4 ms·

That article raises a lot of good points, and I agree San Francisco's housing problem is more with zoning than rent control, but there's definitely some spin an

That article raises a lot of good points, and I agree San Francisco's housing problem is more with zoning than rent control, but there's definitely some spin and assumptions. The idea that rent control doesn't reduce available housing stock sounds true enough in the sense that people enjoying rent controls are less likely to move, and they count just as much as a new resident that might have displaced them, but from the perspective of the new resident the available supply is definitely suppressed and thus the price forced up for all non-rent-controlled apartments. The other one is the unequivocal statement that long-term tenancy is better for the fabric of a neighborhood. In principal I agree with that, but I've known a lot of people in SF that would like to move but can't simply because they are priced out of the current market rate rentals. In these cases, it's not clear whether the benefit of having a controlled rent is worth the inability to move, especially if overall market rates could still be within reach sans rent control.

sudosysgen 6y ago
The solution to this is to tweak rent control. For example, introducing sticky prices and incentivizing leases to end in the same week can do wonders to help people move affordably. I don't see that from the perspective of a new resident it must necessarily be worse with than without rent control. The scenario that would make the difference in overall supply would be if the old resident had to move out against their will, and obviously that's what we're trying to avoid. You really do have to incentivize some construction, though. Getting the ball rolling by buying some unzoned land and building good quality public housing on it can also be good.
- eru 6y ago
  No need for the public housing: the hard part is to get anyone (public or private) permission to build. The building is relatively easy business.
  - sudosysgen 6y ago
    That may very well be the case. That being said, some promoters may decide to neglect some classes of housing or hold out for more profitable ventures even when you fix zoning. So public housing may or may not be needed still, that's going to depend on what happens.
    - eru 6y ago
      In earlier times, when it was easier to get permits for building, the common charge was that building cheap housing was more profitable than building decent yet alone luxury housing. Yes, we want developers to go and seek profit. Build, build and build, until the market price for housing is roughly in line again with actual construction costs. If luxury housing is most profitable, that's fine: those rich folks don't just pop into existence, they leave some slightly lower market housing behind when they move. (And then someone else moves to that, etc, down the chain.) The total amount of housing is more important to affordability at the low end than the type of housing.
    - JAlexoid 6y ago
      That's easily debunked... Let's take NYC as an example - there are many people moving to NYC daily and many are high income people(finance and tech). Where do you think they are going to rent? Are they going to get that $2000 1910s railroad apartment with noise from the subway or... are they going to go for a $4000 apartment in a complex with a gym and a pool? These gentrifying inflows of people have little to no effect on availability of lower cost housing. New housing complexes prevent neighborhood gentrification, by siphoning off the gentry into new buildings.
  - stuaxo 6y ago
    That hasn't worked out well for ordinary renters in the UK. Under Thatcher "right to buy" council houses (public housing) was brought in, in the 80s - at the same time, councils pretty much stopped building to replace the housing stock that was taken. Rents have increased massively above inflation, and waiting lists have soared to over 20 years in some cases for the council houses that are left. Meanwhile, developers build large amounts of "luxury flats" which are sold to foreign investors who often keep them empty. https://londonist.com/london/housing/how-many-vacant-empty-homes-london https://londonist.com/london/housing/how-many-vacant-empty-h... According to the above article 22,000 empty homes in London, but it wouldn't surprise me if there were many more.
    - eru 6y ago
      The UK is actually a good example _for_ what I said: it's really hard to build in London and the wider UK. See eg https://www.economist.com/britain/2017/02/11/britains-delusions-about-the-green-belt-cause-untold-misery https://www.economist.com/britain/2017/02/11/britains-delusi... or https://www.economist.com/leaders/2017/08/03/how-to-solve-britains-housing-crisis https://www.economist.com/leaders/2017/08/03/how-to-solve-br... About the empty homes: they could start by abolishing the empty-home and single-occupier discounts for council tax. (If you want to go further, instead of just abolishing those discounts, replace them with extra tax charges for unoccupied property.) And then jack up the council tax by a lot. The council tax is unpopular, but actually virtually free for renters, its economic burden falls almost completely on landlords. (You can perhaps see that easier with a simple thought experiment: imagine there was a cut in council tax, rents on new leases would go up almost immediately, until the total cost to the renter is the same as before. Of course, a thought experiment is not a prove. Just an illustration.) Even better than the council tax would be a land value tax. But they could make slight tweaks to the council tax to get closer. If those 'evil foreigners' paid lots of taxes on their empty flats, no one would need to mind: We can build up high enough, if there are enough permits, to afford a few empty homes. Especially if the foreign owners of those empty homes were to finance our government expenditures with their generous tax payments.
    - JAlexoid 6y ago
      I used to live in London... and the fact that Tower Hamlets council tax was LOWER than slightly farther out of the city centre is ridiculous. The luxury flats had no effect on supply - because it wasn't nearly enough. Getting government approvals is hard and then you have low council taxes in London. And closer to the city centre - the lower the council taxes! Let alone - 22k is literally a drop in the bucket. It wouldn't make a damn difference in a city of 10mil!
lsiebert 6y ago
Rent control in SF, until a state wide rent control bill came into effect at the beginning of this year, only affected buildings with certificates of occupancy or which had residents from before one month in 1979. Thus there has been, arguably, a big incentive to build new buildings and develop new housing projects, because you could raise rent as much as you want on the tenants. The thing is, cities are not incentivized to allow more housing because of prop 13 and the amount of tax revenues they get. Personally I hate the many barriers that prevent San Francisco from creating more it's own new high quality public housing like many places in the EU or basically all of Singapore does. I think if those limits, which are mainly structural and historical, were eliminated, such that the city could make money directly from housing rental instead of solely through property tax, we'd see a very different SF, with well developed well run public housing that everyone would want to live in, instead of the too often poorly maintained public housing concentrated in economically disadvantaged areas. I'd ask anyone, before they tell me straight off why they think this can't work, to go look up singapore's housing system. Like I definitely could be wrong, but it does appear to be possible.
- refurb 6y ago
  Singapore’s HDB system has its own set of problems. And don’t get me wrong, it did an amazing job of housing it’s population, but it has gaps. - govt had a surplus of units in the 90’s (Asian financial crisis) so moved to a “buyers put down money then we’ll build”. As such there is a 5 year wait for new HDBs, a lottery system and lots of disappointed young adults - HDB lottery means you might end up with an HDB downtown (win!) or way on the outskirts (ok). The ones downtown appreciate a lot more so it’s truly like winning the lottery - you own the HDB and it sells at market rates. Lately govt has been trying to slow price growth while not blowing up people’s investments - Singapore 99 year lease on land is getting to the halfway point and people are left in limbo - will my HDB be worth $0 in 40 years? Or will I get an extension? En bloc development? Some people are gambling that it won’t go to zero and govt is publicly stating that for most people it will.
- wahern 6y ago
  > the city could make money directly from housing rental Unfortunately SF doesn't have a good track record in this regard judging by the Midtown Park Apartment fiasco: https://www.sfchronicle.com/bayarea/article/Residents-of-S-F-owned-apartments-balk-at-rent-6443518.php https://www.sfchronicle.com/bayarea/article/Residents-of-S-F... I too think a Singapore-style development model would be worthwhile trying. That is, subsidizing development of housing that would eventually be sold and transferred to tenants, with or without restrictions such as market value percentage caps on resale, stricter rent controls if leased out, etc. It's almost the only viable way forward because there's simply not enough public funds, now or ever, to make a dent in the supply problem without leveraging private financing. That's the beauty of the Singapore model. But for various practical (e.g. management expertise) and legal (difficult to constitutionally restrict the benefit to pre-existing city residents only) problems, to do this at scale would probably require the joint efforts of the Federal government, state, and city. Or perhaps some billionaires would be willing to step forth to try the experiment themselves, rolling property sale revenues into new projects. Ultimately, though, this doesn't solve the NIMBY problem. And if you can solve that problem, there's less need and pressure for attempting big experiments like this.

sudosysgen 6y ago

The solution to this is to tweak rent control. For example, introducing sticky prices and incentivizing leases to end in the same week can do wonders to help people move affordably. I don't see that from the perspective of a new resident it must necessarily be worse with than without rent control. The scenario that would make the difference in overall supply would be if the old resident had to move out against their will, and obviously that's what we're trying to avoid. You really do have to incentivize some construction, though. Getting the ball rolling by buying some unzoned land and building good quality public housing on it can also be good.

eru 6y ago
No need for the public housing: the hard part is to get anyone (public or private) permission to build. The building is relatively easy business.
- sudosysgen 6y ago
  That may very well be the case. That being said, some promoters may decide to neglect some classes of housing or hold out for more profitable ventures even when you fix zoning. So public housing may or may not be needed still, that's going to depend on what happens.
  - eru 6y ago
    In earlier times, when it was easier to get permits for building, the common charge was that building cheap housing was more profitable than building decent yet alone luxury housing. Yes, we want developers to go and seek profit. Build, build and build, until the market price for housing is roughly in line again with actual construction costs. If luxury housing is most profitable, that's fine: those rich folks don't just pop into existence, they leave some slightly lower market housing behind when they move. (And then someone else moves to that, etc, down the chain.) The total amount of housing is more important to affordability at the low end than the type of housing.
  - JAlexoid 6y ago
    That's easily debunked... Let's take NYC as an example - there are many people moving to NYC daily and many are high income people(finance and tech). Where do you think they are going to rent? Are they going to get that $2000 1910s railroad apartment with noise from the subway or... are they going to go for a $4000 apartment in a complex with a gym and a pool? These gentrifying inflows of people have little to no effect on availability of lower cost housing. New housing complexes prevent neighborhood gentrification, by siphoning off the gentry into new buildings.
- stuaxo 6y ago
  That hasn't worked out well for ordinary renters in the UK. Under Thatcher "right to buy" council houses (public housing) was brought in, in the 80s - at the same time, councils pretty much stopped building to replace the housing stock that was taken. Rents have increased massively above inflation, and waiting lists have soared to over 20 years in some cases for the council houses that are left. Meanwhile, developers build large amounts of "luxury flats" which are sold to foreign investors who often keep them empty. https://londonist.com/london/housing/how-many-vacant-empty-homes-london https://londonist.com/london/housing/how-many-vacant-empty-h... According to the above article 22,000 empty homes in London, but it wouldn't surprise me if there were many more.
  - eru 6y ago
    The UK is actually a good example _for_ what I said: it's really hard to build in London and the wider UK. See eg https://www.economist.com/britain/2017/02/11/britains-delusions-about-the-green-belt-cause-untold-misery https://www.economist.com/britain/2017/02/11/britains-delusi... or https://www.economist.com/leaders/2017/08/03/how-to-solve-britains-housing-crisis https://www.economist.com/leaders/2017/08/03/how-to-solve-br... About the empty homes: they could start by abolishing the empty-home and single-occupier discounts for council tax. (If you want to go further, instead of just abolishing those discounts, replace them with extra tax charges for unoccupied property.) And then jack up the council tax by a lot. The council tax is unpopular, but actually virtually free for renters, its economic burden falls almost completely on landlords. (You can perhaps see that easier with a simple thought experiment: imagine there was a cut in council tax, rents on new leases would go up almost immediately, until the total cost to the renter is the same as before. Of course, a thought experiment is not a prove. Just an illustration.) Even better than the council tax would be a land value tax. But they could make slight tweaks to the council tax to get closer. If those 'evil foreigners' paid lots of taxes on their empty flats, no one would need to mind: We can build up high enough, if there are enough permits, to afford a few empty homes. Especially if the foreign owners of those empty homes were to finance our government expenditures with their generous tax payments.
  - JAlexoid 6y ago
    I used to live in London... and the fact that Tower Hamlets council tax was LOWER than slightly farther out of the city centre is ridiculous. The luxury flats had no effect on supply - because it wasn't nearly enough. Getting government approvals is hard and then you have low council taxes in London. And closer to the city centre - the lower the council taxes! Let alone - 22k is literally a drop in the bucket. It wouldn't make a damn difference in a city of 10mil!

lsiebert 6y ago

Rent control in SF, until a state wide rent control bill came into effect at the beginning of this year, only affected buildings with certificates of occupancy or which had residents from before one month in 1979. Thus there has been, arguably, a big incentive to build new buildings and develop new housing projects, because you could raise rent as much as you want on the tenants. The thing is, cities are not incentivized to allow more housing because of prop 13 and the amount of tax revenues they get. Personally I hate the many barriers that prevent San Francisco from creating more it's own new high quality public housing like many places in the EU or basically all of Singapore does. I think if those limits, which are mainly structural and historical, were eliminated, such that the city could make money directly from housing rental instead of solely through property tax, we'd see a very different SF, with well developed well run public housing that everyone would want to live in, instead of the too often poorly maintained public housing concentrated in economically disadvantaged areas. I'd ask anyone, before they tell me straight off why they think this can't work, to go look up singapore's housing system. Like I definitely could be wrong, but it does appear to be possible.

refurb 6y ago
Singapore’s HDB system has its own set of problems. And don’t get me wrong, it did an amazing job of housing it’s population, but it has gaps. - govt had a surplus of units in the 90’s (Asian financial crisis) so moved to a “buyers put down money then we’ll build”. As such there is a 5 year wait for new HDBs, a lottery system and lots of disappointed young adults - HDB lottery means you might end up with an HDB downtown (win!) or way on the outskirts (ok). The ones downtown appreciate a lot more so it’s truly like winning the lottery - you own the HDB and it sells at market rates. Lately govt has been trying to slow price growth while not blowing up people’s investments - Singapore 99 year lease on land is getting to the halfway point and people are left in limbo - will my HDB be worth $0 in 40 years? Or will I get an extension? En bloc development? Some people are gambling that it won’t go to zero and govt is publicly stating that for most people it will.
wahern 6y ago
> the city could make money directly from housing rental Unfortunately SF doesn't have a good track record in this regard judging by the Midtown Park Apartment fiasco: https://www.sfchronicle.com/bayarea/article/Residents-of-S-F-owned-apartments-balk-at-rent-6443518.php https://www.sfchronicle.com/bayarea/article/Residents-of-S-F... I too think a Singapore-style development model would be worthwhile trying. That is, subsidizing development of housing that would eventually be sold and transferred to tenants, with or without restrictions such as market value percentage caps on resale, stricter rent controls if leased out, etc. It's almost the only viable way forward because there's simply not enough public funds, now or ever, to make a dent in the supply problem without leveraging private financing. That's the beauty of the Singapore model. But for various practical (e.g. management expertise) and legal (difficult to constitutionally restrict the benefit to pre-existing city residents only) problems, to do this at scale would probably require the joint efforts of the Federal government, state, and city. Or perhaps some billionaires would be willing to step forth to try the experiment themselves, rolling property sale revenues into new projects. Ultimately, though, this doesn't solve the NIMBY problem. And if you can solve that problem, there's less need and pressure for attempting big experiments like this.