5 ms·

Nah, the core problem is Prop 13 (and its extensions). There's no solution to allocating dramatically less housing than people demand, regardless of how pro- or

Nah, the core problem is Prop 13 (and its extensions). There's no solution to allocating dramatically less housing than people demand, regardless of how pro- or anti-tenant the law is. Rent control, which Costa-Hawkins limits, is a form of artificial price controls that remove a bunch of housing inventory and the incentives to create more. But it's a mere footnote in the margin of Prop 13, a state wide regime that has been in place twice as long and has the effect of removing a bunch of housing inventory and the incentives to create more.

TomMckenny 8y ago
Yes, the theory is that rent control causes reduction in inventory. But housing is not an ordinary good and the evidence shows that this theory is incorrect. New York has had rent control for most of the 20th century with 2 million units still under rent control. Yet it has plenty of development. And as I point out, housing prices rose slower and housing supply was greater before Costa-Hawkins than they are now. Furthermore, renters favor rent control while landlords oppose it. So whatever the mechanisms, clearly it benefits renters at the expense of landlords, clearly by reducing housing costs. And while it is definitely worth adding as much housing as possible, all new housing will price at the top of the market. And at this moment there are thousands of high end units with vacancy in SF and essentially no low priced. So clearly this does not relive pressure on middle or low end housing. Repealing prop 13 would raise revenue, much of it from large land holders (of which Howard Jarvis was one) so that's nice. It would lower mortgage payments by the amount which property taxes rise thereby converting some mortgage interest into tax revenue. So that's nice. And it makes it easier for new buyers by driving those who can't afford the higher property tax out of their homes. The advantage of this is less clear. The main problem is that it is difficult for people to believe that which is in their financial interest to disbelieve.
- AnimalMuppet 8y ago
  > Yes, the theory is that rent control causes reduction in inventory. But housing is not an ordinary good and the evidence shows that this theory is incorrect. Could you point to the evidence that you think disproves this?
  - TomMckenny 8y ago
    New York has had rent control for most of the 20th century with 2 million units still under rent control. Yet it has plenty of development. Before Costa-Hawkins and the widespread repeal of rent control ordinances, there was less of a housing crisis than after its passage.
    - elgenie 8y ago
      First, correlation is not causation. Second, NYC isn't necessarily a panacea. Third, and most importantly, this is a misrepresentation of New York's situation gross enough to border on willful deception. Per this [1], there are only 38K units in NYC that are rent controlled, and rent control only applies to buildings built pre-1947. An additional 987K units are rent stabilized due to either being built between 1947 and 1974 or been included in buildings otherwise filled with market rate units by developers nudged in that direction by tax incentives (8% of rent stabilized stock), which is probably mildly inefficient but doesn't stand in the way of development. The majority of units are market rate, and there's no rent control requirements standing in the way of building market rate units. [1] http://furmancenter.org/files/publications/HVS_Rent_Stabilization_fact_sheet_FINAL.pdf http://furmancenter.org/files/publications/HVS_Rent_Stabiliz...
      - TomMckenny 8y ago
        There is a frequently repeated but completely unsubstantiated claim that rent control reduces inventory and I produced a counter example; the biggest city in America in fact. >First, correlation is not causation. Second, NYC isn't necessarily a panacea. I do not claim rent control _causes_ growth, I claim it has no distinct effect. And I do not claim that NYC is a good or bad place. I do not care. Growth continued in-spite of rent control therefore rent control does not reverse growth. Indeed from 1920 to 1929 all units were susceptible to compete control over their pricing yet the 1920s were a decade of maximum growth. So again, rent control did not kill housing growth. If for some reason NYC is dismissed as an example, Berkeley too has experienced continuous housing growth. As has Santa Monica. Repeated cases where rent control did not revers growth. And if those are dismissed, California before Costa-Hawkins had a higher rate of housing growth than after. So again, control did not reverse growth. It is endlessly repeated that rent control reduces inventory, so there should be many examples and no counter examples. Instead we find the opposite. Indeed, where is there any case where rent control drove positive growth negative? >border on willful deception Is there any evidence, even theoretical, or any circumstance, however hypothetical, future or past, that could possibly dissuade you of the proposition that "rent control reduces inventory"?
- leetcrew 8y ago
  > Furthermore, renters favor rent control while landlords oppose it. So whatever the mechanisms, clearly it benefits renters at the expense of landlords, clearly by reducing housing costs. this is a questionable line of reasoning. it's not uncommon for people to unknowingly support policies that don't actually benefit them. the only group of people who rent control clearly benefits are people who already have leases. it's not at all obvious that it helps new renters or people who want to move to a different place at all. it seems plausible at least that people in the business of renting buildings (ie landlords) are the group with the most information about the market, and are therefore in the best position to see the distortion.
  - TomMckenny 8y ago
    >it's not uncommon for people to unknowingly support policies that don't actually benefit them. The presumption of democracy is that this is a minority of cases. To suppose it is the case here is to assume that the less likely is happening here. And assume so on an apparently evidence free theory about the effects of a single pricing policy. >it seems plausible at least that people in the business of renting buildings (ie landlords) are the group with the most information about the market, and are therefore in the best position to see the distortion. And so are not voting against their interest when they oppose rent control. Being as rent is rentier income, it is zero-sum, and so is to the disadvantage of tenants.

TomMckenny 8y ago

Yes, the theory is that rent control causes reduction in inventory. But housing is not an ordinary good and the evidence shows that this theory is incorrect. New York has had rent control for most of the 20th century with 2 million units still under rent control. Yet it has plenty of development. And as I point out, housing prices rose slower and housing supply was greater before Costa-Hawkins than they are now. Furthermore, renters favor rent control while landlords oppose it. So whatever the mechanisms, clearly it benefits renters at the expense of landlords, clearly by reducing housing costs. And while it is definitely worth adding as much housing as possible, all new housing will price at the top of the market. And at this moment there are thousands of high end units with vacancy in SF and essentially no low priced. So clearly this does not relive pressure on middle or low end housing. Repealing prop 13 would raise revenue, much of it from large land holders (of which Howard Jarvis was one) so that's nice. It would lower mortgage payments by the amount which property taxes rise thereby converting some mortgage interest into tax revenue. So that's nice. And it makes it easier for new buyers by driving those who can't afford the higher property tax out of their homes. The advantage of this is less clear. The main problem is that it is difficult for people to believe that which is in their financial interest to disbelieve.

AnimalMuppet 8y ago
> Yes, the theory is that rent control causes reduction in inventory. But housing is not an ordinary good and the evidence shows that this theory is incorrect. Could you point to the evidence that you think disproves this?
- TomMckenny 8y ago
  New York has had rent control for most of the 20th century with 2 million units still under rent control. Yet it has plenty of development. Before Costa-Hawkins and the widespread repeal of rent control ordinances, there was less of a housing crisis than after its passage.
  - elgenie 8y ago
    First, correlation is not causation. Second, NYC isn't necessarily a panacea. Third, and most importantly, this is a misrepresentation of New York's situation gross enough to border on willful deception. Per this [1], there are only 38K units in NYC that are rent controlled, and rent control only applies to buildings built pre-1947. An additional 987K units are rent stabilized due to either being built between 1947 and 1974 or been included in buildings otherwise filled with market rate units by developers nudged in that direction by tax incentives (8% of rent stabilized stock), which is probably mildly inefficient but doesn't stand in the way of development. The majority of units are market rate, and there's no rent control requirements standing in the way of building market rate units. [1] http://furmancenter.org/files/publications/HVS_Rent_Stabilization_fact_sheet_FINAL.pdf http://furmancenter.org/files/publications/HVS_Rent_Stabiliz...
    - TomMckenny 8y ago
      There is a frequently repeated but completely unsubstantiated claim that rent control reduces inventory and I produced a counter example; the biggest city in America in fact. >First, correlation is not causation. Second, NYC isn't necessarily a panacea. I do not claim rent control _causes_ growth, I claim it has no distinct effect. And I do not claim that NYC is a good or bad place. I do not care. Growth continued in-spite of rent control therefore rent control does not reverse growth. Indeed from 1920 to 1929 all units were susceptible to compete control over their pricing yet the 1920s were a decade of maximum growth. So again, rent control did not kill housing growth. If for some reason NYC is dismissed as an example, Berkeley too has experienced continuous housing growth. As has Santa Monica. Repeated cases where rent control did not revers growth. And if those are dismissed, California before Costa-Hawkins had a higher rate of housing growth than after. So again, control did not reverse growth. It is endlessly repeated that rent control reduces inventory, so there should be many examples and no counter examples. Instead we find the opposite. Indeed, where is there any case where rent control drove positive growth negative? >border on willful deception Is there any evidence, even theoretical, or any circumstance, however hypothetical, future or past, that could possibly dissuade you of the proposition that "rent control reduces inventory"?
leetcrew 8y ago
> Furthermore, renters favor rent control while landlords oppose it. So whatever the mechanisms, clearly it benefits renters at the expense of landlords, clearly by reducing housing costs. this is a questionable line of reasoning. it's not uncommon for people to unknowingly support policies that don't actually benefit them. the only group of people who rent control clearly benefits are people who already have leases. it's not at all obvious that it helps new renters or people who want to move to a different place at all. it seems plausible at least that people in the business of renting buildings (ie landlords) are the group with the most information about the market, and are therefore in the best position to see the distortion.
- TomMckenny 8y ago
  >it's not uncommon for people to unknowingly support policies that don't actually benefit them. The presumption of democracy is that this is a minority of cases. To suppose it is the case here is to assume that the less likely is happening here. And assume so on an apparently evidence free theory about the effects of a single pricing policy. >it seems plausible at least that people in the business of renting buildings (ie landlords) are the group with the most information about the market, and are therefore in the best position to see the distortion. And so are not voting against their interest when they oppose rent control. Being as rent is rentier income, it is zero-sum, and so is to the disadvantage of tenants.