5 ms·

This is a huge problem. Prices and rents are left to "the market", but construction is not at all. Strong rent control should be introduced everywhere and owne

by jpdus 8y ago

This is a huge problem. Prices and rents are left to "the market", but construction is not at all. Strong rent control should be introduced everywhere and ownership for investment reasons should be massively discouraged (e.g. by strong taxation). On the other hand protection of existing landlords should be reduced to encourage new building. Rent seeking is damaging the economy and the society and only privileged landlords benefit from current conditions. Unfortunately most economists seem to be biased or are probably benefitting themselves, thus there is no concentrated effort to push for better policies.

hammock 8y ago
This article feels like a strawman to me. Infrastructure improvements are not the cause of SF rents. You just need to walk down any block, or sit on BART (if it's working!) and step in a pile of excrement to prove that. Having lived in a few places I see rent control and legislation like Prop 13 as major contributors. When people cite the average rent in SF, that's based on what's currently on the market. What is not counted is the (much greater) inventory that is currently occupied, with rent-controlled tenants paying far less than market rate. When someone cites "the unaffordability" of rent in order to justify rent control, what you also don't see is the high cost of MOVING that comes with rent control. My SF neighbor had been in her unit since the 90's, paying less than half my rent, and she can't afford to move if she wanted to! If she were to move she'd have to leave the Bay Area. She's trapped. Rent control doesn't improve housing choice in that sense.
- philipov 8y ago
  Do you think it's more likely that without rent control she would have been forced to move earlier, or that her income would be higher than it is now? Something about this situation seems circular, but your argument doesn't admit to there being a feedback loop involved, which makes me suspicious.
  - NotAnEconomist 8y ago
    I think the implication is that her having been forced to move at the due economic point would have been less coercive than now being trapped into a single location by economic forces -- leaving her freer to seek happiness in other ways, eg, job mobility. Further, that if all the people of a certain class were forced to move, eg baristas could no longer afford to be in the area, it places a strong economic incentive on fixing the actual political problem, which is semi-masked by her current arrangement. I'm not sure I agree, but I think there's an argument to be had that she'd have more freedom to leave a job if she were living somewhere that she were also free to relocate, and that at scale, this economic distortion leads to high friction.
  - PhoenixReborn 8y ago
    It doesn't seem too circular to me. Rent control keeps your rent low despite rising rents around you. So in the case of the OP's friend, her rent is now vastly below market. In a non rent-controlled world she would absolutely have been forced to move earlier due to rising rents.
    - philipov 8y ago
      If she can't afford to move anywhere today, wouldn't that make her homeless without rent control?
    - bigmanwalter 8y ago
      Some rent control schemes keep all rents low. In Montreal, the government limits all rent increases to 1% per year. Even between tenants.
- Khol 8y ago
  To address the last point - if your neighbour can't afford to move because the rent is too high elsewhere then under a non-rent controlled system would the landlord not have raised her rent to a point she would be unable to pay it and would thus be forced to move elsewhere? (I don't know enough to actually have an answer to this.)
  - hammock 8y ago
    Which would you choose: 1) move away from rising costs, in literally any direction (pick just about any other place in the world), settle into a home you can afford and move again later if you want/need. 2) Live in a rent controlled apartment, become trapped for the rest of your life in a neighborhood where you can no longer afford groceries, healthcare or a haircut because of the rising cost of living.
- nshepperd 8y ago
  > This article feels like a strawman to me. Infrastructure improvements are not the cause of SF rents. You just need to walk down any block, or sit on BART (if it's working!) and step in a pile of excrement to prove that. Huh? No, it's the other way around. SF rents are the cause of lack of infrastructure improvements, according to the article.
- bigmanwalter 8y ago
  I live in a city with rent control and it's great. New York's rent control model is broken no doubt but look no further than Montreal for a better example. The difference is that all rent prices are subject to a maximum increase of roughly 1% per year, even if tenants change, the lease is locked to within 1% of the previous tenant's lease. It works great :) Older rental stock remains cheap, and new properties are reasonably priced too.
  - refurb 8y ago
    Montreal isn’t exactly a city experiencing a massive influx of high paid workers. Easy to solve the problem when their isn’t one.
    - bigmanwalter 8y ago
      Renting is much cheaper in Montreal than similar sized Canadian and American cities. Obviously you cannot compare to cities like NYC or SF directly.
- heavenlyblue 8y ago
  I think the parent means rent control as in "control of the rent in a particular area everywhere at once", rather than "rent-controlled contract for this particular property"
- rtkwe 8y ago
  > Rent control doesn't improve housing choice in that sense. I don't think it's supposed to. It's just a price control meant to keep large swaths of income brackets from being priced out of the city entirely.
timerol 8y ago
In addition to the good policies you mentioned, construction should be encouraged in areas with high rents. The article talks about homeowner NIMBY politics as if it's an inalienable and insurmountable fact of life, but it's definitely possible to upzone areas and/or whole cities. (Shoutout to Minneapolis 2040 removing single-family zoning.) This is more politically tenable in certain areas using inclusionary zoning, basically allowing more units in a building as long as X% of them are reserved for low-income renters, charging no more than 30% of those renters' incomes.
cirgue 8y ago
> Unfortunately most economists seem to be biased or are probably benefitting themselves, thus there is no concentrated effort to push for better policies. Economists create the economy about as much as geologists create rocks. Marx and Pigou were economists, JP Morgan wasn't. I think you mean politicians and municipal governments. Economists aren't exactly a powerful legislative lobby, if they were our society would be radically different. Renteirism, monopoly, and regressive taxation are pretty widely viewed as being bad for society in the econ community.
makotech222 8y ago
Or just outlaw landlording and make all city housing publicly owned.
dcosson 8y ago
Rent control is a terrible idea for the exact reason prop 13 is - it reduces mobility and flexibility for everyone, and completely screws over anybody new (immigrants, young people, people who get unlucky and their landlord happened to want to move back into their house, etc). Even further, it allows a lot of people to completely ignore the high prices, so people benefit from these things, keep voting to block new construction and ignore the housing supply problems and make the jobs/housing imbalance worse, and prices just go up even faster.
jtolmar 8y ago
You could design taxes specifically aimed at lowering the appeal of landlordism, for example a high property tax (or LVT) with a deduction for your primary residence. This would encourage people to sell off buildings that aren't their primary residence and turn apartments into condos, increasing the supply and lowering the price. Graduated wealth taxes solve this even more cleanly.
mi100hael 8y ago
Who is going to want to invest millions developing new apartments if they know they'll be greeted with razor-thin margins thanks to rent control & excessive taxation when complete? I might as well just go buy some Treasury bonds or something.

by jpdus 8y ago

hammock 8y ago

This article feels like a strawman to me. Infrastructure improvements are not the cause of SF rents. You just need to walk down any block, or sit on BART (if it's working!) and step in a pile of excrement to prove that. Having lived in a few places I see rent control and legislation like Prop 13 as major contributors. When people cite the average rent in SF, that's based on what's currently on the market. What is not counted is the (much greater) inventory that is currently occupied, with rent-controlled tenants paying far less than market rate. When someone cites "the unaffordability" of rent in order to justify rent control, what you also don't see is the high cost of MOVING that comes with rent control. My SF neighbor had been in her unit since the 90's, paying less than half my rent, and she can't afford to move if she wanted to! If she were to move she'd have to leave the Bay Area. She's trapped. Rent control doesn't improve housing choice in that sense.

philipov 8y ago
Do you think it's more likely that without rent control she would have been forced to move earlier, or that her income would be higher than it is now? Something about this situation seems circular, but your argument doesn't admit to there being a feedback loop involved, which makes me suspicious.
- NotAnEconomist 8y ago
  I think the implication is that her having been forced to move at the due economic point would have been less coercive than now being trapped into a single location by economic forces -- leaving her freer to seek happiness in other ways, eg, job mobility. Further, that if all the people of a certain class were forced to move, eg baristas could no longer afford to be in the area, it places a strong economic incentive on fixing the actual political problem, which is semi-masked by her current arrangement. I'm not sure I agree, but I think there's an argument to be had that she'd have more freedom to leave a job if she were living somewhere that she were also free to relocate, and that at scale, this economic distortion leads to high friction.
- PhoenixReborn 8y ago
  It doesn't seem too circular to me. Rent control keeps your rent low despite rising rents around you. So in the case of the OP's friend, her rent is now vastly below market. In a non rent-controlled world she would absolutely have been forced to move earlier due to rising rents.
  - philipov 8y ago
    If she can't afford to move anywhere today, wouldn't that make her homeless without rent control?
  - bigmanwalter 8y ago
    Some rent control schemes keep all rents low. In Montreal, the government limits all rent increases to 1% per year. Even between tenants.
Khol 8y ago
To address the last point - if your neighbour can't afford to move because the rent is too high elsewhere then under a non-rent controlled system would the landlord not have raised her rent to a point she would be unable to pay it and would thus be forced to move elsewhere? (I don't know enough to actually have an answer to this.)
- hammock 8y ago
  Which would you choose: 1) move away from rising costs, in literally any direction (pick just about any other place in the world), settle into a home you can afford and move again later if you want/need. 2) Live in a rent controlled apartment, become trapped for the rest of your life in a neighborhood where you can no longer afford groceries, healthcare or a haircut because of the rising cost of living.
nshepperd 8y ago
> This article feels like a strawman to me. Infrastructure improvements are not the cause of SF rents. You just need to walk down any block, or sit on BART (if it's working!) and step in a pile of excrement to prove that. Huh? No, it's the other way around. SF rents are the cause of lack of infrastructure improvements, according to the article.
bigmanwalter 8y ago
I live in a city with rent control and it's great. New York's rent control model is broken no doubt but look no further than Montreal for a better example. The difference is that all rent prices are subject to a maximum increase of roughly 1% per year, even if tenants change, the lease is locked to within 1% of the previous tenant's lease. It works great :) Older rental stock remains cheap, and new properties are reasonably priced too.
- refurb 8y ago
  Montreal isn’t exactly a city experiencing a massive influx of high paid workers. Easy to solve the problem when their isn’t one.
  - bigmanwalter 8y ago
    Renting is much cheaper in Montreal than similar sized Canadian and American cities. Obviously you cannot compare to cities like NYC or SF directly.
heavenlyblue 8y ago
I think the parent means rent control as in "control of the rent in a particular area everywhere at once", rather than "rent-controlled contract for this particular property"
rtkwe 8y ago
> Rent control doesn't improve housing choice in that sense. I don't think it's supposed to. It's just a price control meant to keep large swaths of income brackets from being priced out of the city entirely.

timerol 8y ago

In addition to the good policies you mentioned, construction should be encouraged in areas with high rents. The article talks about homeowner NIMBY politics as if it's an inalienable and insurmountable fact of life, but it's definitely possible to upzone areas and/or whole cities. (Shoutout to Minneapolis 2040 removing single-family zoning.) This is more politically tenable in certain areas using inclusionary zoning, basically allowing more units in a building as long as X% of them are reserved for low-income renters, charging no more than 30% of those renters' incomes.

cirgue 8y ago

> Unfortunately most economists seem to be biased or are probably benefitting themselves, thus there is no concentrated effort to push for better policies. Economists create the economy about as much as geologists create rocks. Marx and Pigou were economists, JP Morgan wasn't. I think you mean politicians and municipal governments. Economists aren't exactly a powerful legislative lobby, if they were our society would be radically different. Renteirism, monopoly, and regressive taxation are pretty widely viewed as being bad for society in the econ community.

makotech222 8y ago

Or just outlaw landlording and make all city housing publicly owned.

dcosson 8y ago

Rent control is a terrible idea for the exact reason prop 13 is - it reduces mobility and flexibility for everyone, and completely screws over anybody new (immigrants, young people, people who get unlucky and their landlord happened to want to move back into their house, etc). Even further, it allows a lot of people to completely ignore the high prices, so people benefit from these things, keep voting to block new construction and ignore the housing supply problems and make the jobs/housing imbalance worse, and prices just go up even faster.

jtolmar 8y ago

You could design taxes specifically aimed at lowering the appeal of landlordism, for example a high property tax (or LVT) with a deduction for your primary residence. This would encourage people to sell off buildings that aren't their primary residence and turn apartments into condos, increasing the supply and lowering the price. Graduated wealth taxes solve this even more cleanly.

mi100hael 8y ago

Who is going to want to invest millions developing new apartments if they know they'll be greeted with razor-thin margins thanks to rent control & excessive taxation when complete? I might as well just go buy some Treasury bonds or something.