3 ms·

Major agreement. Urban housing is effectively a cartel, in that the owners spend a lot of time corrupting city councils and zoning boards to prevent new supply

Major agreement. Urban housing is effectively a cartel, in that the owners spend a lot of time corrupting city councils and zoning boards to prevent new supply so the absentee mega-owners can charge exorbitant prices. It's rent-seeking (literally) parasitism at its worst.

anigbrowl 14y ago
If that's so, how come the city still has rent control? Not that I think rent control is a good idea, but property owners hate it and by your thesis they should be able to get it abolished because they have the city government in their pocket. In reality, it's usually residents and tenants who raise the largest objections to new developments, either on environmental, value-reduction, or affordability grounds.
- 001sky 14y ago
  SF rent control is profitable for landlords. It resets with each tenant. So, only if you overpay when you initially buy are you ever going to lose money b/c rent control. And if you do that, its a fault of the bid being off.
  - tptacek 14y ago
    I don't follow this. How could it be more profitable for landlords to have a price ceiling?
    - 001sky 14y ago
      Its not that its 'more profitable', it is that it 'is profitable' (enough). And, its not only profitbale enough, but it creates a lock-in (people wont move/give up their space) wich reduces turnover. The ideal position for a landlord is protiable tenants that don't turnover. That's why there is more inertia in the system than seems at first blush to be likely.
  - deleted 14y ago
    [deleted]
  - anigbrowl 14y ago
    That assumes a high tenant turnover. From what I've seen, the opposite is true. I know people with downtown apartments that have had them since the 80s and only pay a couple of hundred bucks a month. It's difficult to evict someone; for example, if you buy a house that is rented and you want to move in yourself, you either need to wait most of a year or pay up $15,000 to the tenant, depending on their circumstances (if they have dependents who are old people or children in school, for example). If you buy property as an investment and want to evict the current tenants to charge a higher rent, you'd better a) have evidence they're breaking the lease and b) be prepared for a long appeals process.
- michaelochurch 14y ago
  I don't know about San Francisco, but New York landlords who don't own rent-controlled apartments actually make a huge amount of money out of it. Demand for housing is extremely inelastic, which means that a 1% supply destruction will have a much greater than 1% (possibly 10-50%) effect on prices. The result of supply destruction is that the class of suppliers benefits, although individual suppliers (who experience the destruction) don't. Of course, landlords who own a lot of RC properties are losing on those units, regardless of the aggregate benefit to the class of landlords. The legacy, 1947-era, rent control in New York covers less than 1% of apartments, but it's responsible for at least a 50% increase in what people have to pay for at-market housing. That's how price inelasticity works.
mc32 14y ago
I don't see how that's so. The problem in SF is self-inflicted by the city with its double shot of rent control (which I benfit from) and its labyrinthine permit process coupled with the weight of neighborhood groups who oppose grand projects --their mindset reminds me of the stuff I hear out in the Peninsula, the suburbs. In addition, the argument above is mostly about rental properties and discounts condominiums which are also very necessary to remediate the housing issue in SF. If SF were more like Miami, then we would have seen many more developments coming in and driving prices down --for both housing and rent. But I think it's the home owners rather than absentee mega landlords and landladies who are being self-interested and who want to keep the prices inflated. These are the people who want to keep out the new housing developments. People want to maintain their property values. Anyhow, I agree with the author. SF is a city which likes to pretend its progressive, but actually, in its heart, would like to remain the quaint 19th century Victorian relic city. It's only progressive in a partial social sense, but not in any larger sense.

anigbrowl 14y ago

If that's so, how come the city still has rent control? Not that I think rent control is a good idea, but property owners hate it and by your thesis they should be able to get it abolished because they have the city government in their pocket. In reality, it's usually residents and tenants who raise the largest objections to new developments, either on environmental, value-reduction, or affordability grounds.

001sky 14y ago
SF rent control is profitable for landlords. It resets with each tenant. So, only if you overpay when you initially buy are you ever going to lose money b/c rent control. And if you do that, its a fault of the bid being off.
- tptacek 14y ago
  I don't follow this. How could it be more profitable for landlords to have a price ceiling?
  - 001sky 14y ago
    Its not that its 'more profitable', it is that it 'is profitable' (enough). And, its not only profitbale enough, but it creates a lock-in (people wont move/give up their space) wich reduces turnover. The ideal position for a landlord is protiable tenants that don't turnover. That's why there is more inertia in the system than seems at first blush to be likely.
- deleted 14y ago
  [deleted]
- anigbrowl 14y ago
  That assumes a high tenant turnover. From what I've seen, the opposite is true. I know people with downtown apartments that have had them since the 80s and only pay a couple of hundred bucks a month. It's difficult to evict someone; for example, if you buy a house that is rented and you want to move in yourself, you either need to wait most of a year or pay up $15,000 to the tenant, depending on their circumstances (if they have dependents who are old people or children in school, for example). If you buy property as an investment and want to evict the current tenants to charge a higher rent, you'd better a) have evidence they're breaking the lease and b) be prepared for a long appeals process.
michaelochurch 14y ago
I don't know about San Francisco, but New York landlords who don't own rent-controlled apartments actually make a huge amount of money out of it. Demand for housing is extremely inelastic, which means that a 1% supply destruction will have a much greater than 1% (possibly 10-50%) effect on prices. The result of supply destruction is that the class of suppliers benefits, although individual suppliers (who experience the destruction) don't. Of course, landlords who own a lot of RC properties are losing on those units, regardless of the aggregate benefit to the class of landlords. The legacy, 1947-era, rent control in New York covers less than 1% of apartments, but it's responsible for at least a 50% increase in what people have to pay for at-market housing. That's how price inelasticity works.

mc32 14y ago

I don't see how that's so. The problem in SF is self-inflicted by the city with its double shot of rent control (which I benfit from) and its labyrinthine permit process coupled with the weight of neighborhood groups who oppose grand projects --their mindset reminds me of the stuff I hear out in the Peninsula, the suburbs. In addition, the argument above is mostly about rental properties and discounts condominiums which are also very necessary to remediate the housing issue in SF. If SF were more like Miami, then we would have seen many more developments coming in and driving prices down --for both housing and rent. But I think it's the home owners rather than absentee mega landlords and landladies who are being self-interested and who want to keep the prices inflated. These are the people who want to keep out the new housing developments. People want to maintain their property values. Anyhow, I agree with the author. SF is a city which likes to pretend its progressive, but actually, in its heart, would like to remain the quaint 19th century Victorian relic city. It's only progressive in a partial social sense, but not in any larger sense.