“Your monthly rent .. shall increase from $2145 to $8900”
facebook.com
facebook.com
This should obviously not be legal; if you're going to have a rent control, you can't let landlords take a unit that should have rent control and make it not rent controlled. At the very least, these kinds of changes shouldn't allow the landlord to escape an active rent control obligation to a current tenant.
That a thing is very popular does not make it lawful.
The law has always been distinct from morality, with clear gateways from moral sentiment to the law.
Has it? If you look at Hebrew and Christian tradition, the two are highly conflated.
If it's not illegal, you can still do it, morals be damned, without being punished.
It's pretty much the point of law--to give warning & right to punish. That's not the same as morals.
In that sense, I guess you're correct.
There's still lots of flaws in the theory, for instance morality has changed--slavery was not outlawed by holy laws, and seemingly was considered okay morally.
I don't personally equate legality with anything except written law enforced by people on earth, typically a government. Even in older times, "earth law" did not match "holy law." I don't think that, even at the time of its writing, the holy bible (for instance) described all immoral activity.
You still haven't described what moral is, or how one has an obligation to it.
Moral varies per person/family/culture.
There is no obligation to morality, it's typically enforced by one's own brain and pressure from one's peers.
I don't disagree with the dictionary definition: https://encrypted.google.com/search?hl=en&q=define+moral
I'm not sure if you're just being a pedant or something, but as a for instance, it's not illegal in my US state to drink alcohol to excess in the privacy of one's home, yet a great number of people find it immoral. This can be said for some act or another throughout history--frowned upon, not illegal.
That said, I don't know enough about California law to say what 'point' might be.
Terms of mortgages in the past decade or so have been in tremendous flux, fraudulently granted (on the part of both lender and borrower, yes, in cases), and changed unilaterally. They've also been transferred with little or no documentation. Cases in which homes that were not even under any mortgage being seized are fairly easy to find.
http://www.cbsnews.com/news/robo-signing-of-mortgages-still-...
http://www.huffingtonpost.com/2013/07/24/ohio-bank-foreclose...
http://abcnews.go.com/Business/bank-america-sued-foreclosing...
A few months before the year ends, we decide if we will renew the contract for another year. If not, I have a month or two to find a new place.
That is, property owners are free to do what they want with their property.
Another is: Your rights cannot exceed those of who you got them from (IE tenants cannot have greater rights to land than landlords)
Tenants are tenants for a reason.
The whole point of ownership is to have exactly the ability to have these rights.
Why should somebody who has no title to the land, be able to control what happens to the land?
The fact that someone lives somewhere doesn't give them magical rights to the place, and it shouldn't.
(Most landlord/tenant law exists to ensure everyone plays fair and doesn't flat out abuse each other, but doing something within your rights, tough shit)
When I rented in Boston from operating companies, they always increased rent the maximum allowed every opportunity allowed. This encouraged a lot of churn in the area I lived which I don't think was good for the area. I also had a lot of problems with them never fixing appliances so I moved out. When I started renting directly from personal owners and allowed to go month-to-month then we were both happy and the owners generally never increased rent unless when their costs also increased.
I had a bad experience myself renting in boston, that involved the health inspector fining the operating company about 20k.
This does not decrease the supply of housing, because it's a monopoly, they are doing it because they can, not because supply is low.
The counter argument is, that the governments of regions, (cities, counties, states, etc) have to account for externalities that businesses don't consider or care about.
Governments see benefits in keeping housing affordable. Do you like having restaurants with waiters, stores with clerks, streets that are swept, trash collected, and so on? then those people need places to live too.
Rent, maybe. Sell, no, since that would be a restraint on alienation :)
"Governments see benefits in keeping housing affordable. Do you like having restaurants with waiters, stores with clerks, streets that are swept, trash collected, and so on? then those people need places to live too."
Sorry, but I don't see how this problem doesn't solve itself without any intervention.
If none of these people can afford to live in your area, and they aren't getting paid enough to commute, they'll go elsewhere where they can.
In turn, your area will start to suck, so you'll either pay them enough to commute, etc.
Also that is the best case. Consider older people. I mean there is not really an economic incentive to help old people on fixed income afford homes. Maybe they should be turned out on the street to die, because if it was an issue, the market would have fixed it.
Blind market forces should eventually bring about a reverse, but you will get bubbles and depressions, and there are things which have social, ecological or other utility beyond dollars and cents which won't necessarily be accounted for.
Just because i've lived somewhere, means i get to live there as long as i want? So once someone's got theirs, nobody else gets a chance?
As I mentioned in another thread, i'm 100% not a fan of people having some magical right to continue to live somewhere just because they've lived in that place, or their parents have lived in that place, a while.
It's essentially "blood right", and I emphatically believe it's not a great way to decide who gets to live where.
Not that i'm a fan of just kicking people around continuously, mind you, but things that end up doing the above (like endless rent control), are not societal good to me.
Being part of a social fabric is a basic human need. In the past the strong would displace the week from their communities through violence. Now we do that through the law, which seems like a great improvement.
Nevertheless there is no getting around the harm that you do to someone when you displace them from their community and support networks. This is why the law is not as absolute as you and others with your viewpoint would like.
By all means let's consider by what means we can balance this against other important human needs, but I don't think it's reasonable to claim that the freedoms to deploy capital without restriction trumps the need of humans for stable community.
If I wanted to rent my apartment out I wouldn't go searching for laws--I'd go searching for tenants (and a basic lease agreement I could modify).
If there's a required course or something, I guess it would make sense then.
It doesn't take long to learn the basic laws about something that are most likely to affect you. And then consult a lawyer for anything you are not sure about.
Do you have insurance? Same principle.
I don't feel a lot of sympathy for the landlords in SF. If they want to own property that isn't rent controlled, there's a whole big country out there, the vast majority of which isn't rent controlled. They chose to buy under the restrictions that exist. That's their responsibility.
>If I wanted to rent my apartment out I wouldn't go searching for laws...
This is a dangerous level of ignorance.
When you rent a space that you own to another for residential use, you forfeit the vast majority of your privileges as a property owner. Pretty much every jurisdiction recognizes that a person requires a secure space to come home to in order to have a chance at a decent life.
If you're thinking about renting out your property, you're setting yourself up to be royally fucked if you don't familiarize yourself with the relevant laws.
I know people (in fact, every branch of my family, along with many of my friends) who have rented their entire lives, because they can't own - they've never been able to amass enough capital or convince someone else to lend them it. Should they be uprooted every year (or more often) because someone wants to make a bit more money?
Rentals are whatever the combination of the contract and the local law say they are, by definition.
No, they shouldn't be, but that's not really the issue. The issue is: should landlords be legally allowed to uproot them?
My answer is a decisive yes. For whatever the reason, they should be able to not renew a contract once it expires.
I don't see why laws should be in place to restrict how much someone makes. Nobody has to have that particular apartment, or live in that particular place, etc. There's always options.
Yes, it really is. Which does the most harm - uprooting people and families every year, forcing them to deal with the stress of moving and finding new life patterns which match wherever they live now, or disallowing landlords from making a bit more money?
EDIT: s/allowing/disallowing/
Again I think that's a red herring. There are plenty of reasons an owner might want to remove a tenant outside of profit. But again, it's not the issue--this is really straight to the heart of property rights.
Someone owns a property, and by and large, should be able to do what they want with that property.
Living on someone else's property is part of the risk of renting. Similar to working for someone else--would you also argue an employer should have to keep paying a worker who is underperforming (or any of a litany of legitimate reasons), because if they didn't that worker might have to deal with the stress of moving & finding new life patterns?
As I say in another comment, when you rent out a house to a tenant, you already lose certain property rights, at least while the tenant is living there. You can't write a contract which allows you to keep them, by law. You usually even have certain duties to the tenant, as much as landlords like to shirk these. This is the same in many developed countries, and the world's yet to fall apart for it.
And therein lies some of the disconnect: my answer is a decisive no. I think there are some reasons for which a landlord should be able to kick out a tenant, but I do not believe that any reason will suffice.
And that's why we have (imperfect) laws such as the Ellis Act, and a raft of other things that protect tenants from capricious, rent-seeking landlords.
If they are living on someone else's property, and that person wishes to sell the property, and the lease and any other contractual or statutory guarantees have lapsed, then yes? This is really not a new thing. You can't do away with property ownership as a concept just because San Francisco is ridiculous.
Actually, almost everywhere, when you have a tenant, you lose some ownership rights already, by law. For example, except in an emergency, you generally can't enter the building without prior notice.
Here's the thing, though. It's not as if existing rent control regulation catches landlords by surprise. If a prospective landlord is so unprepared as to be unaware of the rent control status of a property that he's planning on purchasing, then he's likely to do very poorly with pretty much all of the tasks that being a landlord requires of him.
In short, the fact that landlords rent out rent-controlled units is proof positive that they understand and accept the restraints imposed on them by rent control regulations. The fact that rent controlled apartments continue to be rented in SF (rather than withdrawn from the market for five years and converted into condos, as the law allows) is proof that rent control is not draining the lifeblood out of landlords.
The insane rents in SF are not due to rent control (how could they be?), but due to the pathological lack of new residential construction.
Whether you should do so is another question, one to which I don't have the answer.
Landlords have a variety of legal options to terminate a rent-controlled lease. Those options are almost always less palatable than continuing the lease. This is by design, and -in areas with obscene housing supply issues- good for society. Housing security is far more important for societal well-being than the fullness of a landlord's wallet.
Sure, landlords "have the right to change their mind", but only within the legal/regulatory framework in which they've chosen to invest.
But hey, "Uber, but for residential rentals". There's clearly _some_ people who'd benefit from doing end-runs around the rules by which everybody _else_ plays...
(Just think for a minute about how surge pricing for apartment rentals in SF would look... All the "locals" moving out to Oakland or Pleasanton while WWDC or Google IO is on, and moving back in again during Burningman...)
If you're going to trot out an absolutist term like "by definition", I'd like to inform you that "limited time" is by no means a condition for being defined as "rent": http://dictionary.reference.com/browse/rent
I know that sounds a bit pedantic and splitting hairs, but if you're going to base your argument on re-defining what words mean... that's a bit of a problem.
Check another dictionary and it's part of the definition: http://www.thefreedictionary.com/rent (verb, 2)
In common use, it's always in conjunction with a temporary agreement. You don't "rent (a home) forever." GP didn't make up some new usage to further his argument.
Even considering the temporary case, what does "temporary" mean? 1 year? 2? 5? 10? Where's the cut-off where you've rented for "too long" and it's ok to be kicked out of your home? Even if you can pick a number for that yourself, I hope you can agree that others might have different numbers, and that the selection of such a number is somewhat arbitrary.
I think the fact that all of this is a problem proves the point that people do expect to be able to rent a home for some value of "forever" (or even some value of "temporary") that is larger than a landlord's profit motive would allow.
Look, if I want to rent a power saw from a hardware store that offers rentals, me keeping that saw for a long time isn't a problem, assuming I'm continuing to make payments[1]. If the hardware store finds there are more people wanting saws, and they're running out, they'll just buy more; there's a ready supply. The same thing doesn't work for housing because land is a limited public resource. In SF's case it's even more limited due to the arbitrary new-construction planning process and disappointing level of NIMBYism in the city that means we can never keep up with demand, Mayor Lee's housing initiatives notwithstanding. This is why real property law doesn't give absolute power to the owner of that property. There are rules. You can't discriminate based on protected classes, for one. Rent control is another rule. The Ellis act is yet another. These rules aren't perfect, but they do tend to protect people who would otherwise be at the short end of a very unpleasant landlord-tenant power dynamic.
[1] It might be stupid for me to do so, financially, since I'd fairly quickly pay more than the cost of a new saw, but let's assume that, like housing in SF, the cost of a new saw is several hundred times the cost to rent it. This also serves to point out that owning a house is financially impossible for many people, while renting -- up until recently -- was much more doable.
The only value that should be expected is the duration of the lease. Yes, it's true that many landlords are satisfied with their rental arrangements and want to continue renting (I have personally done several lease renewals with the same landlord, and I have relatives that lived in the same rental for 20+ years), but a tenant should never take that renewal for granted. Leases are usually in 12 month increments, and at each renewal point, the relationship is re-evaluated by both parties and one or the other moves on or alters the terms of the rental contract if he/she is dissatisfied. Is it really that hard to figure out how this works?
I'm a tenant now and I will hold no ill will to the landlords if they do not wish to renew our lease. I do not feel entitled to their property beyond the contractual and legal stipulations outlined in our lease and in the state's landlord-tenant law, nor do I feel that it's my right to force them to rent to me in perpetuity.
I'm more surprised that some adults believe renting a home grants them a perpetual interest in it than anything. That's literally the difference between renting and owning. If you have a permanent interest in the land, you are at least part-owner. When people want to keep things forever, they buy them.
You could interpret that either way, I guess, as reinforcement of what you're saying, or as against. People should get the fact that it's always month-to-month after the initial period, and just deal with the uncertainty surrounding that.
But the expectation is that the initial lease functions more for the landlord than the tenant (protects the landlord from a flaky tenant who is going to move out after a few months, causing the landlord to have to bear the cost of re-cleaning and re-listing the property after a very short time). SF's laws are very tenant-friendly, so it's hard to get rid of a tenant even on a month-to-month agreement. That certainly breeds an environment that makes people think that "forever unless I want to leave" is normal.
I'm more surprised that some adults believe renting a home grants them a perpetual interest in it than anything. That's literally the difference between renting and owning. If you have a permanent interest in the land, you are at least part-owner. When people want to keep things forever, they buy them.
That reasoning holds tons of merit, I think. A problem, though, is that the cost to buy in SF is out of reach for most tenants. When a 20% down-payment pushes $150k for some of the "cheaper" houses, buying becomes difficult for the majority of people. It can even be a stretch for the high-flying, well-paid tech worker who has actually been able to put money away for several years.
You don't pay rent and then come into permanent possession.
There is a (temporary) time period attached to a rent payment.
I don't entirely disagree with you here--I just think you're being a pedant to attempt a "technically correct" play.
I truly believe that most people (at least who live in SF; I can't speak for other cities) would not consider a rental "temporary" to the degree that you seem to be thinking. Whether or not they should is another matter, but I think the state of rentals here -- especially among rent-controlled units -- serves only to reinforce the belief that a rental can (and "should") be as permanent as the renter wants it to be. And it's a feedback loop: people believe this because of renter protections, which causes them to believe and fight for (and often get) even stronger renter protections, which allows their rental status to become even more "permanent", and so on.
Again, not saying it's right (or wrong), but I can easily see how the sentiment in SF is that renting need not be a permanent thing.
Most jurisdictions recognize the need for a person to have a safe, personal, private space in order to have a happy and productive life. It is a recognition of this fact that causes most places to agree that a man's home is his castle, even if he is renting his home from another.
So the property taxes are probably trivial. The house acts as an investment with high returns and favorable tax status. They can sell it or take out a mortgage if they ever need money.
Given that burning down the property to avoid a long eviction struggle isn't unheard of, the owner is perfectly rational to decide not to rent it out.
People who are opposed to rent control argue, quite convincingly, that things like the situation you describe lead to bad outcomes for the community at large. A dwelling sitting unoccupied because an owner doesn't want to subject themselves to rent control laws decreases supply and increases rents for everyone.
2) No, that's not just pushing the problem back a bit. That is wrong. There will always be owners who want do do something with their property somewhere down the road. If you allow them to rent it out in the meantime (without getting locked into a forever contract) you can permanently increase the total rental stock in a community.
@harryh: your complaint is rent control prevents owners from renting out their property (while doing something in the meantime) without getting locking into a forever rental. For small landlords, it does not, at least not in this enumerated (most likely the most important) instance. As a small landlord, most importantly of a single unit, you may rent it out as you wish and move back in later, evicting a rent controlled tenant if necessary.
In the current instance it seems pretty likely that the owner has no intention of moving in but instead wants to sell an unoccupied house.
Yes, it's illegal, and the penalties are severe if the person is caught. But it's an option. And if the current owner is sitting there thinking, "Shit, I can't rent this building out and make it worth my while," (property tax, cost of keeping it up to code, etc) he'll sell it to a slumlord who can make a profit out of it.
There's no story here.
The overall lack of self awareness is what is nauseating about HN.
Kinda like the comment the other day on HN that was something along the lines of "I don't see why we need the gov't regulating water prices, why can't the free market just sort this out" ... "because water isn't like an iPhone, it's something that everyone needs and there's a huge butterfly effect to this, less crops, less food, etc. on a very large scale -- not to mention supply/demand doesn't work for something with fairly inelastic demand".
What's next, "I think it's sort of obnoxious and should be illegal to force insurance companies to not take into consideration pre-existing health conditions"? "I think it's sort of obnoxious and should be illegal to force politicians and political parties to reveal who gives them money"? "I think it's sort of obnoxious and should be illegal to force people who are working to pay for the retirement of older people via Social Security"? "I think it's sort of obnoxious and should be illegal to force companies to limit the amount they pollute"?
There are plenty of arguments against rent control. But I find it hard to accept "but this guy could be making more money if the government didn't get in the way!" as an argument against rent control (or most other things, for that matter).
How does this legitimize it? A group that votes to dictate what I can do with my property might be doing it by the letter of the law, but that doesn't make it morally right. If I've earned something (e.g., I've gotten it legitimately through trade, as opposed to theft or fraud), that means I've poured some part of my life into earning that thing. Apart from issues where criminality is involved (theft, fraud, etc.), no life should be subject to the arbitrary dictates of any group.
Each of us should be free to make the most of our lives, as best as each of us can. Some of us will achieve more, others less. And there's no getting around that, because no two people can ever be the same in every respect.
To be clear, I am pro-equality in one fundamental respect: we should strive to be equal before the law.
Land, of course, does not work like you imagine it does. See, e.g.,:
http://en.wikipedia.org/wiki/Land_tenure#Modes_of_ownership_...
http://en.wikipedia.org/wiki/Adverse_possession
http://en.wikipedia.org/wiki/Land_reform
In addition to all that, you ignore that concepts like "trade" and "law" and even "earned" are all intrinsically social concepts. No man is an island. That doesn't mean that property rights aren't useful and important, but if you want everybody to agree on a particular set of rights, you'll have to make a case that is more compelling than, "my particular moral code says you must abide by my particular moral code".
Thievery doesn't become acceptable because someone makes a compelling case or a pretty argument. Justice doesn't become "fundamentalism" because it won't compromise with injustice.
See, I can make sweeping, unsupported assertions, too!
Congratulations, you just justified slavery.
Your fixation on one thing and your refusal to compromise or even to admit the validity of other views is exactly what fundamentalists do.
It's not merely an arbitrary moral code that I'm asserting. What other way is there to live than to use your mind as best you can to make the most of your limited time? What other way is there to live than to treat others neither as masters nor slaves, but as trading partners (in love, friendship, mentorship, business)?
What other way is there to live than to treat others neither as masters nor slaves, but as trading partners (in love, friendship, mentorship, business)?
You're advocating the opposite of that. As a landlord -- assuming a world with absolute property rights -- you have a significant power advantage over your tenant. A 3x-4x rent increase is not treating your tenant as a "trading partner", it's using your status as landowner to your enrichment and their detriment.
Further up you suggest:
A group that votes to dictate what I can do with my property might be doing it by the letter of the law, but that doesn't make it morally right
Not inherently, no. That's only the case if you believe that the voting-majority group is immoral. That certainly can be the case, but I don't believe it's the case often enough to abandon the idea of democracy.
Personally, I'm definitely in favor of limiting property rights. Property is in general not a fungible "product", and its supply is limited. I consider land to be a public good. The state grants you some property rights, but reserves to place some restrictions on what you can do with the property in the name of the public good. I don't think we have the balance down perfectly yet, but I would absolutely not advocate giving property owners carte blanche to do whatever they want with that property.
It's a matter of drawing the line somewhere: I think you might agree that some restrictions are good. Disallowing renting decisions based on discrimination of protected classes is something we might agree is a good thing (sorry, I don't mean to state your position for you, but I don't know you, so I'm just stating a hope, a guess, as to somewhere we might find common ground). If we can take that as a given, then we can agree that the state restricting property owners to some extent does indeed make sense. And from there it's finding a list of things that it's ok to restrict, and it's not ok to restrict. From this discussion I'd guess that my list of things that it's ok to restrict is a bit longer than yours. And that's ok, but at least it's a starting point from which to find a compromise. The final list has more on it than you want, and less on it than I want.
Business deals and compromise are rarely about making one or the other party (or both) 100% happy. I believe there's "common wisdom" floating around that the best deal is one that both sides are slightly uncomfortable with, and I believe that to be pretty true.
If, on the other hand, you do truly believe in giving property owners absolute power and free reign to do whatever they want with it, then I don't know that we can actually have a productive discussion, because our viewpoints may just be too different. That's unfortunate, but that happens sometimes.
In a romantic relationship, either party can decide to leave without retribution.
In a friendship, either party can prioritize something else they value more, and the friendship wanes.
Students can outgrow mentors, and vice versa. Businesses can fire clients, and clients can go to other busiensses.
It can definitely be detrimental for someone's romantic partner or spouse to leave them (and the same can be said for any of the other relationships in this list). Some people are so distraught when someone leaves them that they attempt suicide.
However, does the fact that this happens in any way justify imposing restrictions on couples? Should a person be forced to endure a romantic relationship that they wish to end because it would be to the detriment of the other person? You can say the same thing about any of the relationships I've listed. For example, should you be forced to buy a brand of soap you don't like because the grocer isn't doing well, and he needs you to buy his unsold inventory?
All relationships are a two-way street, and for a fair trade, both parties have to agree, voluntarily.
For your first 3 examples (romantic, friendship, student/mentor), I of course say sure, either party is free to leave whenever they want.
The difference here is an economic one. It's near impossible to make sensible legislation around feelings (though some lawmakers certainly seem to try). While the ending of a romantic relationship may have a huge negative psychological impact on me, it doesn't affect my ability to live on in economic terms. A landlord kicking me out of my apartment can directly affect my livelihood, and the government is trying to protect me there. I think it's also uncommon for that to hurt the landlord (especially in the non-rent-controlled case), so there's an imbalance of pain. In the relationship case, leaving causes me pain, but staying causes the other person pain. Legislating whose pain is worse or less justifiable is, I hope we'd agree, a mess.
The firing topic is interesting, though, because even the law disagrees in different parts of the world. In Europe, for example, many countries have laws that are very employee-centric, and make it very difficult for firms to fire people. I personally don't agree with the extent that they've gone over there, but I can at least appreciate that people in other areas value employee security over employer mobility and lack of overhead. Even different states in the US have different laws that make it easier or harder to fire people, and define different obligations on the employer when they want to fire someone.
All relationships are a two-way street, and for a fair trade, both parties have to agree, voluntarily.
I'd like to agree to that in principle, but that just isn't true. There are plenty of laws on the books that can give one side more rights to make, not make, continue, or terminate an agreement. For example, a landlord may wish to discriminate against people with certain physical disabilities, because otherwise he'll have to spend money to install accessibility features in his building, but the law says... nope, can't do that.
A landlord may also wish to discriminate against an existing tenant who isn't able to fulfill the landlord's newest vision of his property's profit-making abilities, but there are a bunch of laws that also say... nope, can't do that. I happen to agree with a lot of them, or at least the intent behind them.
Our entire legal system is based on the idea that, on an individual level, both parties don't have to agree... only some representatives pulled from the majority do... sorta. There are lots of laws on the books that I never agreed to, and yet I'm bound to follow them just the same.
But all that is fine, I think. Many laws -- renting-related laws in particular -- are designed to weaken inherent power imbalances. The landlord naturally has more power in society than the single mother who is holding down two jobs. The law tries -- often imperfectly -- to protect the mom from people who would ignore her interests and take advantage of her.
- What about the designs my co-worker painstakingly worked on over the same period?
- What about the reams of reports my wife wrote at her company, which makes heart valves? She gets up at 4:30 in the morning, comes home at around 5 at night, works after dinner. When there's an important deadline coming up (which is almost all the time), she works weekends.
All of these things are property. Each of us poured ourselves into these things. We could have done other things, but we chose to do these things. In a way, we're not special - we're just three people, out of billions.
None of us are thieves. You can casually toss around your equivocations and guilt-tripping for being born, but that doesn't change the fact that many people are honest and have earned what they have.
Not that it means his stance was correct, but your argument isn't addressing his point.
At any rate, in all three of my examples, money changed hands for work creating property. That money could be used to buy property, physical or otherwise.
At least in my dialect of English "a property" would always always refer to land (e.g. "steal a property" is nonsense).
Give me strength.
Why do you have property? Why does a police force and firefighters exist to protect that property? Why are there courts and contracts? The only reason is because a group of people have decided to set rules that protect your property - the only "natural property" you can have is that which you can fight for, and anything you have beyond that is by the grace and favour of the same society you are so quick to deride.
> To be clear, I am pro-equality in a fundamental way: we should strive to be equal before the law.
And the poor and rich alike have equal right to sleep under the bridges.
It's not society that decided this. Most people in our society recognize the fact that the alternative would be to resolve disputes (including ones where no one intended to cause anyone any harm) through violence. We need courts, police and contracts so that we can live and create without fear of retaliation, without generations of Hatfields feuding with McCoys.
Because the landlord wants to protect their property and pays the property tax towards that goal unlike the renter? (yes it is built into the cost of rent but it's also built into the cost of every business transaction and people don't criticize that point)
lolwut?
The free market works pretty OK for gasoline and food (taken as a whole; obviously specific foods are elastic). When was the last time you heard people clamoring for price controls at the grocery store?
Even more to the point, the free market works just fine for housing in the vast majority of the US that does not have any form of rent control.
That so many units in SF are rent controlled is a huge part of the problem here. It reduces the incentives for landlords to maintain properties (the OP specifically cites these problems) and makes it difficult-to-impossible for people in rent-controlled units to move (again, cited by the OP). It also significantly reduces the supply of housing in SF, driving up market-rate rents. Eventually the market-rate rents are so much higher than the rent-controlled rents that landlords have a strong incentive to pull stunts like what's happening here.
The other big part of the problem is that so many people seem to think that the solution to all their economic problems is more regulation. What we're seeing in SF is not a failure of the free market, but rather the failure of an over- and ineptly-regulated market.
Government actively intervenes to influence the supply and price of gasoline, and actively intervenes in food, subsidizing both production and consumption.
So, if whatever is being done for gas and food works well, that's not an endorsement of the free market.
But I feel like people are focusing on the weaker argument, about gas and food, and ignoring the far stronger argument, that the vast majority of this country somehow gets by just fine without rent control.
This is, in fact, extremely common, historically and currently. Just within the US in the past several years, look at the demand for price caps on bottled water in the wake of natural disasters.
New construction does face many other issues, though. NIMBY's, parking regulations, zoning, etc.
I full-throatedly support new, dense residential construction sufficient to meet SF's current and future housing demands. This will continue to be my position for the forseeable future.
For those folks who are concerned about new construction destroying their rent-controlled units, Sangiacomo and his tenants worked out a really good plan: https://news.ycombinator.com/item?id=9209304
There is a fairly well-accepted economic system that advocates both profit-seeking and making desired goods affordable. Far from being mutually exclusive, they can be mutually reinforcing.
Now, you can argue that particular rent control laws are too aggressive, or that the strategy for calculating bounds on rent increases cause excessive opportunity losses. But that's a far cry from the implication of your message.
2) You've missed my point about moving costs. Even when the market favors renters, the lease renewal negotiation favors landlords. This is because moving costs time and money payable to third parties. As a result, the landlord can charge higher rents for renewals than they can for new leases.
2 - moving isn't "that" expensive. It's a pain in the ass, but you can do it in a weekend with a few hundred dollar moving truck. You might be able to raise rates a few percent, but you can't just move them significantly above market.
Let me guess: no kids, haven't lived in your place very long, don't know your neighbors, don't have family nearby, don't live in a city with substantial pressure on housing, and you make over the median income.
> You might be able to raise rates a few percent, but you can't just move them significantly above market.
That you can't imagine something doesn't always mean it's not possible. It can mean the world is more complex than you expect.
I'm glad that you have such an easy and comfortable life that moving is no big deal, but that's just not true for everyone on the planet.
If your landlord raises their rates to double the market value, move. If you don't, that just means you're doing it wrong.
Yes, sure, if the rent is doubled, one should probably move despite the hassle. But the point is that landlords can take advantage of the asymmetry in cost/difficulty of changing places to hike rents. Nobody would move because the landlord was charging them $1/yr above what they could pay elsewhere. Most would move if it were double. The landlord's advantage is somewhere in between.
Care to show me a single company that would allow me to rent a truck for a cross country move for less than four hundred dollars?
Go ahead. Take your time.
You've described the typical SF tech worker and decided that everyone is like that. Might want to broaden your horizons a bit.
Regardless, you don't get the security deposit back until a few weeks after you've moved out. Never seen a truck rental or moving company who is all like "sure, you can pay us in a month". A bit of a chicken-and-egg problem, there.
The building I live in is also in the situation currently where a unit is being left vacant in anticipation of a condo conversion in a couple years.. San Francisco has a very complicated condo conversion law but part of it is that during conversion some existing tenants have to be offered lifetime leases which can never be increased. Leaving units vacant is a rational way of dealing with that.
Good for them. Better that they do this than take the rental income, and later whine about how terribly unfair renter protection laws are. :)
Based on my immensely scientific[0] survey of Internet Message Boards (and personal experience in the American Southeast), it seems that potential landlords sometimes forget that when they rent their property to others for use as the renters' home, the landlord loses almost all control over that property. This is right and just: everyone deserves a safe, secure, private place to live.
> Leaving units vacant is a rational way of dealing with SF's condo conversion laws.
Again, it's good for the landlords that they showed this much restraint.
The condo conversion laws prevent landlords from turning their apartment stock (that pays off smaller amounts over time) into condo stock (that pays off one large lump sum). These are sane and rational laws to have in cities that (for a variety of disgusting reasons) find themselves unable to create sufficient housing to meet demand.
[0] Ha!
The market rent is exactly what other potential tenants are willing to pay.
Now, you can argue that particular rent control laws are too aggressive, or that the strategy for calculating bounds on rent increases cause excessive opportunity losses.
Or that the inability to charge market prices causes property owners to refuse to rent in the first place, thereby making housing problems even worse.
You're not understanding the scam. Suppose you move in to a place and pay the then-market rent of $1000 a month. Let's further suppose that it cost you $2400 to move, plus a shitload of time and effort that you'd rather not repeat. If the next year the market price remains $1000/month, the landlord can still raise the rent on you because you'll be reluctant (and possibly unable) to pay moving costs again. The exact amount they can get away with depends on personal tolerance and your time value for money, but given how much moving sucks, in practice it's quite a bit.
> Or that the inability to charge market prices causes property owners to refuse to rent in the first place, thereby making housing problems even worse.
That is definitely a negative side effect, but not a huge one in practice. How many apartments can one person use? Who would really let an apartment building stand empty when you could be charging market rent? In San Francisco, pretty much nobody.
A bigger problem is that it might reduce the supply of new apartments. But that's also not a problem in SF because any building built after rent control was passed is not under rent control.
many cities do not have rent control. the city i live in is one such city. the scenario you're describing does not happen here.
if an owner decides to raise rent above market, now that owner is faced with the possibility of not being able to rent out that space, because now they are renting above market price. even just 1 month of vacancy is already lost revenue that would often dwarf the potential gain of raising the rent.
owners also have costs too. when someone moves out, they have to pay to have the apartment repainted, listed, and brokered.
this is not the reason rent control exists. rent control exists because SF wants to keep prices low without building more housing, making life miserable for everyone.
> A bigger problem is that it might reduce the supply of new apartments. But that's also not a problem in SF
because the city continually refuses to allow new housing developments to be built.
Because -as you mention at the end of the comment- your city builds new housing to meet demand. Rent Control was enacted BECAUSE landlords were raising rents to absurd levels in cities that (for a variety of disgusting reasons) found themselves incapable of building new housing to meet demand. :)
It is my experience, as you say, that rent tends to increase by a small amount each year, usually about 2%. Even people on fixed incomes tend to get cost of living adjustments, though, and the range is about the same as typical rent increases.
I do not see rents increasing by the amounts you suggest, which suggests that either all landlords since I started renting in 1991 have been leaving money on the table, or they can't actually do this reliably.
I think there are several reasons why they can't raise rents by 10% a year in order to keep people there, even though that extra money would be about what it costs to move:
Since the money it would cost to move grows only at inflation, by the second or third year it would suddenly be profitable to move, even for renters who really hated moving. In order to avoid this, landlords would have to apply the rise only once. But if they do this, then the market rate is just the higher one, and you could look at the initial lower rate as a promotion. In fact, this is quite common in rental advertising! Often it comes in the form of "first month free", which is about of the same scale.
More importantly, people who rent probably do not expect to stay in the same house or apartment for many years. In non-rent-controlled areas, rent is more expensive per month than buying the same sort of place, so if you intend to stay in the same location for more than a few years, there's no reason not to buy. As a renter, I've never lived in the same dwelling for more than three years, and when I move somewhere, I assume that I'll be moving again in a year or two, as conditions change (job, relationships, etc).
The dollar and timeline figures here tells me one of two things:
1) they wanted to get rid of me, particularly, or...
2) they took a calculated risk based on their experience managing a great number of units
I'd bet heavily on #2, since this is a pretty typical story in NYC.
They tried to raise the rent 22% to something 29% above market rate. They weren't able to get anything close to that rate for a new tenant. They will pull the same crap on this tenant next year too.
> More importantly, people who rent probably do not expect to stay in the same house or apartment for many years.
This is patently false.
Federal intervention has seriously distorted the home buying market with a variety of subsidies and tax writeoffs. Without this assistance, it would likely be substantially more expensive to buy than rent.
That's an insane assumption. Most landlords are companies which, if human, would be considered sociopaths.
The total loss of income is enough incentive for the landlord to keep rent increases reasonable. If your example held true, there would be violence in the streets across the globe but there aren't. The incentives keep increases in check in markets less insane than those in San Francisco and California at large. The policies of that city and state are the largest differentiator between them and areas with healthy markets/ Maybe we should be looking at policy beyond the veil of partisan rhetoric?
That is incorrect. That is the new price of that unit for that tenant, as if it were a market of size 1. A similar unit on the market would rent for a different rate paid by similar tenants in the market.
when you do that, i'd love to see your opinion then about living in a place where every month you need to set aside a weekend to find a plan-b place just in case your rent jump to a price you can't afford next month.
Do they not offer long term leases? It seems figuring out a more long term solution would be prudent.
rent is either 1 or 2yr contracts and then month-by-month. everywhere in the world. you can try to renegotiate a new 1yr or 2yr each time with a discount (or lower increase) but that is the same as negotiating all over again.
Remember that property is also a limited resource, and all plots of property are not created equal. Property ownership is an agreement between individuals and the state. The state gives the individual some rights to the property, but is empowered to restrict use of that properly when it believes the public good is better served. In theory, both sides benefit from that. But, for now, landlords are trying to throw aside what many (myself included) would consider the public good, in the name of higher profits.
I'm personally not a big fan of rent control, but simply dropping it (and allowing landlords to drive trucks through loopholes such as this) alone is not a way to get ourselves out of our current housing mess.
Well, it doesn't have to be.
But prospective landlords tend not to build new units (or maintain old ones) when they don't feel they are getting a fair deal. It leads directly to the situation they have in San Francisco, where property owners only rent to family, coalesce many smaller units in to few larger ones and sometimes withdraw their units from the market entirely.
Landlords are investing capital and their own labor in their properties. If the expected return on that investment is less than what they could get from government bonds and a 9-5 job, don't plan on a big expansion in housing stock.
Definitely agree that the current situation is broken, but I was only suggesting that "it wouldn't be fair to landlords" is a bit too simple a consideration to make things right.
Also, is rent control even a good idea? In the short term, it obviously protects a renter from the market running away from them. In the long term it seems to create artificial conditions which eventually blow up in everyone's face. Imagine a plan where the current renters had a viable alternative. Now drop all rent control laws and let the market correct itself. Lower income renters move out, higher income families move in. Rent goes up higher. Newly moved in renters realize that they are paying 10x as much as the rest of the country, leave. Rent goes down. The market has corrected itself and all is well. What am I missing?
But, that doesn't make it a fun process to go through for a renter. It sucks. Couldn't the owner just ask the person who is renting the unit to move out in a reasonable amount of time? That seems like the ethical thing to do.
Assuming the original $2145 is below market, the answer would be no, wouldn't it? Or, rather, they could ask, but the tenant would never willingly leave, as they are paying below market.
California has a provision for doing this. It's called the Ellis Act and San Francisco's regulations for Ellis Act evictions require payment of $5k-$15k + $3k per senior/disabled tenant. This remodel + rent increase seems a transparent attempt to circumvent that law. Whether legal or not would require a lawyer to weigh in.
Many of these are externalities - they're born by people who are not party to the transaction itself. For example, if one of your best employees is priced out of the city where your office is, then you need to find a replacement in a hurry. Replacing a key employee can sometimes cost as much as their yearly salary (this is why the recruiting industry exists, and why startups can get "acquihired" for a million or so per engineer). If the employee has a long tenure and lots of domain knowledge, they may actually be irreplaceable, and their loss could permanently damage the business.
The cynic in me wonders if the reason we have rent control isn't to protect tenants, it's because one powerful constituency (employers) is pitted against another (landlords) and the former is currently more powerful.
Agreed, the tenant likely has many bases for recovering any and all costs associated with a move.
When did the owner provide notice that they would attempt to evade rent-control? The tenant has a reasonable assumption that a rent-controlled lease will remain rent-controlled indefinitely.
I'm not familiar with the history of SF's rent-control laws, but in Copenhagen another motivation is stability, though. Beyond simply the hassle of moving, there was a decision some decades ago (probably about a century at this point) that it should be possible for people to choose to live somewhere long-term, organize their life around that assumption, customize the space within reason, etc., and not worry that they will be forced to move constantly because of fickle landlords and markets. Rent-control laws and anti-eviction laws (which aren't quite the same, since a landlord might want to evict for reasons unrelated to rental prices) aimed at that stability, so a tenant who has lived in a place for at least 3 years generally has something like "tenure" in the place, protected against both rent increases and eviction.
Now you might say: if you want that kind of stability, you should buy rather than rent. But at least here, the concept of individually owned condos didn't exist until recently. Real-estate was a system of land ownership, along with any improvements on the land. So you could own some land with a house on it, or some land with a 5-story apartment building on it, but you couldn't own only the left half of the 4th floor of a building. You could rent use of that portion of the building, but you couldn't own a floating piece of the building. (Condo ownership now exists, but it really is an odd kind of real estate, since it comes with no land, and your unit is so heavily structurally coupled to neighboring units, that normal decisions regarding real estate, like choosing to build or demolish structures, can't really be exercised.)
Obviously your average worker couldn't buy an entire apartment building, so almost all of the urban working class rented. This system of rental stability was then developed to provide housing stability for them. (There are alternatives also in use, which arguably work better. The two main ones are cooperatively-structured housing, where residents jointly own their own building through a system of shares; and association-owned housing, where an organization such as a union or philanthropic society owns housing and rents it to their members, or to the public, on generally favorable terms.)
In California, this exists for certain kinds of evictions. The Ellis Act is much-loathed anyway.
The basic problem in SF is that many decades of very, very strong rent control and building restrictions are colliding with an economic boom.
To get your 10x cheaper location, you aren't looking at RTP, but maybe Cambodia (though much of the south feels like a developing country to me...they still aren't that cheap).
Not everyone can easily pack up and just move. People are social beings, they have commitments, children and probably a place where they have some sort of personal connection.
So... there aren't a lot of other choices.
Let the owner give adequate notice to vacate (where I live it's 60 days notice without cause). But the rent-control limitation stays on that land parcel for some period of time after a new building is constructed on the site. Don't want to rent it? No problems.
> Newly moved in renters realize that they are paying 10x as much as the rest of the country, leave. Rent goes down
People have a limited ability to live a certain distance away from work - an hour, sure - two, ... okay but that's pushing it. Three? Well now half your waking day is spent commuting. Four? You're probably not driving because you need to sleep.
Property owners who're assholes will continue to push rental prices up (which is what we're seeing in OPs example) to "what the market will bear". Meaning people who're willing to live in some shithole on ramen and minimal lighting and heat for >half their wage can live within a reasonable distance of their workplace.
All so some asshole (which is probably a company), can make more money. Great for the rich.
In reality, in most transactions, both parties profit due to the fact that there is no fixed concept of "worth."
The apple that you bought from your grocer for 50 cents was valued at 40 cents by him and 60 cents by you.
Without it you'd never bother to buy anything because you would gain no value from the transaction.
You said that I value something at 60 cents and the seller values it at 40 cents, therefore I will buy it at 50 cents. Not only is your simple linear model absurdly reductionist, it's just ignorant. If a grocer is willing to sell at 40 cents, I would never pay a 50% markup when I wouldn't have to, your assertion that I would notwithstanding. I would just pay the 40 cents, and therefore the only objective measurement of how what I valued it at would come out at 40 cents. You stating that I actually value it at 60 cents is just you trying to fit a scenario to your fictional model.
Maybe the real life numbers are 45, 50 & 55. Maybe they're 34, 37 & 50. Maybe you really fucking love apples and it's 34, 37 & 5000 in which case go nuts, buy up the whole orchard, and keep all the doctors away for all time.
Maybe those numbers aren't even close because what exactly does an apple cost these days I don't even know exactly.
But the point holds. There is a price at which the transactions happens. Somewhere below that is the producer willingness to sell. The difference between those numbers is the producer surplus. Somewhere above the price is the consumer willingness to pay. The difference between that number and the price is the consumer surplus.
Go find any economics 101 textbook in the known world and you'll have a downward sloping demand curve, and an upward sloping supply curve. They intersect at a market price. Then you get some shaded in areas for the producer and consumer surplus.
If you don't know what one of these graphs looks like then you aren't qualified to participate in any discussion ever about what things should cost. Just shut up and go back to writing shitty software using the worst programming language in general use today.
Supply/demand curves are literally 4th grade curriculum where I come from. So yeah, mastered that shit 20+ years ago. Thanks for assuming though.
You've gone off the rails and are now confusing 'cost' with 'worth' or 'value'. We can only determine a 'value' or 'worth' when an actual transaction occurs. You can't just extrapolate out on a model curve and expect it to hold in the real world, no matter what your theory tells you.
Bottom line is, if a grocer is currently asking 40 cents for an apple, I will transact at that price no matter how much higher I 'value' that apple. I wouldn't pay 60 cents for an apple that a grocer is selling for 40 cents. I wouldn't pay 50 cents for it either.
BTW, ECMAScript is poised to take over the world. Better strap in.
Where did all this 'profit is evil' talk come from anyway? This is a site dedicated to startups and tech talk, and all of a sudden we have activist student slogans passing for comment?
So every lease becomes a lifetime deal. Hmm. Since rent keeps going up, this means prices are going to have to go up dramatically now so that I'm not completely hosed in ten to twenty years. After all, rent control increase caps are pretty much always below property tax increase caps.
Long-term, me-the-landlord is going to be put in a situation where rent doesn't even cover taxes. Nevermind repairs, maintenance, and insurance.
> You think it's ok to do something that will benefit your bank account but will simultaneously force someone to move out of their home?
Huh. I guess evictions for non-payment are out now. After all, it's their home, and it would be evil for me to evict someone from their home just for the sake of my bank account...
Between this and your previous point, you've made an excellent case that a moral and ethical person who owns property in SF would refuse to rent it under any circumstances. Well done.
> Enriching yourself at the expense of others is an asshole move, to me at least.
Are you aware that you just defined turning a profit as an asshole move? Perhaps you want to rethink your definition.
Nowhere did I say that, and I'll thank you to not put words in my mouth.
Actually, interestingly, you've now also defined profit as a zero-sum game across society. For some to be enriched, others must falter and be brought lower. If that's what profit is, then yes, I do believe profit is an asshole move. (But I don't think that's what profit is!)
It's entirely possible for landlords to raise rents in such a way that continues to cover their costs, continues to provide a tidy profit margin, but does not displace tenants. That's why I said it's possible to maintain your current profit (which you could consider a fixed dollar amount or a percentage, and my argument still holds) and did NOT say maintain your current rent.
OK. What nuance of your stated position did I mistake? In what way do you make a profit and enrich yourself without it coming at the expense of another? Bear in mind that trading something of yours for money from someone else is very literally a trade taking place at their expense - they are spending money.
> It's entirely possible for landlords to raise rents in such a way that continues to cover their costs, continues to provide a tidy profit margin, but does not displace tenants.
Not when prop 13 caps are generally higher than rent control caps. Over time, a property-owner will lose ground and their margin will shrink as their costs increase faster than their incomes.
In practice, this manifests as landlords deciding not to invest in the upkeep and maintenance so they can preserve their profit margins.
I don't believe we're talking about rent control here, or at least not exclusively. The original article is about someone's rent increasing by over 400%. I can't imagine how that could be justified by cost increases on the landlord's side.
I'm not arguing that the current system of rent control and property tax increase limits is working properly and is the best way to do things.
At any rate, you're re-framing the argument here to try to make me look bad. Your original question asked about landlords making 10x of their existing profit. If the landlord is already making a profit (which was the premise of your question), clearly they're not having issues making money in a rent-control+prop 13 environment. There are many multipliers between 0x and 10x, and I would argue that the responsible multiplier in order to maintain non-asshole status is well below 10... and even well below 1... but certainly greater than 0.
Just to be clear, though, to reiterate my initial point and make my position clear: if you're making a $500 profit off a $2000 monthly rental, and decide that you can and should make $5000 (a 10x increase in profit) by raising the rent to $7000, if that's at the expense of the renter's ability to pay... yes, it is my opinion that you're an asshole. That is the original question you asked, and that's the question I answered.
Yes, because the unit is no longer controlled and the landlord wants them out. In your eyes, that makes the landlord an asshole. That may be, but the reality on the ground is that there are few ways to do that... and they found one.
Does it even matter why? What if the landlord wants somewhere for their aging grandmother to live so they can care for her? Would that still make them an asshole? I suspect you'll say yes, because they're looking to push someone out of their home. Maybe the tenant has caused so many headaches that it's not worth putting up with them for the profit anymore. Who knows?
It wouldn't be an issue at all - magical words and warm fuzzies and similar crap aside - if all the various policies supported by not-assholes hadn't created a situation that encourages assholes. It's kind of like well-intentioned policies need to be carefully thought through because they can have consequences other than those intended.
> At any rate, you're re-framing the argument here to try to make me look bad.
Really? I thought I was just exploring the consequences of your position(s), but I'll bow to you on this one.
> There are many multipliers between 0x and 10x, and I would argue that the responsible multiplier in order to maintain non-asshole status is well below 10... and even well below 1... but certainly greater than 0.
OK. Then what is it? What's your happy medium, where you are getting money from someone, providing something in exchange, and making a profit without enriching yourself at their expense?
Of course it does! A big part of whether or not someone is an asshole is about intent.
What if the landlord wants somewhere for their aging grandmother to live so they can care for her? Would that still make them an asshole? I suspect you'll say yes, because they're looking to push someone out of their home.
The Ellis Act provides for landlords who want to take a property off the rental market, so this sort of thing actually is explicitly allowed by law. I think this is a tough thing, because yes, you are pushing someone out of a home, but I think it's a good balance of property ownership rights vs. the public good, as you're saying you want to do something completely different with the property, rather than just finding a way to do the exact same thing but line your pockets more.
Maybe the tenant has caused so many headaches that it's not worth putting up with them for the profit anymore.
The problem with this sort of reasoning is that it's subjective. A landlord could decide that a tenant is a "headache" because the plumbing in the building is terrible and the toilet keeps flooding the bathroom for no reason, and the tenant has decided to withhold a portion of rent until it's fixed. Should the landlord be allowed to evict the tenant because of that? I'd say no. But if the "headache" is that the tenant is constantly violating quiet-time rules and waking people up, then maybe repeated behavior of that sort should be grounds for eviction.
For this sort of thing I'd want the law to stay out of it. A signed lease is a contract between landlord and tenant; enumerate the "headaches" that will lead to eviction. Of course there's room for interpretation, but let the lawyers and courts deal with that.
OK. Then what is it? What's your happy medium, where you are getting money from someone, providing something in exchange, and making a profit without enriching yourself at their expense?
I don't think the exact number is all that important, but there's likely a range of acceptable values for different landlords, properties, and tenants. My position is that a 10x or even 1x increase is crazy and throws the public interest out the window.
When it comes to housing, people tend to buy/rent as much as they think they can afford (and sometimes more). You can argue that this is foolish (and I'd agree!), but that's the reality of the situation. Even doubling someone's rent would likely be catastrophic for their finances. The idea that landowners should be allowed to extract every bit of profit possible out of land -- a public, limited good -- no matter what the consequences, is absolutely reprehensible to me.
And this idea has led to strict rent control, which in turn has led to NIMBYism, which together have led to the clusterfuck that is San Francisco's housing market. Privileged groups act first and foremost to preserve their privilege, and rent control works by creating a privileged group. Hilarity ensues.
You said you wanted to gain in understanding. I think you should internalize that before going on. It's critical to the whole issue.
In short, you need to consider that attempting to put your ideals into policy may have resulted in creating the problems you fear.
That's an excellent point and is something I'll try to reflect on.
Tough. If your tenant isn't doing anything that you can evict them for, that's too bad for you as the landlord. When a landlord rents out his property as a home for another, that property becomes the lessee's castle. In all but a very few aspects, that property is now effectively the lessee's to use in any and all ways that comport with their leasing agreement.
> What if the landlord wants somewhere for their aging grandmother to live so they can care for her?
In California, there is a legal way to do this. It's one of the ways that the Ellis Act permits landlords to evict rent-controlled tenants.
The Ellis Act is a pretty fair and just law. It recognizes that landlords are human, and might have real reasons to get out of the property rental market. (Or that they might need to use their only rental unit to house themselves and their family.) It also recognizes that some all-too-human landlords do try to maximize their profit margins despite the very real damage that they would do to the lives of others.
And pretty much everywhere, you also have the option of increasing their rent to get them to want to move out. Like has happened here.
> The Ellis Act is a pretty fair and just law.
Really? Because if I walk outside and ask around, I'm pretty sure I'm going to be told that it's inherently evil and abusive and needs to be repealed, because a lease should be a lifetime contract for a locked-in low rate.
Do we just not care about that person?
But I'd rather be able to care about both people. I'd rather SF's planning process wasn't so idiotic that it's impossible to build at the rate we need to in order to house everyone who wants to live here, at whatever economic level. I'd rather that rent control hadn't helped to foster a culture of NIMBYism that causes all new projects to get shot down, drastically scaled down, or at best delayed several years.
The main priority in getting ourselves out of this housing crisis should be to build like crazy, and accept that neighborhoods will change, and the city will change. Once we've done that, and demand has stabilized, we can do things like eliminate or drastically scale back rent control, or at least make it more sane. But for now I believe it's necessary to avoid screwing people over.
What's been noted repeatedly across history is that rent control tends strongly to encourage a culture of NIMBYIsm. Rent control has contributed heavily to creating the current situation and its persistence increases the political resistance to building more housing.
Have you not noticed the routine grumbling about extending rent control to new housing and different kinds of housing? That scares the crap out of would-be builders and investers. Couple that with moralizing about how profit margins need to be razor-thin to be morally acceptable, and the scenarios you imagine are ones in which no developer is willing to work.
The result is pretty much what we have now - not enough building. If rent control were relaxed now, or even made hugely more difficult to extend, those fears would be reduced.
But right now? Rent control has created a witch's brew for political stasis. That's what you wanted, right? To enable privilege for people who are deserving by virtue of living in sufficiently old housing?
Not at all. But that's what we have now. It's easy to say "we shouldn't have done it this way", but simply removing tenant protections isn't going to solve the problem: it's just going to put all the power in the hands of landlords and builders... and of course they're going to abuse that power.
Existing rent control[1] isn't causing a lack of building. A city-enforced lack of building is causing a lack of building. Both the city planning committee and the NIMBY crowd just don't want things to change. On that, I completely agree with you.
Couple that with moralizing about how profit margins need to be razor-thin to be morally acceptable, and the scenarios you imagine are ones in which no developer is willing to work.
It's give and take. I'm not advocating for razor-thin profit margins, and I'm getting a little weary of you suggesting that my position is that the only alternative to the crazy rent increases are no rent increases at all. There has to be a happy medium somewhere, where landlords can increase their profit without driving people out.
[1] For the record, I am not in favor of expanding rent control, but I do believe we're at least temporarily stuck with the rent control we have now. Killing the existing rent control without first drastically increasing the housing supply (coupled with finding a way to allow landlords to raise rents without requiring that their tenants move away) would absolutely destroy lower-income renters.
Also, you should probably address harryh's excellent question about everyone else. Preferably with something other than an assertion of privilege.
As a landlord, deciding to raise rent on your units a modest amount, instead of a financially crippling amount, does not put you in a position to be "pushed out" than landlords who choose to be greedy.
Your costs have not increased such that you need to charge your tenant more than what they can afford. With prop 13, property tax increases are capped, the cost of public utilities that a landlord often takes on (like trash and water) don't increase that much year-over-year, and neither does the cost of contractors to maintain the property. Any increases are in-line with non-housing-related cost of living increases.
So what I don't understand about your statement is that you seem to assert that other landlords behaving like assholes somehow causes non-asshole landlords to be unable to maintain their properties and thus have to make the uncomfortable choice between either becoming assholes, or selling their properties to assholes and leaving. That doesn't seem to make sense unless somehow the cost of maintaining properties has started rising by more than single-digit percentage points per year, which doesn't make sense.
Let's assume that property maintenance somehow increases in cost by 5% per year (which I think is at the high end). The apartment in question here would be covered by a $73/mo rent increase. While that's not nothing to most renters, I think it could be considered a reasonable increase, and something that probably wouldn't break the bank. But the apartment in question isn't getting its rent raised by 5%, or even 10%. It's getting raised by 315%. There's no possible way anyone could ever believe that it costs anywhere remotely close to 315% more to maintain that property this year than it did last year.
Remember, we're not talking about profit here. We're just talking about the idea that you're pushing, that only charging a rent increase of 5% will put a landlord out of business, and that somehow the only way to stay in business is to "do what everyone else is doing" and raise rents by much higher numbers. If that's somehow true, I would love to see numbers that suggest that, because it sounds like an outrageous claim to me.
Also, you should probably address harryh's excellent question about everyone else. Preferably with something other than an assertion of privilege.
I find it interesting that you bring up the concept of privilege, as I believe landowners to be a particularly high-privilege group, especially when compared to many of the people who have been losing their homes over the past couple years.
Regardless, I agree that it's an excellent question, and I've already replied. If you feel my response is lacking, please reply to it and I'll try to clarify my position better. I'm really just trying to understand and provide my perspective, and possibly learn a bit in the process.
Bluntly, this is naive. More importantly, it does exactly nothing to actually help address the problems at hand. All it does is give you a way to shake your head and make clucking noises as you feel morally superior.
A few years ago, I would have listened to you and probably even agreed. These days, I'm more interested in solutions than I am in moralizing.
> I'm really just trying to understand and provide my perspective, and possibly learn a bit in the process.
Judging by your furious responses and insistence on labeling anyone making a sizable profit as an asshole, I'd say the only one of those goals you're meeting is the one of providing your perspective. Which is to say that landlords are assholes. Thanks. How about something helpful now?
So what do we do to address the problem at hand? It sounds like you'd advocate for a repeal of rent control, because landlords should be able to extract all the profit they can from their properties? That's not going to fix the housing supply issue; all it's going to do is turn SF into a rich-people-only city where service workers need to live elsewhere and get bused in every day. That's not a place I want to live, and would be a direct result of "market forces" -- but not really, because government regulation nullifies market forces in many cases. Rent control is only one part of it... prop 13 and the city's byzantine planning process are others, and there are certainly more.
So, looking for suggestions? Here's what we do:
1. Gut the city's construction planning process. Make it more objective and based on zoning laws and building codes, as well as continuing to include provisions for low-income housing. Raise (and in some areas eliminate) building-height restrictions. Also, residents in the area no longer get a veto on new construction projects. As long as a building proposal follows the rules, it gets a rubber stamp. No discussion.
2. Repeal prop 13 for rental properties, and only allow it to apply to an owner's primary residence (obviously this is more difficult since prop 13 is state and not city law). This recognizes that owning a home gives you an illiquid asset, and fluctuations in property taxes (especially in an area like SF with strongly rising property values) can cause people to need to move. Homeownership should at least still offer that kind of security.
3. Repeal rent control city-wide and replace it with a gov't subsidy tied to renters' income. This subsidy can be funded with extra tax revenue from #2, and can likely be phased out over several years as rents stabilize and drop. I expect that rents will initially rise, but will start to lower again after a year or two under the new rules, and even more after a few more years as #1 reduces (and hopefully eliminates) the deficit in the housing supply. The (temporary) subsidy protects existing tenants until there's enough housing to support people of any economic status.
4. This is more subjective, but: make it more attractive for landlords to buy out their tenants (or just keep them) than to use shady practices like finding reclassification loopholes and bullying by doing the bare minimum required by law to maintain their properties. I'm not sure of the exact mechanisms to do this, but incentives should be aligned so that landlords want to keep good, steady, reliable tenants, even if new tenants might net them some extra cash. Basically we want to create an environment where landlords are mostly happy to keep their current tenants, but while tenants are also not afraid of the prospect of needing to move.
Is that helpful enough?
This specific case the tenant raised prices to boot an renter under rent control so its really just a perversion of the rent control law (and another great example of how it doesnt work). When the answer to regulation is more regulation you start seeing an infinite loop. Laws developed -> entrapenuers figure a way around them -> new laws created -> new loopholes found -> repeat
I'll start by saying that I do believe that capitalism is pretty much the best we have right now, and has allowed for greater prosperity than other economic systems up to this point.
However, I do think that the public good needs to be taken into account and act as a balance for capitalism sometimes. Housing is a good example for this, as I don't believe the public good is served by allowing property owners to charge as much as they can. Call that socialist if you want; so be it... I do have some socialist leanings.
If we were to repeal rent control tomorrow, rents would shoot up across the board. Formerly rent-controlled apartments would see their rents go up like crazy. Formerly non-rent-controlled apartments might see rent increases slow, but they would almost certainly not drop, at least not for a year or two. Demand is still high (and is still getting higher), and the bay area increasingly houses people who really want to live in SF, and are able to afford higher rents. SF is limited in land area, so, without a massive increase in the housing supply, we're limited in population expansion. With the average & median rent increasing, many people at the low end will be displaced. SF will become a place where only high earners can live, which means most service workers will need to move out of the city and be bused in, or drive, or just fail to find jobs due to lack of transportation options.
That last bit is an example of why I think the public good needs to (through regulation) balance out capitalism sometimes. Lower-income people being unable to live in SF is IMO a bad thing. Increasing the number of cars/buses on the road is a bad thing; causing people to live farther away from their jobs is economically wasteful. Also note that many of the high-income people moving into SF in this scenario will be moving to SF while keeping their peninsula/south bay jobs, further increasing the commute problem.
Definitely agree that regulation and new laws do sometimes form a feedback loop as unintended consequences and loopholes are discovered. But I don't think that's an excuse not to try, because a lightly- or un-regulated market is not going to help, either.
So.. it doesn't make landlords assholes or evil, but its not like there wasnt a class issue. The only reason why this thread explodes is because the wealth difference is getting bigger and bigger.
Ummm... yeah, that's why I bought the place. That's why I took the risk on the investment. That's why I deal with all of the administration. That's why I keep it up to code. So... now I have to rent it for 25% market value? I'll find any way I can out of that situation, and no, it doesn't make me an asshole.
Listen, there's no reason why all the landlords across SF need to raise rents. They do it because they want more money, and know that demand is so high and that the high income earners in the area can afford it, and that there are enough of those types of people to keep the market going, at least for a while.
And, to be frank, I could keep affording an apartment in SF even if it got much worse than it is now. But I wouldn't want to live here. The thought of living in a place populated by only the rich is entirely unpalatable to me. The idea of lining the pockets of people who are displacing families and individuals who have been living in SF for years and decades... that's disgusting. After a while, if things don't get better, I'll give up and move somewhere else, and give my rental money to people more deserving. I'll be sad to leave, but will realize that the city I love has already left me.
That's why I bust my hump working a day job as well as building assets in my spare time; so that someday my investments pay my way with little effort on my end. I am indeed in it to make money; I have no interest in running self-subsidized housing. There's nothing morally wrong with charging market value. It's not that I have no empathy for these people, but circumstances change for a variety of reasons and we all have to adapt. Neighborhoods change over time; rent control won't stop that. My investment finally paid off and you want me to run a charity.
I'm sorry that doesn't jive with your political/world outlook, but that doesn't make me a bad person. There are pros and cons to any economic system, but apparently capitalism is not for you. That's fine, just drop the holier than thou attitude.
How do you define market value?
Because for some landlords it seems to be the highest value that someone will pay to live there.
Taken as a collective action - that results in rents continually going up beyond wages.
I don't know all the circumstances behind the OP's rent increase - but an ~8x increase seems pretty astounding. Were rental prices left untouched for decades? Was there some major increase in the cost of maintaining the property or land? Has the landlord made significant investments in the facilities or amenities?
> My investment finally paid off and you want me to run a charity.
So, can you see any room between asking landlords not to be assholes about squeezing tenants for every last cent, and running a charity?
That's what I'm asking for - I understand you've put in some risk, you've worked hard to earn money. But your tenants are working hard too.
In many cities there's a huge (and growing) demand for properties that are within some reasonable distance to places of employment.
Landlords collectively driving up prices beyond wages and other costs results in a huge flow of wealth from the working class to the wealthy. This means someone on what would elsewhere be a fantastic wage, is at best mediocre. Those on lower wages may find they're having to share rooms and eat ramen two hours away from work well into their adult lives just to survive.
I want to be rich someday, too. But I don't want to be rich knowing that I directly made the lives of other people harder in doing so. I don't think wealth and capitalism has to be a zero-sum game; I don't believe that for me to become richer, someone else must become poorer.
All this is precisely why we don't have absolute property ownership rights. We as a society have collectively agreed that land is a limited, public asset, and we're willing to allow people to own it, and receive some benefits from the state, but also have to follow some rules that serve the public's interest... like not kicking people to the curb out of greed. If you own land, then you should know this already: it's not "yours" in the absolute sense. It's an investment, to be sure, but your return on that investment can be limited by law in some cases. This is just one way in how that shakes out.
I'm sorry that doesn't jive with your political/world outlook, but that doesn't make me a bad person. There are pros and cons to any economic system, but apparently capitalism is not for you.
I'm not going to try to define "good person" or "bad person", but I will say that the idea of evicting someone from their home (and sometimes city) because their landlord sees dollar signs in their eyes is just reprehensible to me. That doesn't put me at odds with capitalism; I think that just makes me human.
Is it a zero-labor investment? Fuck no. But, due to the city's completely batshit insane zoning laws and the militant NIMBY contingent you (as a landlord) are guaranteed an income that increases far more quickly than the cost of maintaining it.
It is for this reason that most landlords in absurdly high-demand areas get no love or sympathy whatsoever.
The exact reason why we have legal limitations to property rights in these cases is to require that landowners sacrifice some of their disposable income for the benefit of others -- and the benefit of the public good. I think the law has the intent correct, there, even if the implementation of it leaves something to be desired.
You're missing the fact that rent won't go down -- at least not by much, because living in San Francisco will remain desirable for enough people who are willing to pay very high rents. Only the very wealthy, or those who bought in a long time ago, would be able to live in San Francisco.
Of course, this is increasingly the case anyway. And one could make the case that this is an acceptable outcome. I (like many) believe that it's unacceptable, but this is debatable.
Fix the supply and the rent takes care of itself.
I personally cannot fathom why one place can be son much more expensive than another. Sure, there is a price differential, but is SF really that much better than Brimingham, or Durham, or Albany?
Besides, if you want to be the master of your destiny and put a root down, buy. Renting is a tool for when you cannot afford to buy yet, or for when you are on the move. It's greatest strength is that it lets you up and move. I never understood why you would rent the same place for more than a few years. If you plan on staying, buy. If you cannot afford to buy, why are you staying in this place?
If you're a certain type of person, yes. Miles better.
You have rows and rows of blocks catering to specialty commerces, astounding, world-class food for ridiculously reasonable prices that can't be obtained anywhere else, a huge amount of access to employers and jobs that are also nonexistant outside of a few large cities. You don't need car ownership; you're trivially close to international airports, and the cultural scene is, once again, not available in smaller cities.
Having spent almost all my life in large cities, the suburbs are just terrible boring, even if your place to live is 5x bigger.
Obviously if you like the outdoors that situation may be very different, but not all suburbs and small cities have access to outdoors recreation, and not all big cities are that far away from excellent parks.
To give just one example, I tried signing up for improv comedy lessons --- and I found that my teachers were among the best in the world, and that they had a range of lessons available ranging from beginner to master. In Columbia, there were beginner lessons only, and then the instructor flaked on us -- so now there is nothing.
From my perspective (30s, single), paying SF rent was the best investment I ever met. In SC I do indeed own my home --- but I find myself saving half my salary, not because I am either unusually well off or frugal, but rather because there is nothing I terribly want to spend money on.
Sure, there is a housing marketplace, which can provide some correction. But houses are also homes. People are born in them. People die in them. They love them, they cherish them, they fight for them. There's a lot of truth in the saying, "Home is where the heart is."
What you're missing in that scenario is the large number of people who are displaced not just from their fungible, replaceable housing unit, but their home, their neighborhood, their family, and perhaps their city and their job.
Note also there are substantial class issues in the sentence, "Lower income renters move out, higher income families move in." The notion that poor people should take it on the chin because rich people covet their homes is not politically neutral. One could just as well say that it's the rich people, more able to cope, that should bear the burden of market fluctuations.
So I don't think, "is rent control even a good idea" is the right question. It's more like, "Are there more effective ways than rent control to reduce the harm?"
Edit: typo
The real answer tends to be building enough housing for everyone. That also tends to be politically unpalatable, because the people with all the emotional attachments want their neighborhoods frozen in amber. So low-income people get pushed out by increasing rent and high-income people move in.
Pick your poison, really.
Is a place "home" to you? You're probably willing to pay for it. Don't like a place much? You'll be less willing to spend.
This runs out after a point, though. Warm fuzzies are great, but I can't eat them, wear them, or sleep under them. I also can't trade warm fuzzies for any things I can do those with.
Taking away someone's home involves potentially massive negative externalities (emotional and otherwise). Therefore, if you want to maintain the political theater that says capitalism is designed to benefit everyone, you have to accept that it may be preferable, optimal in fact, to incur some deadweight loss. Rent control is one strategy that does just that: as long as a person lives in a place, the rent can't go up.
Is it naively optimal? Nope. But it is (or can be, if you get the implementation right) actually optimal. It is a guarantee that a house can be a home, if the tenant so chooses, and it could be used to balance the aforementioned negative externalities.
Does it? Who knows, maybe, I'm not familiar enough with San Francisco's housing laws. Just because they implemented it poorly doesn't mean the concept is unsound or irrational and it doesn't mean that anyone in favor of the concept is "silly" or deserves to be condescended.
I didn't call anyone silly. I said the idea that economics cease to apply because strong emotions and italic fonts are involved is silly.
I am misunderstanding your point?
Edit: I think I understand, my degrees in economics so I assumed you were using the term as its used in economics. Apparently you were not.
That said, I don't think a rental can ever be a home in the way you describe it. The fact that the property is owned by another party means the resident will always be limited in their sense of place during their tenancy. This example is egregious but as an example, there's nothing to force a landlord to rebuild a property with after a disaster for the tenant with the insurance money.
That's already how it's supposed to work.
So, after a few years, rent control effectively guarantees that no apartment is available at an affordable price. At least, you have to live in a controlled apartment for a few years for inflation to erode the value of money you send your landlord every month enough that you can feel like the apartment is affordable. And, of course, the people moving from one rent controlled apartment to another are affected by the market distortion as much as anyone else.
And places all over the world manage to provide affordable housing without rent control, so long as they allow their housing markets to work.
People should disclose if they have an interest in this thread, since last I remember, all landlords are pretty wealthy people without that problem. (they own their place + other places, so, yeah)
This logic taken to its conclusion brings us to some pretty disquieting places. Maybe SF should just build a lot more housing.
It costs a fuckload of money, sure, but efficient cities are pretty much unimaginable without them (for now at least).
I can't blame them (SF-dwellers) they had someting rare in the US for a little time. And general ignorance in, general ignorance out, that's local municipal politics, due to short-term incentives and big "costs" of initiating any kind of change or shift to a longer term horizon, nothing will change fast enough, so a lot of people will get bitten by these problems.
That's kind of the point. The city has several conflicting goals: make it an affordable place to live, don't allow new growth to change the character of the place, attract high paying jobs, don't widen the roads, attract new residents without kicking out old ones, etc.
Rent control is one of the tools they use to try to balance between these conflicting goals. The fundamental problem is that every serious economist says that rent control is a losing battle, and it never truly works anywhere it's been tried. There really aren't any rent control success stories from anywhere in the world. At some point, the city has to realize it can't achieve its conflicting goals, and it will need to prioritize: is it more important to have affordable housing or more important to limit the number of places to live in the city?
If we assume that the NIMBY crowd will continue to block new development and other interests will continue to block increases to the high limits for new construction across much of the city, then what would elimination of rent control do, other than ensure that every renter in the city was paying ~$2500+/month per bedroom?
I have this idea that the monthly payments on the mortgages required to purchase a condo are a pretty good approximation of where rents would be without rent control. With pretty much every condo sale price sitting at or north of $1 million, it doesn't look pretty.
Perhaps this is a stupid idea. Thoughts?
In the meantime, all rent control does is create an arms race between property owners and tenants, one the tenants will all gradually lose. It also eliminates incentives to renovate or even more productively use existing housing stock.
However, looking at the original post, I strongly suspect that the landlord isn't planning to rent out the apartment after the tenant is evicted. I think the letter looks a lot more like a landlord trying to get out of the business. Rent control, and other regulations, discourage people from offering places for rent. Sometimes that is intentional, for instance, as a policy to get rid of tenements. But often it's a surprise to the people writing the regulations. They honestly don't realize that each additional form they want people to fill out discourages people from being in business in any way.
Getting rid of rent control would get rid of some of that disincentive and put some places back on the market.
I recently moved from the Reno area to the New York area (well, New Jersey; but I work in New York). I spent a lot of time in the Bay Area over the last few years. I really would like to see it stop pursuing economically backwards policies, but I think it's more likely that economically illiterate politicians will finally manage to kill what makes Silicon Valley unique, and people will move to other places.
When people pay $500 for something that could be rented out for $5000, they are more likely to keep it for weekend trips after they moved to LA, or at least not take any room mates.
Also, I don't know that there is any official numbers, but I've heard estimated that 10% of the SF rental stock is not rented out, because landlords don't find it worth the pain.
New York City and London are cheaper than San Fransisco. And those two cities have _orders of magnitude_ more peoplel than San. Fran.
So... yeah. The rent is too damn high. Build more houses.
If we want to take housing seriously, let's start with a law that says "If the building is abandoned for 5 years, you lose it, it becomes housing."
San Francisco Marina which can't build out because of the Pacific. https://www.flickr.com/photos/telstar/15230469/
Tokyo Minato-ku (the "Harbor District") which can't build out because of the Pacific. http://www.realestate-tokyo.com/media/249559/Windows-Live-Wr...
(This is mildly unfair to SF, which actually has a higher population density than Minato-ku, principally because Minato-ku is not a residential neighborhood. But if SF was serious about affordable housing, it would look like Minato-ku rather than "miles of two-story buildings.")
And who lives in the good parts of a city should not be determined solely by the depth of their pockets.
If we were to give houses to the people who worked hardest, every single immigrant construction worker I have met would get the houses, and comfortable office-dwellers like me would be out of luck.
You can't legislate life into some gentle state. It is what it is. You can, however, smooth out the bumps.
Unfortunately, rent control does the exact opposite. It creates stupidity like this. Where a landlord has to use a lawyer to increase the rent 4X, which is insane on a number of levels. That is one hell of a bump in the road.
Get rid of rent control and prices will be stable. Yes, they will be higher for some, lower for others, but they'll be stable.
I don't understand the point: none of those things are being torn away from people due to market forces.
Happened all the time a few years ago, and its the same situation. The interest rates rose, people couldn't afford their mortgage anymore and were forced out.
I'd bet real money that almost every applicant for one of these mortgages was reassured up, down, left, and right by the broker (whose interests were most definitely not aligned with the applicant's) that everything will be fine. "When the variable rate kicks in, you can just refinance. Rates will be lower than ever!"
Unfortunately, when one economic domino falls and sets of a chain reaction leading to a market crash, a lot of hard working and responsible people get caught up in and swept away by the ensuing tsunami.
Even if people are rational about this, the 1980s saw an increase of interest rates above and beyond 14%. If 1980s style stagflation ever hit today, I can assure you that even the "rational" home-buyers who fully understood the clauses would be forced out of their homes.
In any case, being forced out of your home, even if it is a situation you set yourself up for, is a traumatizing situation. I think we all can agree to that.
You can end up owing money without the ability to repay fairly easily due to to market forces.
If you have a judgement against you, in other words a court has determined that you owe somebody money, they can seize your property and auction it off to settle the debt. Cars, laptops, anything worth $$$ is a target.
Life can suck. You can't legislate the "suck" away. You can, however, smooth out the bumps. In the scenario above, bankruptcy is a legal construct to smooth out the bumps.
Unlike bankruptcy, rent control makes the bumps worse. That really sucks.
So you don't believe laws against crime?
You can use the same argument for any good or service.
None of the things you mentioned have the universality of a home, which strikes almost everyone, regardless of demographic. Those who aren't adversely affected by not having a home are notable for being extreme outliers. As wpietri said, housing is not a normal good.
Rent control or not, the law of supply and demand still applies; it just expresses itself in more dysfunctional and unproductive ways.
That's the problem with rent control. Reasonable people can disagree about whether the public policy goal of getting people affordable housing trumps the rights of property owners. But they can't disagree about how many digits are in pi, or about whether rent control works. It doesn't work. It harms everyone in the market except for a lucky subset of tenants.
Without rent control, I'm pretty sure that a LOT more people would be pushed out of San Francisco. It seems to me that places like San Francisco, New York, and a few other places are not typical of what other areas experience. I know it's fashionable amongst the libertarian set to blame problems on regulation, but there is much more going on here than simple rent control.
San Francisco's problem seems to be that they can't possibly build enough housing to meet market demands without revising zoning restrictions in ways that would make current home owners angry.
Still, I submit that fears of extending rent control to new construction add to the problems caused by zoning.
http://techcrunch.com/2014/04/14/sf-housing/
Rent control isn't the answer, though. More housing is.
Are you saying you think fewer people would live in SF without rent control?
I would be totally cool with a city deciding to make the first tradeoff as a public policy goal, if the construction stagnation (across all rates) could be mitigated. Have there been any successful experiments in that area (I'm only familiar with the craziness of NYC's implementation)?
As an aside, pi is a fixed constant, whereas 'rent control' is an incredibly complex concept that relies on many other complex concepts - for example, what does 'rent control' mean in a communist country? For a nomadic tribe? It relies on certain concepts around property ownership and capitalism. Which is fine to say it doesn't work as it is in SF, I'm just pointing out that there's a lot more flex in the concept than in the constant 'pi' :)
Owners risk their capital and defer their own consumption. The renters preserve their flexibility and get more house than they could have afforded to buy and avoid losing their shirts in housing busts.
Sounds like a win-win to me.
Ah, but if you can use the power of the state to give you the economy of renting with the rights of owning, without those annoying responsibilities, then you've really got something!
You know the single best way to reduce violent crime? It is to increase wealth, people don't risk bodily harm if they have enough money to eat and sleep under a roof.
Type in "econometrics of rent control" into your search engine.
It's a fairly well studied question with a fairly consistent conclusion.
We don't need to argue about this. Rent control has been removed from many communities, and the rent becomes much more volatile without the stabilization control.
There's lots of actual case study literature on this.
These things aren't mere untested hypothesis where our personal politics come in to play - they are well studied.
I really think you should look into the research. There's a lot of tested hypothesis and survey analysis in them.
We tend to not treat economics like a science - as if our general education is enough to have an informed opinion. We certainly don't do that with psychology, chemistry, biology, or even softer sciences like sociology and anthropology.
But yet, when it comes to economics, we all have a pretty solid opinion and think we are all fairly well informed.
I encourage you to look deeper into the topic. Attend proseminars at your local university. Watch some graduate level lectures online. And, this is just an encouragement, revisit statistics and calculus --- you'll find out why if you look into 21st century econ.
As far as your other claims ... those are harder to measure really.
Rent amounts is a pretty easy number but things like lower quality (how much lower, what kind, where, is it predominant) and higher competition (amongst whom, using what process, which strategies aren't in play any more) ... well those are much harder questions. The microeconomic topic here is called Welfare economics: http://en.wikipedia.org/wiki/Welfare_economics and in economic theory is the social welfare function: http://en.wikipedia.org/wiki/Social_welfare_function
I'm not saying those broad ideas don't hold ... but defining things like quality and competition can be a much trickier business than price.
And unfortunately, if you are going to approach it as a science, you can't really go off anything other than definition, observation, and measurement.
No. This is the philosophy that put our economy in the shitter in the first place. More government regulations, please.
Knock it down and don't jack the rent ~300%?
Everyone blames the owners or some lawyer when a protected tenant becomes unprotected. The blame lies in the law that built up an artificial wall around the tenant and protected them from the market.
Rent control creates shortages, sub-standard properties and illegal tenancies. It should be abolished anywhere it exists.
Rent control is one of the small number of policies that economists on the left and right are essentially unanimous (93% in a survey of US economists; 95% in a survey of Canadian ones) in agreeing are always harmful, because they reduce both the quality and quantity of housing available.
It's not even some vague hypothetical either: In the linked story, the rent control laws have resulted in the conversion of a multi-tenant building into a single-family dwelling, which is a reduction in the number of housing units in the city. A reduction in the quantity supplied will, of course, lead to an increase in the equalibrium price. And the high equilibrium price is both why Follingstad's eviction is so painful, and why they were (effectively) evicted in the first place.
It's a textbook example of Why Rent Control Hurts Everyone, in one compact little story.
Remember, according to the link, the landlord has gone through some efforts to make this hard to challenge, including legally changing the status of the building to single-family. That's a very difficult process[1], but the reverse is even harder. (If converting single family dwellings into multi-tenant units was easy, San Francisco wouldn't have much of a housing crisis.)
Given the huge legal obstacles, plus the fact they already removed the bathroom and kitchen (not cheap), plus given the already strong trend of multi-unit dwellings being converted into single-unit dwellings to fuel demand from the rich, it seems unlikely that this building is going to be multi-tenant any time in the foreseeable future.
(Unless the landlord screwed up and didn't get the paperwork done. In which case they won't be able to raise the rent. But that doesn't seem to be the case.)
[1]: http://www.quora.com/How-hard-is-it-to-get-a-duplex-or-set-o...
From a human right perspective, I am not sure I agree that a person have the right to live at the same place forever as long as he maintain the same income just because he used to live there. Maybe a couple of years but it shouldn't be forever.
Let me put it this way: the rents dropped sharply when rent regulation finally ended in my country. After 15 years of doomsayer horror stories from the left how unregulated rents would make the poor homeless, it turned out, within a year, that the exact opposite was happening.
That's not what you meant? Oh. That's too bad.
1. Apparently this family has tried this once before and failed, but learned from their mistakes.
2. The lawyer is a real estate broker.
3. This bypasses having to pay for the tenant to be evicted through Ellis.
4. This bypasses other provisions in Ellis and preserves rentability: If they used Ellis, they could not evict the tenant and then rent the place out for 5 years without offering the tenant the option of renting the place at the previous price (other companies bypass this through voluntary evictions by buying out tenants, for, say $30k)
At the end of the day: This bypasses the intent of the law but follows the letter of the law. The intent is to sell the house. They pay less by not buying out the tenant. They preserve the rentability. Reclassifying while a tenant is protected under rent control should be prohibited.
And that those merely paying rent don't have total control over something they haven't purchased.
Its an outrage.
I don't live there, so maybe it's not a fair comment, but I would not want to live there for the same reason I don't like flushing money down the toilet.
Or as Yogi Berra allegedly once said: "Nobody goes there anymore. It's too crowded."
- rent is very high, and the higher salary won't compensate all that much (salaries didn't move up as fast as the rent)
- its crowded, expect queues everywhere, and traffic. Lots of traffic.
Brief overview from Krugman from 2000 but plenty more research out there on the topic. http://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-...
The problem is San Francisco and many other cities haven't encouraged developers enough to build housing to make ownership an affordable option.
Rent control stifles new construction, and allows you to live in relative luxury at the expense of others.
Let me ask you, if rent control is the solution to high rent, why not introduce legislation to cut all current rent rates in half?
Rent control in San Francisco only applies to buildings built before June 1979. Landlords of buildings built after that are free to increase rent as they wish. If anything, it should promote more construction.
If so, is it a larger factor than the insane city-wide height restrictions and strong anti-development lobby?
(If you'd like to point a finger at the folks who obstruct demolition of rent-controlled units to construct new units, I point you to this: https://news.ycombinator.com/item?id=9210429 ) :)
Height restrictions are another factor, as is the requirements around affordable housing.
San Francisco's Sangiacomo ("AKA 'The Father of Rent Control'") and his tenants came up with a really great solution for this:
1) Buy a rent-controlled building.
1a) If there's no room for the first phase of your building plan, destroy some of it it and displace the affected tenants.
2) Build the first phase of construction as quickly as humanly possible.
3) Move the displaced tenants back in at the rate that they were paying when they were displaced. These tenants also retain their rent control privileges for as long as they stay in that unit.
4) Build the remainder of the building and rent it out at "market rate".
This works, and works well, as Trinity Place (1190 Mission) has shown us.
You should take advantage of your situation and save the money you are spared by law, so the day that the law stops protecting you, you have a buffer.
Taxes are 11,043 with a value of 904,085. $2145 looks like an EXTREMELY low rent for a house of this size in San Francisco. (half of the rent is just property taxes.) The landlord was likely losing money keeping it rented at $2145 even if he owned it free and clear.
> a value of $904,085
I understand the nature of supply and demand and the appeal of living in an area full of like minded people, but as someone in a flyover state, this absolutely blows my mind.
I understand San Francisco is the home of technology, but get your stuff sorted out, seriously. Is it worth being in a city that absolutely hates you? A city that would do anything to make your lives miserable? I wonder what would happen if Apple and Google packed up and moved to, I dunno, Milwaukee?
People pay the premium because it really is that good. If a big tech company decided to move to Milwaukee, every other tech company would just soak up all the people lost.
Besides the benefits you might get from SF, let's be realistic: the city doesn't want you. It doesn't want any of you. The only benefit you're getting is the people who moved there just like you, and the city doesn't want them, either. If they wanted you, they would let you build houses, or let you run buses without getting rocks thrown at you. They would welcome you and do what it takes to make your stay pleasant.
I don't live in SF, but I frequent HN so I hear all the stories. If half of what I hear here is true, you're a bunch of people living in a city where you have massively overstayed your welcome. And it seems like no one has realized it yet.
Please, tell me I'm wrong. Take a look at your rent, at your city policies, your Senator, and at the people around you (not the tech workers, but the other residents of SF), take a look at them and tell me I'm wrong. I don't want to be right, but that's the only impression I can get from stories like this.
I would gladly live in Silicon Valley if it weren't in San Fransisco. I don't think I would have the stomach to live in a city where the local people and politicians were that hostile to me.
And I still haven't heard anyone say that the local population doesn't totally hate everyone who works in tech. All I'm hearing is "yeah they hate us but look at how good it is for me". That's pretty awful.
I've been here 25+ years, and it's only entitled millenials who 'hate everyone in tech'.
I've been in SF since I was 9 years old, so feel that I can comment as a near native.
I sometimes ask myself what planet they are from...
As for San Francisco not wanting people. It is over blown in my opinion. San Francisco did not want the gays, hippies, beats, Hispanics (even the one's who were originally living here), Chinese, Japanese or any other group who moved in to the city. Never stopped anyone and everyone gets over it eventually...
At some point the bubble will burst. Companies will be forced to relocate away. But sadly there is enough crazy in the market to keep it going on for a while yet.
What is affordable? I'm not in SF (or the U.S.), but as I understand salaries of $150k+ in tech are common. Mortgage repayments on a $1mm property work out to be ~$5,000 a month for a 35 year mortgage, which you can easily pay if you are earning that much.
(Also most of the units being built require HOA membership so tack on another 1k to your monthly outgoing)
Examples:
http://www.trulia.com/property/3191871255-1097-Howard-St-302...
http://www.trulia.com/property/3006745092-2801-Jackson-St-30...
http://www.trulia.com/property/3191823695-425-1st-St-5005-Sa...
http://www.trulia.com/property/3190475980-2145-Powell-St-215...
Also holy shit that place looks like a dump.
Grantor: SHUKRY & VERA LAMA RVC LVG TR Grantee: LAMA NADIA V
Prop 13 was never about making sure Grandma didn't get taxed out of her home, it was about making sure corporations didn't pay property tax.
This conveniently omits the fact that there used to be two units in that house, so the actual rent would certainly have been closer to double that amount.
Nelson: Hey, look how much Skinner makes. 25,000 dollars a year!
Bart: Lets see, he's 40 years old, times 25 grand.. woah! He's a millionaire!Talk about market inefficiencies.
It's totally legal, and done all the time: it's why people lease houses rather than go month to month.
It's not a reflection of the market in SF. This happens everywhere a landlord who isn't getting on with their month-to-month tenants and want them out, for whatever reason. It happened to me in 2005. It's not a necessarily a reflection of anything outside of the personal situation of the poster, and their relationship with their landlord.
If this had happened anywhere but SF, there wouldn't be the flurry of hysterical outrage that's exploding on Twitter and Facebook: there would be crickets.
I don't think it's anything like 'isn't getting on', the landlord wants to convert the building to some other use and simply doesn't care about the tenants, which isn't the same as finding them disagreeable or whatever (one imagines they might want to do something like sell it as a private home).
It's being used as a rallying cry by people who were perfectly content with capitalism until it started being applied to them.
Rent is going way up because there aren't enough homes in sf for the amount of people who want to live there. The city is to blame for this problem. Why is sf such a flat city? There should be a lot more tall condo buildings but as I've read it seems the city blocks any structure over 4 stories.
Raising rent will cause lots of low income people in sf to have to move. That's not a good thing--but what is the answer here? How do other large cities deal with this problem?
Not under current SF rent control laws. The issue here is how the landlord is skirting around the law by making space unusable.
The city is basically making land owners give section 8 rent welfare to tenants, in a bid to keep the city affordable to long time residents during a housing shortage. You'd hope that the city would open up building more high rise housing (high end) to open up more space for the lower end of the community.
What additional value has the owner provided the tenant to justify such a large increase?
If the owner wants the tenant out, the owner should say so, not hide behind some ridiculous attorney letter and extortionist rent increase.
In this case, the owner has evaded rent-control to extrajudicially evict the tenant through extortionist pricing.
2) The reason for the law is that people should not be thrown out of their homes on the whims of a second or third party.
Are 3-, 6- and 12-month leases common? All the residential arrangements I know of here in Australia would be 6- or 12-monthly. Gives a tenant some certainty, but also enables a property owner to move back in, sell, redevelop, etc.
All lengths are common, though 12-month is perhaps the most common. In rent-controlled jurisdictions, when a lease expires it converts to a month-to-month tenancy where the owner may only evict for good cause (failure to pay rent, gross negligence, illegal activities, etc), but a tenant must provide 30 days notice of intent to abandon.
Often an owner is allowed to require a lease extension be signed, only if the extended lease is materially identical to the current lease except in expiration date (including length of the lease).
I'm not very familiar with rent control practices, but in 99.9% of the US, this thing where the tenant is allowed to indefinitely block the usage of your own home is not done.
I didn't claim a moral obligation. It is the market's prerogative to demand justification for a seller's price.
Not everything is always stated in black and white.
Bollocks. It's the market's perogative to meet that price or not meet that price.
Edit: source: http://www.quora.com/What-percentage-of-San-Francisco-apartm...
Owners can apparently force renters to bleed ever more money, but renters can't force a squatting owner to sell, they just have to accept it or, as this letter exemplifies, GTFO.
If you offer to pay at least as much for the building as the landlord would expect to make from renting it out then any rational landlord will sell you the building.
> Owners can apparently force renters to bleed ever more money
If they raise the rent significantly above what typical apartments go for in the area then the tenant will move out and they'll have to spend money to find a new tenant and go without rent in the meantime.
Rental housing is one of the most efficient markets in existence. Landlords have nothing to gain by gouging tenants who will only move across the street to keep paying what they are now, which is why that rarely if ever happens. But when the local market price of housing changes, adjusting rents to meet the market is completely reasonable and natural.
That's a large assumption.
>If you offer to pay at least as much for the building as the landlord would expect to make from renting it out
Over what time period?
>Landlords have nothing to gain by gouging tenants who will only move across the street to keep paying what they are now,
Where in SF is that possible? Do you know of any documented cases?
>is completely reasonable and natural.
Exactly the justification used for so many horrors.
IME (London) what typically happens is you get a bit gouged for rent when you first move in to a place, then, as the landlord gains trust in you as a tenant, the rent is "sticky" - it doesn't go up very quickly. You can use the risk of a new tenant as a negotiation lever to keep rent down.
Which rational tenant would pay the same amount he'd pay as rent to buy the property, when that incurs additional costs (property tax, for example)?
Case in point. In 1998 (At about the height of the Dot Com bubble) a one-bedroom apartment in my building rented out for ~$500/month. In 2010 (While the real-estate market was still recovering from its enormous collapse) that same apartment rented out for ~$1500/month.
That's a 3X increase in "market price" of a good from the height of a superheated bubble to shortly after the collapse of another one.
SF's rental market is seriously fucked by undersupply.
That's what an efficient market is supposed to do. The high price then encourages the construction of more housing.
There isn't enough supply because of rent control and other regulations that discourage or outright prohibit the construction of new or higher density housing. The market is doing exactly what an efficient market is supposed to do under those conditions: Increase the price until demand at that price no longer exceeds the artificially constrained supply.
Restrictions on new construction (both legal and social) are the source of the undersupply in the city.
Do you live in SF? If you did, you would know that in the few new residential buildings that have been constructed, rents are somewhere between $3000 and $4000 per bedroom. What developer could possibly refuse that income? Do you think that rent control is driving rents in newly construction apartments that high? Likewise, do you think that -with rental rates like that- developers are failing to build new stock because of existing rent controlled stock in SF?
As an aside, if you didn't know how rent control works in SF, here's a quick intro. Buildings built before 1979 and rented as residential housing are covered by rent control. No other buildings -unless (as is happening in Trinity Place on Market Street) the landlord enters into a special agreement with his tenants- are covered by rent control. This means that new construction is NOT covered by rent control.
Because new construction is not covered by the rent control ordinances, in a market with extreme undersupply, like SF's, there is no economic reason for a developer not to build new housing stock.
Have you been enlightened? :)
It's a contributing factor.
> Because new construction is not covered by the rent control ordinances, in a market with extreme undersupply, like SF's, there is no economic reason for a developer not to build new housing stock.
That isn't entirely true. A developer has to build new housing stock somewhere. In a developed area that commonly means demolishing old low density housing to build new higher density housing. But if the low density housing has tenants that won't leave because they're paying below market rents, developers can't do that.
Rent control also contributes to high rents in another way: No matter how constrained supply becomes, tenants in rent controlled apartments don't feel any pressure to free up supply by moving somewhere else. Those units are effectively off the market, which requires new tenants to pay that much more to get one of the remaining units.
Rent control is usually pushed by ruthless politicians to buy votes and end up being catastrophic for the cities victim of such policies.
The irony is, they would probably profit even more, if they allowed the city to grow naturally. New York City had a population of 800k (like San Francisco has now) some time in the 1850's. Do you think a piece of land in NYC would be more valuable now, if they had decided to stop the city's population to 800k back then?
Thing, is, even folks in rent controlled units have major life events. You get tired of the person you're living with, get sick of the changing neighborhood, have a baby, or a new Significant Other. In a city that has such an extreme lack of housing, changing your living arrangement to reflect your changing life is somewhere between extremely difficult and impossible.
Folks who are preventing new development aren't folks that are motivated by a desire to protect their rent controlled apartments. They're folks who are motivated by a desire to see greatly increased year-over-year rents on their non-rent-controlled units, greatly increased year-over-year leverage on their existing property, and/or the continued preservation of the look and feel of the neighborhood (read: those with a strong resistance to change.).
http://www.paloaltoonline.com/news/2014/07/10/growth-debate-...
Source: http://m.sfexaminer.com/sanfrancisco/leveling-sf-housing-fie...
We just have acres of open land here... derp.
To those who say it's unfair to the landlord to force rent control on them I say two things:
1. Yes it is. There are cases when legally allowed rents are below the taxes the landlord needs to pay. If the government really thinks affordable housing is a public good, let the government build or buy apartment buildings and offer it rather than having forced income distribution essentially; and
2. To the landlords: it's not so funny when the shoe's on the other foot is it? I'm talking of course about Prop 13. This allows long term owners to pay basically nothing in property taxes with those taxes only resetting when the property is sold.
So the state of California screwed up in creating rent control and Prop 13. Great. Repeal them both.
The problem with massive rent control is it creates a dysfunctional market and a huge disincentive to rent out or build new housing supply [1].
New York City ended issuing new rent control leases in 1973. There are very few left. NYC has a functional housing market (in comparison). There are affordable places to live 30 minutes from Manhattan thanks to pretty good infrastructure.
SF specifically and South Bay in general are basically an object lesson in NIMBYism gone insane.
Honestly, the sooner the startup figures out that the only thing the Valley has got going for it is the weather because everything else sucks, the better.
[1]: http://www.sfgate.com/opinion/openforum/article/San-Francisc...
This does not happen in California. Prop 13 ensures it. Property taxes pretty much never increase. One of the ways that they do is when a property changes hands.
Either this landlord purchased the property with the intent of kicking out the tenants whose rent he knew would be less than the re-assessed property tax, or he's being a dickbag and is throwing out a tenant because he feels that he deserves more money from his long-term investment.
Yes. But the solution isn't more rent controls. That just increases the gap in price between market-rate apartments and rent-controlled apartments. This makes it even harder to move, and it further increases the incentives for landlords not to maintain their rent-controlled apartments or pull stunts like this.
The solution is to add supply to meet demand. We should be furious at the forces that have kept supply in SF so absurdly low.
Supply is the answer. You cannot increase the number of people living in a city without increasing housing stock.
Build, build, build. It is the only answer.
> The rent control creates the mold and stuck windows. That's the point.
Bullshit.
1) Friends down the block from me live in a tall "market rate" tower that is in substantially poorer condition than the rent-controlled building that I call home.
2) In SF, stuck windows and mold are must-repair items for landlords, regardless of rent control status. If you as a tenant can't get satisfaction from your landlord, do the repair yourself and present him with a bill. The law guarantees that you'll be reimbursed in circumstances like these.
<thumbsup city="Austin"/>
<thumbsup city="Seattle"/>
EDIT: fwiw, I'm an SF native, and this same trick was done to me in 2005.
See also pg's "Cities and Ambition" http://paulgraham.com/cities.html. People move to SV to do startups because everyone else moves to SV to do startups. The field of economic geography studies this phenomenon.
My general understanding of the law in The Netherlands based on having rented once during university is that it heavily favours tenants. The bottomline is that no one is allowed to end up on the street, with the main exception being if the landlord is in dire financial straits. Apart from that, the law sides with the tenant. This even goes to the extent that fixed-term contracts are more or less useless, because if a tenant doesn't want to leave, they don't have to.
Is it considered reasonable in SF that the tenant will be able to find alternative accommodation within 60 days?
[1] http://www.rijksoverheid.nl/onderwerpen/huurwoning/huurverho... (Laws on rental increase in The Netherlands in Dutch)
[2] https://www.jurofoon.nl/huren/huurovereenkomst-voor-bepaalde... (Fixed-term contract rules for housing in Dutch)
If the aim is to create affordable housing for low income earners, rent control is not the solution.
In order to cover $3000/month rent, average power, internet access, and $400/week spending cash, you need to gross $100k/year.
If you pull in less than that, then you run out of money and get evicted. Notice that no provision has been made for savings.
I know of a great many programmers working for successful Bay Area companies who would just barely have enough money to pay market rents on their apartment.
Doesn't make sense if we're trying to achieve equality (I still don't know what it's really trying to achieve - some kind of nativism)
There is an argument that removing rent control would actually reduce the price of rent through San Francisco but it would take a few years to stabilize.
It's not bearable by the market. $2145 is low but market rate is nowhere near $8900 for a place like this; not even half that. This is clearly an attempt to force the tenant out with an inflated rate.
I'm not going to comment on either sides rights here but this rate is not simply "what the market will bear".
This person thinks the rent increase wouldn't actually be borne by the market. Maybe the landlord has no actual expectation of making that much, and setting the price so high is just to get rid of this renter. Whether that's an OK tactic is debatable I guess, but legal trickery around zoning laws and lying about prices sound like signs of a broken system too.
Why so many globally reaching, internet based, in every home in the world companies think that they absolutely must be positioned in the mecca of startupdom is why I just can't take my own career seriously for too long. There's no reason we all need to be on that tiny peninsula! If you need to be there for "reach to investors", "proximity to the startup culture", guess what, your product probably sucks. If it were any good, you could do it from anywhere, without having to sit on the great lords of tech investment's front door begging every day.
You want to disrupt something? Why not start with disrupting the idea that being part of "start-up culture" is required to be successful.
Why people join twitter or facebook or any other virtual social network? I think both have similar answers.
In Australia, the government owns houses and rents them out to people cheaply. The owners of the house are compensated when the house is bought.
It seems insane that owners of a property should be expected to keep rent artificially low to help poor people.
This is the government's job.
But then, in America, you guys don't trust the government to do anything like house, educate and heal people.
Go figure.
Or fight wars or manage finances. Because there is strong precedence that the government is pretty bad at these things.
Removing dwelling units in SF (as they did to the downstairs neighbor's flat) almost always requires a public hearing. See http://www.sf-planning.org/index.aspx?page=2816
(via https://twitter.com/markasaurus/status/577252542419062784 )
Is this a typo? I have never heard of a monthly security deposit.
Can someone explain what this means? I've never had to pay a security deposit per month. That must be a copy + paste error?
I'm glad my rent only went up 20% since I'm in Sunnyvale and not the city.
The other option landlords always have is to withdraw the unit from the market. You can Ellis Act anyone you want; the price you pay is $18k per person or so plus waiting 366 days, and a stained title. You can still renovate then TIC the building though, and you'll find plenty of takers.
ps -- having been in a legal fight with an sf landlord, the fact of the matter is despite all the pretty bullshit sf claims, there are vanishingly few actual tenant protections that work against a malicious landlord. At best, you can leave and sue after the fact, but be prepared to spend years on a fight.
@harry: an ellis act eviction, or other no-fault evictions, permanently prevents the building from utilizing the 2-unit lottery bypass to condo the building, so it will have to remain a TIC. TICs have a variety of negative implications, including complicating mortgages. The lottery, which is still necessary for larger units, is suspended until 2024.
see eg http://www.andysirkin.com/HTMLArticle.cfm?Article=158
and
Still, this term encompasses everyone from bernal heights hippies who want to keep density at 18,311/sq mi to atherton billionaires who want to keep it at 1,400. It includes noe valley "activists" who don't want to tear down 100 year old houses and mountain view city council members who voted to allow massive new corporate construction bringing tens (hundreds?) of thousands of new workers to their region but specifically banned new residential construction near those places of business.
All in all, yeah, I hear you on the noe/bernal/mission activists. They are a bit nimbytastic, no doubt. But to me, the actions of the anti-housing forces in some peninsula towns are such an order of magnitude worse (and are causing many of the problems you see in SF) that simply applying the NIMBY label to both without further analysis is an exercise in false equivalence.
It's not for lack of trying. Louisiana, for example, will pay 35% of a programmers salary indefinitely[1]; other states and cities have similar programs. That's serious competition. But the talent/money vortex of the bay area is not just winning, it's actually getting stronger.
The other areas with real companies, like Austin, Seattle, and New York, still feel like also-rans compared to SF and the valley. If you want to raise money, it's still the place to go.
It's just incredible to think about. Is there any other field where there's just one geographical place that's just so far ahead of anywhere else? Especially fields like biotech, where geography isn't directly related to the business?
1. Contact a tenants-rights attorney.
2. Familiarize yourself with housing law and mediation.
In San Francisco, the latter is covered under the San Francisco Rent board: http://sfrb.org/
The former can be located via the San Francisco Tenants' Union: http://www.sftu.org/
There are admittedly some comments that are in the margins, but the number of false positives/negatives is probably pretty close to zero.
In particular, those who rant about the evils of uncontrolled rental markets are 99% likely to not own real estate in San Francisco.
Therefore, those commentors aren't commenting on the objective good or bad of such issues, so much as they are just explaining what their personal situation is. As soon as those people who cried the evils of uncontrolled rental markets came into possession of San Francisco property, they would immediately change their tune.
Should we place any value in ethical principles which are so immediately seen to be self-serving?
For example, do I own real estate in San Francisco? I think your chances of getting that right are pretty close to 50%.
I really like Warren Buffet's perspective, the rules one believes are right, should be created without you knowing what your circumstance will be. That is, if you are trying to determine what is right, or not, about rent controls, you should create without knowing whether you will be renter, or an owner.
I've never met a real estate owner in San Francisco who was rabidly opposed to uncontrolled rent markets - so, with 99% certainly (I'm sure there are some edge cases), anybody who is highly opposed to uncontrolled rent markets is, with a high level of certainty, not a real estate owner in San Francisco.
http://en.wikipedia.org/wiki/Veil_of_ignorance
Most famously described by:
But the rest of your argument doesn't make sense. You've never met an SF real estate owner with a certain opinion, so you know something about most of them? There are at least 10,000 SF real estate owners. Have you talked to more than 0.1% of them? And even if you had, how would that help with your original claim that you can identify whether commenters in this thread were SF real estate owners or not?
Someone living in a rent-controlled apartment will be a strong believer in rent control. Someone owning real estate will be opposed to rent control. What I find fascinating is that the same person with the same knowledge, background, and education might hold two diametrically opposite positions.
But in the non-meta discussion, all I'm saying is that you don't know which commenters are in which situation, and especially not with 95% certainty, like you claimed. Some of the commenters might oppose rent control, even though they benefit from it. Other commenters might strongly support rent control in San Francisco, even though they live in Wyoming. We just don't know.
I guess my only hope is that when people voice a very strong opinion on this topic (or, for that matter, any topic) - that they might consider whether they are holding that position with a "veil of ignorance", or whether they are just projecting from their own situation.
Are you also including those who own property in SF also included in this? They too would immediately change their tune if they had to sell the property and begin renting.
One party in this made the conscious choice to buy property with these restrictions on it, and receives the benefits of being a property owner (Equity, income from rent, etc) whereas the renter is only receiving benefits intended to protect them from price gouging.
I currently rent because I'm not sure if I want to keep living in my current city, and don't want to go through the troubles of having to sell property if I do decide to move. The last few years, my landlord has raised rent more than would be possible under a SF style rent control. I don't particularly care, because I can afford it and if it reaches a level where I do not think it is a fair price for what I receive, I will move elsewhere. I have no vested interest in this, as I have no desire to rent or buy property in SF.
But your comment seems just as biased as those you are singling out for wanting to protect their own interests.
Absolutely.
If we lived in a perfect (or even just a "better") society, this would be fine. But the problem is that we live in a society with different classes. If your parents owned a home or two, you probably will as well. If your parents didn't, you probably won't either.
In reality, "rent" is just another way to keep the rich rich and the poor poor. Rent Control is an attempt to mitigate the damage. Personally, I think it's a terrible band-aid that exists because we aren't willing to face the real issues at hand.
Given that SF hasn't had rent control since 1980 (it only applies to buildings constructed before that), and the market has thus had 25 years to correct, which of the following is true:
1. There is no housing problem 2. Removing rent control didn't make a difference.
I'm actually curious to know the opinion of people blaming rent control...
(edit: typo)
The reality is more complex.
The real Economics 101 answer is: You can't know the effect of more supply on prices without knowing the demand curve. No one truly knows that, but consider this. The current market price is basically what a startup employee can support on their salary without kids, much savings, etc. If there's a large supply of people willing to move into SF for jobs like this and pay that price, but unable to pay more, then that whole worldwide supply needs to be exhausted before the market price comes down. That could take years or even decades depending on how the startup boom goes.
In the meantime, the macroeconomic effects of widespread losses in housing for blue collar, service industry workers, the middle class, artists, etc. can have very undesirable long term effects on a city. There is good reason for city governments to consider managing this growth.
If demand is high, building new homes for people should be allowed.
Edit: Manna was more relevant than I thought:
> The government had finally figured out that giving choices to people on welfare was not such a great idea, and it was also expensive. Instead of giving people a welfare check, they started putting welfare recipients directly into government housing and serving them meals in a cafeteria. If the government could drive the cost of that housing and food down, it minimized the amount of money they had to spend per welfare recipient.
If the VCs weren't there, it'd be a third-rate city, and much of what the VCs are funding isn't even technology but the post-apocalyptic sort of "attempt to engage in one of the short-term natural monopolies that technology sometimes creates" gambits that bloom in the caldera of an imploded technology industry. Yet it has become a more expensive place to live than New York, despite being dysfunctional in every measure other than tech salaries.
I cannot see why California hasn't done something about Prop 13 NIMBYs. All that those useless parasites do is block progress, drive up the rents by preventing new housing from being built, and cause measles epidemics with their anti-vax nonsense. It's really time to call in some Texans on that shit and fix the NIMBY problem. If California can't do that, then how are we supposed to take them seriously? If they can't get their heads out of the ass of the past that the NIMBYs claim that they are preserving, how can we trust them to build the future?
Don't! Whatever the alternative was in your head when you wrote this sentence -- do that! The world needs more future-builders :D
Much of what is funded has always been that.
As for the tenant(s); if you want to relocate, I'll put you up in Minneapolis for free for a couple months if you want. No conditions, just let me know.
Should they have been forced to continue to rent the unit out at a loss?
The tenant was paying $2,145/month = $25,470/year.
According to the letter, they forced out another tenant. IF that tenant was paying a similar amount, the landlord was making >4x taxes in rent, not less than the current taxes.
Also, the current owners bought the property on 12/30/2014. Why should anyone have sympathy for them having tenants? They knew they were buying a rent-controlled building. They aren't some owners for the past 30 years being held victim to tenants who won't move out.