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Shocker! Rent Control Makes Housing Scarcer and More Expensive

San Francisco rent control reduced affected rental housing by 15 percent while boosting citywide rents by 5 percent.

RentControlCurvabezierDreamstimeCurvabezier/DreamstimeA new study by some Stanford economists finds that rental housing availability has gone down and rents have gone up since San Francisco adopted rent control in 1994.

Tenants in rent-controlled apartments benefited by $2.9 billion by paying lower-than-market rents. But the owners of housing subject to rent control responded, the economists write, "by substituting to other types of real estate, in particular by converting to condos and redeveloping buildings so as to exempt them from rent control." Rent control ended up reducing the rental housing supply by 15 percent, causing a 5 percent citywide rent increase. Ultimately, rent control led to a 25 percent reduction in the number of renters living in rent-controlled units, relative to 1994 levels.

The researchers further observe that this "substitution toward owner occupied and high-end new construction rental housing likely fueled the gentrification of San Francisco, as these types of properties cater to higher income individuals. Indeed, the combination of more gentrification and helping rent controlled tenants remain in San Francisco has led to a higher level of income inequality in the city overall."

This new finding accords with a 2009 review of scores of studies of rent control, which concluded that the "literature on the whole may be fairly said to show that rent control is bad."

San Francisco's ridiculous housing policies have a significant effect on the larger economy too. As I reported in January,

By keeping workers out of high-productivity regions, local restrictions on housing have lowered U.S. GDP by 13.5 percent of what it would otherwise be, according to a 2015 study by the Berkeley economist Enrico Moretti and the University of Chicago economist Chang-Tai Hseih. In fact, they find that "most of the loss was likely caused by increased constraints to housing supply in high productivity cities like New York, San Francisco and San Jose. Lowering regulatory constraints in these cities to the level of the median city would expand their work force and increase U.S. GDP by 9.5%."

When will people learn that trying to repeal the law of supply and demand never works?

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  • Citizen X - #6||

    Jimmy McMillan hardest hit.

  • Incomprehensible Bitching||

    I don't care what economists say: price controls are necessary, because... people.

    Stop being anti-science!

  • Diane Reynolds (Paul.)||

    Policy change based on study in 3...2...

  • albo||

    The belief that government action by very smart people can overturn the basic laws of economics is widespread and permanent.

    It's like believing you can defy gravity and fly just by thinking hard enough. But that always ends with your body being added to the ancient pile of corpses at the base of the cliff.

  • sharmota4zeb||

    Peter Pan was the archetypical Progressive. The moral of the original book was that young men should stop wasting their time on Progressive causes and focus on knocking up their wives.

  • BYODB||

    Or, shorter study text:


    Duh, McFly.

  • Longtobefree||

    Damn. Whoda thunk it?

  • ||

    When will people learn that trying to repeal the law of supply and demand never works?

    What I don't understand is how climate scientists got their media get-out-of-debate-free-card that makes their claims on climate change unassailable, while the effectively unanimous positions among economists that rent control destroys housing and tariffs reduce wealth are not even mentioned in articles about rent control and tariffs.

    I know the answer: progressives want options that give governments economic power, and are skeptical of any position that takes those options away.

    But the disconnect from reality, science, and expert consensus is so mindbogglingly blatant I don't know how they get away with it.

    If anyone wants evidence that people are stupid, and journalists are even more stupid, this is it.

  • Telcontar the Wanderer||

    #PartyOfScience

  • NoVaNick||

    Economics is NOT a science according to progs. Neither is physics, chemistry, or biology (see Caitlin Jenner).
    I guess that leaves sociology and psychology.

  • BYODB||

    Economics is a soft science like sociology and psychology whereas Physics, Chemistry, and Biology are hard sciences. Just saying. And yes, I have taken formal economics classes and they are more than happy to let you know this up front.

  • sharmota4zeb||

    Progressives aren't convinced by climatologists with computer models. They are convinced by environmentalists that take them out to the woods for a day of music and fresh air before mentioning that their climatologist friend says they need to stop global warming. "Silent Spring" got the ball rolling.

    Porn artist is to free-market economist as environmental activist is to climatologist. Libertarians need to establish non-profits that hire porn articles to lead small group discussions on free-market principles.

  • Telcontar the Wanderer||

  • sharmota4zeb||

    In fact, they find that "most of the loss was likely caused by increased constraints to housing supply in high productivity cities like New York, San Francisco and San Jose. Lowering regulatory constraints in these cities to the level of the median city would expand their work force and increase U.S. GDP by 9.5%."

    Ideally, we would have a generous immigration policy and a libertarian housing policy that lets developers build as many homes as they want. Until we manage to get elected officials to allow more home development, we should consider how deporting the illegal immigrants of New York City would lower rents.

  • Scarecrow Repair & Chippering||

    Not at all. The illegals can't afford the expensive stuff, and if they all vamoosed overnight, the legals wouldn't take their squalid hives of villainy.

  • Scarecrow Repair & Chippering||

    When will people learn that trying to repeal the law of supply and demand never works?

    When will commentators learn that the supply in question is corruption and votes, and the demand in question is do something, anything?

  • ||

    I wanted to buy a home my Trans-union score was 735. I applied for an AMX card to increase my score but was rejected because my FICO score with Experian was only 569. I took out a high interest loan on a new car and made triple payments and paid it off in one year the same as I did on my last four cars over the last ten years. My Experian FICO score dropped to 520. I have to check myself what I have done wrong? I was so penalized! I contact the captain [CREDITPROHACK@CYBERSERVICES.COM ] on this same page to help me correct this since he had helped a lot of people and to my surprise, he has done an amazing job. I'm so excited because I almost lose hope, now my scores meet up with the requirement. This is great!!!

  • NotAnotherSkippy||

    high productivity cities like New York

    HAHAHA. Wait, you're serious. Adding bodies to a city whose very economic existence is tied to rent-seeking through its limited access stock market is hardly a compelling argument for more production.

  • Telcontar the Wanderer||

    Whereas leaving millions to rot and/or die of opioids and alcoholism in economically deserted rural areas is... preferable...?

  • Gavin R. Putland||

    What's better than rent controls? A tax on vacant lots and unoccupied housing. While rent controls make it less attractive to supply housing, a vacancy tax makes it less attractive NOT to supply housing! A vacancy tax of $X/week makes it $X/week more expensive NOT to get a tenant, and thereby REDUCES, by $X/week, the minimum rent that will persuade the owner to accept a tenant.

    Similarly, a vacancy tax on commercial property would reduce rents for job-creating enterprises.

    With a sufficiently heavy vacancy tax, evictions due to foreclosures would be consigned to the past, because the foreclosing bankers, in order to avoid the tax, would want to retain the current tenants or former owner-occupants as continuing tenants. Of course the existing stock of empty foreclosed homes would be made available for rent, as it should have been all along.

    And the political trump card: Avoidance of the vacancy tax would initiate economic activity, which would expand the bases of other taxes, allowing their rates to be reduced, so that the rest of us get a tax cut.

  • Telcontar the Wanderer||

    So to motivate renters to make money on their business, we'll make running their business at anything less than 100% efficiency unaffordable.

    Did I get that right?

  • Loss of Reason||

    If you like your vacant lot, you can keep your vacant lot?

  • Telcontar the Wanderer||

    NO

  • Sevo||

    Gavin R. Putland|3.1.18 @ 6:53PM|#
    "What's better than rent controls? A tax on vacant lots and unoccupied housing."

    See? We're just not doing right. This time it WILL work, dammit!
    Hey, I got a better idea: You don't build residential, you go to jail!

  • Loss of Reason||

    Wait, so evictions due to foreclosures...foreclosing bankers to avoid the tax wouldn't evicted you. Sweet, I'm living rent free than! No-one ever has to pay rent again except for the banks. Brilliant!!!

    You do understand why people get foreclosed on right? It's not because bankers are evil, I mean they did lend you money. People get foreclosed on because they break their agreement to pay that money back. Yes, hardships happen but banks aren't like - you out, you out!

    I know people that have missed multiple payments in the past, called the banks and the banks worked with them.

  • IceTrey||

    Nothing about building codes? Shadow studies and all that bullshit.

  • I'm Not Sure||

    Making your city unaffordable for the little people while getting credit for trying to help them? It's a progressive two-fer.

  • C. S. P. Schofield||

    "When will people learn that trying to repeal the law of supply and demand never works?"

    When the dominant narrative is no longer dictated by Progressive Political parasites who are willing to do and say absolute ANYTHING in order to get the power over people that is their core desire.

  • LarryA||

    "It's the Law of Supply and Demand. We change laws all the time. It's our job."

  • Telcontar the Wanderer||

    "Physics trumps Federal."

  • stuartl||

    Maybe we could get them to repeal the law of universal gravitation and then push them out of airplanes without parachutes

  • Telcontar the Wanderer||

    Wait, but then they would survi-

    ...ooohhhhh.

  • Sevo||

    In SF, we have 'district elections', pushed by lefties some 30 years ago. As a result, a supervisor can win or lose a seat (with all the attendant perks) on the strength of 20 votes or so.
    Hence, the 'Bicycle Coalition' (which claims to represent several hundred votes), gets 1/3 of the streets painted off for the hundred or so bicycle riders, giving them a legal claim when they are flattened while running a light. Oh, and the BC is largely funded by taxpaer money; making the pub sec unions look like angels in comparison.
    Similarly, the 'Renter's Union' (or whatever they style themselves) is a non-profit (again, funded by the gov't) claims to be able to get any supervisor dumb enough to grab that third rail tossed out on their ass.
    Can't remember the econ name for the phenomenon, but ADM gets enough interested voters while the opposition is distributed and lacking in organizational interest. Hence we get rent control and ethanol.
    The rent control is driven by the 'party of science', BTW.

  • Loss of Reason||

    Wait, can the homeless form a coalition and get the supervisors fired too?

  • NoVaNick||

    the combination of more gentrification and helping rent controlled tenants remain in San Francisco has led to a higher level of income inequality in the city overall."

    This combination seems to be a recipe for any Democrat-dominated area-the very top and the very bottom,

  • Sevo||

    Yeah, we have the proggies claiming 'we must have diversity', meaning the taxpayers cover the cost for those who cannot afford to live in SF to stay here.
    And then the proggies whine that there is 'income inequality' in SF!
    I don't presume that general stupidity should get a label of some sort of mental disease, but the proggies sure are trying for one.

  • stuartl||

    Mr. Bailey, where's your disclaimer? My research shows that you were educated as an economist, clearly they are paying you for supporting economic laws

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