5 ms·

Rent control removes the incentive to build new apartments. There are second order effects that make it counterproductive. Even the socialist economists agree r

by 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]

by 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]