Did you read the article though, it's arguing that the rent control is causing the very thing you're complaining about, that it it discourages from building new housing. So less housing is built which makes the existing housing more scarce and drives up the price.
> a shortage of new construction, a lack of tenant protection
"Tenant protection" -- especially rent control -- is a nontrivial cause of the shortage of new construction. High rents are a signal to developers that there is money to be made constructing new housing. If it's not possible to make the money, they won't do the construction, which is what rent control causes.
You get a population of existing residents with rent controlled apartments, who then have no incentive to fix the housing shortage or eliminate rent control, but insufficient construction going on and consequently even higher prices for people who didn't get a rent controlled apartment in 1975.
(Restrictive zoning is another, independent cause of the same problem, and the two compound each other.)
> The big loss with rent control is the disincentive for developers to create new apartments
Rent control does not prevent developers from building new construction, in fact it may promote new developments. Rent control reduces the cost of housing for a select few people who haven't moved in a while, which artificially raises the prices for newer tenants that just moved into a neighborhood. Higher prices for new tenants make developing new housing more attractive, not less.
Just addressing the on-topic portion of your comment (not that the rest wouldn't be worth commenting on, just not enough time or energy) - I really don't understand your criticism of rent control.
"It causes higher prices for everyone not under rent-control."
Yes, but that's almost the whole point of rent control - people aren't being displaced by the folks bidding up the price of all the other apartments to absurd levels. The article makes it sound like without rent control everything stabilizes into this beautiful bell curve with housing for everyone, but it doesn't actually provide any evidence for this (other than showing less populated and geographically confined cities without rent control).
"Discourages improvement of existing properties"
Because the properties are certainly more important than the people living in them, right? I mean, our goal as a society should be as many improved properties as possible.
"Discourages building new properties"
This one baffles me: new properties aren't subject to rent-control in the vast majority of cases. It seems like rent-control is almost a direct stimulus to build new properties.
"I don't really feel sorry for someone getting a huge apartment for way below market price."
What about feeling sorry for someone who has made their home somewhere for 20+ years and is now getting shoved out because they made a tv show that was set in the neighborhood and a bunch of young overpaid professionals want to play cool for a couple of years?
> rent control increases the cost of rentals on the market by reducing supply (since it allows people that pay way below market to stay in housing that would otherwise be available for someone else)
More importantly (when it comes to increasing the cost of rentals), rent control discourages new construction by reducing it's profitability (easy to see with a discounted cash flow[0] analysis).
The point isn’t about the supply of new construction but rather about supply of open leases. Rent control incentivized renters to stay put thereby reducing supply for potential residents. Limiting supply increases prices which further incentivized renters to stay put. And on and on.
Removing rent control hurts current renters in the short term. It also removes restrictions on supply that improve the overall health of the market over a longer time horizon.
The problem is that is HAS control over making more housing. And, indirectly, it HAS control over making housing cheaper. Because what it does it suppresses the supply of housing, it makes it more expensive for anyone not living in a rent-controlled apartment.
Also, sooner or later, the quality of the apartment will match the rent.
Rent control created an disincentive to build new rentals, increasing the cost for new renters....laws against building made it worse.
People complain because they work low wage jobs in the city and need a place to live. If they don't have an affordable place to live they won't be able to do the work that needs to be done.
I think the point of the article is that rent control, although it may help a select few people, generally decreases the supply of housing, so is actually bad if your goal is to create more housing at an affordable price.
This seems to assume that rent controls are the only thing preventing new home construction (because of the uncertainty of being able to sell units without being hit by rent control), but supply can be restricted in many ways. The most common of which is simply running out of room thanks to natural boundaries (rivers, oceans, lakes) and local policies against building high density housing.
So rent control tends to show up in areas where rents are growing significantly faster than inflation already, meaning the rent control is at best a band-aid over the existing problem. And then the problem gets worse and economists blame rent controls.
Yes, I'm inclined to believe that rent control is a symptom, not the cause. The cause appears to be ridiculous zoning and building restrictions. If more housing is available such that the price drops, then rent control isn't even needed.
Actually, the paper doesn't make any claims on the supply of housing, it makes claims on the rental supply. There is an important distinction.
That rent control makes renting less profitable and that landlords sell some properties is absolutely expected. The question is whether that actually increases rents, which the article does not establish, it instead makes the leap that less rental units means higher rents even if the total supply of housing stays the same, while assuming that rent control doesn't actually lower prices.
All in all, the article doesn't actually make the claim or even suggestion that rent control decreased the supply of housing. The article doesn't provide evidence that rents would have increased faster without rent control, as it doesn't quantify the rent depressing effect of rent control at all.
By the way, I don't actually like the SF implementation of rent control and I believe that the actual implementation details of rent control are critical. I wouldn't be surprised if SF's rent control wasn't effective at all. It's just that the article you linked doesn't actually makes such a claim.
I tend to agree. It doesn't look like a rent control issue to me. I live on the Peninsula where there is no rent control, and rents are skyrocketing just as much as in the City.
Instead it seems to me like there are just too many mechanisms (zoning, environmental review, etc.) whereby homeowners and incumbent landlords can act on their (eminently logical, but self-serving) concerns that 'cheap housing will destroy my property value' and prevent housing from being built, or limit the density of new development.
Something I am surprised not to see discussed more often is the effect on the market of "affordable housing" which in the political lingo refers specifically to means-tested below-market-rate housing. By splitting the housing market into market-rate and below-market pools it actually props up prices of the former and seems like it may (I haven't seen any good analyses on this to be honest) prevent new construction from having as strong of a restraining effect on rents overall as it otherwise might.
The argument is that rent control is a poor bandaid over the long-term problem of housing supply, because it reduces political pressure to build more houses. It's not the same longterm fix that changing zoning laws would be, for example.
Rent control suppresses new housing creation by reducing returns on investment. Zoning is only one half of the equation: you also need developers willing to build housing. Price controls limiting rental rates reduce the return developers would make [1], thus disincentivizing new housing construction.
1. Arguing that rent control doesn't suppress development because it only affects rent increases is misleading. Developers are operating on a decades-long investment horizon, so the fact that long-term renters are going to be underpaying within a few years is definitely a factor taken into account.
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