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Comment by zyxley | Hacker News Reader

> Am lucky to have rent control. Right now, if I move away, I wouldn't be able to afford moving back.

SF-style widepsread rent control seems like part of the problem to me, in the sense that it hides the true extent of market distortions from many people living in the area (especially the demographics most likely to vote), while incentivizing weird and unethical behavior to circumvent it by developers who could probably be nudged into tenant-friendly density increases under more sane conditions.

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SF-style widepsread rent control seems like part of the problem to me

You raise a good question. What would rent in SF look like without rent control?

Thinking through the process, I imagine something like:

1. Rent for everyone would have gone up over time

2. Renters would have been slowly forced out as rent increases exceeded their incomes

3. However, it's likely that there would have been a lot more units opening up over time. That likely would have slowed the increase in rent.

I'm certainly not saying that a "no rent control" situation would be ideal, but I'm wondering if it's just made the rent situation in SF much worse than it would have been otherwise.

> I'm certainly not saying that a "no rent control" situation would be ideal, but I'm wondering if it's just made the rent situation in SF much worse than it would have been otherwise.

I feel that a good proxy for a world without rent stabilization is the condo market. Figure out how much the monthly payment for the low-end and the average condo is, and I suspect that that's where a city full of unstablized rental units would be.

> I'm certainly not saying that a "no rent control" situation would be ideal

Quoting Paul Krugman from 15 years ago:

"The analysis of rent control is among the best-understood issues in all of economics, and -- among economists, anyway -- one of the least controversial. In 1992 a poll of the American Economic Association found 93 percent of its members agreeing that ''a ceiling on rents reduces the quality and quantity of housing.'' Almost every freshman-level textbook contains a case study on rent control, using its known adverse side effects to illustrate the principles of supply and demand."

http://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-...

I'm well aware of the current position of economists on rent control.

That said, if there was no rent control in SF, then slowly, over time, all low income folks would be forced to leave the city. That is likely an undesirable outcome for SF voters.

As far as the city owns the land that could be used for new expensive apartments, or if the city can at least tax a good part the profits private parties make from building more units, the city would a lot of extra income, and could use part of this income for e.g. providing subsidized housing.

The city doesn't have a money problem. The city has a political will problem.

The confounding factor here is that many voters don't want to increase the quantity of housing, especially not near them.

I'm not trying to be confrontational. Please keep that in mind.

I see you're from Brooklyn. Have familiarized yourself with the issues surrounding the anti-development sentiment and roadblocks to new development in San Francisco? There's a lot more to it than "[Some] voters don't want to increase the quantity of housing ... near them."

To speak directly to the Krugman quote: San Francisco's rent control is more correctly termed rent stabilization. Rent increases are slaved to the CPI for as long as a unit is occupied. When a unit is vacated, that unit's rent may be set to any rate the landlord desires. More importantly: unless special arrangements are negotiated, [0] rent stabilization does not apply to housing built or first occupied after mid-June 1979.

AIUI, at the time, existing landholders decided that they would make much more money by raising their rents to ludicrous levels than by increasing the density of the housing on their property. They could do this by taking advantage of high demand and limited supply. When most landholders won't allow a developer to build on their property because they make more money by restricting the supply of housing, Krugman's argument goes out the window.

Rent control and rent stabilization has no place in districts with healthy responses to increased demand for housing. It is a tool of last resort. San Francisco worked hard to balance the potential damage done by rent stabilization with the real damage done by astronomical rents. I would say that they largely succeeded. [1]

[0] As far as I know this has happened only once, with with Sangiacomo's Trinity Place on Market street. A special arrangement was reached to destroy existing rent-controlled units at the site, but have a 1:1 replacement in the new construction. All other units in the building are "market rate" units.

[1] But, -in retrospect- they erred too far in the landlord's favor. The "Vacated units reset to market rate" provision in the ordinance gives landlords ample incentive to harass and subtly force out long-term tenants, and -in times of radical rent inflation- behave as slumlords and neglect maintenance and upkeep. (Because, if they have a captive revenue source, why on earth would they spend more than the bare minimum that they can (legally or illegally) get away with to retain it?) [2]

[2] Naturally, if rent control was the situation in SF, there would need to be some flexibility in the law to encourage new development.

> ...rent control seems like part of the problem to me, in the sense that it hides the true extent of market distortions from many people living in the area...

musesum mentions:

> Am lucky to have rent control. Right now, if I move away, I wouldn't be able to afford moving back.

Everyone I speak to in my building [0] is very aware of the current ludicrously high rents in the city and how it limits their ability to keep a slumlord in line. I can't imagine the situation is substantially different in any other rent-controlled building in the city.

Also, be aware that SF's rent-control is more correctly termed rent-stabilization. Vacated units can have their rent set to any rate. Stabilization only kicks in once that unit is occupied.

> ...while incentivizing weird and unethical behavior to circumvent it by developers who could probably be nudged...

I honestly don't know what you're talking about here. Were you aware that rent control in SF doesn't apply to new construction [1]; only to housing built or occupied before June 13, 1979? [2]

If you were aware of that, would you be so kind as to tell me what you are referring to? :)

[0] Including the old lady who is afflicted with alzheimer's.

[1] Unless -as happened with Sangiacomo's Trinity Place on Market street- a special arrangement is reached to destroy existing rent-controlled units, but have a 1:1 replacement in the new construction.

[2] https://www.sftu.org/rentcontrol/#Rent_Control_Coverage

Wow, I didn't realize there was a 1979 cutoff. Glad to know there's a perk to this oven/icebox victorian.

> Wow, I didn't realize there was a 1979 cutoff.

Frankly, it seems that that most folks who speak in public forums (landlords and developers included) don't understand this. It drives me batshit. (No offence intended. :) )

> Glad to know there's a perk to this oven/icebox victorian.

From what I've seen and heard about those things, I bet it's just about the only perk, eh? :(

Other perks include plunger-assisted-plumbing and laser-guided-kitties.

One of those two perks sounds immensely adorable! =)

About %70-%80 of the buildings in SF were made before 1979 also. So it's not a very useful metric. Go see whats for sale, most of it was built before 1979. Then go see stories about people trying to build a SFH on a empty lot and being block by neighborhood bullshit for over a decade.

> ...go see stories about people trying to build a SFH on a empty lot and being block by neighborhood bullshit...

True. AIUI, it has been incredibly difficult to get anything new built in the city for a wide variety of reasons for a very long time.

However, I bring up the limits of rent stabilization because I often see people saying:

"More people would build in San Francisco if it wasn't for that damned Rent Control in the city."

"Rent Control is why noone builds in San Francisco."

It turns out that -not infrequently-, many of these folks don't understand that rent stabilization doesn't cover new construction. [0]

I hope that once one discovers that rent stabilization doesn't prevent a developer from building a new building full of 1000sf (or smaller!) units that -currently- rent for ~3k/month, and can be adjusted to "market rate" at any time the lease between the landlord and tenant permits, one starts digging around to discover more about the especially fucked up process of getting new construction approved in this town.

[0] Except when specially negotiated, as mentioned in my previous comment.

Owners have an incentive to keep supply low and to maximize the value of their asset. Next, add AirBnB to add yet more demand. Crazy is the new normal.

Homeowner associations organize the vote during off-election years, as per http://techcrunch.com/2014/11/02/so-you-want-to-fix-the-hous...

Removing rent-control would accelerate the displacement. A friend saw his rent nearly triple in 1999. So, he moved back to a more affordable Paris. He was developing a super cool visual-music platform. A neighbor is developing really cool music apps for the iPad. I am doing iOS based art tools. GAFFTA is in the neighborhood. There are advantages to encouraging a cultural mix.

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