The city absolutely is being served. If there's no money to be made building housing, then nobody is going to build housing and there will be a shortage. The beneficiaries aren't just the developers making a profit: it's also the renters paying normal rents instead of suffering from a housing shortage.
There's also the political ramifications of rent control: people paying far below market rates have little incentive to support the construction of additional housing, and more frequently try to shut down developments. One of the most ardent anti-development activists in San Francisco turned out to be paying $740 a month in an apartment estimated to rent for $4,500 at market rate. Get rid of price controls, and I bet this person would stop being a NIMBY overnight.
> That being said there is no rational reason to support advancing rents past wages. Why would there be?
To spur the construction of new housing! If there's a food shortage, the last thing you want to do is cap the price of bread. No, you let the prices rise so that more farmers grow food. If people are struggling to buy food maybe subsidize it to make it affordable. If the price of food is capped, then there's nothing to drive greater food production.
The same dynamic exists with rent control: cap the price of housing and people end up paying less than market rate. Developers realize they won't be making a favorable return on investment when they build in a rent controlled city so they move elsewhere.
There's also the political ramifications of rent control: people paying far below market rates have little incentive to support the construction of additional housing, and more frequently try to shut down developments. One of the most ardent anti-development activists in San Francisco turned out to be paying $740 a month in an apartment estimated to rent for $4,500 at market rate. Get rid of price controls, and I bet this person would stop being a NIMBY overnight.
> That being said there is no rational reason to support advancing rents past wages. Why would there be?
To spur the construction of new housing! If there's a food shortage, the last thing you want to do is cap the price of bread. No, you let the prices rise so that more farmers grow food. If people are struggling to buy food maybe subsidize it to make it affordable. If the price of food is capped, then there's nothing to drive greater food production.
The same dynamic exists with rent control: cap the price of housing and people end up paying less than market rate. Developers realize they won't be making a favorable return on investment when they build in a rent controlled city so they move elsewhere.