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Rent control in SF is not really a problem: https://www.cato.org/publications/research-briefs-economic-policy/effects-rent-control-expansion-tenants-landlords

by irq11 7y ago

Rent control in SF is not really a problem: https://www.cato.org/publications/research-briefs-economic-policy/effects-rent-control-expansion-tenants-landlords https://www.cato.org/publications/research-briefs-economic-p... Pretty much the only study I’m aware of that took the issue head-on, from the Cato institute. They found that rent control greatly benefits recipients, that rents increase diffusely citywide (about 5%), and that the overall positive and negative impacts were roughly equally balanced (~$3Bn over 17 years). The net is slightly positive, in fact. In other words, rent control pretty much does what’s printed on the tin: helps certain renters a lot, hurts others a tiny amount, averages out to zero net impact. Here’s the TL;DR: ”On net, incumbent San Francisco residents appear to come out ahead, but this is at the great expense of welfare losses from future inhabitants.” You can certainly debate the desirability of that outcome, but it’s exactly as advertised.

irq11 7y ago
It is absolutely pathetic that HN’s mods continue to allow politically biased censorship of factual comments using downvotes. Mods, if you can’t control the ideologues, it’s time to get rid of graying of downvoted comments. People are just using it to censor speech.
nugget 7y ago
The practical result of rent control is the further enrichment of real estate developers and investors. It appears to be a populist focused measure and therefore wins support from certain political factions. Meanwhile it removes supply from the market and in a market where demand far exceeds supply - like the Bay Area - it drives up prices for new development. It's one of the more intriguing political coalitions out there. As housing prices increase, salaries have to increase in order to attract and retain talent. In the Bay Area, this represents a transfer of wealth from tech investors to real estate investors and developers. The generous valuations granted to tech companies by the private and public equity markets make this possible, for now.
roenxi 7y ago
I'm not sure the article you've linked is supporting the conclusions you are drawing from it. A $3 billion increase in costs to future tenants is not what I'd call a successful policy outcome. I'm seeing phrases like (gross cherrypicking, also doesn't represent the full picture article, I know, I know) '15 percent decline in the number of renters living in these buildings' and 'led to a higher level of income inequality in the city overall'. This and conclusions like a 5% increase in rents city-wide suggest that the policy is not improving the housing affordability situation. Indeed, it looks like rent control is great if you can get it but is making any housing shortage worse.
- irq11 7y ago
  I took the summary quote directly from the Cato institute website; I am in no way misrepresenting their top-line conclusions. As I said, you can certainly dispute the goal of favoring incumbents over new residents. There are also issues with landlords in rich neighborhoods wiggling out of the controls, which lead to the rich/poor inequities you note. But on net, it does what people want it to do: protects existing residents, with a minimal net impact to the housing economy.
  - rongenre 7y ago
    Having gone through an eviction in SF, it's not rich residents, but residents who don't want to risk a 5-figure judgement against them and an adversarial relationship with a landlord. If I didn't mind the financial outcome (because I didn't have the money in the first place) I'd have hung on for dear life.. instead I took the settlement and found another living situation.
  - gibsonf1 7y ago
    The big loss with rent control is the disincentive for developers to create new apartments which has happened in San Francisco dramatically. We should have far more apartments here given the demand with normal market incentives. The incredibly high cost of regulation in SF is also a large negative force, but if the normal market incentives (without rent control) were able to operate, developers would work through the regulation as they do in other cities without rent control.
cactus2093 7y ago
If it otherwise breaks even, when you consider that a significant portion of the people it helps aren’t particularly in need of help, it seems like it easily becomes an overall net negative on the city. I also have a hard time supporting it just in principal - it restricts mobility, disincentivises renting out property at all, and puts young people and immigrants and anyone else who didn’t happen to get here first at a disadvantage. Then the only housing those folks can get is market rate housing, which we now just call luxury housing as a shorthand even though it’s the only possible housing, and now we can write them off as rich assholes and pretend there’s not a housing problem. Obviously the causality of these issues is complex, and it’s not all the fault of rent control, but it does seem to be a major pillar of this whole crazy mess we’ve created here. One last point — think about how big of a deal that 5% increase really is. The median rent is around $3500 for a 1 bedroom apartment, that’s $175 a month the average person in the city could save. That’s significant.

by irq11 7y ago

irq11 7y ago

It is absolutely pathetic that HN’s mods continue to allow politically biased censorship of factual comments using downvotes. Mods, if you can’t control the ideologues, it’s time to get rid of graying of downvoted comments. People are just using it to censor speech.

nugget 7y ago

The practical result of rent control is the further enrichment of real estate developers and investors. It appears to be a populist focused measure and therefore wins support from certain political factions. Meanwhile it removes supply from the market and in a market where demand far exceeds supply - like the Bay Area - it drives up prices for new development. It's one of the more intriguing political coalitions out there. As housing prices increase, salaries have to increase in order to attract and retain talent. In the Bay Area, this represents a transfer of wealth from tech investors to real estate investors and developers. The generous valuations granted to tech companies by the private and public equity markets make this possible, for now.

roenxi 7y ago

I'm not sure the article you've linked is supporting the conclusions you are drawing from it. A $3 billion increase in costs to future tenants is not what I'd call a successful policy outcome. I'm seeing phrases like (gross cherrypicking, also doesn't represent the full picture article, I know, I know) '15 percent decline in the number of renters living in these buildings' and 'led to a higher level of income inequality in the city overall'. This and conclusions like a 5% increase in rents city-wide suggest that the policy is not improving the housing affordability situation. Indeed, it looks like rent control is great if you can get it but is making any housing shortage worse.

irq11 7y ago
I took the summary quote directly from the Cato institute website; I am in no way misrepresenting their top-line conclusions. As I said, you can certainly dispute the goal of favoring incumbents over new residents. There are also issues with landlords in rich neighborhoods wiggling out of the controls, which lead to the rich/poor inequities you note. But on net, it does what people want it to do: protects existing residents, with a minimal net impact to the housing economy.
- rongenre 7y ago
  Having gone through an eviction in SF, it's not rich residents, but residents who don't want to risk a 5-figure judgement against them and an adversarial relationship with a landlord. If I didn't mind the financial outcome (because I didn't have the money in the first place) I'd have hung on for dear life.. instead I took the settlement and found another living situation.
- gibsonf1 7y ago
  The big loss with rent control is the disincentive for developers to create new apartments which has happened in San Francisco dramatically. We should have far more apartments here given the demand with normal market incentives. The incredibly high cost of regulation in SF is also a large negative force, but if the normal market incentives (without rent control) were able to operate, developers would work through the regulation as they do in other cities without rent control.

cactus2093 7y ago

If it otherwise breaks even, when you consider that a significant portion of the people it helps aren’t particularly in need of help, it seems like it easily becomes an overall net negative on the city. I also have a hard time supporting it just in principal - it restricts mobility, disincentivises renting out property at all, and puts young people and immigrants and anyone else who didn’t happen to get here first at a disadvantage. Then the only housing those folks can get is market rate housing, which we now just call luxury housing as a shorthand even though it’s the only possible housing, and now we can write them off as rich assholes and pretend there’s not a housing problem. Obviously the causality of these issues is complex, and it’s not all the fault of rent control, but it does seem to be a major pillar of this whole crazy mess we’ve created here. One last point — think about how big of a deal that 5% increase really is. The median rent is around $3500 for a 1 bedroom apartment, that’s $175 a month the average person in the city could save. That’s significant.