Stanford paper says rent control is driving up cost of housing in San Francisco
sf.curbed.com
sf.curbed.com
So, because you cannot trade apartments without spending significantly more money, there's a couple of hour-long commutes instead. This is part of a general pattern - messing with prices doesn't help, since the market still has to clear. You just start paying in things other than money. Paying for things with money is great in general, since then someone else has the money. Paying for things with a longer commute is terrible, since there's no beneficiary.
End of the day, short term leases make rents float at the cost of making renters second class citizens who cannot stay in any one place or area.
Rent control is a way to deal with that. It exists because voters care deeply about it.
You've got to address a moral judgement you've implicitly made: What makes the current renters of a city more deserving than the future renters who might move to the city?
But I totally see how this is kind of hypocritical. I just want things my way, everywhere. :-] idk!
I suppose that the next-best thing is to have local control with freedom of movement. The United States and cities are kind of like this--- it allows for states and cities to try out different policies, and compete based on policy.
The high value of property in San Francisco is a lot to do with its proximity to amenities and services provided for by the very people suffering because of continually rising property prices. This is a highly parasitic dynamic.
If moral judgements are really your primary concern why are you advocating for eliminating a policy that allows a tiny bit of clawback from the pre-existing titanic wealth transfer that goes from renter to landlord?
Moreover, it's a policy that by and large keeps people who do necessary work.
There's a fair, economically efficient solution to all of this, of course: the 100% land value tax.
Rent control is merely a hack that offsets some of the gargantuan harm done by leeches extracting value from the communities surrounding them via untaxed land. I'd be fine with seeing it go... after implementing a 100% land value tax.
It's starting to feel like articles and posts like this aren't driven by discussion or curiosity but just political fights.
Thus the underlying issue is that there has not been proper correction and guidance from the governance structures established by the people in the area; mostly because the rising home prices and status-quo of neighborhoods generally benefit those people.
It's going to take state or federal level correction to fix this issue and the "best" way of doing that would be to sour the use of housing as an investment.
It might help to think of it in a "top down" fashion. Imagine laying out housing for everyone in a metro area as an optimization problem, where you're trying to maximize a value function over things like amount of space, proximate to peoples' workplaces, quality of schools, affordability, etc.
Housing restrictions add additional constraints that make the solutions worse for everyone. E.g. say some group of people with kids are willing to live in a duplex on 1/8 of an acre rather than a detached home on 1/4 of an acre in order to reduce their commutes and see their kids more often. But they're not willing to live in a city apartment with their kids and pets. Housing restrictions basically eliminate that part of the solution space by making it illegal to construct such housing. That group of people get punted to their less-preferred alternatives, and the resulting solutions are worse for everyone.
That doesn't exclude the cost scenario outline further up, and the relative strength of these effects vary from person to person.
And no argument will "win" such debates for either side. These are complex issues, and even if everyone can agree on the mechanisms at work, you'll get widely different results based on differing importance for the conflicting goals you're trying to optimise for.
Rent control, as shown above, might legitimately add to traffic. But it's also cruel to force elderly people to leave their remaining friends, and their familiar neighbourhood, just because they can no longer afford rent.
Anyone claiming "it's so easy: just..." is invariably wrong. California's legislators aren't stupid. The main contributor to housing problems happens to be the unparalleled economic success of the state, plus a few geographic quirks.
Simplifying to the tired old "free market" vs "regulation" debate is only exchanging one set of problems for another. The US happens to have other locales that dabbled in an ideology-driven "free market" approach. The result are the suburban hell-holes that are Atlanta, or parts of Houston: Low-density clone cities totally reliant on cars, with much longer commutes and huge environmental footprints, almost devoid of street life.
What's usually needed is neither more nor less regulation, but smarter: encourage high-density mixed zoning, create public transport that can compete with cars, encourage companies to adopt telecommuting, flexible hours, distributed workplaces instead of central campus etc...
I assume because that's what people want?
HNers seem to think a downtown core existence is the best and apparently aren't aware there is a big group of people who don't want that.
https://www.strongtowns.org/journal/2013/1/14/its-so-much-mo...
Yes and no: Given the choice, people will prefer a single-family home with a large garden, to the same home without a garden, or a smaller apartment.
But rephrase it and the answer changes: People prefer to life in (nice) apartments if others do so as well, and the resulting increase in density cuts a 60min car commute into 15min on a bike, or even 30 in public transportation.
In any case, I would consider mixed zoning more important than density. It's not just metropolitan city centres that provide higher quality of life than the suburbs. Another winning model is that of the classic "Small Town USA".
It's perfectly possible to have suburban-style homes with gardens clustered around a city centre providing everything you need in a typical week, plus schools/medical care/sports/you kids' friends all within a radius of about 3 miles, making it easily accessible by bike, and even on foot.
And yet in those places there are no housing shortages and normal people can actually buy a house without waiting for the equity fairy.
I absolutely agree, and I think these justifiable and yet ill-defined concerns are shared by a lot of UBI opponents.
I just hope anyone trying to come to an informed decision remembers to include unrestrained capitalism's second-order effects on the pro/con list.
It sounds scary when put like that but it just means people free to interact, while secure from other social actors in their person and property. By the nature of voluntary configuration, interactions have a tendency toward being mutually beneficial, and there are corrective feedback loops that naturally exist in a voluntary society to reduce those that aren't (e.g. scammy operators increasingly excluded by increasing consumer vigilance and growing reputation markets).
And you can still have governments provisioning economic resources that qualify as public goods, like basic research, public information resources, policing and national defense, in such a setting, so there is no fundamental deficiency in unrestrained capitalism, aka an absolute free market.
Except a tendency toward consolidation and monopolies. And, inherent in the word "unrestrained", a tendency to use corporate money to unduly influence politics to benefit the corporation at the expense of the public interest.
> it just means people free to interact, while secure from other social actors in their person and property
It's kind of irrelevant anyway, all I really meant was UBI should be evaluated in comparison to "the status quo", whatever you choose to label it.
That assumes no government provisioning of public goods that can counteract capture of natural monopolies, but there's nothing inherent to a free market to prevent such government intervention.
>>And, inherent in the word "unrestrained", a tendency to use corporate money to unduly influence politics to benefit the corporation at the expense of the public interest.
The term here is "unrestrained capitalism", meaning people in possession of their right to contract and secure in their person/property, not "unrestrained society". An absolute free market doesn't mean anarchy. It doesn't preclude checks within the electoral and political process itself to prevent corruption. It doesn't prevent laws from being passed to place restrictions on those in public office, like, to give an extreme example, a lifetime ban on receiving any compensation from the private sector.
>>It's kind of irrelevant anyway, all I really meant was UBI should be evaluated in comparison to "the status quo"
Fair enough. I just take issue with the connotations of "unrestrained capitalism", where it implies malevolent behavior is legalized. A less biased term would be "free market".
That rent control is bad is not exactly a new finding. This has been known to economists across the political spectrum for decades.
This is basic economics. (Seriously, this is in the easy stuff like Hazlitt.)
For an example, see joe's response.
If a would-be producer cannot source materials that would cost him less than the sale price, he just won't build the product.
[1] has more details on the subject.
If someone is currently on $25k and gets a $10k basic income, their employer can lower their salary to $20k and they'll still be getting $5k more than they were before. (This won't happen immediately because people will be reluctant to take pay cuts, but I think it will in the longer term.)
Exactly how much of this difference the employee and employer capture in the longer term is a concern, but I think giving people the option to quit without starving will go a long way towards empowering them to insist on fair pay. I also think a result would be an increase job quality, because I think a lot of people would take a pay cut to work somewhere less awful if they could afford it.
Of course that money comes from taxes, so there's still a cost somewhere, but I'm not as convinced progressive taxes on the wealthy will have quite as big an impact on the costs to produce basic goods.
I live in San Jose, I commute to SF 3 days a week (super thankful for the chance to work remote 2x a week). My current apartment (a 1BR I live in by myself) costs a bit less than 1k a month and is rent-controlled. The equivalent in SJ is probably worth 2-2.5x as much per month, and in SF (or somewhere in-between) it can be worth anywhere from 2.5-4x as much.
I've been hunting for an apartment more on the peninsula since I don't necessarily need or want to live right in the city, just closer (especially in case I switch jobs eventually), but I definitely want to halve the commute time at least (Caltrain plus door to door is nearly 1.75hrs each way).
But why would I want to leave my rent-controlled steal and be spending over half my monthly income for the equivalent? It's ridiculous.
So now it's a matter of figuring out the cost analysis of moving into a better area that's closer to work, and therefore an increased quality of life, or stay where I'm at where I can save much more money and have a rather crappy quality of life (I don't care for where I live now strictly other than the cheap price of the rent).
That's the only way you're going to come anywhere near your current rent. As a bonus you'll get more space generally and some community.
In case you want me to answer, there are myriad advantages: the chance to work with your most preferred tools, on a product that's more interesting you, with maximally compatible coworkers, etc. All the normal reasons people go somewhere besides where they were born for a job.
The more interesting question is, why are the 50 miles between SF and SJ reserved for sparsely packed single family homes and one story strip malls?
Redwood City is also nicely positioned as a mid-point between SF and South Bay.
Beyond that, it seems the entire El Camino corridor is being heavily developed with retail and high-density condos and apartments.
Some of these areas (Redwood City in this case) are next to major Caltrain stations with Baby Bullet stops. But they're also convenient (technically speaking) for going on 101S/N to work, etc.
That's part of why I'd prefer living on the peninsula than in downtown SF. Weather is consistently better in the summer months. More space/less people (except for rush hour traffic). More parks for recreation. Pools aren't necessarily a deal breaker for me, but it's a nice extra.
A shiny high-rise is nice but unless you can afford a penthouse or similar you're probably looking at a small unit. Less space, fewer parks, more people everywhere (tourists, homeless, etc.)
The downtown has a solid layout though and lots of room for growth. The RWC downtown has the potential for offering a lot more than some neighboring downtowns that are less dense and could be a nice hybrid between SF and more "suburban" Peninsula cities.
My unit is rent-controlled. However, the owner of the building has only increased rent twice, both being the max they could under the rent control limit. They just haven't continually increased it on an annual basis because apparently they haven't needed to.
still, an annualized 8% is quite a bit (over 5 years it would be 46%)
Instead of increasing commute times, more typically it involves simply not taking jobs that are further away.
Restricting labor mobility is really bad for obvious reasons: people not being able to move where the jobs are means jobs not being filled even as unemployment increases. There is overwhelming evidence that labor mobility has gotten drastically worse in recent decades, and local NIMBYism is one of the major causes: http://neighborhoodeffects.mercatus.org/2017/01/26/why-the-l...
Compare this to China, which has had tens of millions of people flock to brand new megacities for the new job opportunities there.
It is an extreme example of a place where labour mobility is so valuable it happens in spite of restraints. In fact it is so extreme that it is hard to draw lessons for modern western countries (although it has obvious resemblances to urbanisation in Europe a few centuries ago).
Many American state universities discriminate against students based on where their parents live (e.g. charging in-state vs out-of-state tuition).
B. Yes, but you easily get residence by living there for less than a year. Also,public K12 schools can’t discriminate like they do in china.
i.e. I'm comparing the lower labour cost of the west in general vs the west before the 70s. https://www.epi.org/productivity-pay-gap/
If you want to deep dive into a present county per county labour cost specifically, then I'd argue yes as well http://projects.sfchronicle.com/2016/teacher-pay/
Anaheim teachers make ~50% more than SF teachers and spend 4 times less proportion of their income on rent.
Here is where the analysis should happen. All of the "significantly more money" aspect boils down to transactional costs. Transactional costs in rentals will always, always be higher than transactional costs of ownership. Ownership's transactional costs get offset, (to only a small extent in the Bay area, but it is not nothing), by the equity the owner has accumulated.
Renters never accumulate equity to offset their transactional cost of "trading". The paper (and all of the anti rent control camp) constantly misconstrues lower-than-market rent as "savings". It is not savings; it's merely delaying the inevitable transactional cost of "trading".
Not sure if anyone pointed this out, but this problem of labor mobility exists for all of those who own their home as well.
So does:
* good quality schools, rather commute long distances than change schools;
* a really good city with a nice downtown;
* a spouse's job location;
* friends' location;
* ... point is there are many reasons for someone to not want move closer to the current job.
Rent control allows people (wealthy or poor) to remain where they are without purchasing their residence. Unfortunately, to do accomplish this objective, it increases the price for new arrivals (be they wealthy or poor).
In California, Prop 13 does the same thing -- drives up the cost of housing for everyone other than the people who already own a home.
+ Sometimes it works for a short period, as the policy reflected the economy at the time of creation, then becomes irrelevant via technology/market reaction to policy/general progress... but yet stays a policy for decades.
The important point is that we rarely ever measures whether it does work or not, and policy tends to have an extremely long shelf-life.
My ideal state would have:
1) a well-staffed multi-partisan agency entirely dedicated to reviewing policy, with a mandate of removing any policy having a net-detrimental effect on society. By launching scientific studies of the effects with subpoena power over other agencies, making policy recommendations, and potentially the power to temporarily suspend regulations until reviewed by congress.
2) require timeframes attached to most policies, forcing future reviews which must factor in measured results (likely from agency mentioned in 1) or face expiry
The way it is now, everything is geared towards "doing" things, and credit is received for "accomplishments". Its usually much harder to undo things. It would be refreshing to have specialists in undoing things.
Different system, but some thematic similarities.
* Around 2001, voters in British Columbia elected a government with a specific campaign promise to reduce "regulation" by 1/3.
* Initially this was accomplished by among other things setting a rule that for every new regulation introduced two existing ones had to be eliminated.
* Then the status quo was maintained by mandating a 1-for-1 rule (each new regulation requires elimination of a existing one).
* In 2015, the government of Canada introduced its own 1-for-1 rule.
There are obviously complications around what constitutes "one regulation", which neither my summary nor the linked article completely capture.
Repealing a law is doing something, and people frequently point to it as an accomplishment (or goal, if not yet done) if they think the law is unpopular with their constituency.
Probably the last politician who was proud of saying no was Calvin Coolidge. The vast majority of politicians are wired the other way.
Much like the constitution there should be a baseline and non-aggression seems like an obvious first law.
This would allow for more experimentation and for consensus building. As it is now, the law is always in the context "and forevermore, it shall be this way". If the context was, let's try this for a few years and see what happens, it would be a less contentious thing. Without the imposed time limits, partisans grab as much as they can whenever they can.
Ancient Isrealite law had something similar with the jubilee. Every 50 years, debt was forgiven and many other things reset. This tended to keep things more balanced.
(A lot of the national press incorrectly portrayed this as the Texas governor calling an emergency session to ban trans women from women's restrooms. While that was debated as part of the emergency session, it wasn't the goal and the governor made allowing it or anything else to be debated conditional on passing the critical Texas Medical Board renewal - forcing the supporters of the bathroom bill to pass that first and give up their leverage in order to get a bathroom bill vote they would inevitably lose. The national media reporting on this was terrible.)
How do you feel about laws like the Civil Rights Act of 1964?
I think that law continues to serve our society well. And I'm certain it would not be renewed by our current Federal government.
Ditto for regulations on water, sewage, pharma purity and many other laws that facilitate civilization. It's all very nice to say 'sunset every law', but we depend on many of them being in place.
Like removing redundant rivets on an aircraft. You can't be sure which ones are critical. The cost of discovering that can be quite high.
Maybe certain parts of it - yes. But I've read many articles talking about how housing segregation is far worse than it was even before the civil rights act.
The act explicitly cites this problem yet completely failed to address it.
Some acts can have obvious no-debate reenactment. But this deters broad sweeping legislation from being passed, if subsets are not well thought out or are pigeonholed in. Why not pin sections onto acts so you can easily repeat ones with strong data/political support, while ending other less effective parts?
That said, there should no doubt be a dichotomy between human rights and constitutional limitations (which are pre-emptive limitations on legislation) and the general type of policies passed by congress.
My primary focus is on economy law as well. Social law might be more socially evolutionary.
Imagine the equivalent of constant miniature government shutdowns every time a law expired and congress couldn't come to a consensus.
I used to believe in an ideal state as the one you describe. More recently, I think about what a system - i.e economic, political, social - that is stable (in some sense) looks like. For example, liberatarians believe that markets sort things out on their own. I usually conclude that small societies are optimal for quality of living.
I came to the same conclusion. Sadly many 'libertarians' often gets dismissed as disliking all forms of government and regulation, which is not the case, rather preferring a limited one. But I guess intentional/unintentional misrepresentation is a savvy and common political tactic because it's effective.
My question to you is how do you achieve a limited/small government (without a revolution)? I believe controls like this are one way to achieve it. Much like how the strict policies of the Constitution (or Bill of Rights) have limited/stopped potentially hundreds of thousands of overreaching policies in the US alone over the last two centuries.
The constitution, aka strict pre-emptive limitations, are good. But I believe post-defacto limitations and reviews are also a necessity. Because as I said, some policy does seem rational at the time - which then becomes out-of-date or a bad idea with retrospect.
We currently have no good tools to deal with those outcomes...
I think the only way to guarantee that you don't government overreach is not have a sociaety where all member are active and responsible. Not in that they all vote. In that they all deal with issues in their community, rather than pawning it off to the government and also giving them the power they need.
I think that society that takes care of itself - instead of inventing institutions to do so - is feasable, but a real pain in the ass to maintain. And it's just easier to not. Sorry if i ranted a bit.
If the opposition is boycotting the referendum its sort of obvious the promoters of the referendum and a hidden objective
The central problem isn't rent control, it's the fact that property is a very privileged asset class that allows owners to extract rent from those with less political and economic power.
Rent control is like pushing down on a balloon that's inflating. The inflation keeps happening whether you like it or not. The best you can do is minimise the effects in selected locations.
That doesn't mean rent control is causing the problems. The underlying problem is the inflation, and you can't make it go away with palliative measures.
In the US, you can't make it go away at all, because the economic system has been designed to privilege rent-seeking - at various levels of obviousness and abstraction - over other kinds of activity.
Rents in the Bay Area and the financial biases and traditions of VC and startup culture are both manifestations of the same underlying problem.
The current costs of never-ending legislation and regulation is incredibly underrated IMO:
https://imgur.com/a/zagcH (please excuse the non-log axis, but the point remains)
Pretty much the only limit on the scope and extent of legislation is the constitution, which affect a limited scope of the interests of society. We must as a society demand that the legislation being enacted is demonstrably effective and useful, beyond the era it was enacted.
Like-- let's take on Oregon's statute banning self-pumping. Most of the reasons are safety related: https://www.oregonlaws.org/ors/480.315
It'd be cool to have a system where a private citizen would be allowed to file a lawsuit if they thought the justifications didn't have evidence. So the case would look at the justifications, and if the state couldn't prove that self-pumping wasn't more dangerous, the case would immediately remove the law.
One justification for banning self-pumping gas is that it's a jobs program. Except that that reason was never included in the original policy. So under my "challenge the law" framework, that couldn't be used as a defense, unless the Oregon legislature actually amended it.
I know this sounds like a good idea. It almost sounds like a good idea to me. But I don't think it will have the effects that you imagine.
Bureaucracies are always understaffed. That's because reality is always more complicated than they can model, so the task of rationalizing things so they can be apportioned, assessed, allotted, regulated or taxed can never end. If you put your plan into practice the immediate effect will be a need for a lot more bureaucrats. Before they just had the real world to worry about; but now, they will have to worry about reality plus an ongoing audit of the regulatory environment. And if they make stupid, unaccountable decisions, as bureaucrats sometimes do, some of them will involve stupidly and unaccountably repealing regulation that was serving a useful purpose. I'd be willing to bet that the problems caused when good law ceases to apply are worse than when bad laws are applied for too long.
It seems like the term was used simply to mean “fair and not favoring any particular political agenda,” but that is a huge hand-wave. Who decides the members of this agency? If we had a good method to establish this fair agency, we could just use that method to establish the entire government.
This proposal just pushes the entire problem of governance back one step. I see this a lot in discussions about improving government: proposing some oversight committee to keep the government (which we all agree has flaws and biases) in check. Even the entire idea of checks and balances between branches of government is based on this concept, and is flawed for the same reasons (although that’s a bigger discussion). If you can make the oversight committee fair and efficient and effective, just do that for the whole government!
Housing prices in California increased a crapload in the years before prop 13 was enacted. Real people with good jobs in new, modest houses they recently bought - not just granny in her 50 year old home - were in danger of being driven from their homes due to increases in property taxes.
No, it wasn't.
> Housing prices in California increased a crapload in the years before prop 13 was enacted. Real people with good jobs in modest houses they recently bought - not just granny in her 50 year old home - were in danger of being driven from their homes due to increases in property taxes.
It would be very easy to address that problem with a much smaller policy change than Prop 13. For one thing, the described problem doesn't justify any alteration to non-residential property taxes.
Unless the intervention is addressed to a market failure (and rent control is not), the cost of intervention almost by definition outweighs the benefits. I.e. the value gained by cheaper rents for early residents is more than offset by higher rents for everyone + dead weight loss from distortion of economic incentives.
EDIT: But I like the observation that prop 13 is to ownership as rent control is to rent.
It can easily cost $1800 on a $1000 a month rental. And moving is usually cheaper than $1800.
However politicians got around the limitations decades after by just raising taxes in every other area of life. most of those directly impacted the poor.
Prop 13 likely needs to be revised along with a comprehensive land usage policy that prevents local politicians from playing favorites, similar how to many states established boards to monitor elections.
Basically, if the real market price of an apartment is ~$3,000/mo, but in 5 years it realistically would be $5,000, they will simply list it for $5,000 now, to mitigate the loss.
My mother-in-law is a land lord in Los Angeles (a very fair one at that), and is also about as bleeding heart liberal as you can get. She is a staunch opponent of rent control.
Is this supposed to be surprising...? Regardless of whether it works for tenants, obviously rent control isn't there for the landlord's benefit.
The reason was that almost half of the apt. in the building were rent controlled (grandfathered in).
I think a mix of limited rent control (i.e. 5 years, max) plus building more apt for people that can't afford it, is a better combo on keeping a stability and folks being able to afford and live closer to work.
The only way to build more affordable apartments, is to allow for building more market rate apartments as well. Right now this current older (baby boomer) generation is screwing hard the upcoming one.
It sounds like blaming the game rather than striking out against those who abuse it.
The good landlords aren't pulling out every technically not illegal trick to make more money because they value things more than just being in the clear legally, but they do value being in the clear legally. The slimy landlords don't care about other effects, as long as they are legally in the clear. If you increase punishment/enforcement of the laws, you will hit both the good and the slimy landlords harder, with the slimy ones still taking a lead because they don't care about factors like a good reputation or having a clean conscious (yes, I'm somewhat stereotyping the good and slimy groups).
That the slimy ones know and practice working around the law may even mean that the good landlords get hit harder from a crackdown. In some way the government can't focus on the slimy landlords because by their very being they avoid government focus more than the good landlords.
Perhaps another example: the drug war. Making marihuana illegal creates criminal activity other than just selling it. You could say "okay, so just police that", but that's not so easy in the real world, and we've seen the negative consequences of attempting it.
A lot of problems would be solved if politicians thought less about the intentions of their policies and more about the incentives those policies create. Too many policies make bad behavior rational. Even worse is that once you do that it's not just that good people start behaving badly, but also that bad actors out compete the good ones. A good policy aligns self interest with the common interest.
For example, how does, "rent-control => neglect the state of housing" That happens already without rent-control.
1) It incentivizes the landlord to shorten the amount of time a particular tenant will inhabit the property, because it is only when a tenant leaves and a new one comes in that the landlord is free to jack up the rent to market rates.
2) It compels the landlord to lower his expenses in order to ensure that his investment stays profitable. Ordinarily, a landlord is constrained by a desire to keep a property that will attract and retain good tenants, but since that is no longer (as much of) a factor, he will avoid making repairs and enhancements except in emergency situations where the law requires him to.
Source: landlord (albeit one who has never worked in an area with rent control policies)
Because slumlords are better able to extract profits from rent controlled properties, they are willing to buy them for more than they are worth to bleeding hearts. All rent controlled properties will be managed by slumlords in the long run.
I'm a tenant in Los Angeles, and a staunch supporter of rent control. Knowing that my rent (which is already high) can only go up so much year-over-year provides some bit of stability as the tech industry devours eastward from Santa Monica.
They don't ignore it, they're just not ignorant about the costs of income and social stability.
For example: I grew up in a relatively modest house (3BR, 1,100 square feet) about 40 minutes outside of D.C. Growing up, there were quite a few young families in our neighborhood. Average household income was probably about $70k/year in today's money--relatively well off but not even what you'd call "upper middle class." Today, you'd need about $130k/year to afford to live in the same house. You're talking about a completely different class of people at those two income levels. It's two people with average jobs (maybe even without a four-year degree), versus two people with mid-level white-collar jobs (GS-11, since this is D.C.). It's people who had kids in their 20s versus people who put off having kids for 5-10 years to focus on their careers.
Today, the people I know starting families in the area are professionals making multiples of what my parents and our neighbors made at a similar stage in their lives. Instead of playing the housing bubble game, my wife and I commute in 60+ minutes each way. Partly because it enables us to raise our kids in a neighborhood with young families. But also just out of spite.
All this "stability" is a huge drag on young people that proponents of things like rent control ignore. That grandma living in her rent-controlled apartment is displacing some family that now has to live out further and end up seeing the kids they put off having for fewer hours each day.
Who exactly is being spited here when you waste 10% of your life sitting in a car 'commuting' ?
Plus, income distributes follow a pareto distribution: in DC a 60th percentile family earns between ~35% more money than an 50th percentile family does, and a 70th percentile family earns ~35% more than a 60th family does, etc.
Those two factors are behind the explosion in housing prices around the nation. The same number of people can afford to pay substantially more for housing than they could previously. When you were growing up, your parents were competing with median income families for housing. But today, you're competing with ~70th percentile families for the same housing (per your income assessment).
The solution is to tear down low-density suburbs and replace them with high density residencies. But there's no incentive to do this because people are more than willing to just spend more time commuting so they can have a yard to mow on the weekends.
It’s hard to tell what people actually want. The lots in my neighborhood, laid out in the 1930s, has a standard plot size of 1/15 of an acre. This is a suburb of detached single family homes. A few people have doubled up the lots, but for the most part people just deal with having no yard. Today, the minimum lot size is five times bigger, 1/3 of an acre! So is there no incentive to build denser because people are willing to commute more to have the space, or because it’s illegal to do anything other than build ultra low density housing?
This is literally an entire field of focus of economists and one of the fastest growing ones in the field. Have you considered that maybe you are the one that is ignoring the second-order effects of being a proponent of rent control and how it helps a specific person over a population?
Fundamentally modern economics despises the use of any other type of social control and signaling other then capital. Solution's to all problems must be in the context of markets.
One can see the effect that has had on middle and lower income families. And on our political systems. Where families are starved of resources and politicians are fearful of exercising independent political power on behalf of the voters.
That's the system that economists insisted was going to work much better than the system we had before.
Address the issue with more supply.
(At a livable standard of living, including proper sound isolation and fresh air, and even a space for vehicle storage* because people need to leave the city some time... *: Having an in city goods and services transport layer in weather controlled environments that leads to peripheral IO structures such as mega parking garages is fine.)
I realize what you are trying to say (I think), but your phrasing is curious.
Shortages are almost always caused by government intervention in a market by increasing the burden for suppliers and/or capping prices. There is no need to mandate anything, but instead just let developers do what they already want to do, build. It is the prohibitions (zoning regulations) on development that are the problem, not disinterest by developers.
In order to have an actual //correction// in current trends directed building must be several times beyond a normal build rate to make up for the decades of under-performance.
Ah yes, the landlords are forced to massively raise rents, unlike the tenants, who are allowed to choose whatever price they want.
Simple reliance on a profit model for housing is never going to adequately meet housing needs.
Can you give something to justify that statement, something more than just a bare assertion? To me, it looks like reliance on something other than the profit motive (that is, rent control) is what's causing the problems here.
https://www.globalresearch.ca/a-timeline-of-cia-atrocities/5...
Referring to them as talking points without refuting them sounds a whole lot like trying to dismiss the argument without dealing with the contents. Don't get upset and fall back on procedural obfuscation if you're trying to have a conversation with me.
The non-communist countries tried to sabotage the communist ones, true. (And vice versa - a cold war is like that.) That is not at all the same as saying that, within a capitalist countries, the capitalists will not permit you to set up a commune. Your argument (and link) therefore do not actually address jules' point at all.
> In addition, a commune within a capitalist society would still be reliant on the labor of an external, exploited proletarian class.
How does that address jules' point (or even mine)?
> Communism is internationalist. Ultimately this is the failure of first world social democratic programs that provide decent gains for their working classes but do so at the expense of oppressed peoples in the global south.
How does that address jules' point (or even mine)? Starting a commune in the US doesn't exploit the oppressed in the global south whatsoever.
This is why I say it looks like you're just looking to spew talking points. You're saying a lot, but it's not relevant to the subject.
2 & 3. What I'm trying to help you understand is that a commune within a capitalist state that doesn't challenge the structures of capitalist society is not a communist project.
Please calm down, it's clear you're getting upset. I'm trying to help you understand.
If not for rent control, he would charge $3000/month now at market-clearing rates, get a tenant in there in 30 days, and increase rent by the standard market price every 12 months. But due to rent control undercutting profits, he can't do this, so he keeps it open at a higher price.
http://www.bayareacensus.ca.gov/counties/SanFranciscoCounty....
That's not what he would do. Tenants tend to value a property more as time goes on. Beyond increasing market rates.
Without rent control, your rent will increase faster than the average market increase would indicate unless you move very often. Rent control may not be the optimal way to combat this, but it is something many societies recognize as a problem.
If I have rent control, I will list at a higher price and let the property sit vacant for longer to find a tenant because the law says that I am limited in the ability to later adapt the rent to the market.
Without rent control, there is much less incentive to leave a property vacant, looking for a tenant willing to pay a higher price point.
Most microeconomics courses teach that markets don't have one price for a good, and one of the lessons will be in strategies, such as coupons, that owners of goods use to sell into the market at multiple prices. There isn't a single number that a landlord can rent a unit out for in a given market.
[1] https://ftalphaville.ft.com/2016/03/29/2157698/ranking-ameri...
I've know plenty of people who winced at the rent they paid, but told themselves that in 5 years it'll be worth it as the rent will be below market.
That makes it the market rate for the apt though. You'd be above market rate if it didn't get rented out in a normal timeframe.
Forces them? As if they wouldn't raise rents as much as they felt they could get away with anyway.
Or as if without rent control landlords would keep rents low, merely out of the goodness of their hearts.
When you institute rent control, you save existing teachers some money, but when they retire, good luck finding new teachers willing to work in the new market with much higher rents.
I agree to rent this place for a year.
I agree to rent this place for a year, and I'm paying for the option to re-rent it at the same rate for the next 5 years.
You can imagine that in commercial real estate one of these contracts is more expensive per month than the other. Especially in markets with rising rents.
Basically rent control bans the first type of contract, and requires the second. And therefore increases rental rates.
I am sure most people here who claim that the likes of Google and Apple should not 'avoid' taxes take every possible tax deduction in their personal lives so as to minimize their tax liability.
There's a reason the young are such idealists. It's easy to preach in the abstract about how OTHER parents should raise THEIR kids. Or how OTHER landlords should manage THEIR property investments. When these people become parents and homeowners themselves is when the rubber hits the road, and most just regress to the mean.
Depends on the scheme in place. There are a lot of places where the amount the landlord can raise the rent between tenants is capped.
There are two big problems with rent control: It results in a constriction of supply over time, and it causes degradation in housing stock quality. There's no reason to put one cent more into your rent controlled place than required by law.
This study is interesting primarily because it tries to put some hard numbers on how much it drives up the cost of housing.
IME, this is a pretty universal statement.
Hop across the bridge to cities without rent control and you'll see the same thing. The problem isn't any specific policy, it's the power balance between landlord and tenant created by a market with limited supply and ever-growing demand.
But then you look at what $1.5M gets you! It's bottom of the barrel housing most other cities. You need to move up to $3M to get something modern that has things like double-paned windows and a decent kitchen.
Is he adding more than $800k to the value of his home? Probably, but it's not as much as one would expect.
But I'm just getting this from talking to friends who have done it; no first-hand experience here yet.
More than 1,000 planned purpose-built rental units have instead been converted to condominiums in the Greater Toronto Area since Premier Kathleen Wynne's government expanded rent control[1]
It's making the housing crisis worse, not better. For those who already have low rent locked in, it's the ultimate "fk you, I got mine."
[1]https://www.theglobeandmail.com/news/national/report-finds-1...
*according to the landlord lobbying group based on unknown data that even the report says they cannot guarantee the accuracy of.
The paradox occurs because rent prices are much more flexible than peoples' income. If you have rapid increase in wages (like in SF area), then landlords match the increase by raising rents even faster than the wages rose and the tenants don't get no better services nor quality of living. Just higher prices they have to pay.
That supply and demand determine the price is like describing gravity as "things just fall to the ground when dropped". While true, these tell you nothing about how fast things fall nor where the market prices stabilize.
To see where rent levels come from and why they match up with general income level for a given locality, look at David Ricardo's "law of rent" (introduced in 1809), which tells you exactly that. It basically tells you that rents increase exactly to the level that wages increased. Therefore eating away all technological progress and only giving you higher rents and house prices. This is the progress and poverty paradox. The harder the society works, the larger wealth gap and poverty.
Failing to understand the cause of all this people just slap some random regulation to alleviate the problem - in this case the rent control.
--- To observe the law of rent, simply look at the fact that rents almost exactly match some general level of income of majority of bottom workers so that they barely get by and don't save a cent. Any excess goes to rent.
Just plot wage vs rent of any city on earth and you'll see it.
You can always trust them to keep digging.
Our rent control works because it applies between leases. Last year rent increases were frozen at 0.5%. In the apartment that I moved into, the landlord is not allowed to increase the rent more than 0.5% above what the previous tenant was paying. Increase are also allowed in order to reflect any major renovations performed to the unit. Increases due to renovations must be anchored to the cost of the renovation, and distributed over the next 10 years of rental. This system works spectacularly for renters. Some people may argue that this leads to more slums, but it effectively incentivises landlords to renovate their units in order to maximize their returns.
If a tenant refuses to pay a rent increase, the landlord may apply for a hearing before the Housing Authority to have the tenant evicted, but the judge will take the illegality of the rent increase into consideration before giving permission to evict.
But no, instead we get this, "Rent Control Is Uniformly Bad" title which is designed to split the demo and bring in people who want to argue.
Surely we can do better!
(We changed the URL back because it's not clear that that article has more information in it.)
That's all there is to it. Obsessing about rent control, population numbers, tech workers, or whatever else is nothing but a distraction. Dramatically increase supply and prices will drop.
If rent control isn't applied to all rental units (as is the case in SF), then the units not under rent control end up being higher than average to make up for the units under rent control.
Even if rent control is applied to all rental units, then you see large spikes in rent that are speculative to several years in the future whenever a tenant moves out and the unit is re-listed.
The problem is that you can't just kill rent control and expect everything to be ok overnight, especially in a place like SF where the housing supply is constrained. Two things:
1) Demand outstrips supply even at the high prices commanded by non-rent-controlled units, so if you were to kill rent control here, the only thing that would happen would be that the units that were previously subject to rent control will get price hikes. I wouldn't expect rents to fall for the units that were never subject to rent control, because there are still people willing to pay those prices to live here, even if they'd prefer something lower.
2) Even if I'm not entirely correct, and there is enough supply that the overall market rate actually would be lower than the current market rate for non-controlled units, we'd still lose a lot of lower-income residents; I would be very surprised to find many (if any) landlords in the city who wouldn't raise rents at least modestly if their units stopped being subject to rent control. Some of the less exploitative ones might work with their existing tenants so as not to force them out of the city, but there are a lot of people in SF in rent-controlled housing that can't afford much more in the way of increases than rent control allows.
We need to 1) build like crazy, 2) kill rent control, 3) have some sort of phase-out period where we subsidize housing for lower- and middle-income people hit hardest by post-#2 rent increases. (And probably other things; I'm no economist.)
Rent control causes supply issues. Look at the City of Berkeley. Their supply increased massively right after rent control was lifted in 1997.
https://alamedasun.com/news/appeal-costa-hawkins-rent-contro...
i.e., if you want to change the budget expenditure (how many people live in SF), shifting how the budget income is sourced wouldn't help.
AKA market rates.
Therefore, no houses are being added to rent control. And the number can only stay constant or go down.
And in response to the state law requiring ADUs to be legalized in single-family homes, the Board of Supervisors wrote a law requiring ADUs in most single-family homes to be rent-controlled.
Now one of Supervisor Safaí’s friends is even proposing a new building voluntarily put under rent control. It may get killed by city politics, though.
http://www.sfchronicle.com/bayarea/article/Developer-wants-t...
If you're willing to live with diversity of political affiliation (it's a pretty even mix of Democrat and Republican around here, and I've heard people on HN say they'd be absolutely unwilling to live somewhere like that), you can get a 2200 square foot house in a nice neighborhood for around 250,000. We have an airport, IKEA, two art museums, and all sorts of interesting exhibits to see and things to do year round. I plan on having at least four kids, if I went to work for Google to have a house the same size would cost something like $2,800,000? (from a quick Zillow search of somewhere like Sunnyvale if I wanted a similar commute) So 11x more expensive? It seems like madness to me.
I know a guy who lives here but works for a big company on the coast, and he lives in a mansion in one of the nicest neighborhoods around, and even the local mid level tech jobs easily pay 6 figures.
I mean, I guess the weather is nice, but other than that I don't really get it.
They're actually mostly right about that. [0]
The problem is that the perception remains well beyond its usefulness. Mid-sized Midwestern and Southern cities have everything a married couple in their 30s with (or without) a couple kids could possibly want -- all the stuff you mention and a lot more, really. And they provide it with a COL-tradeoff that can't be ignored.
I have a fairly good idea what people in New York think of my hometown and other cities like it and, frankly, they're wrong far beyond otherwise reasonable differences of opinion (as in they hold what are inarguably factually incorrect views (about, say, the size of Midwestern economies, the availability of jobs, the number of cultural institutions, the experiences of people of color and homosexuals (in urban centers, admittedly), the prevalence of ethnic restaurants, and on and on).
[0] I think it's exaggerated (especially in the sense that it's not for everybody), but real.
If I could talk my wife into living somewhere with winters, then we'd probably move to Cincinnati, since we have friends there. At my current pay we could probably retire there when the kids are in HS.
It feels like the title and the thesis of the news piece is either incorrect or at least misleading.
This is a simple incentive. To expect landlords not to act in this manner is to ignore Economics 101. If you design policies and laws in such a manner that rational actors will... act rationally... and this is bad, then the problem is how you designed the laws, not the rational actors - no matter how "greedy" you think they are.
With less hyperbole, you can use this argument regarding externalities involved in capitalism from the exploitation of workers to pollution of rivers. The way you change incentives is you add regulation.
Regardless, this thread is floating away from my point. No one is addressing the actual article here, which is really discouraging and fits with the trend of discourse on HN for the last year or so.
>>which is really discouraging and fits with the trend of discourse on HN for the last year or so.
Yeah, the guy who is posting terrible rape analogies is the guy I trust to judge what is or isn't discouraging with regards to the value of discourse on this website.
Trying to force anyone out of a home so you can make a buck puts their livelihood and safety at risk. You can't just excuse terrible behavior because people are greedy.
Rent Control surely just prevents local families from being muscled out by the tech employees?
The SF rent control law (like the CA Prop 13) does allow rents to increase, but very slowly. It would be possible to have both without as strong of adverse consequences by changing the ceiling at which both are permitted to increase.
Indeed! It's also worth mentioning that this has had the perverse side-effect of encouraging people to find any and every way possible to block the removal of old buildings.
Which is to say that the incentive to build new apartments has been matches with tools designed to prevent exactly that.
And, as ghouse indicates, new housing isn’t subject to rent control so developers make a killing if they get approval.
I’m not convinced it happens so much more in SF to cause the high rents. I think years of building almost nothing after the 208 crisis while jobs exploded is responsible.
Not even 1% as much as untaxing land and property does.
Deregulating the zoning restrictions would allow more buildings to be built. [2]
Here is a startling fact: in 2014 there were 142,417
housing starts in the city of Tokyo (population 13.3m, no
empty land), more than the 83,657 housing permits issued
in the state of California (population 38.7m), or the
137,010 houses started in the entire country of England
(population 54.3m).
Tokyo’s steady construction is linked to a still more
startling fact. In contrast to the enormous house price
booms that have distorted western cities — setting young
against old, redistributing wealth to the already wealthy,
and denying others the chance to move to where the good
jobs are — the cost of property in Japan’s capital has
hardly budged.
This is not the result of a falling population. Japan has
experienced the same “return to the city” wave as other
nations. In Minato ward — a desirable 20 sq km slice of
central Tokyo — the population is up 66 per cent over the
past 20 years, from 145,000 to 241,000, an increase of
about 100,000 residents.[3]
[1] https://en.wikipedia.org/wiki/Land_value_tax#Efficiency
[2] http://urbankchoze.blogspot.ca/2014/04/japanese-zoning.html
[3] https://www.ft.com/content/023562e2-54a6-11e6-befd-2fc0c26b3...
https://www.japantimes.co.jp/community/2014/03/31/how-tos/ja...
You'd really want some kind of net housing units measure, rather than housing starts, to compensate this when comparing Tokyo to other cities.
[edit]
Also due to house vs. lot-size restrictions the house would have been limited to just over 2000 square feet. This is regardless of the number of stories (i.e. a 2-storey house would need to have about a 1000 square foot footprint, but a ranch could have about 2000 square foot footprint).
That's exactly what I was saying. The owners of inner city land pay very little cost for monopolizing land that could be put to better use. It's a store of value that is unlikely to go down in value. There is nothing to offset the instinct to hoard.
>The same generation has now pulled the ladder up behind them to spit down on future generations.
All of the "it was boomers what done it" is just the 1% playing identity politics as a means of scapegoating and divide and conquer.
At the end of the day, the 1% millenial children of 1% boomers are going to be the beneficiaries of this ladder pull-up.
But rent control manipulates the free market. With rent control, people who might otherwise be priced out and forced to move away, aren't.
I'm failing to see the problem. Unless those people would have moved for reasons other than soaring rent, them getting to keep their homes is a GOOD THING.
But the bigger issue is that is artificially raises demand. That prices up for everyone else, which does more harm. It's a subsidy for older people paid for by younger people.
Instead of letting the bubble pop when it's harmless it's growing more and more and when it does pop it is going to be extremely painful.
Correct. And in the process of doing so, further contributes to the lack of inventory of market-rate rental units available to the influx of newcomers/tech employees.
As mentioned elsewhere in the comments here, this causes huge disparities for rents of similar units within a given building as landlords attempt to compensate for all the market-rate rent being missed from longtime tenants. E.g. I've known folks paying $4,000 while their neighbors pay $400. While I don't have numbers or a study to point to, my experience over the years with the SF housing market suggests the impact of this effect is nontrivial.
Hi, let me introduce myself. I am SF's housing crisis. So are many of my friends. We're those "local families" who have been living in SF for 15+ years in rent-controlled apartments. We're still here because the rent is cheap. If our rent went up even moderately, we'd probably move to the suburbs; by the time you hit your 40s, you get tired of stepping over panhandlers and human feces.
If you really want to get angry, let me tell you about the multiple times I've moved away for extended periods and kept the apartment unoccupied as a pied-a-terre. Rent control makes it affordable!
There are a lot of us, enough to occupy a significant chunk of the housing stock. Because we've taken this stock off the market, the available float is smaller than it would otherwise be, so everyone's bidding up what's left.
Would average rents go up without rent control? Certainly. But it would force a lot of us "local families" to make long-overdue decisions, freeing up housing, and driving down the average "new rent".
No, it absolutely is not.
Google or whatever doesn’t pay based on housing costs. They pay based on business value.
A number of companies have pay brackets that vary by location, to reflect cost-of-living differences in different locations. I can't tell you whether Google is one of those companies.