I really don't see how making more apartments expensive to live in helps anyone but landlords.
1. It incentivizes owners to convert rental stock to housing stock.
2. It disincentivizes developers from building new rental stock.
3. It concentrates demand and removes supply driving up the price of non-rent controlled apartments.*
* Every rent controlled place that is lived in my a person who can't afford market rent displaces an individual who can afford market rent who then competes for the remaining rental stock driving up the prices of the non-rent controlled apartments.
It's been interesting seeing how the "if you can't afford to live there, you don't deserve to" attitude can be played both ways.
But my empathy will fall on the elder living on SS.
This is a good thing for creating new housing. New apartments will not be under rent control and can command higher rent, so developers are incentivized to build new apartments.
Rent control, in effect, converts tenants into pseudo-landowners with less fungible rights.
If locations are valuable, and by extension the rents, that is good. But to whom does the rent belong?
If rents are unaffordable, it is because wages are too low and the rent is not shared... which comes back to bargaining power and the overall health of the economy.
Taxing production, for instance, harms economic health.
But allowing speculators to hold the land for ransom creates stagnation, sprawl, and harms the bargaining power of labor... by worsening everyone's best available options for living and working.
Property owners paid all the development costs, directly and indirectly,as well as all the maintenance and bureaucratic work.
If you rent an appartment, you're not paying for a percentage of the lot. You're paying for the fraction of a whole system (structural, electrical, sanitary, etc) which exists only because those who invested their hard-earned cash puting everything together.
More importantly, that little lot is only worth something because other investors spent their hard-earned cash investing in that area, either in urban development projects or in commercial and/or industrial activities.
So quite obviously that sort of exploitation angle makes no sense as it is based on a very weak strawman (i.e., there is only value in occupying a specific region in space) that had no bearing in reality.
Let's put it this way: what would happen to San Francisco's housing costs if magically the entire tech industry raised their figuratice anchor and moved elsewhere?
Only land is to be taxed. Not capital. Not labor.
The issue at hand will always be that there isn't enough housing for newcomers, if we mandated housing construction to grow in a parallel way with office construction and job growth we wouldn't have nearly the sorts of problems we have today.
Require that new offices build an equal square footage of housing on top of themselves, and you've immediately build enough housing for at least the initial stage of population growth that comes with that new office.
Housing people on the same ground area than the offices would probably prove to be a huge technical challenge since it would effectively need probably 8 to 10 times the square footage, not to mention I'm not quite sure people really all want to have their colleagues as neighbours.
I'm also not saying that the office needs to match the housing supply of it's office workers in full, as a lot of new office development is hiring from people locally as well. But say, if you looked at the Seattle area, where Microsoft and Amazon have built over 10 million square feet of office space in recent years, an extra 10,000 apartments would go a long way in relieving the pressure on housing prices.
My belief for that issue is that zoning powers need to be removed from towns and done at a state level as travel technology has made it too easy for towns to push off their negative externalities to other towns. Towns have no incentive to add new housing stock as that leads to more people needing to be serviced and new voters who might push to change the way of life that the current citizens enjoy. Businesses on the other hand, don't get to vote and usually pay much more in taxes than they cost in services. Every city appears to have towns that have realized this an effectively become polluters by letting new business come in but making it other towns problems to pay for. If the state controls zoning, and likely the burden of providing services, then that kind of fucking over of your neighbor won't occur at the level of cities other than ones on interstate borders like NYC and the two Kansas Cities.
Just as how parking requirements make it much easier to find parking in high density and otherwise crowded areas, housing requirements will do the same for housing. A lot of folks on the public housing side of the debate want to decomodify housing through public ownership, but it would be far more effective if we just mandated housing be a part of every commercial development project nation wide.
This would be good for so many reasons ranging from better land use to much more abundant housing.
Additionally, zoning codes should be a state or federal system, as this would make it much easier to build economies of scale around housing development. But the placement of those zones/codes should still remain in the hands of local muncipalities, as no municipality should be able to protect their right to certain types of euclidian zoning.
https://en.wikipedia.org/wiki/Home_mortgage_interest_deducti...
"Economists have demonstrated that high-cost high-income areas receive most of the tax benefit. For example, San Francisco, California receives $26,385 per home while El Paso, Texas receives $2,153 per home, a 1,225% difference.[28] The five highest income metros receive 87% of tax inflows, with over half going into California alone.[29]"
If there are people out there "sheltering" themselves from taxes by paying more in mortgage interest, those people are idiots. Any savings you gained on taxes were already wiped out by the fact that you effectively threw away money on your home (i.e. your money did not go into equity; to you, the money just went into a black hole).
I understand that they pay less in taxes as a result of mortgage interest, but if you have an actual choice between (1) spending $1 on mortgage interest and getting a tax deduction or (2) spending $1 on principal and not getting a tax deduction, the choice that leaves you wealthier is #2. Obviously this is not how mortgage payments work and ignores choice (3) of putting money in some other asset, and the time value of money should be considered, but for each equivalent dollar, I would rather get more equity in my home than a tax deduction. The tax deduction is nominally smaller than the equity you would gain on an equivalent amount of money going to principal rather than interest.
This isn't even considering the extra costs of homeownsership, especially property tax and maintenance (and the latter is tax deductible to a much smaller extent than mortgage interest).
> The tax deduction is nominally smaller than the equity you would gain on an equivalent amount of money going to principal rather than interest.
True, but you can't ignore the "choice (3)" that you mention. I'm not in the market for a house right now, but if I were, I would absolutely get a mortgage even though I could pay cash for the whole thing. It's a non-zero risk, but I feel it's a reasonable bet to believe I can make enough in the markets to more than offset the mortgage interest, especially with the MID in play reducing my overall tax.
That doesn't really address the point the parent was making about buying a house being a good tax shelter (I agree with your premise if you restrict thinking to just that), but I don't think it's safe to ignore it in the bigger picture, either.
Henry George would say so: https://en.wikipedia.org/wiki/Georgism
You could defray those negative effects by building lots of public housing and/or heavily subsidizing new construction.
To the extent that you actually do that, you will naturally lower the market rent to the level that you wanted, making rent control pointless (except that it removes the signal that would warn you when you need to build more housing).
You kind of answered your first clause with your second. Demand can rise very rapidly, but supply can only grow slowly. If you want to keep housing prices stabile for people so they're not being thrown out of their homes or displaced, public housing doesn't address that because you don't get the signal that it's a problem until after the displacement has happened.
It kind of is because housing isn't the only component of housing value. Access to transit, safety, and public amenities like parks and schools are a huge component of what makes housing valuable. All of those things are public goods built by the government. Expecting private builders to build is just allowing public expenditure to line the pockets of a landowner who did nothing to add value to it.
Do you think that people would choose to ignore housing that isn't close to certain public services, if it existed? No, they would choose to live there because it'd still be closer to their workplace than neighboring cities and what not.
Don't forget that if the private sector isn't spending money to create value for the rest of us where we need it, then the alternative is spending people's money through government efforts. And as with any government effort, it is still less efficient because of its much bigger bureaucratic overhead.
Government programmes aren’t always less efficient than their private equivalents, e.g. the NHS in the UK is more efficient than many private healthcare systems (source: https://www.bmj.com/content/343/bmj.d5143)
Yes. People with money would choose to ignore them and they would wind up being peripheral slums and shanty towns because there aren't public services being built out to support the capacity.
> it is still less efficient because of its much bigger bureaucratic overhead.
Have you never interacted with a telecom provider or health insurance company? Heavily regulated industries and monopoly industries tend to approach messy bureaucracies as well. The messiness of bureaucracy comes from having to suit everyone's needs rather than just ignoring segments of the population that aren't profitable to serve.
This article of faith that government is inherently more bureaucratic or less efficient than the private sector is just not borne out by anything but religious devotion. The assumptions of perfectly fungible goods in a perfectly competitive market, which provides the theoretical basis for the idea of market efficiency, doesn't even hold in real estate.
Also consider existing renters who need to move, or people who become renting-age.
I will need to move out of the city if I lose my place. I'm paying $1000 below market value.
Here's a better alternative to rent control. Instead of rent control on a per-unit basis, cities could provide subsidies to long-term low-income residents that reduce their personal expenditure on rent. The subsidies would be paid for through taxes, thus amortizing the subsidy across the local tax base instead of impacting an individual landlord or unit.
But let me note that this must be done only for long-term residents (that is, those who have been there for years). For example, if someone moved to SF within the last 5 years, they should have known what the price of living there is. This is one of the most desirable cities, and it makes sense that it would be expensive and that not everyone would get to live there. Those moving there in recent years therefore, simply made an irresponsible personal choice and must yield to the consequences, rather than being subsidized at others' expense.
It's not super unreasonable for a city to try to protect its current residents but when an entire country of cities are all protecting their own residents that country is much worse off.
But no place does that. They actively encourage new growth, just not new housing, which has the effect of systematically displacing lower income people, and eventually the middle class too. Long term it ends up hurting the original people it was supposed to benefit - ie. all the Californians crying about how their kids can’t stay in state when it’s the discriminatory policies they supported that created that situation.
> If you don’t want anyone to move to an area raise taxes and stop allowing new business etc. - ie, actually discourage new growth.
Personal responsibility is still a thing. If someone can't afford to live in some area, or they don't like what they're getting out of it in terms of wages or expenses, they shouldn't move there.
> They actively encourage new growth, just not new housing
If people continue to move there, they are signaling they are OK with low wages or high expenses or any other drawbacks associated with that choice. If they are not OK with those things, they shouldn't move there.
I, for one, would like to raise the bar a bit and give more people actually good options.
Anyone who suggests that a "best option" that involves commuting 3 hours every day is actually a good option is not someone I want in charge of public policy.
I have seen a lot of people in my area assert that my political will should be subordinate to theirs because I came from somewhere else. Last place I lived, the notion that a particular demographic I fall into should be kept out of the general housing market when possible due to pricing others out was not just a fringe idea but part of several (ultimately successful) city council candidates' platforms. Perhaps people in your area are less nutty about outsiders.
If someone can't afford to live in some area…
Yes, those who can't afford the rent can live elsewhere, so rent control is not needed.
https://www.sfgate.com/expensive-san-francisco/article/peter...
This is an opinion and not fact - it's how it looks from your perspective. The line between what is a smart investment and unfair feudalism is pretty gray, and I am betting people decide how to frame the situation based on how it personally affects them. That is, I am betting everyone is acting in a self-serving manner.
> Not what's good for the SF boomer wanting to sell his shack for 2M and retire in Florida.
This statement comes off as ageist. Why is it wrong for the SF boomer to want to make a gain off their investment and retire elsewhere? This is a core mechanism of every modern society.
> A couple of billionaires in Atherton should have no say on Caltrain improvements that could benefit millions of working people at the expense of a couple of trees in their backyards.
You are cherry-picking. It isn't just a "couple of billionaires in Atherton". But even if it were, why can't they choose to defend their quality of life? Why does everyone have to live in the bay area? This all comes off as people feeling entitled to live in a highly-desirable region, but on terms that suit them.
Whilst unlimited population growth is impossible, stagnant communities and regions tend to slide into decline. Those regions most amenable to and rewarding of new activity tend to grow.
California occupied this position, globally, for much of the period from ~1930 - 2000, and particularly from ~1950-1975 or so. It does so far less now, with housing costs being a major factor.
Choosing a subclass of people to scapegoat doesn't solve a structural problem.
It's also useful to think about who is doing things to make things better or worse. Moving in makes things worse, moving away makes things better. Building more housing helps, removing housing makes things worse.
So far that seems to make sense, but here's the counterintuitive part: in any given year, choosing not to move away is as bad as moving in. You're taking up space someone else could use.
(But normally we don't beat ourselves up too much for taking up space.)
Just to be clear, "move to an area" includes "move out of their parents' house and live on their own".
> because it serves existing constituents above new ones
Because the "new ones" are the kids of the "existing ones", in many cases, if not most. As in, they are also existing constituents.
Do you have a source for this? Personally I don't buy it.
But just for a second, let's assume that's the case. Would you be OK with limiting rent subsidies to just those who either have provably been residents for multiple years (let's say 5+ years) or have long-time roots (e.g. family)? I don't think any city owes expansion and housing supply and a re-architecture to accommodate just anyone who wants to move there.
Non-anecdotal? Not at the moment, sorry. I'd have to go dig. But anecdotally, most of the people I hear complaining about rents (not in SV, various places on the East Coast) are complaining about it being impossible to stay near aging relatives.
> Would you be OK with limiting rent subsidies to just those who either have provably been residents for multiple years (let's say 5+ years) or have long-time roots (e.g. family)?
I personally? It really depends on the form the "rent subsidies" take and how they're financed. I do think that thinking of "build more housing if there's more demand" as a "rent subsidy" is a bit odd, if that's the sort of thing we're talking about here.
> I don't think any city owes expansion and housing supply and a re-architecture to accommodate just anyone who wants to move there.
Now we're talking about the moral and ethical dimension of things, right? Opinions on this differ widely; I personally do not have strong opinions that would apply in a blanket way, and would prefer to analyze specific cases (i.e. specific cities) on a case-by-case basis.
Because walling off cities has awful consequences for national GDP
https://www.nytimes.com/2017/09/06/opinion/housing-regulatio...
Yes, and they would still be available. If wages/living conditions are not good enough for them and they move away, there would be an under-supply of their labor which would cause their wages to rise, which would self-correct the problem.
Right now, those same people are willing to work for less. This is a personal choice they are making. And I don't think it obligates lower residents to provide lower-cost housing or greater housing supply.
https://www.cbsnews.com/news/los-angeles-hidden-homeless-pri...
It's not just people moving into an area, it's moving within an area.
Rent control creates an market where existing renters are inhibited from moving even into the building next to their current residence. It prevents free movement in/out and within the market.
This also makes it so landlords want to evict/churn renters as much as possible, so they are incentivized to become slum lords. Landords invest as little as possible into the property because as soon as a renter moves in, that renter is never going to leave and the landlord sees diminishing returns over time.
But let me note that this must be done only for long-term residents (that is, those who have been there for years). For example, if someone moved to SF within the last 5 years, they should have known what the price of living there is. This is one of the most desirable cities, and it makes sense that it would be expensive and that not everyone would get to live there. Those moving there in recent years therefore, simply made an irresponsible personal choice and must yield to the consequences, rather than being subsidized at others' expense.
They're going to move there anyway. Making it more difficult and expensive won't stop them, as the example of SF shows. Accomodating them, then, is about mitigating the negative effects of immigration on residents and welcoming your new neighbors.
I don't think this is going to be true in the longer-term, and clearly SF has an exodus underway (https://www.sfgate.com/expensive-san-francisco/article/Bay-A...). People will (are?) realize that the benefits of SF are not worth the tradeoffs (if their circumstances are such that they can't make it there), and move elsewhere. They might (should?) make their way to many of the inexpensive cities away from the coasts that are more affordable, and the new residents moving into those cities will help make them vibrant cities.
At some point, the incumbent residents of SF or other communities may change their policies if what they desire is different. Or not.
But I don't think there is any lack of housing supply or jobs in the middle of the US. What is lacking is the exact housing people want, at the exact price point people desire, at the exact locations they want to live in, in the line of work they want to be in. Demanding such an exceptional situation is highly unreasonable. Making tradeoffs/compromises is a part of life, and no one is entitled to have the best on every dimension by default - that has to be earned.
You're right! SF has an exodus underway among certain groups. It may be possible that this might be distinct from an overall exodus and resulting shrinking population, however.
Is it possible that your perspective, while completely valid in every possible way, may not be as widely shared as you could hope for?
But I guess they just don't care. "I got mine; fuck you" seems to be an attitude prevalent around here.
But it's also a bit hypocritical to encourage and incentivize building tons of new office space, and then be surprised when the people who are to fill that office space would like to live within a reasonable commute distance of that office, and then deny them that opportunity, because "it will change the character of the neighborhood", or, "it will reduce my home value".
With rent control, whoever lives there pays lower rent. Without rent control, whoever lives there pays higher rent.
There is no net change in the number of people living there either way.
So why (other to benefit landlords) would we want whoever lives in a given apartment to pay higher rent?
"it will tend to weaken coalitions in favor of reducing housing prices for new home buyers/renters and will tend throw currently homeless people under the bus"
Landlords are not going to voluntarily lower rent prices if they can get away with charging more (else rent control would not even be necessary), and homeless people are not going to be able to afford the higher prices that non-rent controlled apartments cost.
Precisely the opposite is true. Uncontroversially the immediate effect of abolishing rent control will be to create more homeless.
Rent control does not apply to new construction in many cities such as SF, so it does not affect the incentive to build. The mechanism by which abolishing rent control might lower prices somewhat for wealthier people moving into the city is by clearing out the less fortunate who have built lives here, adding their units to the market. Those that have nowhere else to go will become homeless.
If you believe that then it might be worth pondering why New York's highest rate of homebuilding occurred when it had its strictest rent controls though.
In reality all rent control really does is redistribute some the spoils of rising land values from certain owners to certain renters.
This makes some property owners extremely angry but as far as renters and potential renters are concerned it's potentially good or potentially neutral.
If you really want to incentivize home building you need to disincentivize land hoarding. That means repealing prop 13 or implementing LVT.
Have you ever considered how much more housing might have been built if it weren’t for rent control?
It's still an extremely inconvenient fact for anybody advancing the hypothesis that rent control impedes housing development.
It might very well be that the effect is real but is so weak that it is completely overwhelmed by other factors.
It might also be that bringing down property values (which rent control will do) lowers the bar to housing development, spurring more of it.
No, rent control also redistributes the burden of rising rental costs from people who have rent control to people who don't, and tends to make that burden larger than it would be otherwise.
> If you really want to incentivize home building you need to disincentivize land hoarding. That means repealing prop 13 or implementing LVT.
On this, we agree. And we can't just simply throw rent control in the trash overnight and expect everything to work out. It needs to happen in concert with other initiatives that increase the housing stock, and be phased out over time, with targeted help to more vulnerable people.
But I don't expect any of this to happen, at least not until things get to people-are-rioting-in-the-streets levels.
Supply of apartments and demand for apartments doesn't suddenly change under rent control so no, there's no market pressure making non rent controlled apartments more expensive hence there is no redistribution between renters.
Lucky renters get below market rate and unlucky renters get market rate.
There is only re-redistribution from rentiers (landlords) back to renters. 1% -> 99%.
I don't think rent control is the best solution for the housing crisis (100% LVT ftw) but it's intellectually dishonest to pretend that it hurts renters. It never has and it never will.
Yes it absolutely does. Demand doesn't change, but supply is artificially reduced because people with rent control are less likely to want to (or be able to) move out.
Unless you're talking about the people forced on to the street or out of the city entirely by rising rents...?
I don't see the problem. "Wanna move to the area" is a choice. "I am forced out of my house because of higher rent" is not.
Would you extend this idea to property? After all everything you've inherited is like that too (an accident of birth). How about parents? Perhaps children should be assigned to random families at birth, to keep it fair? How about citizenship? Would you give up your citizenship because you being an X citizen is just an "accident of birth" (and as such not really entitled to it)?
People don't have "accidents of birth". People are born in a place because their parents moved there. And the important part comes after the birth: people grew up there, played there as kids, connected with the place, etc. A place is part of a person's life history. It's not just a consumer good up for grabs by the highest bidder.