4 ms·

It is not an accident that locations with rent control have the worst housing crises. Rent control immediately discourages new construction and therefore the s

It is not an accident that locations with rent control have the worst housing crises. Rent control immediately discourages new construction and therefore the starting rents go up as fewer units are available with growing populations. New York and San Francisco are classic examples of the destructive force that rent control has on affordable rents.

likpok 7y ago
SF rent control does not apply to new construction. The argument that rent control causes this is a little more convoluted: renters would support more development if they were not shielded from the impact of not building. SF has its own way of discouraging development via long discretionary review processes.
- aeternum 7y ago
  Rent control can still limit development even though it does not apply to new construction. 2004 is an arbitrary date that will likely be bumped up in the future. This is a looming risk for anyone looking to purchase rental properly and therefore developers. You're right though that the review process and other regulations such as the requirement for some percentage of affordable housing units is also quite significant.
  - onlyrealcuzzo 7y ago
    As a R/E investor, one of the things I'm most cautious of is buying a building that might end up in rent control. It's the difference in making a good investment and losing a ton of money. I like to consider myself a good person, but I have zero interest in renting housing to people at a loss. I know people can use some help, but I'm not that rich and life is too short.
dsfyu404ed 7y ago
I think it's not correct to imply rent control is the cause. I see it as the symptom Once a place gets rich enough to where they can justify micromanaging what goes where (poor places mostly have bigger fish to fry and are happy to have any tax paying development) it artificially constrains supply. Then they double down by tacking on rent control to slow the death spiral but it just makes it worse.
Pfhreak 7y ago
It does not need to be. The problem is that when a unit gets replaced, the tenants cannot get an equivalent unit in the new building at the same rent. So they are incentivized to try to stop new construction. By all means build more units in the same area, but guarantee that folks who will be displaced can move back in one of the units for their existing rent. Then everyone wins. I encourage you to think beyond one or two examples where things have gone wrong and instead try to figure out how you could take the fundamental idea and improve it.

likpok 7y ago

SF rent control does not apply to new construction. The argument that rent control causes this is a little more convoluted: renters would support more development if they were not shielded from the impact of not building. SF has its own way of discouraging development via long discretionary review processes.

aeternum 7y ago
Rent control can still limit development even though it does not apply to new construction. 2004 is an arbitrary date that will likely be bumped up in the future. This is a looming risk for anyone looking to purchase rental properly and therefore developers. You're right though that the review process and other regulations such as the requirement for some percentage of affordable housing units is also quite significant.
- onlyrealcuzzo 7y ago
  As a R/E investor, one of the things I'm most cautious of is buying a building that might end up in rent control. It's the difference in making a good investment and losing a ton of money. I like to consider myself a good person, but I have zero interest in renting housing to people at a loss. I know people can use some help, but I'm not that rich and life is too short.

dsfyu404ed 7y ago

I think it's not correct to imply rent control is the cause. I see it as the symptom Once a place gets rich enough to where they can justify micromanaging what goes where (poor places mostly have bigger fish to fry and are happy to have any tax paying development) it artificially constrains supply. Then they double down by tacking on rent control to slow the death spiral but it just makes it worse.

Pfhreak 7y ago

It does not need to be. The problem is that when a unit gets replaced, the tenants cannot get an equivalent unit in the new building at the same rent. So they are incentivized to try to stop new construction. By all means build more units in the same area, but guarantee that folks who will be displaced can move back in one of the units for their existing rent. Then everyone wins. I encourage you to think beyond one or two examples where things have gone wrong and instead try to figure out how you could take the fundamental idea and improve it.