4 ms·

When there is high demand for a product, including housing, the market has to respond. High prices attract investment in more housing, usually denser housing. R

When there is high demand for a product, including housing, the market has to respond. High prices attract investment in more housing, usually denser housing. Rent Control prevents the market signals from working. There is no incentive to construct more housing because its not worth it. Additionally, if blue collar jobs can't be filled because its not worth the pay+commute, then either wages have to raise or these go undone. If the market isn't allowed to operate, then you can't expect these systems to work.

supercanuck 8y ago
the problem is there is market failure. The Housing Asset is more valuable as a financial instrument than the actual utility it provides. This is why you see homes sitting empty in Manhattan.
- refurb 8y ago
  The market is failing because of the distortions introduced by things like mortgage tax deduction, 30-year term mortgages, restrictions on new housing, etc.
  - onemoresoop 8y ago
    Could you please elaborate on that? Thanks
    - refurb 8y ago
      There are gov't policies that make it much easier to get money to purchase a home. 30 year mortgages were created by the gov't which locks in low payments. Mortgage tax deduction lowers the effective cost of a mortgage. Easier to get money to buy a home -> price of homes go up. Normally when prices go up, supplier (homebuilders) have an incentive to produce more housing, countering the increase in price. However, many cities (SF is a great example) make it very hard to build new housing. Restriction on supply with increasing demand -> price of homes go up.
    - deepakhj 8y ago
      85% of SF bans apartment buildings. Projects take years to get approved. All of those costs get rolled into the final amount.
  - growlist 8y ago
    > restrictions on new housing Unfortunately they are not making any more land.
    - deepakhj 8y ago
      When land is scarce, the only thing left to do is build up!
      - supercanuck 8y ago
        Demand for Empty Condo’s has never been higher!
MAGZine 8y ago
In San Francisco, this problem was "solved," by not subjecting new development to rent control.
- viggity 8y ago
  "san francisco". "new development". hahaha. you don't need to worry about no rent control if you don't allow any new developments. guy_tapping_temple.gif
- deepakhj 8y ago
  How many new developments are there in the outer sunset?
  - MAGZine 8y ago
    That's a zoning issue, not rent control.
- masonic 8y ago
  That's case law and state law, not SF specific.
romed 8y ago
You don’t want to wreck individual lives just because you want efficient price-finding. Rent control that protects tenants from super-nominal price increases works fine in the presence of abundant supply and liquidity. You can see how successful this can be in places like Belgium where standard lease is rent controlled for nine years with an option for additional nine years. This is enough time for a family to become established and raise children without being sacrificed on the alter of market signals. It is the kind of policy you get when you view tenants as people rather than revenue sources.
- everdev 8y ago
  Are individual lives ruined by having to move? I understand the pros and cons of rent control and there are valid arguments on both sides, but it doesn't sound like people's lives are being ruined. IMO, a lot of political and cultural tension comes from tying our identity to a piece of land. Maybe if we moved around more often we might be more tolerant of new cultures and people?
  - romed 8y ago
    This attitude is why American cities aren’t real places. Yes, being forced to move far away, as in the Bay Area where we evict people from Oakland and expect them to live in Antoich, is highly disruptive to lives. It severs friendships, increases travel, and all manner of negative effects.
  - mijamo 8y ago
    It does. I know several kids who suffered severe depression because they had to move far away several times and had no real friend, no feeling of belonging, no home.
- JamesBarney 8y ago
  Why does an increase in rent wreck people's lives? Also what does super nominal pricing mean? And anyone can sign a lease for 9 years. But the vast majority of tenants do not want to make a commitment for that long. And they could also sign a lease with an option to renew for up to a number of years similar to a commerical lease. But again no-tenant wants to pay the option cost.
cabalamat 8y ago
> High prices attract investment in more housing, Often planning laws restrict new housing... > usually denser housing ...and denser housing > Rent Control prevents the market signals from working. Rent control is also unfair, if some people (selected how?) are entitled to it and other people not entitled. I am against rent controls unless it is a right for all. By this I mean that anyone[1] living in a city can go to the local authority and say "I want a rent-controlled flat" and the local authority would be legally entitled to let them one, building new houses where necessary. This would mean the local authority would be required to act on market signals of people wanting rent-controlled housing. 1: with maybe a few qualifications like residence in that city for a year, citizenship, etc.
- MAGZine 8y ago
  Rent control, at least in San Francisco, applies to buildings/units of a certain type. It is not given to people or applied for. You get it automatically if you live in a unit that qualifies. So it is a right for all... just live in a building that qualifies. Most older buildings already do, so rent control is already applied to the cheapest units (again, in SF)
  - ap3 8y ago
    Why don’t more people just rent a rent control apartment instead of paying higher rent at other places?
    - MAGZine 8y ago
      The non-rent controlled places are newer/nicer.
  - cabalamat 8y ago
    > You get it automatically if you live in a unit that qualifies. And how do you get to live in a unit that qualifies? That isn't something everyone has the right to do. > just live in a building that qualifies "Being rich is easy, just be born to rich parents."

supercanuck 8y ago

the problem is there is market failure. The Housing Asset is more valuable as a financial instrument than the actual utility it provides. This is why you see homes sitting empty in Manhattan.

refurb 8y ago
The market is failing because of the distortions introduced by things like mortgage tax deduction, 30-year term mortgages, restrictions on new housing, etc.
- onemoresoop 8y ago
  Could you please elaborate on that? Thanks
  - refurb 8y ago
    There are gov't policies that make it much easier to get money to purchase a home. 30 year mortgages were created by the gov't which locks in low payments. Mortgage tax deduction lowers the effective cost of a mortgage. Easier to get money to buy a home -> price of homes go up. Normally when prices go up, supplier (homebuilders) have an incentive to produce more housing, countering the increase in price. However, many cities (SF is a great example) make it very hard to build new housing. Restriction on supply with increasing demand -> price of homes go up.
  - deepakhj 8y ago
    85% of SF bans apartment buildings. Projects take years to get approved. All of those costs get rolled into the final amount.
- growlist 8y ago
  > restrictions on new housing Unfortunately they are not making any more land.
  - deepakhj 8y ago
    When land is scarce, the only thing left to do is build up!
    - supercanuck 8y ago
      Demand for Empty Condo’s has never been higher!

MAGZine 8y ago

In San Francisco, this problem was "solved," by not subjecting new development to rent control.

viggity 8y ago
"san francisco". "new development". hahaha. you don't need to worry about no rent control if you don't allow any new developments. guy_tapping_temple.gif
deepakhj 8y ago
How many new developments are there in the outer sunset?
- MAGZine 8y ago
  That's a zoning issue, not rent control.
masonic 8y ago
That's case law and state law, not SF specific.

romed 8y ago

You don’t want to wreck individual lives just because you want efficient price-finding. Rent control that protects tenants from super-nominal price increases works fine in the presence of abundant supply and liquidity. You can see how successful this can be in places like Belgium where standard lease is rent controlled for nine years with an option for additional nine years. This is enough time for a family to become established and raise children without being sacrificed on the alter of market signals. It is the kind of policy you get when you view tenants as people rather than revenue sources.

everdev 8y ago
Are individual lives ruined by having to move? I understand the pros and cons of rent control and there are valid arguments on both sides, but it doesn't sound like people's lives are being ruined. IMO, a lot of political and cultural tension comes from tying our identity to a piece of land. Maybe if we moved around more often we might be more tolerant of new cultures and people?
- romed 8y ago
  This attitude is why American cities aren’t real places. Yes, being forced to move far away, as in the Bay Area where we evict people from Oakland and expect them to live in Antoich, is highly disruptive to lives. It severs friendships, increases travel, and all manner of negative effects.
- mijamo 8y ago
  It does. I know several kids who suffered severe depression because they had to move far away several times and had no real friend, no feeling of belonging, no home.
JamesBarney 8y ago
Why does an increase in rent wreck people's lives? Also what does super nominal pricing mean? And anyone can sign a lease for 9 years. But the vast majority of tenants do not want to make a commitment for that long. And they could also sign a lease with an option to renew for up to a number of years similar to a commerical lease. But again no-tenant wants to pay the option cost.

cabalamat 8y ago

> High prices attract investment in more housing, Often planning laws restrict new housing... > usually denser housing ...and denser housing > Rent Control prevents the market signals from working. Rent control is also unfair, if some people (selected how?) are entitled to it and other people not entitled. I am against rent controls unless it is a right for all. By this I mean that anyone[1] living in a city can go to the local authority and say "I want a rent-controlled flat" and the local authority would be legally entitled to let them one, building new houses where necessary. This would mean the local authority would be required to act on market signals of people wanting rent-controlled housing. 1: with maybe a few qualifications like residence in that city for a year, citizenship, etc.

MAGZine 8y ago
Rent control, at least in San Francisco, applies to buildings/units of a certain type. It is not given to people or applied for. You get it automatically if you live in a unit that qualifies. So it is a right for all... just live in a building that qualifies. Most older buildings already do, so rent control is already applied to the cheapest units (again, in SF)
- ap3 8y ago
  Why don’t more people just rent a rent control apartment instead of paying higher rent at other places?
  - MAGZine 8y ago
    The non-rent controlled places are newer/nicer.
- cabalamat 8y ago
  > You get it automatically if you live in a unit that qualifies. And how do you get to live in a unit that qualifies? That isn't something everyone has the right to do. > just live in a building that qualifies "Being rich is easy, just be born to rich parents."