Stanford paper says rent control is driving up cost of housing in San Francisco • Hacker News Board

Re: Stanford paper says rent control is driving up cost of housing in San Francisco

#101

Post by bzbarsky » Mon, Jan 08, 2018, 9:21 PM UTC

snissn wrote: post #51

tomohawk wrote: post #33

Earlier quoted context omitted.

Heinlen in "The Moon is a Harsh Mistress" introduces the idea of a legislature with 2 chambers. One for creating laws and the other for getting rid of them. The threshold for creating them being higher. The way it is now, everything is geared towards "doing" things, and credit is received for "accomplishments". Its usually much harder to undo things. It would be refreshing to have specialists in undoing things.

Has that ever been tried in practice?

Not sure about with laws, but similar things have been tried with regulations. See http://redtapereduction.com/BC_Reg_Reform_Model.aspx but in brief:

* Around 2001, voters in British Columbia elected a government with a specific campaign promise to reduce "regulation" by 1/3.

* Initially this was accomplished by among other things setting a rule that for every new regulation introduced two existing ones had to be eliminated.

* Then the status quo was maintained by mandating a 1-for-1 rule (each new regulation requires elimination of a existing one).

* In 2015, the government of Canada introduced its own 1-for-1 rule.

There are obviously complications around what constitutes "one regulation", which neither my summary nor the linked article completely capture.

Re: Stanford paper says rent control is driving up cost of housing in San Francisco

#102

Post by rayiner » Mon, Jan 08, 2018, 9:23 PM UTC

antisthenes wrote: post #96

rayiner wrote: post #65

Earlier quoted context omitted.

> they ignore the importance of income and social stability They don't ignore it, they're just not ignorant about the costs of income and social stability. For example: I grew up in a relatively modest house (3BR, 1,100 square feet) about 40 minutes outside of D.C. Growing up, there were quite a few young families in our neighborhood. Average household income was probably about $70k/year in today's money--relatively…

> Instead of playing the housing bubble game, my wife and I commute in 60+ minutes each way. Partly because it enables us to raise our kids in a neighborhood with young families. But also just out of spite. Who exactly is being spited here when you waste 10% of your life sitting in a car 'commuting' ?

Each buyer that refuses to bid on an inner-suburb house drives the market price down by some real, but infinitesimally small, amount. Symbolic, sure, but I can't in good conscience bid some split level in a 1950s Levittown development up to $600k.

Re: Stanford paper says rent control is driving up cost of housing in San Francisco

#103

Post by knodi123 » Mon, Jan 08, 2018, 9:24 PM UTC

DougN7 wrote: post #91

ThrustVectoring wrote: post #43

Another second-order effect of rent control is increased traffic. Suppose you have two residents with significantly below-market-rate housing at the same quality level, one in downtown SF and another in Mountain View. The former starts a new job at Google in Mountain View, the latter starts a new job at a trendy start-up in downtown SF. Since they're paying significantly below market rate, they're unable to trade apa…

That's a really great insight. The fact that such good intentions often lead to bigger problems is what concerns me about UBI - it will surely have huge second-order effects. I'm not sure what they will be, but rent control in a city is tiny compared to the effect a universal change like UBI would introduce.

> UBI - it will surely have huge second-order effects

I absolutely agree, and I think these justifiable and yet ill-defined concerns are shared by a lot of UBI opponents.

I just hope anyone trying to come to an informed decision remembers to include unrestrained capitalism's second-order effects on the pro/con list.

Re: Stanford paper says rent control is driving up cost of housing in San Francisco

#104

Post by oldsklgdfth » Mon, Jan 08, 2018, 9:24 PM UTC

dmix wrote: post #50

oldsklgdfth wrote: post #34

Earlier quoted context omitted.

Personally I think that 1) is not attainable in a practical sense. It would require resources that are not available and would just add to the ridiculous overhead of running a government. I used to believe in an ideal state as the one you describe. More recently, I think about what a system - i.e economic, political, social - that is stable (in some sense) looks like. For example, liberatarians believe that markets s…

> I usually conclude that small societies are optimal for quality of living. I came to the same conclusion. Sadly many 'libertarians' often gets dismissed as disliking all forms of government and regulation, which is not the case, rather preferring a limited one. But I guess intentional/unintentional misrepresentation is a savvy and common political tactic because it's effective. My question to you is how do you achi…

I think that you can't, PERIOD. Catalonia was attempting to have a small local government and got shut down. Also, revolutions don't benefit the masses, only a different small group of people. The american revolution displaced the english royalty with new american power. The rebels become the new establishment.

I think the only way to guarantee that you don't government overreach is not have a sociaety where all member are active and responsible. Not in that they all vote. In that they all deal with issues in their community, rather than pawning it off to the government and also giving them the power they need.

I think that society that takes care of itself - instead of inventing institutions to do so - is feasable, but a real pain in the ass to maintain. And it's just easier to not. Sorry if i ranted a bit.

Re: Stanford paper says rent control is driving up cost of housing in San Francisco

#105

Post by hardtke » Mon, Jan 08, 2018, 9:26 PM UTC

ThrustVectoring wrote: post #43

Another second-order effect of rent control is increased traffic. Suppose you have two residents with significantly below-market-rate housing at the same quality level, one in downtown SF and another in Mountain View. The former starts a new job at Google in Mountain View, the latter starts a new job at a trendy start-up in downtown SF. Since they're paying significantly below market rate, they're unable to trade apa…

Another second order effect is the reduced supply of family sized units. Many 3+ bedroom units are occupied by older couples and single people who raised their kids there and no longer need the space but would find it much more expensive to downsize. This drives families out of the city (among other things). Prop. 13 solves this by allowing people older than 55 to transfer their property tax break to a smaller house.

Re: Stanford paper says rent control is driving up cost of housing in San Francisco

#106

Post by ggg9990 » Mon, Jan 08, 2018, 9:26 PM UTC

Rent control is just one of the ways that people who are in a place benefit themselves at the expense of the people who are not yet there (and thus don’t get to vote).

Re: Stanford paper says rent control is driving up cost of housing in San Francisco

#107

Post by bzbarsky » Mon, Jan 08, 2018, 9:27 PM UTC

Spooky23 wrote: post #84

mattlong wrote: post #24

Earlier quoted context omitted.

> Rent Control surely just prevents local families from being muscled out by the tech employees? Correct. And in the process of doing so, further contributes to the lack of inventory of market-rate rental units available to the influx of newcomers/tech employees. As mentioned elsewhere in the comments here, this causes huge disparities for rents of similar units within a given building as landlords attempt to compens…

The market would speak anyway. If people are paid enough to pay $50k/year in rent, no landlord in his right mind will charge less. Google or whatever doesn’t pay based on housing costs. They pay based on business value.

> Google or whatever doesn’t pay based on housing costs.

A number of companies have pay brackets that vary by location, to reflect cost-of-living differences in different locations. I can't tell you whether Google is one of those companies.

Re: Stanford paper says rent control is driving up cost of housing in San Francisco

#108

Post by hcknwscommenter » Mon, Jan 08, 2018, 9:28 PM UTC

jedberg wrote: post #57

jrs95 wrote: post #36

This is almost irrelevant if they don’t get the supply issues worked out.

Why would I build new supply if I'm going to be stuck renting it out under rent control? If I already own a property, how can I build more if I can't raise rents on my current properties to market rates so I can afford to build new buildings at market rates? Rent control causes supply issues. Look at the City of Berkeley. Their supply increased massively right after rent control was lifted in 1997.

New supply is NOT subject to rent control in any way shape or form. Only non-single family housing that was built before 1979 (or maybe 1980) has rent control. Nothing built after that is rent controlled at all.

Re: Stanford paper says rent control is driving up cost of housing in San Francisco

#109

Post by icelancer » Mon, Jan 08, 2018, 9:28 PM UTC

linkregister wrote: post #64

nicholas73 wrote: post #38

Earlier quoted context omitted.

Landlords will rent at whatever they can a tenant to pay for, not some number in their mental ledger.

Exactly! If the landlord can get a tenant to pay $5000 per month, then the market rate for that particular unit is $5000 per month.

No, not exactly. In the scenario above, the landlord obviously has to keep the property vacant for some time at $5000/month, much longer than at $3000/month. But because it is a near-certainty the real price would go to $5000/month in 5 years - but he is unable to increase rent to that if he rents out today at $3000/month due to rent control (and this is critical) - he would rather keep it vacant until someone comes along and pays the higher amount.

If not for rent control, he would charge $3000/month now at market-clearing rates, get a tenant in there in 30 days, and increase rent by the standard market price every 12 months. But due to rent control undercutting profits, he can't do this, so he keeps it open at a higher price.

Re: Stanford paper says rent control is driving up cost of housing in San Francisco

#110

Post by mnemonicsloth » Mon, Jan 08, 2018, 9:29 PM UTC

dmix wrote: post #10

ghouse wrote: post #5

Rent control solves some problems. Creates other problems. Similar to almost any intervention in free markets. Sometimes the cost of intervention outweigh benefits, sometimes they don't. Rent control allows people (wealthy or poor) to remain where they are without purchasing their residence. Unfortunately, to do accomplish this objective, it increases the price for new arrivals (be they wealthy or poor). In Californi…

> Sometimes the cost of intervention outweigh benefits, sometimes they don't. + Sometimes it works for a short period, as the policy reflected the economy at the time of creation, then becomes irrelevant via technology/market reaction to policy/general progress... but yet stays a policy for decades. The important point is that we rarely ever measures whether it does work or not, and policy tends to have an extremely…

1) a well-staffed multi-partisan agency entirely dedicated to reviewing policy, with a mandate of removing any policy having a net-detrimental effect on society. By launching scientific studies of the effects with subpoena power over other agencies, making policy recommendations, and potentially the power to temporarily suspend regulations until reviewed by congress.

I know this sounds like a good idea. It almost sounds like a good idea to me. But I don't think it will have the effects that you imagine.

Bureaucracies are always understaffed. That's because reality is always more complicated than they can model, so the task of rationalizing things so they can be apportioned, assessed, allotted, regulated or taxed can never end. If you put your plan into practice the immediate effect will be a need for a lot more bureaucrats. Before they just had the real world to worry about; but now, they will have to worry about reality plus an ongoing audit of the regulatory environment. And if they make stupid, unaccountable decisions, as bureaucrats sometimes do, some of them will involve stupidly and unaccountably repealing regulation that was serving a useful purpose. I'd be willing to bet that the problems caused when good law ceases to apply are worse than when bad laws are applied for too long.