Rent Control Creates Higher Rents in SF
nickstefan.net
nickstefan.net
As noted by others here, it discourages maintenance and property improvements to rent control units. The landlord has an incentive to create a terrible living situation to get the tenant to move out.
It also reduces tenant mobility. If you're a long time renter and have a great, but maybe just affordable to you, rate, and then have any life change where you'd normally want to move, you face a tough decision. Get a new job, want to move in with someone, have a baby, need to take care of a parent, sell or buy a car, etc... and when you would like to move, instead you're stuck.
Rent control also directly causes Ellis Act evictions, IMO. If your building has occupants who've been there for a while then you're getting much lower income than market rate. One way to retrieve the true value out of the property is to sell it someone who will convert to private residence, thus valuing the property much more than a landlord.
Rent control is a subsidy to renters paid by landlords. They bear almost all of the financial responsibility for this attempt to make housing affordable. Home owners don't, and employers and employees don't. And the subsidy is incredibly unevenly applied: You get more a subsidy the longer you've been in a rental, it's not dependent on how much you need the subsidy.
As long as the city deems it beneficial to have a rental subsidy, they should just go ahead and have a real subsidy paid by taxes, and get rid of rent control. There's a good argument that a diverse population is good for the the city, so a subsidy funded by income, sales, corporate, property, and hotel tax makes a lot of sense.
this is such a great point and I wish it was talked about more in the discussions of these issues. rent control basically traps people in a single apartment for the rest of their lives. it traps their sons and daughters there too (if they elect to "inherit" the apartment, which they frequently do).
this is one of the ways that ghettos come in to existence. the ability to move to somewhere else is really fundamental to preserving a person's freedom and quality of life. rent control takes that away and replaces it with a market dislocation and transfer payment.
http://www.denverpost.com/business/ci_27709567/apartment-dwe...
But imagine if Somerville did have rent control. The minority of units on the market would have rents go up by much, much more than 10% a year, and people who need a new place would be screwed. This is what's happened in SF.
I can't deal with this anymore, as a result I have to move out now.
They are simply banking on the fact that moving for tenants is costly, time consuming and could affect kid's school. Moreover, they only gave me 3 days to decide if I want to renew or move out. They gave the renewal offer 33 days before lease end, and I have to give a notice of 30 days if I want to move out.
Last year, I fell into their trap and gave into the substantially increased rent; but now what they are asking is at least 30% higher than market.
It doesn't "trap" anyone; that's just hyperbole.
The main effect is that it gives a significant number of people a chance to stay in the city in a profoundly deteriorating market for middle-class housing stock (driven, in NYC's case, to no small degree by external factors such foreign investment, and radical and -- in the view of many -- essentially undemocratic "pro-building" changes to the local zoning laws).
this is one of the ways that ghettos come in to existence.
Perhaps. But given the vastly greater forces at play (racism/classism; the collapse of inner-city manufacturing base; and deliberate wholesale razing of neighborhoods in NYC, Boston and elsewhere; mistaken notions about the wonderful community-building effects moving people out of quirky single-family housing and into massive high-rise development projects; and just the inevitable effect of multi-lane freeways in high-density urban areas, generally) it seems you'd have a hard time pinning it as one of the major factors.
A guy I worked with had lived in his apartment for 20 years when he finally bought a house (because he got married). He had been paying a ridiculously low rent for decades, and he just couldn't move and spend 10x more for what he got.
It may be counter intuitive to you, but it is not hyperbole.
A lot, maybe most by now, of my friends who live in SF cannot afford to move at all - they really are trapped in their current lease. It's often even worse because rent control encourages so many off-the-books subleases, so they can't directly deal with the landlord for fear of being caught. If the lease holder decides to give the lease up, they're screwed. This has happened to more than one of my friends who lived with someone else who had the lease and then moved out. The original leaseholder kept the lease as a courtesy, but it's actually a liability to them and they won't do it indefinitely. It's a shitty situation for all involved.
One argument against rent control is that it drastically drives up the price of the available units because there's such a reduced supply, exactly because the "trapped" can't move. This is a vicious cycle that causes even more renters to become trapped.
With subsidies instead of rent control, the available rental stock would be bigger, renters could choose from more options, and not be penalized for needing to move. Subsidies would still have an effect of increasing demand and ability to pay, thus pushing up prices a little, but the price inflation would be spread across the whole market, rather than concentrated on just the small portion of vacant units.
If this is confinement, then I'll admit that I much prefer confinement to the life of freedom I would experience when my landlord kicks me out in order to get a richer tenant.
Thanks for your concern, though. It's really touching.
I guess you're just ignoring the part where no rent control and direct subsidies would lower the prices of the available rental stock. Do you like being penalized for moving? I don't.
You don't need to invent fancy theories to explain rents in SF: we're in a demand bubble, driven by the influx of venture-funded tech companies into the city. This is neither new, nor surprising.
This isn't a very fancy theory, it just effects supply and demand. I don't think you'll find many economists who would disagree with the assertion that rent control reduces supply, thus driving up prices. That reduction is caused by people incentivized to stay in a unit when they otherwise might have moved.
But yeah, tell me more about how rent-seekers are getting a bad deal. We renters are such parasites, with our unreasonable need for stable living situations in exchange for the willingness to pay for other people's investments. We just take take take, don't we?
You're comfortable with the idea that you get rent control? The market has been set up to essentially subsidize you, at the expense not only of the evil landlords but of all the potential SF tenants who do not get rent control, many of whom are (I can only assume, but it seems a pretty safe guess) far less economically secure than you are.
I'm sorry to personalize it like this (I'll forget your name soon after I write this comment). I really don't mean this as an attack. I'm just pointing out that you're a member of an undeniably elite class of worker, one that is essentially inheriting most of the economy (I believe "eating" it is the verb our industry prefers) and --- no moral judgement here --- displacing previous residents from the old outmoded economy. I'm a little startled to hear you suggest that you need a subsidy.
My landlord's inability to exploit me at optimal efficiency to pay for her income-generating asset is not a subsidy, it's just a policy decision in favor of tenant's rights.
Respectfully: you are practically the poster example of the problem with rent control in a supply-constrained and rapidly gentrifying real estate market. Working class families get moved out of the city. That happens; it's part of economic growth. Meanwhile, a policy that should serve first and foremost to protect the interests of the least mobile workforce participants instead protects an elite startup founder at their expense.
Someone who wanted to make a case against SF rent control could literally just point at you. "We're distorting the housing market for the benefit of elite tech workers. We should stop doing that."
I don't blame you for accepting rent control. You're a rational actor, the option was available to you, and if you want to commit charity, there are probably more efficient vectors for that available to you than enriching a landlord. But I don't think your experience is a particularly good illustration of the public policy benefit of rent control.
> rent control basically traps people in a single apartment for the rest of their lives.
so does buying a house. still, some people tend to appreciate it regardless of how bad the added lack of mobility is for them.
If you want to move elsewhere, and housing prices have gone up substantially, you have increased equity in your current property to cover the increased cost elsewhere.
Mortgage payments are based on the loan amount, not the value of the property. Excluding transactions costs, if you buy a $X house and have $Y month payments, then the property value doubles to $2X, you can sell and still buy another house that costs $2X, add $X to the down payment, and still have a $Y/month mortgage.
So if you own a home, not only do you have mobility, but if you move to another house of lesser value you can extract equity without increasing monthly costs.
Now Prop 13 is what restricts mobility for homeowners, because property tax can be 10x on a new purchase if you've been in the old house long enough. Rent control and Prop 13 both need to go.
You're assuming equity is guaranteed.
If you buy a house at $X, and it adjusts to $X/2 because of speculation or job losses in the area, you're still paying down the $X + $Y mortgage, where $Y is interest, fees, and whatever else the bank tacks on, now or in the future, and have no way to recoup your losses. And you still have to pay property tax, based on the assessed value of your property circa pre-collapse.
Historically that is almost unprecedented - and no, a few thousand homes in a couple of areas does not make it any better an argument. Over time, property values go up - it's not a theory, it's a fact.
>you're still paying down the $X + $Y mortgage, where $Y is interest, fees, and whatever else the bank tacks on, now or in the future
The bank can't 'tack on' arbitrary 'fees, and whatever' in the future on any decent mortgage - in fact I've never seen a residential mortgage that allowed that. If you don't get a fixed rate mortgage then your rates may rise, but that's an argument against variable rate mortgages, not home ownership.
> And you still have to pay property tax, based on the assessed value of your property circa pre-collapse
No, at least not in California - counties were required to reassess property value down after the crash, and they did. In fact from what I've seen they haven't been assessing value back up enough to keep up with the market.
Most jurisdictions have regular reassessment schedules, and while some have formulas that delay or limit the effect of market value increases, most don't for decreases which take full effect immediately.
It seems to be a strange and repeated message board blind spot that we're very alert to equity in upside, but not in opportunity cost. The same thing happens in virtually every HN discussion about the stock market. Everything always seems to be based on the notion that prices are always rising, and our only concern is sharing those profits as uniformly as possible. No. The market is fundamentally structured around the likelihood that prices can go either way.
Otherwise everyone investing in index funds for retirement is screwed.
Second, rent control generally makes you more and more stuck each month. Selling your home and buying a new one is a one-time hit, and if there is sufficient motivation, it will happen after a while (technically, brokers' fees increase with the home value, but they are 6% or less, so doubling the broker's fee is a lot more palatable than doubling your rent).
Third, home ownership offers other options, like renting it out, if Prop 13 keeps you stuck with the house.
Fourth, home ownership is not subject to the tension between a tenant and a landlord who doesn't want them there.
I know many people who have moved out of rent-controlled apartments for one reason or another. I've done it myself. I don't know a single one who says, "Whew! Thank goodness I escaped that terrible trap of being able to afford living in a place I liked!"
So... the assumption is that left to itself, a good which is incredibly scarce in a market full of wealthy, fiercely competitive customers would see a price decline?
I mean, I can sort of see a long-term argument for it (the people who would occupy the housing are dependent on a much larger and much less wealthy serving class for their food and other necessaries and luxuries, and as that serving class was priced out of being able to live anywhere within an increasingly-large radius, housing would begin to become less attractive and thus prices would finally come down at least a bit). But I highly doubt that's the argument attempting to be made here, as one of the goals of rent control is to shortcut to the end of that cycle (where costs have come down enough that the serving class can afford to live nearby again).
Spoiler: I don't think there is one. You're using the term as a catch all for "economic arguments I don't believe".
http://www.econlib.org/library/Enc/RentControl.html
"Economists are virtually unanimous in concluding that rent controls are destructive. In a 1990 poll of 464 economists published in the May 1992 issue of the American Economic Review, 93 percent of U.S. respondents agreed, either completely or with provisos, that “a ceiling on rents reduces the quantity and quality of housing available.” Similarly, another study reported that more than 95 percent of the Canadian economists polled agreed with the statement."
Well yeah, that's about as reliable as asking the members of the Supreme Soviet if socialism is a perfect society model.
Maybe we could do this study again and include the numbers for people which are not part of the "free market will save you"-propaganda group? Or add a few reasons why the answers should be correct besides "I want it!"? Come on ... american and canadian economists .. you can do better.
Maybe I'm missing something, but if I'm not, I think you're hurting your point by waving terminology like that around. By trying to discredit an unrelated concept from econ, it's like you're saying "if you can find an argument that doesn't rely on economics of any sort, feel free to bring itup".
* the actual number of people who wish to move to SF at any given time
* the number of people who pay rent control, but could pay more, and what that number is
* the actual rents that people pay under rent control
As obvious as parts of a toy model might be to people who are familiar with economics terminology, the toy model's conclusions are really quite 'new' to some people. For example: the rents in SF dont need to be 'supported' in the sense most of us think (by everyone). They merely need to be supported by a small amount of wealthy people bidding on a tiny amount of available apartments.
I think that's an important fact regarding how 'frothy' the market is. It can definitely go higher.
But the situation is actually better than that because if we could convincingly get rid of rent control there would be a lot of new entry into the market, making the good less scarce.
Under tight rent control, landlords have an incentive to take apartments off the market and convert them into condos or luxury homes. Remove rent control and some of those apartments will come back, which grows the supply and drives down price. Under a true market where landlords can recoup development costs we should expect see an increase in both the supply and quality of available apartments compared to the current day.
What would really happen is a massive influx of demand, because many people rich people (rich in this context: "Have the means to buy high-priced properties") who do not want an apartment today (because there are none which meet their 'standards', partly thanks to rent controls), would start to move in. This would lead to a situation where a) all new supply would be concretated in high-priced estate, which would still be bought up by the increased demand, while b) the bottom (i.e. todays rent controlled apartments, going with the assumption these are not well maintained and therefore 'cheap') would just go up in price, because there still wouldn't be any new options for the inhabitants of those properties. Result: Higher prices for the current occupants of apartments, a new crop of high-priced apartments bought up by rich people, no better supply of "main street" living room.
I'm sorry, but I've never met a Landord who cared about the condition of their units, unless it affected the property in a structural way.
I have never met a landlord who didn't try to get as much for their property as legally possible.
I don't have the answer, but human greed is palatable.
I have, but not one who cares and controls rent controlled units in SF. Landlords who know they have to compete care a great deal.
What you describe is a market that is utterly dysfunctional because supply is incredibly limited.
An enforcement in issue. In NYC the laws are actually aggressively pro-tenant on the issue of deliberate neglect; if you don't keep the basic services working (or keep the building reasonably free of infestations, for example), the tenant can use that to delay any attempted eviction processes (justified or otherwise) quite substantially. The smarter landlords in NYC all know this, and hence generally resort to buy-outs as a tool for vacating tenants. Overt harassment-by-neglect does happen, but is quite rare.
It also reduces tenant mobility.
To some extent, it reduces mobility within the local market (and this effect can be quite significant, in some markets). But in an unregulated environment, a great many of these people simply would not be able to continue renting in the local market, at all. So it's a tradeoff, basically.
Rent control also directly causes Ellis Act evictions, IMO.
A non-sequitur; there's no reason one needs to have something like the Ellis Act in order to have rent control. NYC's market (famously) does not, for example; and profit-driven conversions of the sort you mention are generally illegal, and easily blocked in landlord-tenant court.
In other words, the Ellis Act causes Ellis Act evictions; not "rent control."
Rent control is causing a shortage of suitable living areas and property owners are ignoring maintenance costs.
"Well then, let's pass another law!"
Property owners are passing rent controlled properties to their friends and family, or influencing local government regulations to do complicated rezoning laws or even straight up bribing inspectors
"hmmm, well let's just pass more laws then!"
How many times are you willing to try a solution that continues to fail before you give up? It would be funny except in the mean time your belief that a couple "smart people(TM)" passing laws is ruining the lives of the very people you profess to want to help.
EDIT: The fact you believe it is perfectly reasonable for landlords to be held hostage and forced to do 'buy outs' of tenants who refuse to leave an apartment that isn't theirs is all I need to know about your thug mentality.
If rent control were actually causing a shortage, we'd expect that rents would have continued to rise during that time. Instead, the far more likely conclusion, given the data, is that rents are being driven mostly by increases in demand.
It is difficult for the armchair libertarian economists of HN to accept that, while rent control probably puts some upward pressure on rents (in theory, anyway), that effect is likely totally swamped by the demand-side imbalance.
Rent control also leads to gross nepotism where the relatives and friends of the wealthy are given first dibs on rent controlled properties by the owner of the tenement building. A quick google search will reveal how common it is for those most well off to benefit from such government run schemes like rent control.
I appreciate rent control because I value so much the little free time I have from work, given to me by more stable cost of living (I live in Berlin). And I know I couldn't handle the constant necessity to fight for pay increases to cover dramatic increases in rent and insurance over time. Other people are more skilled at this nuanced life but my point is for some it works, and others not. I think having a Government that tries to keep large costs at steady is much better than them paying for subsidies which may just wind up inflating the prices.
You're trapped for logistical reasons that are surmountable with a little work. You're not trapped in the sense that you absolutely can't afford to move anywhere else in your city, because of overinflated residence costs.
I'd expand on this: Rent control is a subsidy to current residents, paid by future residents. The landlord is merely a conduit across which the wealth transfer flows.
I voted (especially for pro-building, pro-housing candidates). Maybe if everyone else did the same we could change a few things.
It's very easy!
http://www.immihelp.com/forum/showthread.php/91741-Denied-N-...
http://www.hg.org/article.asp?id=27445
http://www.gmanetwork.com/news/story/141110/pinoyabroad/pina...
https://beki70.wordpress.com/2011/03/03/fortunately-i-wasnt-...
And, on a separate note, it's ridiculous that I have lived here for over 4 years and paid hundreds of thousands in taxes but do not have any way to influence the democratic process (it is equally ridiculous that I can still vote in my home country despite not setting foot there for more than 2 weeks per year for the past 6 years and not contributing to its economy at all. The current definition of citizenship is completely outdated in the globalized world)
Remember that SF is an anomaly. Generally it's the wealthy in the suburbs and the underprivileged in the city. Suburbanites voting on urban policy (in general) is the last thing you should support if you are concerned about privilege.
It's not an anomaly, it's a trend.
That's why rent in Manhattan is so cheap.
Consider the entire middle of the country.
That kind of mentality is just like "its ok to break the law because everyone else does it!!1"
I actually tell my H1B friends that getting a green card but not naturalizing is likely their best ROI.
https://www.reddit.com/r/housingforsf/comments/22xoht/help_h...
It's easy and takes five minutes! Give it a shot and post a reply below either confirming or denying that it's really as fast as I claim.
My company (a tech company) sent a bunch of emails about registering to vote and voting, and also had a drop box for voter registration forms, and encouraged people to get out of the office to vote.
Yes, this is just one anecdote, but there are people at tech companies who recognize that political issues are important and push people to get involved.
Rent control and Prop 13 are two sides of the same coin.
If property values increase and there is no rent control, do you really expect landlords to not pass the property tax increases to the renters?
In fact, I would argue that more home ownership would be a lot better than rent control, because if the home owner chooses to leave a given area by selling, he/she is able to benefit from the increased values. Renters on the other hand cannot.
While it would be very interesting to contrast the tax situation in Washington state (property taxes adjust every year there from what I understand) with that of California, I doubt the current situation would greatly improve prop 13 gone, and I know for sure a lot of people would be squeezed.
The tax rates for the bands are then set by the local council, as a political decision. Band A property? £1000 a year. Band E property, maybe it's £3000 a year.
Admittedly, assessing a tax band is a little subjective - but it seems to work OK. Any idea why local government taxes in the US aren't calculated the same way?
From what I know, WA state uses real estate tax as one of the primary revenue streams (in addition to sales tax), whereas CA also has income tax. CA and WA seem to have similar sales taxes, so the main difference in funding is in WA not having an income tax.
There are many more differences, but I don't know if those are for a "good reason" or bloat. My personal biases make me lean to CA budgets being bloated...
California put limits on what property tax can be used for, how much it can change per year, and when the property's value gets reassessed (answer: when the property sells) in the '70s ( http://en.wikipedia.org/wiki/California_Proposition_13_%2819... ). It was done through a ballot measure, which means the legislature can't make any changes by itself.
Of course, somebody decided it would be easy to apply it to everyone, even large commercial properties. The fact that it applies to commercial properties is kind of insane.
http://www.sfgate.com/news/article/Bill-to-close-Prop-13-loo...
| In fact, I would argue that more home ownership would be a lot better than rent control...
This may be the case, but its an experiment that will never happen. SF is at an extreme housing deficit, and refuses to build new housing commensurate to its population growth (1 unit per 10 new people for the past decade). Prop 13 is a large part of the problem - minus squeezing, home owners have no incentive to allow new construction.
That said, I do live in a place that is fairly constrained on new development, but not as badly as SF. For my part, the lifestyle that makes both of these places so appealing includes a certain level of density, but not much more than that. It's hard for me to fault people who bought their properties for defending the lifestyle they bought into.
On the commercial use of prop 13, I would tend to agree that it's not the best idea today. I am entirely against means testing and such for personal uses, including non-primary residences.
A simple use case for non-primary residence non-commercial use is if one is taking care of elderly parents. Should the parents be forced out of their home because their child happens to own the property? This is not commercial use to me either, unless rent is being charged of course.
Part of the attraction of homeownership is security, in that homeowners aren't subject to fluctuations in the rental market. Prop 13 helps to reinforce that security, delaying the property tax increases to the point where the homeowner would be able to afford them -- at moving time. It's certainly not perfect, but I'm not convinced repealing prop 13 is the answer.
Perhaps a hybrid approach: live-in owners are subject to prop 13 caps on increases, but rental properties are not? Coupled with a repeal or loosening of rent control would allow landlords to pass on at least some of that cost increase to renters, which I think is a reasonable thing. Again, not perfect, but perhaps an improvement.
Prop 13 benefits people that have owned property for a LONG time. I cringe every time I see my prop tax bill while my neighbors who have been here for decades pay a fraction of taxes only because they were here first [1]. But Prop 13 props up housing prices which would drop like a rock if Prop 13 were outright abolished. So there would need to be some sort of retro tax event to help lessen the pain.
Additionally, I would make the distinction of this tax event for primary residence, investment property and commercial property. Maybe it should just apply for primary residence, I don't know the right answer to this but longer term, I agree that rent control and Prop 13 need to be revisited.
This could even be part of a hybrid approach where owners have some protection against rapid changes, but bills slowly catch-up to their neighbors… restoring equal protection under the law regardless of date-of-purchase.
For example, the increase-cap could be "the larger of 1% [like Prop 13] or a rate that, compounded 20 years, would reach parity with peer properties". As long as your bill is only ~22% less than comparable properties, you're still on the Prop 13 1% plan. But when things really get out of whack, your rates go up slightly more... and you have very strong visibility into the next two decades' of rises, if you assume property values hold. (If you're paying half your comparable-property new neighbors, your bill would go up around 3.5%/year.)
No surprises, small annual changes, but (over time) far less of a giant tax-handout to the already-property-rich.
What do these have to do with each other? And I guarantee if you gave landlords the option, they would jump on that offer. Prop 13 is saving long-time owners a few thousand dollars a year, which would be easily made up (and more) with higher rents.
Your argument is that renters shouldn't give up something that hurts them, until another group gives up something unrelated?
Can you articulate why you think that negotiating strategy might lead to optimum outcomes for renters?
I think (guessing a bit here) is that the argument goes like this: repealing Prop 13 would drive down house prices, allowing some renters to instead buy/mortgage, therefore reducing the demand for rentals, driving rents down.
By increasing supply, I would imagine, at the expense of older, retired home owners. In my community, there are a lot of old people that wouldn't be able to afford a fraction of my property tax. Many would be forced to sell and there would be a glut on the market of new homes, which would likely drive prices down.
I hate paying the property tax rate I do, but I would also hate to drive all the old people of my community to cheap, depressed housing stock in some remote place.
What's the way out of this? I really don't know.
Prop 13 as it stands is simply a way to allow commercial landlords to avoid paying property tax at market rates.
It would make sense for governments to formalize this arrangement and allow deferring of property tax payments until the house is sold.
I have complex feelings about Prop 13, and I'm not by any means unilaterally a fan. But to suggest that it necessitates rent control sounds, at the very least, under-argued. How does San Jose fit into this picture?
Repealing rent control without repealing Prop 13 would result in a MASSIVE wealth transfer from renters to landlords. I don't think that's fair.
Prop 13 makes new property buyers pay more for property taxes. Rent control makes new renters pay more for rent.
As long as there are more people benefiting from these 2 laws than hurting, they will be in effect. It would be interesting to see organized efforts in changing these laws.
Both have "got theirs" and don't want to let new people into the city.
Anyone who cares to know this, does. People who don't want to know this won't be convinced by a carefully reasoned toy example.
But if you really want to understand the problems with the housing crisis, http://techcrunch.com/2014/11/02/so-you-want-to-fix-the-hous... is unusually good.
Rent control is more than an economic issue, it's a class and moral issue. Why should only people with the means to buy property have the ability to live a stable life? Imagine if your child had to change schools every year because your one of the overwhelming number of people who cannot absorb rent increases.
I personally have zero or negative sympathy for landlords charging usurious rents while simultaneously crying proverty and getting all puffy about property rights. If you can't handle the regulatory environment, nobody put a gun to your head and made you a real estate speculator.
Tell me that doesn't explain basically all of it...? Rent control seems like a minor factor. I can see ways it might contribute, but if SF had plenty of land and no earthquakes I'm sure things would not be so bad.
Rent control is more than an economic issue, it's a class and moral issue. Why should someone pay less rent simply based on when they originally moved into the apartment? Imagine if you are a poor immigrant just moving to the city and having to pay market rate while reasonably well off people get to pay a rate that made sense 5 years ago.
I personally have zero or negative sympathy for people paying lower rates than everyone else while simultaneously crying proverty and getting all puffy about the possibility of their rent going up. If you can't handle the price of the city, no one put a gun to your head and forced you to move here.
A young man lived in a rent controlled apartment for many years. He eventually met a lovely woman and they began dating seriously. They moved into the apartment together and enjoyed several years there together.
Eventually, they were ready to have children and moved to the East Bay, but they decided to keep the rent controlled apartment for occasional weekends in the city. At this point, between both of their incomes, it was a drop in the bucket. That apartment to this day sits mostly empty, while a housing crisis dwells around us and rents keep going higher.
We talk about pushing people out of neighborhoods — this literally has taken a home away from someone that could be living and working in the city. No story is the same, but the inefficiency is clear.
I think building more adding more supply is the only way to help keep rents and sales prices at a reasonable level.
They charge higher taxes to non-resident owners, which is an interesting tactic. But rents have gone up enough that people who leave my building often opt to rent their units rather than sell them.
It doesn't help that my state doesn't seem to make public transit outside the city core a priority (Boston, Cambridge, Somerville, Brookline), meaning commutes into the city from outside can be painful.
It sucks, because only 2 or 3 towns in MA had rent control, but developers scared city councils across the state into voting to ban the practice.
Why does it suck? The market should be allowed to work.
Quite frankly, I consider "the market" forcing people out of areas they've lived in for most of their lives to be a far worse outcome.
I don't. I don't really know why anyone would. Like, ideally in a perfect world both Joe and Frank would be able to live where they want, but given that land is a persistently scarce resource, what's the basis for privileging Joe over Frank? And what is the magnitude of the privilege that we should regard as a natural right? Surely not infinite.
Basically, you're just making a "Might makes right" argument, but substituting wealth for physical might.
Do I have to sell my labor to my current employer cheaper than a prospective new employer? Do I have to sell my used car cheaper to someone who once rode in it than I could to another buyer? Why then should landlords be subject to those restrictions?
A stable community is a thing not much valued by (young and transient) tech workers, though I would argue that even they derive some benefit from living near folks who make less money than they do.
Rent control doesn't create utopia -- and this article describes some of its acknowledged problems -- but neither would abolishing it be free of consequence.
Like most things in life, it's a trade-off. Don't overlook one side of the exchange.
If you go to the Marxist extreme of a centrally planned economy people aren't taken into account.
If you go to the extreme of a completely unregulated free market economy people aren't taken into account.
The happy medium is a free market that's regulated to prevent coercive and abusive practices. The US had a much stronger overall economy and greater general prosperity when it followed that model. The neoliberal extremist policies that have been been adopted since the 80s have been a series of unfolding tragedies for the poor and middle class in the US.
Rent controls don't appear in a vacuum, they are a response to the unfolding human tragedies of rentier exploitation that harm actual people. They may not be optimally implemented in SF, but to label them Communist is extremist.
The neoliberal shock-treatment approach in Russia was a human disaster as well, and the horrors in Chile, parts of the EU, and elsewhere show why extremism that cares more about ideology than humanity is a vice. It doesn't matter if the ideologues are Marxists or Capitalists, ideologues always promote policies that are bad for humanity, since they care more about ideological purity than practicality or humanity.
simply put, they don't want the type of people associated with that type of housing messing up their neighborhood. The lesson learned in the 60s is that it takes regulation to control who can move into an area by simply pricing it beyond the means of the undesired groups from moving in.
The separation is now more money based than race, but a little of the latter still exist; actually a lot of the latter still exists
For starters, the story doesn't account for the fact that new housing may be built without being rent-controlled. This allows new housing stock to be built without regard to whether it will be rented under rent-control.
Secondly, SF doesn't have a "rent control" ordinance per se. It has a rent stabilization ordinance. Landlords can indeed increase a tenant's rent, but there are restrictions on how much they can raise a tenant's rent. It's based on the Consumer Price Index (though I don't think this is a good choice of index to peg rental rates to).
What it basically boils down to is less about economics and more about social mobility. Between rent control and prop 13, the Bay Area is set up for social stability. It is intended to encourage people to stay where they are. Us techies, mostly being from elsewhere in the world, are more inclined to push for more mobility.
Opposition is pretty much guaranteed, though.
I guess the real question in my mind is "cui bono?" Seems that this policy would greatly benefit any landlords with non-rent-controlled property, since the artificially low price would create an increase in demand... since the price of those units can't increase the effects would presumably be felt in the next best substitute(s), i.e. free market apartments and/or values in the surrounding areas. Seems like property developers in the both the city and the suburbs might have a strong interest in distorting the market in this way.
- home owners would cut hot water and electricity, just to get tenants out.
- there was regular black market where one could buy contract for cheaper rent
- tenants with lower price would subrent apartments for commercial price
- in Prague it was highly discriminatory for students and other poor people, who had to live in Prague.
- It did not protected city center anyway, people eventually moved away.
- there was huge conflict of interest. Some PM, government members, town hall officials... lived in cheaper apartments.
A precursor to AirBnB!
1) Moral/legal arguments
2) Whether rent control is the small problem and lack of housing development due to zoning laws or NIMBYism or conspiracy or whatever is the much bigger problem - i.e. rent control is one small facet of the housing issues in SF.
The solution where each participant in a market acts to optimize their own returns is sometimes nowhere near the global optimum allocation of resources (for basically _any_ theory of optimum allocation other than "whatever the market did").
If you do have skyrocketing rental prices, you should buy yourself an Econ 101 textbook and educate yourself about why this is impossible.
Then the problem will go away.
>both San Francisco and Boston have very strong NIMBY groups in the various neighborhoods.
Well, yes. In the real world - the one that doesn't consider 'just so' stories an explanation of anything - it's well known that rents depend on a mix of factors, not least of which is strong government support for affordable social housing.
Germany has a very strong rental culture, and excellent availability. Rentals remain reasonable, because there's a critical political mass of renters who would cause problems for politicians if they stopped being reasonable.
London, meanwhile, has limited housing stock and no rent control. The result is that rents are increasingly insane, landlords are increasingly disinterested in spending money on repairs (...so much for that argument) and most ordinary people are either sharing in overcrowded conditions, living in spare rooms, or moving elsewhere.
As a test case, this is hardly a resounding success for the no-control lobby.
London used to have a solid reservoir of social housing, but that was deliberately eliminated in the 80s. The result has been a steady cycle of manic-depressive boom/bust explosions.
Currently property prices are being driven up by foreign speculators. Wherever there's boom, capital flocks to it - until prices crash again, and then the greater fools are left behind, trying to capitalise on decrepit slum properties.
Rent control on its own isn't a solution to this. But an integrated and thoughtful housing policy certainly can be.
"If you do have skyrocketing rental prices, you should buy yourself an Econ 101 textbook and educate yourself about why this is impossible."
ok, this made me laugh more then it should :)
"If you do have skyrocketing rental prices, you should buy yourself an Econ 101 textbook and educate yourself about why this is impossible."
Please explain; genuinely curious.
[0] Friedman, Milton, and George Joseph Stigler. Roofs or Ceilings?: The Current Housing Problem. Foundation for Economic Education, 1946.
> The few of us who still remain in San Francisco have no choice but to live in sub-par conditions like mold, windows that don't shut, rodents and countless other issues because there is no other choice, because the rents are so high you can't move so you don't.
This is what you get when you set the price artificially below market value: subpar product. Has anyone here seen Soviet-era apartments? They were exactly like this. So in the long run, the place will fall apart around the renter, and they will be pretty much powerless to do anything about it. And the bit about "can't move" because it's too expensive just means that the area is now too expensive for you and rent-control is the only thing allowing you to stay here.
If the excuse is that your job is here, well maybe your job is not paying you enough to live in SF. Perhaps founders should stop starting companies in this incredibly expensive area, and explore greener pastures.
The only difference now is the skyrocketing rates in SF due to dot com 2.0 immigration. The same thing happened back in 1999-2000. EVERYONE had to be in SF for the boom back them, so rates skyrocketed. When the bubble burst, rents leveled off while the rest of the country eventually (almost) caught up.
Plus there's the "Google / Facebook" stipend. Google & Facebook were having a hard time hiring because employees couldn't find a place to live. Google / FB started offering $1k / mo above asked monthly rates to help employees get units quick. That also helped bump up even the worst apartments up to unrealistic levels.
Pay is higher in the Bay Area due to high cost of living, like for most companies, but I've never heard of a housing-specific "stipend" or anything like that.
Obviously for many people, "People with money can't have something they want" is a better outcome than "people with less money will be required to leave their homes and go to less desirable places." You can, of course, disagree, but there is nothing strange or puzzling about this value judgement.
You can say "that's how capitalism works, tough shit" but SF has found a power which is in this case mightier than the market: law.
If it were the case that eliminating rent control would cause rents to settle somewhere reasonable and such an exodus would not happen, then that would be a compelling argument.
But HN instead argues that those people deserve to be forced out of their homes. Obviously if eradication of rent control is landlords' condition for building new construction, they intend to raise rents further, otherwise they would not demand the ability to do so. You may think that's fine, but you can't really say it's unreasonable for the people who lose in that situation to oppose it.
If the government wants housing to be affordable, it can build more of it, or provide households with tax credits or vouchers to help them afford to pay rent. Vouchers are less desirable than increasing supply, but they cause fewer market distortions and bad incentives than rent control, which is a price ceiling, which we know for sure leads to shortages.
Instead of taking on this public policy responsibility, the government of San Francisco has decided to take the easy way out by capping rents on certain units, which unfairly forces landlords to shoulder the burden of a job the government ought to be doing. This incentivizes all kinds of crazy things, including removing housing stock from the market under the Ellis Act.
Property owners are the ones wearing the pain, not the government. Doesn't help that landlords are in the minority when it comes time to vote.
I wish we had some county/city mergers like miami-dade. I think a regional authority would weaken the nature of neighborhood politics which conflict with larger regional goals. We could have an integrated transit system as well as well planned -or at least better planned- housing policies and strategies.
Bay area nimbyism resulted in a fragmented Bart and uncoordinated transit system as well as wasteful low rise housing developments. I can only hope this changes. And also agree getting rid of rent control is a bitter but necessary pill. Build more and rent will go down.
Rent control discourages investment in real estate. Less investment in real estate means lower quality and fewer apartments. There are some lucky winners who get cheap apartments, but the rest pay higher prices to live in worse places. The same thing happens in New York City.
The economically sound answer is to make it as easy as possible for builders to make large buildings with lots of apartments. Right now it is so hard to build that only luxury apartments are profitable.
* It's just not inherently very efficient. If you can build 12 luxury apartments that will rent for $3k per month or 20 low-income apartments that will rent for $1k per month, then you're leaving a lot of money on the table.
* Incumbent neighbors hate hate hate low-income housing and will fight to destroy the project during public meetings (because they believe that their property will become less valuable/their neighborhood less desirable with low-income neighbors).
* Low-income tenant are more likely to stop paying rent/force an expensive eviction process than high-income tenants.
* Much of the maintenance cost on an apartment is per apartment or per tenant, not per square foot, so your maintenance cost may be lower on fewer larger apartments.
* Low-income housing developers do not have the resource of market-rate housing developers to move through the (complicated, awful) permitting process, or to buy land. Financing of low-income housing is much more complicated than financing of market-rate housing. Mostly market-rate developers who occasionally put together a low-income project tend to give those projects low numbers of resources/backburner them.
Source: My wife is a project manager at Habitat for Humanity.
- The "Not in my backyard" is economically rational, but still wrong. I'm not sure how to fight it.
- My general view is to remove the roadblocks to let economics help out. Large public works doesn't seem to be the right solution either. (High crime, bad schools, etc)
- The better case is not "luxury vs low-income" but rather to put the lower (or even medium) income apartments somewhere that there's less competition from luxury. There's no natural law that says they need to be side by side. (But I would argue we should ensure the quality of schools for both is similar)
In which case there would be no concept of "affordable housing" as a kind of development -- affordable housing would just be older housing.
Since structures are a significantly durable asset, this would operate over the course of decades, or even a century, not years.
In which case we could imagine that changes in the supply stock over 35 years (ie, rent-controlled stock in SF) would have a magnified effect on the well-being of the poor.
That said, I suspect this model is too simple to have that much predictive power. You are right to focus on schools (though note that in SF, public schools are built on a lottery system, and being local to the school gives you only limited access to it).
Many people are very hostile to the option to say, "Well, fuck it, SF is expensive -- people who want cheaper housing should live in more geographically remote places." It's hard for me to figure out where any concept of a right to live near place X begins or ends.
People would rather live in an old house with good schools and close to work (say Palo Alto or Los Altos) than new houses a significant drive away.
You can't tell someone "Take a risk on the schools, get a bigger commute, and pay up" but you can say "Get a nice new apartment, roll the dice on the schools, but save a lot of money and buy a nice car for the commute"
Of course, in the SF context that might also be impossible due to zoning/nimby opposition, but it is one huge factor.
Both do little to protect their intended target (artists and elderly) both do a lot to protect the non-mobile (and in fact discourage mobility).
One issue with Prop 13 is that it should maybe only protect property owners who live in their property as a primary residence, but currently covers commercial properties, vacation homes, etc..
Higher home prices get locked into the tax rate if the property changes hands so I'm not sure what the link is to Prop 13 creating higher prices....
Prop 13 has several provisions, the two most important being:
1) It limits the nominal rate of ad valorem property taxation.
2) It limits the increase in the tax basis value of property except when a reset to the full assessed value is allowed for certain qualifying events (changes of ownership and certain improvements.)
The first directly increases property values by making it more attractive to own property because of lower cost of ownership and less tax risks regardless of length of ownership.
The second restricts mobility (and therefore, both supply and demand) because it discourages exchanging one property for another, because doing so increases almost always increases effective tax rates (and total tax costs for like valued properties.) Because the it affects supply more than demand (insofar as some demand comes from people moving from out of the state, who aren't affected by Prop 13 on the demand side), this also increases prices, though its main effect is to reduce market clearing volume independent of price and thereby increases price volatility.
This is not strictly true, if you're 55+ and moving from Ca to Ca. http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#1
"In a nod to the youngsters, the survey found that the top markets offering “the right live/work/play environment” for millennials were Nashville, Brooklyn, Portland, and Memphis."[1]
In all seriousness, I think its a shame that SF can't keep up with housing. It's a tough problem. I don't envy the people in Government that have to balance all the different interests.
Then again, I would hate it if the majority of my paycheck went to my rent.
[1] http://blogs.wsj.com/moneybeat/2015/03/11/u-s-regained-top-s...
For one, there's the freedom to sprawl, while San Francisco proper is constrained to a much smaller geographic space. That alone skews a lot of the comparisons.
I was reading this today, and it struck a chord especially after yesterday's "rent in SF" article, and while I feel that the Houston approach is indeed the enlightened one, I don't know that it's appropriate for every particular place.
http://joshblackman.com/blog/2015/03/15/the-economist-housto...
Beyond that, of course, as much as it pains me to knock my home town, we left Memphis because of the rapid rise in crime, and that hasn't seemed to improve terribly. Since we've left, they've apparently done a fantastic job of buggering up the schools.
The draw of home pulls strong on me, and I frequently contemplate moving back, especially with the craft brew scene producing what I believe are some of the best beers in the nation (especially High Cotton), but between the things I've already mentioned and the oppressive summers, it's a tough sell.
<checks cranium> nope, no screw-vices here.
Here is an excerpt from an article that discusses rent control in Singapore & Hong Kong, among other places:
"Rent controls [in Hong Kong] were renewed in 1973, to halt increases exceeding 90% of prevailing market rates or hikes above 30%, for two years"
They actually had to add rent control there because the landlords acted exactly as you described.
http://www.theonlinecitizen.com/2014/05/is-regulating-rents-...
In my building, rent has increased from $1800 to $2550 in the last 2.5 years; that necessitates $18k more in pretax income to service.
Yes, the arcticle does not mention that word. Neither the comments there or the comments here.
But this is what giving up rent control encourages: gentrification. And it's really bad.
I'm not a US citizen, I don't live there, but I've visited SF quite a few times. You can see gentrification happening yearly after every visit. It's sad.
Perhaps the discussion should not be "rent control" vs "no rent control" and really "how to effectivelly control rent prices".
In Brazil, landlords are allowed to raise the rent every year by the same ammount of one of the country's inflation indexes. It's not perfect, but people seem to be more or less happy with it.
Also the rent price can never be more than a small percentage of the property's declared value per month (if you want to change the declared value, your ownership taxes will change accordingly). This helps a bit.
This is just an example of my point: stop thinking binary - yes or no - and start thinking how.
All I'm saying is, market prices reflect supply and demand, but they also balance the demand which would otherwise threaten to overwhelm the place. Who am I to say 'I want to live here! Make it happen!!' We could be building the city of our dreams, of the future, a mere 30 miles away.
Adam Smith's big contribution was showing that, generally, if we assume people are greedy and will look out for themselves, we can still end up with a fair system. Lasseiz faire economics has a much better track record in that regard than the alternatives that try to ignore greed. You can set things up based on how you want them to work, or you can set them up based on how they really do work.
Prop 13: The long-time home owners get to put a disproportionate amount of the tax burden on newer buyers.
Rent control: long-term renters put a disproportionate cost of the rental prices on newer renters, and landlords.
Building code: Land owners want to be able to build when it's their turn, but as soon as they build they want to restrict others for obstructing their view, or changing the character of the neighborhood.
Public transportation: Residents who don't use public transport have typically fought against it coming to their neighborhood to keep the undesirables out, then find out that their property values are lower, or shops aren't doing well, because of this 30 years later. See Georgetown, DC.
Basically, everyone wants to lock in their position, then keep everyone else out. That's really only rational, so I can't fault it that much. Where I personally get annoyed is when those motivations aren't acknowledged and also get paired with complaints about super high rent and property prices.
The "rush to grow" is simply the reasonable response to skyrocketing prices. If the city doesn't want to grow, then it should be ok with those prices. What's not reasonable to want to be a desirable place to live, not grow, and have stable, affordable prices.
We could, and in a few decades we'd have the exact same problems there and people would look to move back to SF. This, incidentally, is essentially what happened when interstates led to suburbanization and now people are moving back to core cities.
From a consequentialist/utilitarian perspective, you'd say that the utility benefit if you allowed a million more people to live in SF at affordable rents would outweigh by orders of magnitude the disutility of incumbents.
Another framing is just the attitude that it's wrong to exclude the poor from a community via high rents. I think people that focus on this framing are also relatively friendly to rent control, but building more housing is arguably more radically inclusive.
The 20 people who originally couldn't find houses in SF (who formerly would have needed to bid $4), can bid $2 on some of the formerly rent controlled houses. They get leases.
If the market rent is $4, and the control is $1, and the control disappears, why on earth wouldn't the landlords in possession of the formerly-controlled properties immediately raise their prices to the market price?
[0] http://www.ezracompany.com/2012/04/30/why-do-landlords-let-s...
Obviously it will be lower than $4, but what?
Civilization, OTOH, cannot exist for arbitrarily long times (the heat death of the universe presents a pretty firm outer boundary), so the fact that the market can stay irrational for arbitrarily long times, but not forever, should not be seen as reassuring, or even meaningful.
Or, to quote Keynes, "In the long run we are all dead. Economists set themselves too easy, too useless a task, if in tempestuous seasons they can only tell us, that when the storm is long past, the ocean is flat again."
A rational person holding out for the "right" renter willing to pay the higher price would lower their prices sooner, but as previously established, people are not rational. Given the landlords that are holding multiple properties, they may just let the surplus profit soak up the loss from leaving the place without tenant.
Hiou linked a few good (and actually rational) reasons why this may happen, as well: http://www.ezracompany.com/2012/04/30/why-do-landlords-let-s...
The end result is that it's not as simple as ECON101 supply and demand.
If there's 100 houses there will more supply and the market rate will drop. Basically market rent is simply the price at the available margin.
There's probably not 120 people, and 100 houses. I think it's 500 people and 100 houses. Higher rent has driven a lot of people out who would have preferred to stay but couldn't because of the price.
Rent control is the only thing keeping some of them here.
- written from my cold, moldy dying home in the Sunset.
This is mistaken. The cost of living is routinely taken into account when people are deciding what wages they will demand. If literally no teachers can afford to live in your city, and you wish your children to be educated, you'll have to pay a lot in order to import a teacher who can then afford to live there. That drives up wages to equilibrium.
Furthermore, if literally no teachers can afford to live in your city, and you wish your children to be educated, you might very well decide to move to somewhere with a lower cost of living. This drives down demand to equilibrium.
The only argument in favor of rent control is that it reduces short-term volatility of rent. This only makes sense if moving entails huge negative externalities. You do see people making this argument (they talk a lot about long-term community cohesion).
The annoying thing with the fixation on rent control over zoning is that at least rent control has some altruistic value to people who can't really afford their rents being raised. The zoning rules largely benefit property owners, I expect.
This is a very naive idea. The "market" exists only as a system protected by the state security apparatus. The state prohibits poor people to randomly capture property from rich people, in effect protecting landlords with the backing of violence. What do the poor get in return? Surely they must receive something to opt into the social contract? In general, that "something" is welfare. THAT is why welfare for poor renters is important, in the form of rent control or subsidies or whatever else they demand.
A market propped up on the spectre of state violence is not "free".
Also, let's not forget that SF also has a pretty large amount of subsidized housing stock in the form of BMR (below market rent) units and other things.
I don't see a problem with having the rent control stock transitioned to some sort of means-testing.
I'd love to see them building, building, building. The amount of fighting that went on to knock down a Walgreens in the mission that was right next to a BART stop though, leaves me wondering if that could ever happen.
Zoning protects owners, but remember that a tenant in rent control has a right not unlike an ownership right; it's a perpetual lease at a fixed price. They can sub-lease it, for instance. It is all but impossible for them to be evicted. So rising property values and quality-of-life in their area benefits them (the tenants) greatly; so opposing construction keeps the value and exclusivity of their position high. The tenants are accruing a large economic surplus that would normally accrue to the owner.
Anyway, I've heard of quite a few anecdotes that involve people making huge salaries and having incredibly cheap rent-controlled apartments, or even worse, sub-leases of one. Never mind the pied-a-terre accusations.
I have not seen any meaningful statistics, though.
http://sf.curbed.com/archives/2013/12/05/whats_the_story_wit...
http://missionlocal.org/2013/12/developers-turn-old-gas-stat...
I would guess this would make landlords avoid renting to low income tenants at all costs -- better to rent to someone who is not qualified for the means test, even at a cheaper rent, to assure flexibility.
Even with rent control, San Francisco would benefit from being denser. There's a lack of all kinds of housing which is making it unaffordable. Manhattan is 70,000 people/mi2. Brooklyn is 35,000 people/mi2. SF is 17,000 people/mi2.
Since new buildings aren't rent controlled in SF, there is no discouragement to building due to rent control.
The real answer is just geometry. SF is geographically constrained in such a way that there isn't really a way to build more housing within commuting distance. A city like Omaha (or even Berlin) has the available land go up with the square of the commuting time. SF has the land available for development go up roughly linearly (the valley doesn't get much wider until all the way to San Jose)
The way to lower housing costs is to increase the available housing as a function of commuting time. The easiest way to do this is high speed rail.
It's not a coincidence that all the communities in the valley have fought tooth and nail against high speed rail.
http://www.cahsrblog.com/2011/04/anti-hsr-activism-is-a-rich...
Once it becomes possible to get to SF from Gilroy in 40 minutes, tons of housing will be built far from the city, where land is available and cheap. People won't have to choose between paying a huge premium to avoid a long commute, or spending 3 hours of every day sitting in a car.
This is economics 101. The marginal property is south of San Jose, and the premium for living in SF is about 2 hours * 20 days of commute time a month, which if you are making $200k per year is about $4166 of lost time per month, assuming a 40 hour work week and ability to convert that time into salary (a bad assumption, but this is the actual analysis to figure out how much more prices should be in SF, it just doesn't factor everything in appropriately). It's not a coincidence that this is roughly the difference in rental costs between these two areas.
Abolishing rent-control could never take effect immediately, but would be phased out slowly to protect current occupants. Hence, the number of apartments coming on the market would increase slowly, owners could rent this 'new' inventory out at "market rates" ($4, aka the max the market can bear right now and 'the norm') and the best we can hope for is a (temporary) drop or slowdown in rental rate increases.
With a more realistic ratio of people looking for apartments (250 for 100? 500?) there may be no slowdown or drop at all. End result: neighborhoods pulled apart as long-term residents are forced to leave, rents not affected measurably, $4 considered 'normal'.
PS I live in NYC, where local renters compete with people parking their money due to overly lax taxes on non-residents, making it worthwhile to own but not occupy. Many buildings are half empty as a result (many thousands of apartments). Rents meanwhile go through the roof.
A good way to affect housing stock in NYC would be to make non-residential ownership not longer interesting. I suspect the same is valid in SF. The suggestion below of increasing housing stock by allowing bigger buildings and improving commute times seems to be a much better long-term solution.
This whole discussion is a social class issue. The folks there have defined their upper class and they actively don't want lower class people there.
Otherwise, if you insist on hyperinflation of tech salaries and hyperinflation of property prices, there's no reason not to glorify a similar hyperinflation in teachers salaries or a hyperinflation in social worker salaries. But no, there's agony and terror that a lower class human might soil our pristine streets if we paid them a living wage...
I don't know anyone who wants to push out "lower class" people. I do know lots of people who want to live in a San Francisco where everyone can afford rent. Everyone includes programmers, teachers, social workers, and dishwashers.
I'm not making an argument for rent control, per se -- it's hard to dispute that it's a distorting influence on the market in San Francisco itself -- but it's hard to appreciate just how banana crazypants the housing market across this whole region is right now.
Basically, if we had the mass transit system of new york, the rest of the bay might actually not be that bad compared to walking to work.
If you're trying to save money, of course you don't live in those places. Are you going to list Woodside, Hillsborough, and Atherton as well?
There are plenty of other less expensive cities that have great access to public transportation and decent access to SF; like Redwood City, Fremont, Hayward, South SF, Daly City, Oakland, and others that are a lot less expensive (most of these places are also way more bike friendly than SF). Even really inexpensive places like Concord, Pittsburg, or Livermore have decent access to Bart.
> even most of the supposedly "cheap" East Bay will run you far more than most other metro areas across the US.
Well yes, but your salary is higher as well compared to the rest of the US; so the East Bay is very affordable. Is is still more expensive than the rest of the US? Of course, but that's what happens when a lot of people want to live in a specific spot.
You can also just rent out a room too if you want to save money in pricier areas. In the past even with an engineering salary, I've rented a room in a cheap area just so I could save up money for house later on.
I'll tell you why this YC thread is really annoying to me: Hacker News is a forum supposedly filled with thinkers who aim to solve problems. Yet with a good number of HN people in this thread, instead of looking for alternative solutions (i.e. cheaper neighboring cities), they seem to be focused on how the problem is unsolvable without legislation.
This is the most important line here. This article is about reserving rights to the already privileged. Nothing more, nothing less.
Obviously, many people want to live there.
Keyword: delusion.
Why should someone who banks 80k a year get to keep a $700 apartment in the Marina? That is the problem with rent control.
I don't know if San Francisco has this problem, but New York has a lot of upper-middle-class, well-connected people who bought their way into rent control by paying "key money" and being named as family by a deceased beneficiary (who need not be related to them). They're now in an arrangement that is actually superior to ownership (because they don't pay property taxes). It's pretty disgusting. People actually used to follow obituaries as a way of finding available RC apartments.
Meanwhile, a tenant leaves an old building and the landlord starts looking at existing rental rates. What do you know, that one-bedroom I was renting for $1500 two years ago now goes for $3500. I guess I'll up the rate! It's not as nice as the new unit, but at least it's not stuck in BFE China Basin (people will pay a premium to be near food / park / Muni).
That's how rent rates got so high: development costs > listing rates > matching rates. Period.
Further, any truth in your statement would argue against rent control. If owners could rent at discounted rates to fill their units, then raise rent to market, everyone would be better off. With rent control (in SF new units are not rent controlled) owners are incentivized to hold out for a higher initial rent.