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

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

#21

Post by paulgb »

bendmorris wrote: post #13
theduro wrote: post #12

Rent control is a failed experiment. All it does is force land lords to massively increase rent amounts when someone moves out to account for multi-year market increases. Basically, if the real market price of an apartment is ~$3,000/mo, but in 5 years it realistically would be $5,000, they will simply list it for $5,000 now, to mitigate the loss. My mother-in-law is a land lord in Los Angeles (a very fair one at tha…

>My mother-in-law is a land lord in Los Angeles ... She is a staunch opponent of rent control. Is this supposed to be surprising...? Regardless of whether it works for tenants, obviously rent control isn't there for the landlord's benefit.

Having read up on some of the building purchases in my own neighborhood (East Village of NYC), it seems that rent control is bad for honest landlords and good for the slimey ones who are willing to "encourage" people to leave. And thanks to Coase's theorem the building sales are usually in that direction.

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

#22

Post by theduro »

bendmorris wrote: post #13
theduro wrote: post #12

Rent control is a failed experiment. All it does is force land lords to massively increase rent amounts when someone moves out to account for multi-year market increases. Basically, if the real market price of an apartment is ~$3,000/mo, but in 5 years it realistically would be $5,000, they will simply list it for $5,000 now, to mitigate the loss. My mother-in-law is a land lord in Los Angeles (a very fair one at tha…

>My mother-in-law is a land lord in Los Angeles ... She is a staunch opponent of rent control. Is this supposed to be surprising...? Regardless of whether it works for tenants, obviously rent control isn't there for the landlord's benefit.

Agreed. I guess what I was getting at was, given her particularly less than favorable views on deregulation and hyper free-market views in other respects, I find her opinion on this interesting.

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

#24

Post by mattlong »

45h34jh53k4j wrote: post #4

Now, I have not read the paper, but I would have thought the free market combined with sky-high wages and demand, combined with a lack of inventory, was the cause. Rent Control surely just prevents local families from being muscled out by the tech employees?

> 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 compensate for all the market-rate rent being missed from longtime tenants. E.g. I've known folks paying $4,000 while their neighbors pay $400. While I don't have numbers or a study to point to, my experience over the years with the SF housing market suggests the impact of this effect is nontrivial.

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

#25

Post by Alfredo123 »

Rent control is nothing but a populist political measure. It makes no economic sense what so ever.

If rent control worked why not set prices of everything else to low values ?

Any intervention in a free market system will benefit some people at the expense of others and that losing party would then be less willing to participate. What incentive will people have to maintain and increase housing when they might end up broke because of rent control ?

California needs high rises and denser dwelling units for that the zoning laws needs to change.

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

#26

Post by 0wing »

crdoconnor wrote: post #17
wycs wrote: post #6

Earlier quoted context omitted.

Rent control removes the incentive to build new apartments. There are second order effects that make it counterproductive. Even the socialist economists agree rent control is terrible.

>Rent control removes the incentive to build new apartments. Not even 1% as much as untaxing land and property does.

Actually the opposite, by taxing land in high demand urban cores it would incentivize more efficient use of the land - i.e. building up to support more occupants or higher value economic activity. [1]

Deregulating the zoning restrictions would allow more buildings to be built. [2]

  Here is a startling fact: in 2014 there were 142,417 
  housing starts in the city of Tokyo (population 13.3m, no 
  empty land), more than the 83,657 housing permits issued 
  in the state of California (population 38.7m), or the 
  137,010 houses started in the entire country of England 
  (population 54.3m).

  Tokyo’s steady construction is linked to a still more 
  startling fact. In contrast to the enormous house price 
  booms that have distorted western cities — setting young 
  against old, redistributing wealth to the already wealthy, 
  and denying others the chance to move to where the good 
  jobs are — the cost of property in Japan’s capital has 
  hardly budged.

  This is not the result of a falling population. Japan has 
  experienced the same “return to the city” wave as other 
  nations. In Minato ward — a desirable 20 sq km slice of 
  central Tokyo — the population is up 66 per cent over the 
  past 20 years, from 145,000 to 241,000, an increase of 
  about 100,000 residents.[3]
With artificially constrained supply from Prop 13, there's dozens of empty lots and empty units just doing nothing of value. It's surreal to hear about stories from baby boomers about moving across the country to NYC/SF/LA/etc and being able to easily find a job and affordable housing in a major city, often while attending school at the same time. The same generation has now pulled the ladder up behind them to spit down on future generations.

[1] https://en.wikipedia.org/wiki/Land_value_tax#Efficiency

[2] http://urbankchoze.blogspot.ca/2014/04/japanese-zoning.html

[3] https://www.ft.com/content/023562e2-54a6-11e6-befd-2fc0c26b3...

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

#27

Post by Gibbon1 »

michaelchisari wrote: post #18
theduro wrote: post #12

Rent control is a failed experiment. All it does is force land lords to massively increase rent amounts when someone moves out to account for multi-year market increases. Basically, if the real market price of an apartment is ~$3,000/mo, but in 5 years it realistically would be $5,000, they will simply list it for $5,000 now, to mitigate the loss. My mother-in-law is a land lord in Los Angeles (a very fair one at tha…

My mother-in-law is a land lord in Los Angeles I'm a tenant in Los Angeles, and a staunch supporter of rent control. Knowing that my rent (which is already high) can only go up so much year-over-year provides some bit of stability as the tech industry devours eastward from Santa Monica.

I've been paying attention to what economists say fairly rigorously for the last ten years and they have some huge blind spots. One of them is they completely and utterly ignore the importance of income and social stability. Which is they see any expenditures needed to provide those as a unacceptable drag on society.

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

#30

Post by bendmorris »

theduro wrote: post #22
bendmorris wrote: post #13

Earlier quoted context omitted.

>My mother-in-law is a land lord in Los Angeles ... She is a staunch opponent of rent control. Is this supposed to be surprising...? Regardless of whether it works for tenants, obviously rent control isn't there for the landlord's benefit.

Agreed. I guess what I was getting at was, given her particularly less than favorable views on deregulation and hyper free-market views in other respects, I find her opinion on this interesting.

No offense, but I don't think it's especially surprising when people support one set of political views when it affects other people, but deviate from it when it affects their own bottom line. See for example the powerful in Silicon Valley, who are mostly "progressive" until it comes to economic issues that affect their personal finances.
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