Wichita?
Lubbock?
This might work if you were an artist looking for a super cheap place to live, and you just wanted to hole up and paint all day and all night.
Every academic paper I’ve seen on rent control agrees that it raises rents overall, because it’s implemented half-assed. Rent control needs to limit rent increases regardless of whether the renter changes, or it just leads to frivolous evictions. If the landlord has no incentive to change over occupants, there are fewer evictions and fewer complaints about failure of the landlord to perform basic maintenance.
Wouldn’t full-assed rent control reduce incentives to build housing in cities that need it, though? If rent no longer goes up with demand, it becomes more attractive to build, let’s say a hotel rather than an apartment building. You might keep rent low but now you have waiting lists or lotteries or something just to even have a chance at moving in (which is already the case with subsidized affordable housing in expensive cities, I believe?)
Or if it doesn’t apply to new construction, then you exacerbate gentrification since all the old rent controlled places will be occupied or impossible to get when they enter the market, and the new market rate places will be exorbitantly expensive. Only the wealthy will be able to move into the city.
I think the only real solution is to build more housing…
Even that doesn’t address the problem by itself. The economic incentives around home construction lead to the building of large, expensive places that tend to be too expensive to reduce housing pressure.
Rent control raises rents overall, constrains supply and creates winners and losers arbitrarily.
“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. The agreement cuts across the usual political spectrum, ranging all the way from Nobel Prize winners Milton Friedman and Friedrich Hayek on the “right” to their fellow Nobel laureate Gunnar Myrdal, an important architect of the Swedish Labor Party’s welfare state, on the “left.” Myrdal stated, “Rent control has in certain Western countries constituted, maybe, the worst example of poor planning by governments lacking courage and vision.” His fellow Swedish economist (and socialist) Assar Lindbeck asserted, “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.” That cities like New York have clearly not been destroyed by rent control is due to the fact that rent control has been relaxed over the years. Rent stabilization, for example, which took the place of rent control for newer buildings, is less restrictive than the old rent control. Also, the decades-long boom in the New York City housing market is not in rent-controlled or rent-stabilized units, but in condominiums and cooperative housing. But these two forms of housing ownership grew important as a way of getting around rent control.”
Thanks for posting this.
It’s one of those “top ten striking images” that my brain carries around, permanently, until I die, at least.
In the world of “a picture says a thousand words” that one says about a million words.
Here’s another, it’s from Montana, and it’s also my top ten. Not “top ten favorites” because I can’t remain sane if I consider the world on fire, all the time, and humans being blasé about that to be a favorite-y good thing.
I keep hearing that assertion. It’s basically making the argument that, because there’s a problem, don’t solve it, because of the problem. Would landlords still make money in SF if rent for a 2 bedroom apt was $1000 instead of $5000? Yes, yes they would. There are “landlords” who have properties with 40% occupancy who still make money there. Not to mention the “investment” properties that remain completely vacant. Once you factor in those, supply is not the issue. It’s the perverse incentives that make it so landlords are somehow better off charging either $5000/mo or not leasing the apartment at all.
Re: AirBNB: roll that into the legislation. Again, artificially nerfing rent control isn’t a fault in rent control, it’s a fault in nerfing rent control.
Re: Housing supply: In a city of SF’s size, there might be something in the neighborhood of 150k unoccupied spaces for those people. Even if there isn’t, even if there’s only 20k, open them up for people to rent, rather than letting them sit vacant. There’s also the fact that some cities, like SF and Seattle, have geographic limits to housing expansion, that will make it so supply will always be a limitation. Right now, that acts as a positive feedback loop to make prices skyrocket. Putting a limit on the rent growth rate slows the feedback loop.
You’ve got my statement backwards. It’s not the perverse incentives of rent control that is the problem. It’s the perverse incentives of the real estate market that make it better for landlords to hold an apartment vacant rather than rent it at a reasonable rate. The combination of controlling all rent, not just freezing rates for existing renters, along with penalties for holding properties vacant, act in opposition to those perverse incentives.
I’m probably being too much of an optimist, but maybe this will prompt some action on this issue at something more than the municipal government level (of course, exactly what “action” should be taken is going to be an argument in itself). As long as this issue only affects people who live in a few specific large cities, I think it’s been easily dismissed by many as “you brought this on yourself by living on the coast and if you don’t like it, just move”. If this issue is hitting smaller cities too, maybe it will generate more support for the idea that we actually need to do something about it.
