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Stanford paper says rent control is driving up cost of housing in San Francisco
- deleted 9y ago[deleted]
- wycs 9y ago>The solution is to stop allowance of condo conversions or TIC (Tenancy In Common) conversions,” she said. You can always trust them to keep digging.
- 45h34jh53k4j 9y agoNow, I have not read the paper, but I would have thought the free market combined with sky-high wages and demand, combined with a lack of inventory, was the cause. Rent Control surely just prevents local families from being muscled out by the tech employees?
- wycs 9y agoRent control removes the incentive to build new apartments. There are second order effects that make it counterproductive. Even the socialist economists agree rent control is terrible.
- ghouse 9y agoSo as to not remove the incentive to build new apartments, in San Francisco, rent control only applies to units built before 1978. The SF rent control law (like the CA Prop 13) does allow rents to increase, but very slowly. It would be possible to have both without as strong of adverse consequences by changing the ceiling at which both are permitted to increase.
- Kalium 9y ago> So as to not remove the incentive to build new apartments, in San Francisco, rent control only applies to units built before 1978. Indeed! It's also worth mentioning that this has had the perverse side-effect of encouraging people to find any and every way possible to block the removal of old buildings. Which is to say that the incentive to build new apartments has been matches with tools designed to prevent exactly that.
- mrgordon 9y agoEveryone who wasn’t gentrified out of their home agrees it’s great. An economist might foolishly brush off everyone being priced out of their neighborhoods as simply “externalities” but San Francisco’s politicians thankfully have a more nuanced view of the situation. And, as ghouse indicates, new housing isn’t subject to rent control so developers make a killing if they get approval.
- almost_usual 9y agoThis addresses active developers who are looking to profit from renters. There are plenty of speculators in the Bay Area who purchase homes without renters or buy them out only to sit on the home and not rent it (since it decreases the value of the home). This isn't a rare thing, there many pre 1978 residences with nobody living in them owned by overseas investors.
- mrgordon 9y agoThis happens to a large degree even without rent control. Miami is full of properties owned by snowbirds who only visit for a few months in the winter or by rich investors who figure a penthouse on South Beach isn’t likely to lose value any time soon. This is especially true of investors from South America who are happy to own a stable investment in US dollars. I’m not convinced it happens so much more in SF to cause the high rents. I think years of building almost nothing after the 208 crisis while jobs exploded is responsible.
- Decade 9y agoThe housing crisis is much, much, much older than the 2008 crisis. The underbuilding has been going on for as long as almost everybody can remember. https://twitter.com/enf/status/764614550750494721 https://twitter.com/enf/status/764614550750494721
- crdoconnor 9y ago>Rent control removes the incentive to build new apartments. Not even 1% as much as untaxing land and property does.
- 0wing 9y agoActually the opposite, by taxing land in high demand urban cores it would incentivize more efficient use of the land - i.e. building up to support more occupants or higher value economic activity. [1] Deregulating the zoning restrictions would allow more buildings to be built. [2] Here is a startling fact: in 2014 there were 142,417 housing starts in the city of Tokyo (population 13.3m, no empty land), more than the 83,657 housing permits issued in the state of California (population 38.7m), or the 137,010 houses started in the entire country of England (population 54.3m). Tokyo’s steady construction is linked to a still more startling fact. In contrast to the enormous house price booms that have distorted western cities — setting young against old, redistributing wealth to the already wealthy, and denying others the chance to move to where the good jobs are — the cost of property in Japan’s capital has hardly budged. This is not the result of a falling population. Japan has experienced the same “return to the city” wave as other nations. In Minato ward — a desirable 20 sq km slice of central Tokyo — the population is up 66 per cent over the past 20 years, from 145,000 to 241,000, an increase of about 100,000 residents.[3] With artificially constrained supply from Prop 13, there's dozens of empty lots and empty units just doing nothing of value. It's surreal to hear about stories from baby boomers about moving across the country to NYC/SF/LA/etc and being able to easily find a job and affordable housing in a major city, often while attending school at the same time. The same generation has now pulled the ladder up behind them to spit down on future generations. [1] https://en.wikipedia.org/wiki/Land_value_tax#Efficiency https://en.wikipedia.org/wiki/Land_value_tax#Efficiency [2] http://urbankchoze.blogspot.ca/2014/04/japanese-zoning.html http://urbankchoze.blogspot.ca/2014/04/japanese-zoning.html [3] https://www.ft.com/content/023562e2-54a6-11e6-befd-2fc0c26b3c60 https://www.ft.com/content/023562e2-54a6-11e6-befd-2fc0c26b3...
- robrenaud 9y agoJapan is weird. They demo/rebuild housing much more than in other places in the world. https://www.japantimes.co.jp/community/2014/03/31/how-tos/japans-30-year-building-shelf-life-is-not-quite-true/#.WlPZnXWnFFQ https://www.japantimes.co.jp/community/2014/03/31/how-tos/ja... You'd really want some kind of net housing units measure, rather than housing starts, to compensate this when comparing Tokyo to other cities.
- deleted 9y ago[deleted]
- ghouse 9y agoBut rent control manipulates the free market. With rent control, people who might otherwise move, don't. Further, people who might rent a vacant apartment while they're overseas don't. Or people who start a family and move to the suburbs keep their city place as a pied a tier. So supply is suppressed, but demand is not.
- ribosometronome 9y ago>But rent control manipulates the free market. With rent control, people who might otherwise move, don't. But rent control manipulates the free market. With rent control, people who might otherwise be priced out and forced to move away, aren't.
- s73ver_ 9y ago"With rent control, people who might otherwise move, don't." I'm failing to see the problem. Unless those people would have moved for reasons other than soaring rent, them getting to keep their homes is a GOOD THING.
- rhino369 9y agoThere are plenty of bad outcomes: say they no longer need a 3 bed apartment. But with rent controls, they might actually pay more if they moved to a 1 bed. Or they get a job in San Jose and are forced to commute instead of just moving because they are getting such a deal. But the bigger issue is that is artificially raises demand. That prices up for everyone else, which does more harm. It's a subsidy for older people paid for by younger people.
- deleted 9y ago[deleted]
- imtringued 9y agoIf they truly didn't want to move out because of soaring rent then they would lobby for building more housing. Rent control and prop 13 prevent this from happening. Older residents are now actively fighting to keep their protections and prevent the construction of new housing at the cost of newer residents. Instead of letting the bubble pop when it's harmless it's growing more and more and when it does pop it is going to be extremely painful.
- mattlong 9y ago> Rent Control surely just prevents local families from being muscled out by the tech employees? Correct. And in the process of doing so, further contributes to the lack of inventory of market-rate rental units available to the influx of newcomers/tech employees. As mentioned elsewhere in the comments here, this causes huge disparities for rents of similar units within a given building as landlords attempt to compensate for all the market-rate rent being missed from longtime tenants. E.g. I've known folks paying $4,000 while their neighbors pay $400. While I don't have numbers or a study to point to, my experience over the years with the SF housing market suggests the impact of this effect is nontrivial.
- s73ver_ 9y agoSo what's the solution for addressing this problem, AND not having local families from being muscled out by tech employees? Because whatever is proposed, if it means that local families have to leave because the rent was increased astronomically underneath them, then it's a non-starter.
- hindsightbias 9y agoPave Golden Gate Park.
- linkregister 9y agoWhat in particular about incumbent renters justifies making policies that benefit that group above all others? Is there something inherently less worthy about families seeking to return to a city after having left it? About a daughter seeking to move out of her parents house?
- s73ver_ 9y agoWhat in particular about the tech workers justifies making policies so that they can muscle out people who are already there?
- thinkloop 9y agoIt's not about favoring one group over another, it's about (trying to) reduce volatility, favoring less change over more change when it comes to housing because forced relocation can be tough. Also things like reducing class segregation, etc. Not saying it works.
- ghouse 9y agoRent control solves some problems. Creates other problems. Similar to almost any intervention in free markets. Sometimes the cost of intervention outweigh benefits, sometimes they don't. Rent control allows people (wealthy or poor) to remain where they are without purchasing their residence. Unfortunately, to do accomplish this objective, it increases the price for new arrivals (be they wealthy or poor). In California, Prop 13 does the same thing -- drives up the cost of housing for everyone other than the people who already own a home.
- dmix 9y ago> Sometimes the cost of intervention outweigh benefits, sometimes they don't. + Sometimes it works for a short period, as the policy reflected the economy at the time of creation, then becomes irrelevant via technology/market reaction to policy/general progress... but yet stays a policy for decades. The important point is that we rarely ever measures whether it does work or not, and policy tends to have an extremely long shelf-life. My ideal state would have: 1) a well-staffed multi-partisan agency entirely dedicated to reviewing policy, with a mandate of removing any policy having a net-detrimental effect on society. By launching scientific studies of the effects with subpoena power over other agencies, making policy recommendations, and potentially the power to temporarily suspend regulations until reviewed by congress. 2) require timeframes attached to most policies, forcing future reviews which must factor in measured results (likely from agency mentioned in 1) or face expiry
- cortesoft 9y agoYou would also need to define the metrics you are going to be using to measure success at the time you pass the legislation. You would also need some sort of control to measure against, and some way to discourage gaming the metric.
- tomohawk 9y agoHeinlen in "The Moon is a Harsh Mistress" introduces the idea of a legislature with 2 chambers. One for creating laws and the other for getting rid of them. The threshold for creating them being higher. The way it is now, everything is geared towards "doing" things, and credit is received for "accomplishments". Its usually much harder to undo things. It would be refreshing to have specialists in undoing things.
- juicyfroot 9y agoHaha. No shit. Another solution by the government interfering with the free market and having the opposite effect as intended. Who would have guessed /s
- theduro 9y agoRent control is a failed experiment. All it does is force land lords to massively increase rent amounts when someone moves out to account for multi-year market increases. Basically, if the real market price of an apartment is ~$3,000/mo, but in 5 years it realistically would be $5,000, they will simply list it for $5,000 now, to mitigate the loss. My mother-in-law is a land lord in Los Angeles (a very fair one at that), and is also about as bleeding heart liberal as you can get. She is a staunch opponent of rent control.
- bendmorris 9y ago>My mother-in-law is a land lord in Los Angeles ... She is a staunch opponent of rent control. Is this supposed to be surprising...? Regardless of whether it works for tenants, obviously rent control isn't there for the landlord's benefit.
- paulgb 9y agoHaving read up on some of the building purchases in my own neighborhood (East Village of NYC), it seems that rent control is bad for honest landlords and good for the slimey ones who are willing to "encourage" people to leave. And thanks to Coase's theorem the building sales are usually in that direction.
- ardit33 9y agoagreed, lived in apt in the East Village, and while my apt. was really nice, the common areas were in shambles and it looked like the managing company didn't care about its exterior either. The reason was that almost half of the apt. in the building were rent controlled (grandfathered in). I think a mix of limited rent control (i.e. 5 years, max) plus building more apt for people that can't afford it, is a better combo on keeping a stability and folks being able to afford and live closer to work. The only way to build more affordable apartments, is to allow for building more market rate apartments as well. Right now this current older (baby boomer) generation is screwing hard the upcoming one.
- deleted 9y ago[deleted]
- bsder 9y agoPossibly. But Prop 13 is the real problem.
- pzone 9y agoBoth of them are bad, restrictions on new development are even worse. It's a huge, huge mess.
- Alfredo123 9y agoRent control is nothing but a populist political measure. It makes no economic sense what so ever. If rent control worked why not set prices of everything else to low values ? Any intervention in a free market system will benefit some people at the expense of others and that losing party would then be less willing to participate. What incentive will people have to maintain and increase housing when they might end up broke because of rent control ? California needs high rises and denser dwelling units for that the zoning laws needs to change.
- fnord77 9y agoI believe most of the people living in SF are renters. Getting rid of rent control will never happen, politically.
- c1utch1 9y agorenters are less likely to vote though.
- peterjlee 9y agoRent control is only available in units built before 1980. So renters who were not lucky enough to find a rent controlled housing has an incentive to vote against rent control. Though, any politician who leans one way or the other will piss off the other group and could be a political suicide.
- vinniejames 9y agoOf course it is. It artificially limits supply due to long term rent squatters taking advantage of the system
- s73ver_ 9y agoWhat do you mean "squatters"? Presumably these are people who have been living there for a while, and are paying rent.
- cyberpunk0 9y agoAka people who lived there before the insane hikes in cost with rent control being the only thing keeping them from being forced out of their home due to greed-driven economic practices
- icelancer 9y ago>greed-driven economic practices AKA market rates.
- vinniejames 9y agoAs in, yes, people don't give up those leases. Instead they pass them on to friends, then friends of friends, etc long after they've left the city. Or worse use them as AirBnbs to make a killing
- 0wing 9y agoBuilding additional units (supply) in SF isn't being limited by the renters, it's zoning laws, prop 13, and NIMBYs.
- refurb 9y agoThis is what new rent control regulations in Toronto are doing... More than 1,000 planned purpose-built rental units have instead been converted to condominiums in the Greater Toronto Area since Premier Kathleen Wynne's government expanded rent control[1] It's making the housing crisis worse, not better. For those who already have low rent locked in, it's the ultimate "fk you, I got mine." [1]https://www.theglobeandmail.com/news/national/report-finds-1000-planned-rental-units-convert-to-condos-in-wake-of-ontario-rent-control-expansion/article36382681/ https://www.theglobeandmail.com/news/national/report-finds-1...
- boomboomsubban 9y ago>This is what new rent control regulations in Toronto are doing... *according to the landlord lobbying group based on unknown data that even the report says they cannot guarantee the accuracy of.
- icelancer 9y agoLook into any study based in NYC on rent control. The exact same things happen; rental properties are quickly converted to condos.
- tomohawk 9y agoPrice controls always end up creating artificial scarcity. The solution to lower housing costs is more housing, not less.
- danieldisu 9y agoMaybe we need something deeper than that, you have 3/4 of your country that are almost a wasteland and you insist on cram all the people in 4 or 5 cities. Maybe we need to start to incentive moving people to other more empty places...
- 8ytecoder 9y agoEnvironmental advocates I have spoken to are generally of the opinion that vertical building is better than sprawl and less number of cities are better than building in every nook and cranny of available space in the country. (of course we have to balance health, open space, happiness and other concerns)
- IWeldMelons 9y agoMany people in SF, Chicago etc. depend on public transit. Wastelands do not have it, usually.
- wincy 9y agoIt's not really a wasteland, though. My wife moved here from New York to Kansas City, and her old friends act like there are cows walking down the street or something. If you're willing to live with diversity of political affiliation (it's a pretty even mix of Democrat and Republican around here, and I've heard people on HN say they'd be absolutely unwilling to live somewhere like that), you can get a 2200 square foot house in a nice neighborhood for around 250,000. We have an airport, IKEA, two art museums, and all sorts of interesting exhibits to see and things to do year round. I plan on having at least four kids, if I went to work for Google to have a house the same size would cost something like $2,800,000? (from a quick Zillow search of somewhere like Sunnyvale if I wanted a similar commute) So 11x more expensive? It seems like madness to me. I know a guy who lives here but works for a big company on the coast, and he lives in a mansion in one of the nicest neighborhoods around, and even the local mid level tech jobs easily pay 6 figures. I mean, I guess the weather is nice, but other than that I don't really get it.
- jrs95 9y agoThis is almost irrelevant if they don’t get the supply issues worked out.
- jedberg 9y agoWhy would I build new supply if I'm going to be stuck renting it out under rent control? If I already own a property, how can I build more if I can't raise rents on my current properties to market rates so I can afford to build new buildings at market rates? Rent control causes supply issues. Look at the City of Berkeley. Their supply increased massively right after rent control was lifted in 1997.
- hcknwscommenter 9y agoNew supply is NOT subject to rent control in any way shape or form. Only non-single family housing that was built before 1979 (or maybe 1980) has rent control. Nothing built after that is rent controlled at all.
- charleslmunger 9y agoThis is sort of true, but in practice (in the bay area) new construction only happens at the whims of neighbors. Since rent controlled tenants are totally insulated from supply and demand, it's common for tenants to only evaluate their annoyance with new construction, and not the beneficial effects on the rental market. Renters can only be NIMBYs even they're locked in by rent control.
- Decade 9y agoDon’t count on it. https://alamedasun.com/news/appeal-costa-hawkins-rent-control-horizon https://alamedasun.com/news/appeal-costa-hawkins-rent-contro...
- 8ytecoder 9y agoAnother point which is usually not well-discussed, the houses/apts in SF are really bad in terms of quality, amenities and features. With new housing, this is starting to change a little bit. But, overall, rent control results in really bad maintenance. Landlords do the absolute bare minimum to not get sued/fined. For the rent people in SF pay, the value they derive is almost a joke.
- seandougall 9y ago> Landlords do the absolute bare minimum to not get sued/fined. IME, this is a pretty universal statement. Hop across the bridge to cities without rent control and you'll see the same thing. The problem isn't any specific policy, it's the power balance between landlord and tenant created by a market with limited supply and ever-growing demand.
- 8ytecoder 9y agoThose are typically cities with lower demand. I'm on the other side of the bay as well and my building was recently renovated and upscaled quite a bit to take advantage of the new demand.
- jostmey 9y agoI've never lived in SF, but the apartments here in Dallas are luxurious and much cheaper. It was the exact opposite in Chicago, where every place I stayed at was a dump
- olalonde 9y agoWhen I moved to SF, I was shocked to find out most 3000+$/month apartments didn't have their own washing machine.
- almost_usual 9y agoSome people are also surprised to find out they pay 3000+$/month to be in Norteno/Sureno gang territory.
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- KirinDave 9y agoI really wish the submitter of this story did a better job than repeating the clickbait title at Curbed. Because this article is actually a fairly good summary of an interesting paper which has a lot to say about the mixed results of rent control as a long-term strategy. But no, instead we get this, "Rent Control Is Uniformly Bad" title which is designed to split the demo and bring in people who want to argue. Surely we can do better!
- dang 9y agoHappy to change it, but I couldn't think of a better one. Actually we briefly changed the URL to https://www.mercurynews.com/2017/11/02/rent-control-policy-likely-fueled-the-gentrification-of-san-francisco-study-finds/ https://www.mercurynews.com/2017/11/02/rent-control-policy-l..., which has the title "Rent-control policy `likely fueled the gentrification of San Francisco,’ study finds" — is that better? (We changed the URL back because it's not clear that that article has more information in it.)
- ThrustVectoring 9y agoAnother second-order effect of rent control is increased traffic. Suppose you have two residents with significantly below-market-rate housing at the same quality level, one in downtown SF and another in Mountain View. The former starts a new job at Google in Mountain View, the latter starts a new job at a trendy start-up in downtown SF. Since they're paying significantly below market rate, they're unable to trade apartments with each other without paying a significant amount of money. So, because you cannot trade apartments without spending significantly more money, there's a couple of hour-long commutes instead. This is part of a general pattern - messing with prices doesn't help, since the market still has to clear. You just start paying in things other than money. Paying for things with money is great in general, since then someone else has the money. Paying for things with a longer commute is terrible, since there's no beneficiary.
- hangonhn 9y agoIs this a well known problem? It has never occured to me that this could happen but it makes a lot of intuitive sense. Do you know if anyone has measures this effect? Very curious how much this contributes to the Bay Area traffic problems.
- ThrustVectoring 9y agoSecond-order effects are difficult to study in general. My comment was driven entirely by fundamental economic modeling: price controls generate harms by forbidding beneficial trades, and people move to reduce their commute. There are other reasons why people move, and I expect to find these situations as well. For instance, people tend to downsize their housing after their children move out, but who would downsize when the smaller apartment is more expensive?
- Spooky23 9y agoThat’s a real stretch. End of the day, short term leases make rents float at the cost of making renters second class citizens who cannot stay in any one place or area. Rent control is a way to deal with that. It exists because voters care deeply about it.
- noobermin 9y agoDid anyone read the excerpts in the article and not come to the conclusion that rent control caused this? It sounds to me to like greedy landlords being greedy. It feels like the title and the thesis of the news piece is either incorrect or at least misleading.
- hindsightbias 9y agoIf only landlords could be greedy with all their units, prices would average lower.
- noobermin 9y agoYour comment doesn't really address my point. The argument the article presents has less to do with free market fundamentalism than it does with landlords trying to get tenants of rent controlled units to leave in order to get market rates. That seems like the issue. Blaming rent control sounds a lot to me like blaming the victim for the crime.
- icelancer 9y ago>>landlords trying to get tenants of rent controlled units to leave in order to get market rates. That seems like the issue. This is a simple incentive. To expect landlords not to act in this manner is to ignore Economics 101. If you design policies and laws in such a manner that rational actors will... act rationally... and this is bad, then the problem is how you designed the laws, not the rational actors - no matter how "greedy" you think they are.
- noobermin 9y agoLet's teach our daughters not to wear short skirts, because that increases the chances they'll be raped. Sounds like a similar argument. With less hyperbole, you can use this argument regarding externalities involved in capitalism from the exploitation of workers to pollution of rivers. The way you change incentives is you add regulation. Regardless, this thread is floating away from my point. No one is addressing the actual article here, which is really discouraging and fits with the trend of discourse on HN for the last year or so.
- Lazare 9y agoNote: Everyone (in the economics world, anyhow) has known that rent control does this for a long time. There's no controversy here; left, right, socialist, Chicago-school, heterodox, mainstream: It's a known thing. This study is interesting primarily because it tries to put some hard numbers on how much it drives up the cost of housing.
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- fictionfuture 9y ago"rent control appears to be the most efficient technique presently known to destroy a city – except for bombing" - Lindbeck
- ggg9990 9y agoRent control is just one of the ways that people who are in a place benefit themselves at the expense of the people who are not yet there (and thus don’t get to vote).
- NTDF9 9y agoOf course?
- jadbox 9y agoCould this be Coase Theorem in effect? As transaction costs/restrictions go up, the market also becomes increasingly inefficient?
- snidane 9y agoThe problem here is the character of current housing markets causing the progress and poverty paradox. Rent control then is just (quite unfortunate) measure to mitigate the poverty problem when rents rise rapidly. The paradox occurs because rent prices are much more flexible than peoples' income. If you have rapid increase in wages (like in SF area), then landlords match the increase by raising rents even faster than the wages rose and the tenants don't get no better services nor quality of living. Just higher prices they have to pay. That supply and demand determine the price is like describing gravity as "things just fall to the ground when dropped". While true, these tell you nothing about how fast things fall nor where the market prices stabilize. To see where rent levels come from and why they match up with general income level for a given locality, look at David Ricardo's "law of rent" (introduced in 1809), which tells you exactly that. It basically tells you that rents increase exactly to the level that wages increased. Therefore eating away all technological progress and only giving you higher rents and house prices. This is the progress and poverty paradox. The harder the society works, the larger wealth gap and poverty. Failing to understand the cause of all this people just slap some random regulation to alleviate the problem - in this case the rent control. --- To observe the law of rent, simply look at the fact that rents almost exactly match some general level of income of majority of bottom workers so that they barely get by and don't save a cent. Any excess goes to rent. Just plot wage vs rent of any city on earth and you'll see it.
- xster 9y agoBasically it's like a progressive tax system. How the income is sourced doesn't affect the budget expenditure in the end. And instead of varying on your income bracket, it varies on how early you got in the queue, which has nothing to do with fairness. i.e., if you want to change the budget expenditure (how many people live in SF), shifting how the budget income is sourced wouldn't help.
- AndyMcConachie 9y agoIt really does take an American economist to come up with the idea that price controls drive prices up. "And that in turn prevents flight from San Francisco itself. “We find that absent rent control essentially all of those incentivized to stay in their apartments would have otherwise moved out of San Francisco,” note the economists. Yikes." This is like saying that had demand decreased prices would also have decreased. Well duh. The more people you price out of SFO the cheaper it gets. You could also increase supply if the people living there weren't such assholes. I'm so glad I left the Bay area with its fucked up politics and other assorted BS.
- deleted 9y ago[deleted]
- joeblau 9y agoI had a friend that lived on Pine and Stockton in a rent controlled apartment. His rent was around $1400 a month for a 1 bedroom decent sized apartment (900 sq ft). He moved out and the landlord immediately made some upgrades to the apartment and the next tenant living there was paying $3300 a month. It wasn't even feasible for my friend to move out and then move right back in to the same place he just left.
- horsecaptin 9y agoWhat are the chances that the number of rent controlled homes will go down in the next five to ten years?
- glitch003 9y agoThis number will always go down, because in SF only houses built before 1980 are subject to rent control. Therefore, no houses are being added to rent control. And the number can only stay constant or go down.
- Decade 9y agoExcept that demolishing a rent-controlled apartment is practically illegal. And in response to the state law requiring ADUs to be legalized in single-family homes, the Board of Supervisors wrote a law requiring ADUs in most single-family homes to be rent-controlled. Now one of Supervisor Safaí’s friends is even proposing a new building voluntarily put under rent control. It may get killed by city politics, though. http://www.sfchronicle.com/bayarea/article/Developer-wants-to-create-rent-controlled-housing-10152241.php http://www.sfchronicle.com/bayarea/article/Developer-wants-t...
- kelnos 9y agoThis shouldn't be surprising; this is an obvious result of rent control. If rent control isn't applied to all rental units (as is the case in SF), then the units not under rent control end up being higher than average to make up for the units under rent control. Even if rent control is applied to all rental units, then you see large spikes in rent that are speculative to several years in the future whenever a tenant moves out and the unit is re-listed. The problem is that you can't just kill rent control and expect everything to be ok overnight, especially in a place like SF where the housing supply is constrained. Two things: 1) Demand outstrips supply even at the high prices commanded by non-rent-controlled units, so if you were to kill rent control here, the only thing that would happen would be that the units that were previously subject to rent control will get price hikes. I wouldn't expect rents to fall for the units that were never subject to rent control, because there are still people willing to pay those prices to live here, even if they'd prefer something lower. 2) Even if I'm not entirely correct, and there is enough supply that the overall market rate actually would be lower than the current market rate for non-controlled units, we'd still lose a lot of lower-income residents; I would be very surprised to find many (if any) landlords in the city who wouldn't raise rents at least modestly if their units stopped being subject to rent control. Some of the less exploitative ones might work with their existing tenants so as not to force them out of the city, but there are a lot of people in SF in rent-controlled housing that can't afford much more in the way of increases than rent control allows. We need to 1) build like crazy, 2) kill rent control, 3) have some sort of phase-out period where we subsidize housing for lower- and middle-income people hit hardest by post-#2 rent increases. (And probably other things; I'm no economist.)
- notadoc 9y agoSan Francisco needs to build high rise apartments and condos with tons of units, and lots of them. That's all there is to it. Obsessing about rent control, population numbers, tech workers, or whatever else is nothing but a distraction. Dramatically increase supply and prices will drop.
- asah 9y agoDon't forget about transit.
- cryptonector 9y agoWell, duh. Rent control causes housing shortages because who wants to be a rent controlled landlord? Well then, housing shortages are reflected in higher housing costs for anyone who can't benefit from having [had for a long time] a rent-controlled apartment.
- Savvis 9y agoThis seems obvious, no?
- bigmanwalter 9y agoIn Montreal, we have rent control that has worked spectacularly. Rent is significantly below what it costs in comparable cities across Canada, the United States and even Europe. This all stems from our laws originating in French common law which is decidedly more for-the-people than British law. Our rent control works because it applies between leases. Last year rent increases were frozen at 0.5%. In the apartment that I moved into, the landlord is not allowed to increase the rent more than 0.5% above what the previous tenant was paying. Increase are also allowed in order to reflect any major renovations performed to the unit. Increases due to renovations must be anchored to the cost of the renovation, and distributed over the next 10 years of rental. This system works spectacularly for renters. Some people may argue that this leads to more slums, but it effectively incentivises landlords to renovate their units in order to maximize their returns.
- patricius 9y agoHow does it work from the landlord’s perspective?
- bigmanwalter 9y agoThe landlord is allowed to ask for whatever price they want. After signing the lease, if the landlord has made an illegal rent increase, the tenant can ask for a hearing before the Housing Authority (Régie de Logement). In the hearing, a judge will reduce the rent retroactively to the maximum allowed increase. If a tenant refuses to pay a rent increase, the landlord may apply for a hearing before the Housing Authority to have the tenant evicted, but the judge will take the illegality of the rent increase into consideration before giving permission to evict.
- kevinthew 9y agothe issue is the lack of housing, the artificially restricted supply, not marginal effects like rent controls. definition of missing the forest for the trees.