 101 textbook.
simoncion 11y ago
> No, because there aren't enough people who are willing to pay $3000. There are. There are far more than enough, because... > Rent controls push the average rent down temporarily (until supply drops to regain equilibrium) ... there isn't enough supply to meet demand. There are literally _not_ _enough_ _apartments_ for the people who want to come into the city. There hasn't been enough supply to meet demand in SF for at least ten years. What little is being built will come nowhere close to meeting this year's influx, let alone next year's. In almost any other city, I would agree that rent controls are obscene. Here in SF, rent controls don't go far enough. Units built before 1970-mumble should not reset to "market rate" upon vacancy.
- cperciva 11y ago
  There are literally not enough apartments for the people who want to come into the city "Want to come into the city" isn't a yes/no proposition. How much are those people willing to pay to come into the city? I'm sure there are plenty of people who are living in SF right now who are not willing to pay $3000 to live there. Lucky for them, they don't have to, because their rent is controlled at a lower price than that. In a free rental market, you would see some current SF residents leave because they're not willing to pay market rates, but the market rate would drop as a result. In other words, long time residents would move out to make space for the people who want to move in and are willing to pay for the privilege.
  - timr 11y ago
    "In a free rental market, you would see some current SF residents leave because they're not willing to pay market rates, but the market rate would drop as a result. In other words, long time residents would move out to make space for the people who want to move in and are willing to pay for the privilege." So your argument is that the people who can't afford the asking price would move out, and the people who can afford that rate would take their place, and the net result would be that market rate would go down? Um. What you mean to say is that market rate would go down for the average new arrival. But why should anyone who already lives here care about that person? Because they work for a startup?
    - cperciva 11y ago
      What you mean to say is that market rate would go down for the average new arrival. I was taking the words "market rate" to mean "rate negotiated by people operating at arms length" as opposed to "rate dictated by government without any negotiations having taken place". But yes. But why should anyone who already lives here care about that person? They don't. And that's exactly the problem with rent controls: They benefit the current local residents at the expense of future residents, and hurt society as a whole. It's the same problem as property tax controls (current owners pay lower rates than future owners) and union seniority rules (current union members get paid more than future union members), which is why some states have laws prohibiting rent control in spite of the desire by local governments to impose it.

jrochkind1 11y ago

> No, because there aren't enough people who are willing to pay $3000. In S.F. there might be. In Manhattan too.

cperciva 11y ago
If $3000 is the market-clearing price for people chasing 5% of SF's housing stock, I can guarantee you that the market-clearing price would be less than $3000 if 100% of SF's housing stock needed to be cleared.
- jrochkind1 11y ago
  Demand changes too though, don't forget. There are people living in the S.F bay area who would be living in S.F. proper if the prices went down, there is surplus demand waiting in the wings. S.F. and Manhattan are both geographically limited ultra-high-price islands within larger metro areas (and of course people can move in and out of entire metro areas in response to price too), which, among other things, seems like it should make the market more complex than a simple supply-demand curve from a micro-economics 101 textbook.

simoncion 11y ago

> No, because there aren't enough people who are willing to pay $3000. There are. There are far more than enough, because... > Rent controls push the average rent down temporarily (until supply drops to regain equilibrium) ... there isn't enough supply to meet demand. There are literally _not_ _enough_ _apartments_ for the people who want to come into the city. There hasn't been enough supply to meet demand in SF for at least ten years. What little is being built will come nowhere close to meeting this year's influx, let alone next year's. In almost any other city, I would agree that rent controls are obscene. Here in SF, rent controls don't go far enough. Units built before 1970-mumble should not reset to "market rate" upon vacancy.

cperciva 11y ago
There are literally not enough apartments for the people who want to come into the city "Want to come into the city" isn't a yes/no proposition. How much are those people willing to pay to come into the city? I'm sure there are plenty of people who are living in SF right now who are not willing to pay $3000 to live there. Lucky for them, they don't have to, because their rent is controlled at a lower price than that. In a free rental market, you would see some current SF residents leave because they're not willing to pay market rates, but the market rate would drop as a result. In other words, long time residents would move out to make space for the people who want to move in and are willing to pay for the privilege.
- timr 11y ago
  "In a free rental market, you would see some current SF residents leave because they're not willing to pay market rates, but the market rate would drop as a result. In other words, long time residents would move out to make space for the people who want to move in and are willing to pay for the privilege." So your argument is that the people who can't afford the asking price would move out, and the people who can afford that rate would take their place, and the net result would be that market rate would go down? Um. What you mean to say is that market rate would go down for the average new arrival. But why should anyone who already lives here care about that person? Because they work for a startup?
  - cperciva 11y ago
    What you mean to say is that market rate would go down for the average new arrival. I was taking the words "market rate" to mean "rate negotiated by people operating at arms length" as opposed to "rate dictated by government without any negotiations having taken place". But yes. But why should anyone who already lives here care about that person? They don't. And that's exactly the problem with rent controls: They benefit the current local residents at the expense of future residents, and hurt society as a whole. It's the same problem as property tax controls (current owners pay lower rates than future owners) and union seniority rules (current union members get paid more than future union members), which is why some states have laws prohibiting rent control in spite of the desire by local governments to impose it.