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Comment by roenxi | Hacker News Reader

I'm not sure the article you've linked is supporting the conclusions you are drawing from it. A $3 billion increase in costs to future tenants is not what I'd call a successful policy outcome.

I'm seeing phrases like (gross cherrypicking, also doesn't represent the full picture article, I know, I know) '15 percent decline in the number of renters living in these buildings' and 'led to a higher level of income inequality in the city overall'. This and conclusions like a 5% increase in rents city-wide suggest that the policy is not improving the housing affordability situation.

Indeed, it looks like rent control is great if you can get it but is making any housing shortage worse.

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I took the summary quote directly from the Cato institute website; I am in no way misrepresenting their top-line conclusions.

As I said, you can certainly dispute the goal of favoring incumbents over new residents. There are also issues with landlords in rich neighborhoods wiggling out of the controls, which lead to the rich/poor inequities you note.

But on net, it does what people want it to do: protects existing residents, with a minimal net impact to the housing economy.

Having gone through an eviction in SF, it's not rich residents, but residents who don't want to risk a 5-figure judgement against them and an adversarial relationship with a landlord.

If I didn't mind the financial outcome (because I didn't have the money in the first place) I'd have hung on for dear life.. instead I took the settlement and found another living situation.

The big loss with rent control is the disincentive for developers to create new apartments which has happened in San Francisco dramatically. We should have far more apartments here given the demand with normal market incentives. The incredibly high cost of regulation in SF is also a large negative force, but if the normal market incentives (without rent control) were able to operate, developers would work through the regulation as they do in other cities without rent control.

I don't think rent control has discouraged new construction, since it can't apply to new construction in SF.

All housing was new construction at some point.

Rent control only applies to buildings built before a particular date. So unless the developer is using a time machine, rent control can't affect the potential profit from building.

> The big loss with rent control is the disincentive for developers to create new apartments

Rent control does not prevent developers from building new construction, in fact it may promote new developments. Rent control reduces the cost of housing for a select few people who haven't moved in a while, which artificially raises the prices for newer tenants that just moved into a neighborhood. Higher prices for new tenants make developing new housing more attractive, not less.

>Higher prices for new tenants make developing new housing more attractive, not less.

I think you have switched cause and effect. Developers have to charge higher prices because they have to subsidize rent controlled units. Without rent control you may get away with charging $1000 per month to cover your costs and then slowly increasing prices as inflation picks up over the years.

If you expect 3% inflation but rent control only allows a 1% increase then only charging $1000 will result in a net loss over time so you will have to adjust the rent upward. Assuming a tenant in a rent controlled unit stays for 20 years then the land lord has to charge the tenant $1400 from day one.

>> Higher prices for new tenants make developing new housing more attractive, not less.

> Developers have to charge higher prices because they have to subsidize rent controlled units.

I don't think these two points are contradictory. Yes, rent control increases housing prices on newer units. However, higher prices on newer units provides incentive for developers to build new construction rather than squeezing everything they can from existing ones.

The article I cited found a minimal impact of rent control on new construction in SF. The costs of this were accounted for in the numbers cited.

You should read the article before you assert that your opinions rebut its contents.

You may be taking the quote directly off the site, but I don't trust the Cato Institute to publish anything that doesn't fit with a specific narrative. You may not be misrepresenting them, but they may be misrepresenting the truth.

> "The Cato Institute is an American libertarian think tank headquartered in Washington, D.C. It was founded as the Charles Koch Foundation in 1974 by Ed Crane, Murray Rothbard, and Charles Koch, chairman of the board and chief executive officer of the conglomerate Koch Industries."

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