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From the numbers I can find, I don't think this is true. The biggest population constraint in the Valley by far comes in the form of explicit density constraints, such as minimum lot sizes, not rent control. Palo Alto has no rent control, for example, but is less dense than SF, despite the fact that demand exists for much denser housing to be built (especially near Stanford) if it were permitted. Some kind of scared-rich-person-club mentality going on where they're worried that allowing apartments, or even townhomes, might bring in too much riff-raff, so by law everything has to be an undivided and large single-family home (in a large portion of the total area).

Do any parts of the Bay Area south of San Francisco have rent control? I do not know of any.

That's my point: the biggest density problem is the Valley sprawl, and that one's not caused by rent control, because there isn't any rent control there.

san jose does.

Thanks. Good to know.

As a former Civil Engineer [4] and advocate of commodity-housing [1], I can tell you that rent control [3] is the minor issue here. I'm glad that HN is finally paying some attention to the elephant in the room...zoning laws. I bet that for most HNers who pay rent, it is about 50-60% of monthly expenses. This is freaking ridiculous! Look at it from a Civil Engineer's perspective: modern houses are built from very durable materials, and once constructed the maintenance expenses are minimal.

Is it that hard to connect the dots? People in power are all landlords, and they get a big chunk of their idle income via rents [2]. All they need to do is make sure that no new housing is constructed where they own rental property...basically protection racketeering. Next time you visit the Golden Gate park just spare a few minutes to read the plaque next to Joseph Strauss' statue. It says, "the biggest opposition to building the bridge came from the landlords of San Francisco, who feared that once the bridge was built, it would lead to a nose dive in rents".

[1] Housing so abundant that rents are on the order of maintenance costs, about $50-100/month!

[2] https://news.ycombinator.com/item?id=3959941

http://www.theglobeandmail.com/globe-investor/personal-finan...

https://news.ycombinator.com/item?id=3959500

[3] http://www.baycitizen.org/columns/elizabeth-lesly-stevens/sm...

This article describes in depth the problem you are facing, and since you are a new landlord it does seem like the biggest issue ;)

[4] One of the reasons for leaving Civil Engineering was the realization that the problem of high-cost-of-housing was not an engineering problem, but completely a political and social one. Constructing abundant, high quality and cheap housing was declared a solved problem in Civil Engineering by the 60s!

Maybe you're someone to ask. Why don't we have sweet apartment buildings like the kind you find Tokyo? In the heart of Tokyo you can rent a tiny (but complete, clean, modern, beautiful) apartment for < $1k. In most major US cities that's totally impossible.

They're small as hell, but totally sufficient and way nicer than living in a bigger shittier place.

I think someone could make a killing bringing these kinds of buildings to the US.

Any reason it's not possible?

Such housing already exists in the US.

See http://shine.yahoo.com/green/simple-life-in-manhattan-a-90-s...

But, why do you think so small, when what is possible is a BIG, clean, modern, beautiful, 2 BR apt for $50/month!

To put it another way, when someone can't afford food, we provide them food stamps, paid for by our shared tax revenue. We don't make grocery store owners grant them discounts out of pocket.

Thats a pretty good analogy. I am absolutely for helping out those in need- I just dont think it should be shelved on the landlords shoulders- It should be a responsibility of government.

And it could be financed by higher property taxes for landlords, so that the average landlord is in the same financial situation before and after, but the element of luck is greatly reduced, and the perverse market incentives are removed.

This has nothing to do with rent control.

San Francisco is just one part of the Bay Area, and the Bay Area is just one part of California.

The entire state has high real estate prices, despite pockets of low-priced housing (Stockton, for example).

Law of supply and demand: a lot of people don't want to live in freezing Minneapolis or bleak Detroit. Or Mumbai or Monterrey, for that matter.

Rich or poor, they would rather be in place where there is a chance to bask in the sun by the ocean, even if requires an hour or two drive from their gritty neighborhood.

Stockton hasn't had high real estate prices since 2008 when their market crashed harder than anywhere else in the country.

That's why I said it was a pocket of low-priced housing.

If it's really weather, why are almost all of the east coast sun states significantly cheaper? And two of them don't have a state income tax! (Florida and Texas). New York also has fairly shitty weather comparatively and it's even more expensive.

It's more complicated than that. Prop 13, cities forcing a lack of density and other polices and forces I don't know about push California to it's sky high rates.

> If it's really weather, why are almost all of the east coast sun states significantly cheaper?

Simple - people don't want to live in those states as much as California. For example, we have palm trees in California. They have them in Florida too - it's not the same!

Similarly, Texas also has nice weather but it's way more variable than California which has a fairly temperate climate. In TX crazy temperature swings are the norm. Also, I've known a number of Texans throughout my time in the Bay Area, pretty much all of them from Austin. The culture of Austin is the most like California and San Francisco - artsy, liberal, etc. Places like Dallas, Fort Worth and San Antonio are decidedly not like San Francisco.

To your point about Prop 13, I agree that it's an issue, and it's definitely a major part of why we keep having this budget crisis over and over and over again, every friggin' year. Sadly, I don't think Prop 13 will be abolished or really revised until the state is completely broke - much worse than it is now. But eventually it will change.

If they didn't have rent control in San Francisco half the population would clear out every bubble. The city is already transient enough as it is. Having lived in and around San Francisco I have seen the mega-booms and busts. I think that rent control keeps the housing market from being warped by the gigantic tidal waves of money that slosh in and out of San Francisco every couple of years.

As a new landlord in San Francisco, you want to get rent control abolished so that you make lots of money. But of course when you bought your property you knew it was rent controlled and what the rent control price was, so if you do own rent controlled buildings you should have known what you were getting into.

Rent control does not really affect growth of housing, because new housing is almost never rent controlled. Furthermore, abolishment of rent control would also create a lot of inflation in a city because a city cannot function on engineers only. And once low income people get forced out of town they will want more money commute to the city.

So it is not such a black and white issue.

What's your thought on Prop 13? It's hard to imagine why owners should be insulated from tax increases while tenants should not be insulated from rent increases.

The 1% is tied to the market value of the home, at the time of taxation. Its saying, they will never tax you more than 1% of the market value of your home.

Rent control is tied to the time of original purchase. If you want to say that your rent can never be more than 1% of market rent, sure- sounds good.

The way rent control works is certainly designed to help those in need but instead it creates a artificial demand for affordable housing.

I am having trouble wrapping my head around this quote. How could this be? Do you mean supply? There is always more demand for a good at lower prices than higher prices. If you took rent control away poor people would still want to live in nice places and pay low rent.

From the Wikipedia article on price ceilings:

"A price ceiling set below the free-market price has several effects. Suppliers find they can't charge what they had been. As a result, some suppliers drop out of the market. This reduces supply. Meanwhile, consumers find they can now buy the product for less, so quantity demanded increases. These two actions cause quantity demanded to exceed quantity supplied, which causes a shortage"

Price ceilings are monumentally stupid. Unfortunately, the government rarely seems to be run by people who have much of an economic education.

I still take issue with the argument and I had trouble finding the citation for this statement or the graphs.

Under the price ceiling there is excess demand relative to the supply. This is a no brainer. But excess demand is not the same thing as an increase in demand. If there is an increase in demand why is the demand curve not shifted to the right? The curve stays in the same place.

The quantity demanded is a point on the demand curve. Yes, the demand curve remains in the same place. However, the point at which it intersects the price ceiling is at a lower price and higher quantity than the natural equilibrium. If you're forced to sell something at a lower price, then there will be more people willing to buy it.

"demand curve remains in the same place" = no change in demand

False.

I'm talking about the actual quantity being demanded. You're talking about a demand function. They are two different things. I'm talking about a number like 1,500. You're talking about something like a coefficient changing in Q = a - bP.

A demand curve shift does result in a change in quantity demanded. However, there are other things that can result in changes in quantity demanded as well (such as a price ceiling or technological progress resulting in lower prices).

You already agreed that a price ceiling leads to excess demand. That means demand > supply. Yet, the supply curve did not shift either. Again, this is because demand is a point on the demand curve. You're confusing a graph of demand at each price with demand itself.

Check these articles out for some good points

http://www.cato.org/pubs/pas/pa-274.html http://www.nmhc.org/ResearchReport.cfm?ItemNumber=55262

I apreciate the links but I wish they were from less biased sources. Any peer reviewed academic citations?

Quote from NMHC: NMHC is a national association representing the interests of the larger and most prominent apartment firms in the U.S.

Cato is obviously infinitely more reputable than an industry trade group. But lets face it Cato is not exactly an unbiased source for discussion of government policies.

Actually rent control tends to push poor people out, because with rent control landlords are forced to chose between multiple applicants before letting them in. Landlords would clearly prefer to deal with wealthier tenants than with poor tenants.