4 ms·

Why would removing rent control increase the supply of affordable housing? Honest question. Presumably a lot of people depend on it in order to live in SF itsel

by drb91 8y ago

Why would removing rent control increase the supply of affordable housing? Honest question. Presumably a lot of people depend on it in order to live in SF itself.

chroma 8y ago
Economists agree that rent control hurts cities as much as dentists agree that sugared gum hurts teeth.[1] The main problem with rent control is what it incentivizes. Landlords have less incentive to maintain or improve their properties and more incentive to get tenants out so they can rent to new tenants at market rates. From CityLab's summary of the economic analysis of SF's rent control law:[2] > As a result of these landlord reactions, rent-controlled buildings saw a 15 percent decline in the number of renter residents, and a 25 percent decline in those living in the rent-controlled units, compared to 1994 levels. In other words, rent control had a counterproductive effect. Fewer residents mean less supply of housing, meaning higher prices overall. Rent control effectively subsidizes current tenants with money from future tenants. 1. https://www.bloomberg.com/view/articles/2018-01-18/yup-rent-control-does-more-harm-than-good https://www.bloomberg.com/view/articles/2018-01-18/yup-rent-... 2. https://www.citylab.com/equity/2018/01/rent-control-a-reckoning/551168/ https://www.citylab.com/equity/2018/01/rent-control-a-reckon...
stickfigure 8y ago
Because of people like me that have ancient rent-controlled apartments in SF that would leave them if the rent went up. I have many friends in the same situation; we're not enjoying SF like we did in our 20s and 30s, but the rent is too cheap to move. Right now the market is bifurcated into the lucky ones who have absurdly cheap housing and the unlucky ones that have absurdly expensive housing. Without rent control, the equilibrium state would be something in between.
ww520 8y ago
Rent control depresses housing supply. It subsidies current tenants with future tenants' increased cost. The high housing cost people complaining about is the cumulating cost of decades of rent control. It incentivizes tenants with artificial low rent to stay beyond what were needed. People with low rent hang on to the units even when they have bought houses (I actually know people doing it). It decentivizes landlords to keep the buildings as rentals. It decentivizes investors to add more housing supplies.
solatic 8y ago
Imagine that you're a young couple in a 1 BR apartment in SF that you're paying $1500/month controlled rent on. You wish to move to a 3 BR apartment, so that you can have enough room to start a family, and thereby free up the 1 BR apartment you're living in. Because you're married, and your career is starting to develop, your budget has increased to allow you to spend $2500, maybe $3000 on rent. Unfortunately, market rent costs much, much more than that, so you're stuck in your cheaper $1500 apartment, even though you can theoretically afford to pay more. Rent control hurts affordable housing because it incentivizes over-consumption of affordable housing. Without rent control, average rents would rise, but it would be easier to find apartments at the low end of the market.

by drb91 8y ago

Why would removing rent control increase the supply of affordable housing? Honest question. Presumably a lot of people depend on it in order to live in SF itself.

chroma 8y ago

Economists agree that rent control hurts cities as much as dentists agree that sugared gum hurts teeth.[1] The main problem with rent control is what it incentivizes. Landlords have less incentive to maintain or improve their properties and more incentive to get tenants out so they can rent to new tenants at market rates. From CityLab's summary of the economic analysis of SF's rent control law:[2] > As a result of these landlord reactions, rent-controlled buildings saw a 15 percent decline in the number of renter residents, and a 25 percent decline in those living in the rent-controlled units, compared to 1994 levels. In other words, rent control had a counterproductive effect. Fewer residents mean less supply of housing, meaning higher prices overall. Rent control effectively subsidizes current tenants with money from future tenants. 1. https://www.bloomberg.com/view/articles/2018-01-18/yup-rent-control-does-more-harm-than-good https://www.bloomberg.com/view/articles/2018-01-18/yup-rent-... 2. https://www.citylab.com/equity/2018/01/rent-control-a-reckoning/551168/ https://www.citylab.com/equity/2018/01/rent-control-a-reckon...

stickfigure 8y ago

Because of people like me that have ancient rent-controlled apartments in SF that would leave them if the rent went up. I have many friends in the same situation; we're not enjoying SF like we did in our 20s and 30s, but the rent is too cheap to move. Right now the market is bifurcated into the lucky ones who have absurdly cheap housing and the unlucky ones that have absurdly expensive housing. Without rent control, the equilibrium state would be something in between.

ww520 8y ago

Rent control depresses housing supply. It subsidies current tenants with future tenants' increased cost. The high housing cost people complaining about is the cumulating cost of decades of rent control. It incentivizes tenants with artificial low rent to stay beyond what were needed. People with low rent hang on to the units even when they have bought houses (I actually know people doing it). It decentivizes landlords to keep the buildings as rentals. It decentivizes investors to add more housing supplies.

solatic 8y ago

Imagine that you're a young couple in a 1 BR apartment in SF that you're paying $1500/month controlled rent on. You wish to move to a 3 BR apartment, so that you can have enough room to start a family, and thereby free up the 1 BR apartment you're living in. Because you're married, and your career is starting to develop, your budget has increased to allow you to spend $2500, maybe $3000 on rent. Unfortunately, market rent costs much, much more than that, so you're stuck in your cheaper $1500 apartment, even though you can theoretically afford to pay more. Rent control hurts affordable housing because it incentivizes over-consumption of affordable housing. Without rent control, average rents would rise, but it would be easier to find apartments at the low end of the market.