Well, instead of companies paying employees money which goes to rent, the city could tax those companies to subsidize the housing instead. That would make similar amounts of money available but the city would have more control over who gets the rent money. Unforeseen consequences abound, I'm just pointing out that rent doesn't have to go up forever.
OK here's a better alternative. Instead of rent control on a per-unit basis, cities could provide subsidies to long-term low-income residents that reduce their personal expenditure on rent. The subsidies would be paid for through taxes, thus amortizing the subsidy across the local tax base instead of impacting an individual landlord or unit.
But let me note that this must be done only for long-term residents (that is, those who have been there for years). For example, if someone moved to SF within the last 5 years, they should have known what the price of living there is. This is one of the most desirable cities, and it makes sense that it would be expensive and that not everyone would get to live there. Those moving there in recent years therefore, simply made an irresponsible personal choice and must yield to the consequences, rather than being subsidized at others' expense.
I don't see how that will prevent rent from going up forever unless you put a cap on prices. Salaries in SF keep going up because rent is going up. The subsidy would have to continue to grow forever. If you are looking to just have certain groups of people to live there without concern for rising rents, just mandate rent control instead of the layers of indirection
[Apologies - copying a comment I made elsewhere, but it is relevant to the point you made]
Here's a better alternative to rent control. Instead of rent control on a per-unit basis, cities could provide subsidies to long-term low-income residents that reduce their personal expenditure on rent. The subsidies would be paid for through taxes, thus amortizing the subsidy across the local tax base instead of impacting an individual landlord or unit.
But let me note that this must be done only for long-term residents (that is, those who have been there for years). For example, if someone moved to SF within the last 5 years, they should have known what the price of living there is. This is one of the most desirable cities, and it makes sense that it would be expensive and that not everyone would get to live there. Those moving there in recent years therefore, simply made an irresponsible personal choice and must yield to the consequences, rather than being subsidized at others' expense.
Based on your summary, the comment you're replying to would be a better solution as there wouldn't be a perverse incentive. Do you think a replacement of rent control with such a policy could happen?
Wrong. Long term, subsidies encourage building more housing. Rent control has the opposite effect. On top of that, subsidies can be directed to bring the most benefit to the city (teachers, for example), while rent control benefits whoever happens to be renting at the time it is instituted. There are better long term options, but the political reasons for rent control are because the short term problems can't be ignored, so they aren't actual alternatives to rent control.
It's not ideal and no silver bullet, but having rents go up means "normal" people living in places for years get pushed out of the city and land lords get richer, faster. It seems to address that issue, which is not all bad on the surface.
It's not the perfect solution, but what do you propose as something better that still helps normal people not get pushed out?
Instead of controlling rents, wouldn't it be better to adopt a housing policy which increases supply for everyone? For example, the office space is projected to house 3000 employees in 2 years. Why not plan on building about 3000 housing units in that same time frame?
What would happen if one of these cities passed a law that apartment rents would have to be adjust for income level? So lower income people would get a break, and higher income would have to pay more? Would that be effective, and would it be legal?
Or, the city could have a housing subsidy tax that is progressive based on income.
If the city really wanted to stop the rising rent they could just implement rent-control, and do it on a block by block basis, so you don't have the same issues that exist in NY.
Rent control could technically be done by handing money to tennants to then hand to landlords, but in practice it's done by taking money away from landlords. Obviously, that's going to keep landlords from being able to give that money to construction companies.
Another possible solution would be to take money away from tenants and landlords both to give directly to construction companies. That's socialized housing. However in the long run it's not likely to be much cheaper, because it's not like landlords are making that much profit in the first place. The profit in renting is about the cost of capital, the government is not going to do much better.
Yup. Simply disassociating the benefits of rent control from the housing unit it is attached to would go a long way to permitting development. The way things are today, rent control basically serves as an almost permanent mutex on the development of the underlying real estate.
I'd be more useful if cities made it a policy that the amount of housing subsidy you receive is proportional to the year you moved to the city. That would achieve the same goal as rent control (i.e. affordable housing), but alleviates the mutex on many structures that could be torn down to make way for structures that permit great density.
Affordable housing programs are fine. Tying up the underlying asset indefinitely is counterproductive.
The thing is, that assumption that without rent controls, developers can finance more money on builds hinges on the fact that supply is constrained, and will continue to be constrained in the future such that rents will march past average wages. At which point you have to wonder who is being served by laws set up like that? Certainly not the city, which has a tacit interest in housing all the workers that generate its economic activity within its own borders just for tax base reasons to cover the infrastructure these workers use to work in said city. Certainly not the workers of the city, who would like to live a reasonable distance from their job for a reasonable proportion of their net pay. The only real benefactor from such a paradigm are those that stand to make profit hand over fist from this status quo, and these people are often not the central cogs of the regional economy that makes the place such a place to invest in the first place. They are more like a parasitic loss on the system versus serving any mutually beneficial function to the system. These beneficiaries may live outside of the system entirely, and basically serve to extract wages from the system which aren't replaced much like any other extractive industry.
Now, there is a solid argument that apartments have gotten too expensive due to regulation. Look at any apartment building and what do you often see? Its cladded in tiny 3 feet by 8 feet balconies that can scarcely hold a cafe table, it often has some big central mostly useless courtyard like area within the complex itself to check a box for some outdoor space requirement, and it has a parking garage that extends 100 feet into the earth. All of these things are also brought on by regulation that demands the developer to build these things if they are to see the build approved. These can also all be nixed, and in many cases they have been used pretty much to just serve as a vehicle for graft for city officials. Put a bag of popcorn in your microwave and then read about Jose Huizar if you want a brief of how these sorts of things function in large american cities.
That being said there is no rational reason to support advancing rents past wages. Why would there be? Its the snake eating itself; the race to the bottom is that you end up with only the high income sliver of your regional economy of workers living where the job activity takes place, which is pretty wholly terrible for the environment and also deprives most of the opportunities that present themselves from being able to live near a major job center. We should be doing anything we can to prevent this race to the bottom, just for our own climates sake if the mere wellbeing of your fellow worker isn't enough.
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