Earlier quoted context omitted.
Ugh, I hate to pull this out, by: NIMBY-ism. To a first approximation nobody wants an SRO on their back yard. Me? I am just fine with it, I have lived near SROs for years . But…oh whatever, I’ll be blunt: Karen doesn’t want a giant building full of itinerant men on her block, and she is going to fight tooth and nail to prevent such a thing.
It’s not just NIMBY-ism, and NIMBY-ism isn’t what drove these away. What it is is pretty much the minimum mage—housing has to meet a minimum threshold in quality or else it can’t exist. Never mind that people might still be willing to live there and are able to make their own decisions. And some people might not have other options. To many, this seems like exploitation. They’d rather have people living on the street…
And it's not even the exploitation. Believe it or not, it's the fact that there is no one to hold liable if things go wrong. At root, it's about on which head does liability rest. You don't meet code, firefighters rush in, and the staircase collapses. Who do the cops and the firefighters go after? If it's the owner of the SRO, then no real estate investor will build one. (At least, not one that isn't up to code.) You can try to loosen the code, but the firefighters are only going to allow you to cut so much before their unions have your picture up on billboards around town as the big, bad, slumlord pushing for substandard housing.
Owning a lot of real estate is not a picnic, and you learn a lot of things you never knew before about how local politics work.