Why affordable housing is scarce in progressive cities

This is a very insightful article. Every discussion about high prices in cities usually ends into a big argument about rent control, but, in my opinion this is rarely the real issue. Rent control laws in the US are rather weak, and the percentage of rent controlled units is ever decreasing.

I think this article points to a much more important issue. And that is existing real estate owners acting to keep the value of their holdings as high as possible, i.e., to keep prices as high as possible. A lot of the wealth in America is locked up in real estate and this is especially the case in large cities. The landowner lobby (although they do not call themselves that) is quite powerful.

Actually the fact that rent control comes up so often as an issue is just another piece of evidence that the landowner lobby is so powerful that they are able to completely control the conversation. When faced with what is basically an accusation that they are gouging the population they turn it around and declare that the few weak laws that slightly reduce their ability to gouge are really the problem.

And while rent control is a point of contention, the real way the landowner lobby keeps prices high is by restricting new construction. This is a much more important factor than rent control.

A very important issue here is that homeowners and landlords are much more active in most political processes. If one person decides that he will dedicate his life on ownership of land and will make that the main source of his income, he will easily see that it is important to devote time and energy in a lot of the rather tedious local political processes. If a second person decides to dedicate his life to some type of profession or art instead, then local politics tend to become a bore and a time waster. But then the second person is not at the table when important decisions are made and his interests are negatively impacted.

So the general answer is to be more active in politics. But how to be more active in politics?

Here is an issue that the article did not really touch upon. The most important requirement for more construction and higher density living is the availability of infrastructure. Nobody will approve high density buildings without the infrastructure, nobody wants to create Mumbai style tenement cities.

And the most important and most expensive part of infrastructure is transportation. Look at any successful large city in the world -- they are usually defined by their subway system. After all the subway is the only sane way to move large number of people around in a very dense environment.

In fact the main battle against development of LA has been fought for the last 20-30 years over the LA subway. There have been some very successful attempts to slow down and block the development of the subway launched mostly by neighborhood groups. As a result the subway came in much later than originally planned and the most important and most desired line (the purple line) is still only a tiny fraction of what it should be.

So if you want to help create more housing it is always best to vote in favor of new transportation projects, especially high density high efficiency projects, like the subway.

Yes, it is an ideological preference. Rent control is conservative, market distribution is liberal. I just point that people really really want to be called progressive without being one.

You can't be progressive and conservative at the same time! You can barely be progressive if you hold conservative view on one of the most important issues. You can only be centrist that way.

In all the major cities I know of (and this includes san francisco and los angeles), if there is rent control it is set for buildings older than a fixed date (usually somewhere about 1979). So no, newer buildings will not become covered by rent control unless the laws are drastically changed.

Furthermore, in California the Ellis act allows landlords to mass evict rent controlled tenants in order to demolish a building for new construction, so your second point is not valid either.

> In Prague, they started removing rent controls several years ago, and we have seen highest increase in property values in maybe three decades.

Property values are not the same as rents or general housing costs. As soon as you make construction more profitable, it makes the land worth more -- property values go up. But then the construction happens and housing costs, i.e. price per unit, go down as a result of more units.

Before you had two housing units on $500K in land going for $1000/month. After the land is worth $2M but it has 20 housing units going for $750 -- and the landlord is making more revenue, because 20x$750 is more than 2x$1000, enough to offset the higher property cost.

> Also, if I owned some property, I am not sure I would want to invest in building new one and have to decrease rent rather than enjoy the fact that the rent is high.

Rent doesn't materially decrease as a result of one person building one building, it's a result of many new buildings across the city. So your choice isn't between the existing two units at $1000 and twenty new ones at $750 (though even that itself is still profitable), because if you do nothing the existing units will still fall to $750 each as a result of what other people do once they're allowed to do it.

> More important is probably lack of actual housing construction financed by government.

Actual construction subsidies might help when you have a massive shortage and you want it correct it quickly, but in general it isn't necessary -- when rents are high and construction is permitted, it happens.

Most communities try and walk a fine line trying to prevent boom and bust cycles.

While creative destruction is a necessary part of free market theory it is beyond scary when it comes to peoples communities. That fear and the reality that some of the losers of the market correction are people that one may know personally are why that true free market is never seen in housing.