12 ms·

Right, the problem is NIMBYs are allowed to rent-seek by preventing construction around them. And in San Francisco, Prop 13 / rent control insulates many people

by klipt 8y ago

Right, the problem is NIMBYs are allowed to rent-seek by preventing construction around them. And in San Francisco, Prop 13 / rent control insulates many people from any consequences of rising prices, as long as they don't have to move, which means they make decisions that push up prices for everyone else. In the economically ideal case we'd have a fair Land Value Tax to encourage as much building as necessary.

asdff 8y ago
So what might happen if California enacted statewide rent control? Capping yearly rent increases at inflation + 3%? There are places where properties have doubled in value in less than a dozen years while wages remain stagnant, leading to rents surging and more %income going to housing. Many low income renters are paying 50% or more of their income on rent, that's not sustainable for the wider economy that relies on low skill labor to function, and the solution is not to have people commute 4h every day to clean an office, teach a class, or fight a fire. The housing market moves so much faster than wages ever will, and it seems having only some units rent controlled exacerbates the problem for units that aren't, so why not make every unit in the state a rent controlled unit? The landlords are already insulated from the whiplash of the housing market from statewide property tax control in the form of prop 13, why not let renters enjoy that isolation as well?
- jdavis703 8y ago
  There are several rent control bills in California right now. AB 36 will allow cities to enact rent control on older buildings. AB 36 would not apply to new construction, only to buildings older than 10 years. This should help to prevent supply crunches, or at least not make them worse. AB 1482 would set a state-wide cap on rent increases, for example inflation + 10%. The idea is to stop massive rent increases that lead to evictions. The exact number hasn’t been determined yet, the bill sponsors are trying to figure out a good number that protects tenants and gives landlords a legally guaranteed return on investment. These bills will face a lot of corporate opposition. It’s important that our electeds here from renters, homeowners and “mom & pop” landlords as they consider these bills.
  - bobthepanda 8y ago
    AB 36 sounds like it would encourage a lot more turnover on older buildings, incentivizing the redevelopment of what is currently affordable housing. New York has similar regulations, and what you end up having happen is that landlords will either redevelop or renovate to whatever the threshold is to get out of the affordable housing requirement.
    - jdavis703 8y ago
      In California landlords are already allowed to pass through “reasonable” capital costs on rent controlled units, so they can essentially already do this.
      - shuckles 8y ago
        This is true in theory but in practice often hard to get approved. For example, in San Francisco you can never apply for a pass through on buildings occupied by the elderly or disabled even if that tenant sublets to non-protected people. In my experience, pass throughs are a theoretical concession instead of a practical one.
- outlace 8y ago
  The price of housing is only part of it. The rising prices reflect the rising demand and the relatively static supply. Even if prices were capped, it doesn’t mean more people would be able to get housing. There’s still fewer units than there are people who want them, so people would get units based on some other mechanism beside price such as a lottery. The unpredictability this would entail would probably be worse than a functioning price mechanism. Imagine you get a job in San Francisco but there’s only a 20% chance you’ll be able to “win” a housing unit where you want. Versus the current reality of for sure being able to find housing given you’re willing to pay enough.
  - deleted 8y ago
    [deleted]
  - freedomben 8y ago
    Exactly. It surprises me how many people don't understand the basic economics of scarcity. There has to be some rationing factor. In a free market this is price. If you remove price, it will be something else besides price, such as a lottery, how politically connected you are, or something else. The only real solution that doesn't result in shortages is to increase supply (build more housing).
    - pascalxus 8y ago
      Or, reduce demand by spreading out jobs to other cities and states where their more needed. (not ideal, i know, but it is a secondary option)
      - xvedejas 8y ago
        I have seen it argued in gentrifying neighborhoods that we should reject all projects which make those neighborhoods nicer to live in, to discourage new residents. This is a pretty direct way of reducing demand: making your neighborhood shittier.
        jjgreen 8y ago
- blobbers 8y ago
  Consider the opposite - if San Francisco allowed building. Your charming San Francisco would get demolished in the same way the Pudong in Shanghai did. Housing prices would level out a bit as developers cashed in on the gold rush and the housing supply leveled off with the demand. SF has room to build up but no incentive with rent control and restrictions. Consider Shanghai as described below. Consider following the link. "In 1996: After the mayor boasted that 18% of the world’s construction cranes were at work in Shanghai, international media widely reported – and exaggerated – the statistic. Reports described the crane as China’s national bird. The figure on how many cranes were working in Shanghai got rounded up to “a fifth,” “a quarter” and, in more than one publication, “half” the world’s total. "[https://blogs.wsj.com/chinarealtime/2011/12/21/china-shanghaipudong-views-then-and-now/ https://blogs.wsj.com/chinarealtime/2011/12/21/china-shangha...]
  - BurningFrog 8y ago
    That would be fantastic! It would house and employ enormous amounts of people, and eventually turn SF into the world class city it imagines it is! BTW, people who call SF "charming" have not visited it recently!
  - xvedejas 8y ago
    If you don't do any land seizures, shouldn't the result of upzoning be more mixed levels of density, according to who sells to developers and who doesn't? I don't see any scenario where SF gets "demolished" without active government redevelopment like what happened to the western addition.
  - CPLX 8y ago
    Or you could just landmark a couple charming districts of SF to preserve some of its uniqueness, and let the rest get developed. You’d lose some neighborhoods composed of endless streets dominated by garage doors at the ground level, and all those surface parking lots, but I think you guys could figure out how to cope.
- lmm 8y ago
  > So what might happen if California enacted statewide rent control? Capping yearly rent increases at inflation + 3%? No-one would move, ever. People wouldn't be able to change jobs even for much higher salaries or better conditions. Children would live with their parents forever. Many people would live precariously in illegal sublets with inadequate fire exits etc. Developers would stop building. Landlords would stop doing maintenance and let their buildings rot. Everyone would be miserable. > Many low income renters are paying 50% or more of their income on rent, that's not sustainable for the wider economy that relies on low skill labor to function, and the solution is not to have people commute 4h every day to clean an office, teach a class, or fight a fire. Rent control creates longer commutes. To the extent that the economy actually relies on low skill labour, it can pay the actual cost of having that labour where it needs it. In fact by having rent control you artificially depress wages and encourage companies to employ humans in bad jobs rather than finding ways to make things better.
  - geezerjay 8y ago
    > No-one would move, ever. I feel like this post should feature at the top of any discussion on housing.
  - lexs 8y ago
    > No-one would move, ever. People wouldn't be able to change jobs even for much higher salaries or better conditions. Children would live with their parents forever. Many people would live precariously in illegal sublets with inadequate fire exits etc. Why?
    - lmm 8y ago
      Because anyone who's been living in the same place for a while is paying well below-market (by design, otherwise there'd be no point in the rent control). Actually it's worse than that: the market rate rises much faster because landlords have less upside so there's little reason to build, and existing buildings can make more money as offices rather than residential. And when there's a huge gap between what a new tenant would have to pay and what the current tenant pays, that creates a huge incentive to do illegal sublets, and if your sublet is already illegal then why bother spending money complying with fire regulations or any other safety regulations?
- tunesmith 8y ago
  Oregon just did this statewide, at inflation + 7%. I have no idea what the effect will actually be.
- zip1234 8y ago
  Rent control is worse than useless. Not only does it not address the root cause of the problem, which is lack of supply, but it then skews prices and makes it so people won't move when they normally would.
  - mr_overalls 8y ago
    Exactly. There are few positions that most working economists share, but a disdain for rent control is one of them. It seems to make sense, but creates perverse incentives that lead to urban blight, a shortage of new housing, etc. As Walter E. Williams said in 1987: "Short of aerial saturation bombing, rent control might be one of the most effective means of destroying a city."
- ap3 8y ago
  >The housing market moves so much faster than wages ever will Is that true everywhere? Or are you just focusing on one-off locations like the Bay Area ? According to Schiller housing has tracked inflation in the US for 100+ years
gnopgnip 8y ago
What is the downside to a land value tax? Or put another way, how can you fairly assess taxes based on the value of the land? It seems absurd that a vacant parking lot pays basically nothing in property taxes while a hotel of the same size pays tens of thousand a month, but both take up the same amount of space and have the same potential. This kind of tax would certainly lead to better utilization.
- zzzzzzzza 8y ago
  most straight forward way is to buy a lot demolish everything on it, then sell it on the open market; voila you have a price point, do it a couple time and you can create a gradient Actual valuation methods used in real world by countries like Taiwan, Estonia, and Singapore to levy lvt (all countries with 90% plus home ownership) are more sophisticated than that though
- closeparen 8y ago
  Land value tax is all about driving each parcel towards its highest-value, most economically rational use. City planning is all about cultivating low-value, (locally) irrational uses. So think about all the stuff that exists because planners kneecap its better-funded competition: art galleries, theaters, cute mom & pop retail, auto service & repair, manufacturing jobs, etc. Would you miss it? Could the city council get away with losing it? LVT says the state should not only stop protecting these things, it should do a 180 and actively kill the uses by levying taxes they can't afford. Rather than slowing/blocking the transition to condos and formula retail, accelerate it. In principle, the new denser buildings could have space for the old low-value uses, but new construction is expensive. The new buildings would have to age a while before those marginal uses could afford them, and in the meantime the tenant organizations would all die. Maybe this could be averted using some central-planning scheme, maybe not. But you can imagine how the electorate might not want to risk it. The trends LVT would tend to accelerate are the ones most residents lament. I think we should allow sites that are already dead or are transitioning voluntarily to drastically increase density. Letting owners do this forces tenants' hands, which is a sad tradeoff (and to the left-NIMBYs, a dealbreaker). LVT goes even further and forces owners' hands, which I'm less wild about.
Bombthecat 8y ago
In cologne (Germany) there is a law which forbid high buildings. (https://mobil.ksta.de/das-hoehenkonzept-kirchen-und-dom-sind-der-massstab-6658064 https://mobil.ksta.de/das-hoehenkonzept-kirchen-und-dom-sind...) you can bet your life, that this law will never leave. Preventing high buildings in the citi..
- legulere 8y ago
  If you want high buildings go to Frankfurt. The structure of a city is what defines it. People move to a place because of how it is.

by klipt 8y ago

asdff 8y ago

So what might happen if California enacted statewide rent control? Capping yearly rent increases at inflation + 3%? There are places where properties have doubled in value in less than a dozen years while wages remain stagnant, leading to rents surging and more %income going to housing. Many low income renters are paying 50% or more of their income on rent, that's not sustainable for the wider economy that relies on low skill labor to function, and the solution is not to have people commute 4h every day to clean an office, teach a class, or fight a fire. The housing market moves so much faster than wages ever will, and it seems having only some units rent controlled exacerbates the problem for units that aren't, so why not make every unit in the state a rent controlled unit? The landlords are already insulated from the whiplash of the housing market from statewide property tax control in the form of prop 13, why not let renters enjoy that isolation as well?

jdavis703 8y ago
There are several rent control bills in California right now. AB 36 will allow cities to enact rent control on older buildings. AB 36 would not apply to new construction, only to buildings older than 10 years. This should help to prevent supply crunches, or at least not make them worse. AB 1482 would set a state-wide cap on rent increases, for example inflation + 10%. The idea is to stop massive rent increases that lead to evictions. The exact number hasn’t been determined yet, the bill sponsors are trying to figure out a good number that protects tenants and gives landlords a legally guaranteed return on investment. These bills will face a lot of corporate opposition. It’s important that our electeds here from renters, homeowners and “mom & pop” landlords as they consider these bills.
- bobthepanda 8y ago
  AB 36 sounds like it would encourage a lot more turnover on older buildings, incentivizing the redevelopment of what is currently affordable housing. New York has similar regulations, and what you end up having happen is that landlords will either redevelop or renovate to whatever the threshold is to get out of the affordable housing requirement.
  - jdavis703 8y ago
    In California landlords are already allowed to pass through “reasonable” capital costs on rent controlled units, so they can essentially already do this.
    - shuckles 8y ago
      This is true in theory but in practice often hard to get approved. For example, in San Francisco you can never apply for a pass through on buildings occupied by the elderly or disabled even if that tenant sublets to non-protected people. In my experience, pass throughs are a theoretical concession instead of a practical one.
outlace 8y ago
The price of housing is only part of it. The rising prices reflect the rising demand and the relatively static supply. Even if prices were capped, it doesn’t mean more people would be able to get housing. There’s still fewer units than there are people who want them, so people would get units based on some other mechanism beside price such as a lottery. The unpredictability this would entail would probably be worse than a functioning price mechanism. Imagine you get a job in San Francisco but there’s only a 20% chance you’ll be able to “win” a housing unit where you want. Versus the current reality of for sure being able to find housing given you’re willing to pay enough.
- deleted 8y ago
  [deleted]
- freedomben 8y ago
  Exactly. It surprises me how many people don't understand the basic economics of scarcity. There has to be some rationing factor. In a free market this is price. If you remove price, it will be something else besides price, such as a lottery, how politically connected you are, or something else. The only real solution that doesn't result in shortages is to increase supply (build more housing).
  - pascalxus 8y ago
    Or, reduce demand by spreading out jobs to other cities and states where their more needed. (not ideal, i know, but it is a secondary option)
    - xvedejas 8y ago
      I have seen it argued in gentrifying neighborhoods that we should reject all projects which make those neighborhoods nicer to live in, to discourage new residents. This is a pretty direct way of reducing demand: making your neighborhood shittier.
      - jjgreen 8y ago
blobbers 8y ago
Consider the opposite - if San Francisco allowed building. Your charming San Francisco would get demolished in the same way the Pudong in Shanghai did. Housing prices would level out a bit as developers cashed in on the gold rush and the housing supply leveled off with the demand. SF has room to build up but no incentive with rent control and restrictions. Consider Shanghai as described below. Consider following the link. "In 1996: After the mayor boasted that 18% of the world’s construction cranes were at work in Shanghai, international media widely reported – and exaggerated – the statistic. Reports described the crane as China’s national bird. The figure on how many cranes were working in Shanghai got rounded up to “a fifth,” “a quarter” and, in more than one publication, “half” the world’s total. "[https://blogs.wsj.com/chinarealtime/2011/12/21/china-shanghaipudong-views-then-and-now/ https://blogs.wsj.com/chinarealtime/2011/12/21/china-shangha...]
- BurningFrog 8y ago
  That would be fantastic! It would house and employ enormous amounts of people, and eventually turn SF into the world class city it imagines it is! BTW, people who call SF "charming" have not visited it recently!
- xvedejas 8y ago
  If you don't do any land seizures, shouldn't the result of upzoning be more mixed levels of density, according to who sells to developers and who doesn't? I don't see any scenario where SF gets "demolished" without active government redevelopment like what happened to the western addition.
- CPLX 8y ago
  Or you could just landmark a couple charming districts of SF to preserve some of its uniqueness, and let the rest get developed. You’d lose some neighborhoods composed of endless streets dominated by garage doors at the ground level, and all those surface parking lots, but I think you guys could figure out how to cope.
lmm 8y ago
> So what might happen if California enacted statewide rent control? Capping yearly rent increases at inflation + 3%? No-one would move, ever. People wouldn't be able to change jobs even for much higher salaries or better conditions. Children would live with their parents forever. Many people would live precariously in illegal sublets with inadequate fire exits etc. Developers would stop building. Landlords would stop doing maintenance and let their buildings rot. Everyone would be miserable. > Many low income renters are paying 50% or more of their income on rent, that's not sustainable for the wider economy that relies on low skill labor to function, and the solution is not to have people commute 4h every day to clean an office, teach a class, or fight a fire. Rent control creates longer commutes. To the extent that the economy actually relies on low skill labour, it can pay the actual cost of having that labour where it needs it. In fact by having rent control you artificially depress wages and encourage companies to employ humans in bad jobs rather than finding ways to make things better.
- geezerjay 8y ago
  > No-one would move, ever. I feel like this post should feature at the top of any discussion on housing.
- lexs 8y ago
  > No-one would move, ever. People wouldn't be able to change jobs even for much higher salaries or better conditions. Children would live with their parents forever. Many people would live precariously in illegal sublets with inadequate fire exits etc. Why?
  - lmm 8y ago
    Because anyone who's been living in the same place for a while is paying well below-market (by design, otherwise there'd be no point in the rent control). Actually it's worse than that: the market rate rises much faster because landlords have less upside so there's little reason to build, and existing buildings can make more money as offices rather than residential. And when there's a huge gap between what a new tenant would have to pay and what the current tenant pays, that creates a huge incentive to do illegal sublets, and if your sublet is already illegal then why bother spending money complying with fire regulations or any other safety regulations?
tunesmith 8y ago
Oregon just did this statewide, at inflation + 7%. I have no idea what the effect will actually be.
zip1234 8y ago
Rent control is worse than useless. Not only does it not address the root cause of the problem, which is lack of supply, but it then skews prices and makes it so people won't move when they normally would.
- mr_overalls 8y ago
  Exactly. There are few positions that most working economists share, but a disdain for rent control is one of them. It seems to make sense, but creates perverse incentives that lead to urban blight, a shortage of new housing, etc. As Walter E. Williams said in 1987: "Short of aerial saturation bombing, rent control might be one of the most effective means of destroying a city."
ap3 8y ago
>The housing market moves so much faster than wages ever will Is that true everywhere? Or are you just focusing on one-off locations like the Bay Area ? According to Schiller housing has tracked inflation in the US for 100+ years

gnopgnip 8y ago

What is the downside to a land value tax? Or put another way, how can you fairly assess taxes based on the value of the land? It seems absurd that a vacant parking lot pays basically nothing in property taxes while a hotel of the same size pays tens of thousand a month, but both take up the same amount of space and have the same potential. This kind of tax would certainly lead to better utilization.

zzzzzzzza 8y ago
most straight forward way is to buy a lot demolish everything on it, then sell it on the open market; voila you have a price point, do it a couple time and you can create a gradient Actual valuation methods used in real world by countries like Taiwan, Estonia, and Singapore to levy lvt (all countries with 90% plus home ownership) are more sophisticated than that though
closeparen 8y ago
Land value tax is all about driving each parcel towards its highest-value, most economically rational use. City planning is all about cultivating low-value, (locally) irrational uses. So think about all the stuff that exists because planners kneecap its better-funded competition: art galleries, theaters, cute mom & pop retail, auto service & repair, manufacturing jobs, etc. Would you miss it? Could the city council get away with losing it? LVT says the state should not only stop protecting these things, it should do a 180 and actively kill the uses by levying taxes they can't afford. Rather than slowing/blocking the transition to condos and formula retail, accelerate it. In principle, the new denser buildings could have space for the old low-value uses, but new construction is expensive. The new buildings would have to age a while before those marginal uses could afford them, and in the meantime the tenant organizations would all die. Maybe this could be averted using some central-planning scheme, maybe not. But you can imagine how the electorate might not want to risk it. The trends LVT would tend to accelerate are the ones most residents lament. I think we should allow sites that are already dead or are transitioning voluntarily to drastically increase density. Letting owners do this forces tenants' hands, which is a sad tradeoff (and to the left-NIMBYs, a dealbreaker). LVT goes even further and forces owners' hands, which I'm less wild about.

Bombthecat 8y ago

In cologne (Germany) there is a law which forbid high buildings. (https://mobil.ksta.de/das-hoehenkonzept-kirchen-und-dom-sind-der-massstab-6658064 https://mobil.ksta.de/das-hoehenkonzept-kirchen-und-dom-sind...) you can bet your life, that this law will never leave. Preventing high buildings in the citi..

legulere 8y ago
If you want high buildings go to Frankfurt. The structure of a city is what defines it. People move to a place because of how it is.