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Now, 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 cau

Now, 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 ago
Rent 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 ago
  So 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 ago
  Everyone 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 ago
    This 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 ago
      This 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 ago
        The 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 ago
    Actually 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 ago
      Japan 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 ago
But 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 ago
    There 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 ago
    If 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 ago
  So 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 ago
    Pave Golden Gate Park.
  - linkregister 9y ago
    What 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 ago
      What in particular about the tech workers justifies making policies so that they can muscle out people who are already there?
    - thinkloop 9y ago
      It'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.

wycs 9y ago

Rent 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 ago
So 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 ago
Everyone 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 ago
  This 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 ago
    This 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 ago
      The 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 ago
  Actually 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 ago
    Japan 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 ago

But 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 ago
  There 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 ago
  If 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 ago
So 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 ago
  Pave Golden Gate Park.
- linkregister 9y ago
  What 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 ago
    What in particular about the tech workers justifies making policies so that they can muscle out people who are already there?
  - thinkloop 9y ago
    It'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.