If you read the caption, the real issue here is a horrible abuse of the rent control law. When the renter signed their lease, the unit was covered by rent control, putting very tight restrictions on rent increases and evictions. However, the landlord then essentially destroyed the other unit in the building so that they could reclassify the building as a single-family home instead of a multi-unit building. Single-family homes are not covered by the rent control law.
This should obviously not be legal; if you're going to have a rent control, you can't let landlords take a unit that should have rent control and make it not rent controlled. At the very least, these kinds of changes shouldn't allow the landlord to escape an active rent control obligation to a current tenant.
OTOH, how much can you restrict the property owner? What if the other unit needed to be knocked down for a reason other than to get rid of rent control? Would it be OK for the law to tell the owner to fix it some other way? What if both units were destroyed in a natural disaster and a new structure had to be built from nothing? Is that still rent-controlled?
Also, is rent control even a good idea? In the short term, it obviously protects a renter from the market running away from them. In the long term it seems to create artificial conditions which eventually blow up in everyone's face. Imagine a plan where the current renters had a viable alternative. Now drop all rent control laws and let the market correct itself. Lower income renters move out, higher income families move in. Rent goes up higher. Newly moved in renters realize that they are paying 10x as much as the rest of the country, leave. Rent goes down. The market has corrected itself and all is well. What am I missing?
What you're missing is that housing is not a normal good.
Sure, there is a housing marketplace, which can provide some correction. But houses are also homes. People are born in them. People die in them. They love them, they cherish them, they fight for them. There's a lot of truth in the saying, "Home is where the heart is."
What you're missing in that scenario is the large number of people who are displaced not just from their fungible, replaceable housing unit, but their home, their neighborhood, their family, and perhaps their city and their job.
Note also there are substantial class issues in the sentence, "Lower income renters move out, higher income families move in." The notion that poor people should take it on the chin because rich people covet their homes is not politically neutral. One could just as well say that it's the rich people, more able to cope, that should bear the burden of market fluctuations.
So I don't think, "is rent control even a good idea" is the right question. It's more like, "Are there more effective ways than rent control to reduce the harm?"
You can use the same argument for any good or service. Tear something away from a person and you can absolutely traumatize them. It can be a teddy bear for a little kid, a car for an adolescent, your laptop, you get the idea.
You can't legislate life into some gentle state. It is what it is. You can, however, smooth out the bumps.
Unfortunately, rent control does the exact opposite. It creates stupidity like this. Where a landlord has to use a lawyer to increase the rent 4X, which is insane on a number of levels. That is one hell of a bump in the road.
Get rid of rent control and prices will be stable. Yes, they will be higher for some, lower for others, but they'll be stable.
You can use the same argument for any good or service.
None of the things you mentioned have the universality of a home, which strikes almost everyone, regardless of demographic. Those who aren't adversely affected by not having a home are notable for being extreme outliers. As wpietri said, housing is not a normal good.
A better way for him to have put it would have been: "Just like the Indiana state legislature can't by statute declare pi to be 3.14, San Francisco cannot repeal the law of supply and demand".
Rent control or not, the law of supply and demand still applies; it just expresses itself in more dysfunctional and unproductive ways.
That's the problem with rent control. Reasonable people can disagree about whether the public policy goal of getting people affordable housing trumps the rights of property owners. But they can't disagree about how many digits are in pi, or about whether rent control works. It doesn't work. It harms everyone in the market except for a lucky subset of tenants.
"Rent control or not, the law of supply and demand still applies... or about whether rent control works. It doesn't work."
Without rent control, I'm pretty sure that a LOT more people would be pushed out of San Francisco. It seems to me that places like San Francisco, New York, and a few other places are not typical of what other areas experience. I know it's fashionable amongst the libertarian set to blame problems on regulation, but there is much more going on here than simple rent control.
The general response from economists seems to be that rent control suppresses growth in the supply of housing that could otherwise address the cost of housing.
Zoning suppresses growth in the supply of housing. Of course, that doesn't mean that zoning is bad by definition. Instead of artificially keeping building height low, you could mandate new buildings have at least so many stories.
San Francisco's problem seems to be that they can't possibly build enough housing to meet market demands without revising zoning restrictions in ways that would make current home owners angry.
I agree with you. But what does that mean? Why is it inherently a bad thing? It could have a dramatic effect upon other areas like Oakland (revitalization) Or maybe it spreads further and wider than the Bay Area or even CA. If those folks are driven out it would change the character of San Francisco. Suddenly it'll be just wealthy people side by side with wealthy people and lose it's appeal. That in turn might take the heat out of the market and recreate more affordable neighborhoods that draw back in future people at lower income levels.
This is an interesting topic. Eviction inflicts a disproportionate harm to those least-equipped to bear it. While rent-control inflicts a purely proportional harm to those best-equipped to bear it. But rent-control also inflicts a difficult-to-characterize harm in the form of stagnant rental construction.
I would be totally cool with a city deciding to make the first tradeoff as a public policy goal, if the construction stagnation (across all rates) could be mitigated. Have there been any successful experiments in that area (I'm only familiar with the craziness of NYC's implementation)?
In San Francisco (the subject of the post), houses built after 1979 are not covered by rent control[1]. This "new construction exemption" was designed to avoid stagnation in rental construction.
Regardless of whether rent control works or not, my point was that it's not pointless to legislate around things like this. 'Laws of nature' get legislated around all the time. Look at violent crime and the natural law of 'might makes right' as one example. Cigarettes here in Australia are another example of legislation changing supply and demand.
As an aside, pi is a fixed constant, whereas 'rent control' is an incredibly complex concept that relies on many other complex concepts - for example, what does 'rent control' mean in a communist country? For a nomadic tribe? It relies on certain concepts around property ownership and capitalism. Which is fine to say it doesn't work as it is in SF, I'm just pointing out that there's a lot more flex in the concept than in the constant 'pi' :)
It is not a crime to take risks. Or to avoid them. Or to enter into contracts on mutually agreeable terms.
Owners risk their capital and defer their own consumption. The renters preserve their flexibility and get more house than they could have afforded to buy and avoid losing their shirts in housing busts.
Sounds like a win-win to me.
Ah, but if you can use the power of the state to give you the economy of renting with the rights of owning, without those annoying responsibilities, then you've really got something!
Making it illegal to be poor or homeless doesn't magically make the problem go away, or making it illegal to use drugs doesn't stop drug use -- in fact Portugal demonstrates that making drugs legal reduces drug use.
You know the single best way to reduce violent crime? It is to increase wealth, people don't risk bodily harm if they have enough money to eat and sleep under a roof.
"econometrics of rent control" brings here. The fairly consistent econ 101 conclusion about rent control is that it never works. If you're talking about another conclusion, what is it?
Huh? The idea was without rent stabilization or leveling, rent would magically be more stable then if mechanisms were in place.
We don't need to argue about this. Rent control has been removed from many communities, and the rent becomes much more volatile without the stabilization control.
There's lots of actual case study literature on this.
These things aren't mere untested hypothesis where our personal politics come in to play - they are well studied.
I think the problem here is assuming terms like stable and volatile equate to better and worse. A lack of rent controls will definitely result in price changes occurring based on supply and demand and therefore much more frequently than with controls. So in that respect they're more "volatile" At the same time that market is much healthier because the prices are transparent and all economic agents can act rationally (My rent goes up 10% each year I'm here that's going to be a back breaker in 2 to 3 more years if this holds up so I'd better start planning a change) Controlled prices might be more stable because they don't change but underneath the surface that volatility is still there and building as it has no pressure valve for release. I'd rather my volcano constantly releases gases and shakes my house occasionally than sits under a cap and gives me no warning sign until it blows after 10 years of building up.
The claim was that markets without stabilization eventually stabilize. However, from what I've read, the markets studied continue to be more stochastic for the long term.
I really think you should look into the research. There's a lot of tested hypothesis and survey analysis in them.
We tend to not treat economics like a science - as if our general education is enough to have an informed opinion. We certainly don't do that with psychology, chemistry, biology, or even softer sciences like sociology and anthropology.
But yet, when it comes to economics, we all have a pretty solid opinion and think we are all fairly well informed.
I encourage you to look deeper into the topic. Attend proseminars at your local university. Watch some graduate level lectures online. And, this is just an encouragement, revisit statistics and calculus --- you'll find out why if you look into 21st century econ.
I've never heard it claimed that getting rid of rent control was a way to stabilize the housing market until this thread. I have heard that rent control creates severe housing shortages, insane competition for existing apartments (like having a renter's resume in SF), and lower quality housing for everyone. To me, it seems you've defeated a strawman.
Sorry, I'm not making this out to be competition. We all come to this discussion with different backgrounds. I'm fascinated by economics. So when I see claims that really aren't backed by the literature I feel obliged to bring it up.
As far as your other claims ... those are harder to measure really.
Rent amounts is a pretty easy number but things like lower quality (how much lower, what kind, where, is it predominant) and higher competition (amongst whom, using what process, which strategies aren't in play any more) ... well those are much harder questions. The microeconomic topic here is called Welfare economics: http://en.wikipedia.org/wiki/Welfare_economics and in economic theory is the social welfare function: http://en.wikipedia.org/wiki/Social_welfare_function
I'm not saying those broad ideas don't hold ... but defining things like quality and competition can be a much trickier business than price.
And unfortunately, if you are going to approach it as a science, you can't really go off anything other than definition, observation, and measurement.
Sane argument for free-form enterprise. Trauma enterprises are from a gross gap legal sanitizer function that forces markets to change. Tearaways you can take from logical systems that try to sense problems with random, arbitrary math(tied) category .
> Tear something away from a person and you can absolutely traumatize them. It can be a teddy bear for a little kid, a car for an adolescent, your laptop, you get the idea.
I don't understand the point: none of those things are being torn away from people due to market forces.
Then lets say someone's house due to foreclosure from a variable-rate mortgage.
Happened all the time a few years ago, and its the same situation. The interest rates rose, people couldn't afford their mortgage anymore and were forced out.
While there is definitely a lot of blame to be placed on the creditors, don't you hold the homeowners to any standard of responsibility? They signed the mortgage.
So you want to blame people who probably didn't fully understand what they were signing up for (not least because they probably weren't responsibly disclosed to) for having been fleeced by crooks peddling predatory loans?
I'd bet real money that almost every applicant for one of these mortgages was reassured up, down, left, and right by the broker (whose interests were most definitely not aligned with the applicant's) that everything will be fine. "When the variable rate kicks in, you can just refinance. Rates will be lower than ever!"
Many of the families who lost their homes to foreclosure signed into a mortgage under the assumption that they would be employed/in-business for the next 20-30 years.
Unfortunately, when one economic domino falls and sets of a chain reaction leading to a market crash, a lot of hard working and responsible people get caught up in and swept away by the ensuing tsunami.
It was an example of how people place bets against the "Free Market" and lose sometimes.
Even if people are rational about this, the 1980s saw an increase of interest rates above and beyond 14%. If 1980s style stagflation ever hit today, I can assure you that even the "rational" home-buyers who fully understood the clauses would be forced out of their homes.
In any case, being forced out of your home, even if it is a situation you set yourself up for, is a traumatizing situation. I think we all can agree to that.
> none of those things are being torn away from people due to market forces.
You can end up owing money without the ability to repay fairly easily due to to market forces.
If you have a judgement against you, in other words a court has determined that you owe somebody money, they can seize your property and auction it off to settle the debt. Cars, laptops, anything worth $$$ is a target.
Life can suck. You can't legislate the "suck" away. You can, however, smooth out the bumps. In the scenario above, bankruptcy is a legal construct to smooth out the bumps.
Unlike bankruptcy, rent control makes the bumps worse. That really sucks.
They should realize that not everyone can live in a good area of the city. A city, by its structure, has a center and periphery. The good zones are good by relation to the other zones, otherwise, space is just space. So, valuable property will always be limited in quantity.
> They should realize that not everyone can live in a good area of the city. A city, by its structure, has a center and periphery. The good zones are good by relation to the other zones, otherwise, space is just space. So, valuable property will always be limited in quantity.
And who lives in the good parts of a city should not be determined solely by the depth of their pockets.
Why? Isnt this the free market at work? Allowing the people who work the hardest for it (of course this always the case, but you get my point), to choose their place of residence.
Markets are mechanisms we use to accomplish goals. They are not ends in themselves. They are certainly not universal moral guides. If you think in this case a market is the best mechanism to achieve a particular social goal, you'll have to make the case.
If we were to give houses to the people who worked hardest, every single immigrant construction worker I have met would get the houses, and comfortable office-dwellers like me would be out of luck.
I certainly cant argue with that, but wouldnt the people buying them be the hard workers in industries that reward them for that work (the reward values are a whole different issue imo).
But there are many examples of goods that are not considered "normal." The state has always regulated such vital goods, usually ensuring supply. The Farm Bill is a perfect example. Housing is another.
(This is mildly unfair to SF, which actually has a higher population density than Minato-ku, principally because Minato-ku is not a residential neighborhood. But if SF was serious about affordable housing, it would look like Minato-ku rather than "miles of two-story buildings.")
Well, you've got to tear a bunch of stuff down first. And I've read before that the city doesn't want to build up too much because they want to retain some of their character or something.
> I've read before that the city doesn't want to build up too much because they want to retain some of their character or something.
That's kind of the point. The city has several conflicting goals: make it an affordable place to live, don't allow new growth to change the character of the place, attract high paying jobs, don't widen the roads, attract new residents without kicking out old ones, etc.
Rent control is one of the tools they use to try to balance between these conflicting goals. The fundamental problem is that every serious economist says that rent control is a losing battle, and it never truly works anywhere it's been tried. There really aren't any rent control success stories from anywhere in the world. At some point, the city has to realize it can't achieve its conflicting goals, and it will need to prioritize: is it more important to have affordable housing or more important to limit the number of places to live in the city?
It's worse than a losing battle; it actually makes the housing problem worse. It's good for the lucky few who end up in rent-controlled housing, but most of the people who can't afford $4k/mo rents also aren't that lucky.
How does it make the housing problem worse in San Francisco?
If we assume that the NIMBY crowd will continue to block new development and other interests will continue to block increases to the high limits for new construction across much of the city, then what would elimination of rent control do, other than ensure that every renter in the city was paying ~$2500+/month per bedroom?
I have this idea that the monthly payments on the mortgages required to purchase a condo are a pretty good approximation of where rents would be without rent control. With pretty much every condo sale price sitting at or north of $1 million, it doesn't look pretty.
Rent control isn't the only thing distorting San Francisco's market. But San Francisco won't get any more affordable until it gives up on the policy.
However, looking at the original post, I strongly suspect that the landlord isn't planning to rent out the apartment after the tenant is evicted. I think the letter looks a lot more like a landlord trying to get out of the business. Rent control, and other regulations, discourage people from offering places for rent. Sometimes that is intentional, for instance, as a policy to get rid of tenements. But often it's a surprise to the people writing the regulations. They honestly don't realize that each additional form they want people to fill out discourages people from being in business in any way.
Getting rid of rent control would get rid of some of that disincentive and put some places back on the market.
I recently moved from the Reno area to the New York area (well, New Jersey; but I work in New York). I spent a lot of time in the Bay Area over the last few years. I really would like to see it stop pursuing economically backwards policies, but I think it's more likely that economically illiterate politicians will finally manage to kill what makes Silicon Valley unique, and people will move to other places.
Even if no new housing could be built, rent control leads to underutilized housing.
When people pay $500 for something that could be rented out for $5000, they are more likely to keep it for weekend trips after they moved to LA, or at least not take any room mates.
Also, I don't know that there is any official numbers, but I've heard estimated that 10% of the SF rental stock is not rented out, because landlords don't find it worth the pain.
The "NIMBY crowd" also must stop blocking new development. SF desperately needs new housing development at a scale unprecedented in its recent history.
In the meantime, all rent control does is create an arms race between property owners and tenants, one the tenants will all gradually lose. It also eliminates incentives to renovate or even more productively use existing housing stock.
Rent controlled apartments are effectively removed from the supply of housing in the market. Thus, anyone who isn't lucky enough to get a rent controlled apartment (which are most people) faces a market with decreased supply and thus higher prices. It's one of the economically proven ironies of rent control -- higher prices for everyone else.
In a free market yes, but not in a speculation market that does not respond market demands (combined with macroeconomic mechanisms and manipulations from the Federal Government). Going beyond simplistic supply/demand, high speculation markets have constrained economic growth, and many governments, such as HK or South Korea, have taken measures control it as well. It's not that the cost in the area rise, but also startup cost for new enterprises becomes to high, making it difficult for startups and new innovations they create.
Your comment missed the irony, which is that rent control is an effort to mitigate the impact of scarcity for tenants that increases scarcity and reduces market outcomes for tenants.
Rent control is a deliberate tradeoff between price stability for existing tenants and supply (and therefore market clearing price for new leases.) So the supply effect isn't an irony, it's part of the chosen tradeoff.
Can you find a source that acknowledges that rent control is a deliberate attempt to trade additional scarcity for price stability for incumbent residents? I can't find one. I'm a little concerned that this is an instance of retconning.
San Francisco's rent control, at least, doesn't apply to building built after rent control was passed. [1] I believe that's a deliberate attempt to solve for the scarcity concern.
Well the geography and political climate of San francisco and its surrounding towns make this pretty difficult. It's a small city in a major earthquake zone, with tons of hills, surrounded by water and suburban neighbors who consistently vote down any expansion of the existing rapid transit system. Any new transportation infrastructure would take literally decades (see California's coming high speed rail line).
Only problem is politics. Japan has all that and pulled it off a bit too well. Similar goes for the crazy sandcastlers like Singapore.
I can't blame them (SF-dwellers) they had someting rare in the US for a little time. And general ignorance in, general ignorance out, that's local municipal politics, due to short-term incentives and big "costs" of initiating any kind of change or shift to a longer term horizon, nothing will change fast enough, so a lot of people will get bitten by these problems.
This is already happening: the area just north of Bay Bridge looks like Berlin after the wall came down. In my opinion, it has positive feedback and will increase prices even further. Money attracts more money. See New York or Hong Kong- they've built up too.
As the economy becomes global, the rise of super expensive cities is inevitable: London, New York, Hong Kong, San Francisco.
Oregon has plenty of charming and cheap real estate for non-participants in the global economy.
On Mission street in my neighborhood alone there are at lease 3 large lots with derelict buildings on them and they've been that way for years. There are quite a few other smaller parcels on Mission and smaller streets.
If we want to take housing seriously, let's start with a law that says "If the building is abandoned for 5 years, you lose it, it becomes housing."
Unless SF eliminates its insane height restrictions, the very few buildings that would be repurposed in this fashion would immediately become $4000 apartments.
It's a few drops in the bucket, yes -- but if we can't even bring ourselves to turn derelict buildings into housing, it's hard to claim that we're serious about solving the problem.
In all seriousness though, I'm fairly certain that a repurposed cruise ship turned luxury condo building anchored off the coast with a free, regular speed boat shuttle could be a profitable business given the bonkers prices in SF proper.
Some cities actually do stuff like that. You can can anchor large, cheap boats in Paris on the Seine (you pay a rent for that of course,but its much cheaper - closer to a parking spot).
Then these boats are made into single apartments. They're larger than most apartments in fact. There is electricity and water included, the only thing you need to get wirelessly is internet (which is rather easy).
I don't understand this argument. _Quality_ housing seems to me, to be a normal good, because when income increases the demand for such housing increases. Even crappy places in SF seem to be quality housing. Whether or not there are class issues, or your house is sentimental is irrelevant.
Apparently "normal good" is an economic technical term, and apparently you are using that technical definition here and not the normal use of "normal". I have no idea why you'd do that; as you point out, that technical term bears no relation to what I'm talking about.
What you're talking about is the idea that economics shouldn't apply because there are a lot more emotions involved in house than in most other markets. Do I need to point out that that is silly, or is it sufficiently self-evident that economics applies anyway?
The real answer tends to be building enough housing for everyone. That also tends to be politically unpalatable, because the people with all the emotional attachments want their neighborhoods frozen in amber. So low-income people get pushed out by increasing rent and high-income people move in.
Economics is not value-free. Actually, economics already has a way of dealing with exactly the problem GP cites: externalities.
Taking away someone's home involves potentially massive negative externalities (emotional and otherwise). Therefore, if you want to maintain the political theater that says capitalism is designed to benefit everyone, you have to accept that it may be preferable, optimal in fact, to incur some deadweight loss. Rent control is one strategy that does just that: as long as a person lives in a place, the rent can't go up.
Is it naively optimal? Nope. But it is (or can be, if you get the implementation right) actually optimal. It is a guarantee that a house can be a home, if the tenant so chooses, and it could be used to balance the aforementioned negative externalities.
Does it? Who knows, maybe, I'm not familiar enough with San Francisco's housing laws. Just because they implemented it poorly doesn't mean the concept is unsound or irrational and it doesn't mean that anyone in favor of the concept is "silly" or deserves to be condescended.
Even without NIMBY-ism, rent control keeps new housing from being built, because it makes the return on investment for new housing uncertain. People generally don't build apartment buildings out of the kindness of their hearts.
That's a bit of a snarky way to put it, but this is correct; the parent comment is abusing the term "externality". The consequences of rental contracts for tenants in a free housing market are not an externality; the tenant is a party to the transaction.
In this case, the tenant isn't a party to the transaction, the tenant can't afford to be a party to the transaction at $8,000+ per month, that's my whole point.
They perhaps they should consider building more housing. With the bonkers prices there, I bet even with a portion dedicated to low income housing, stuff would still get built, as long as the rules were clear.
In theory, yes. In practice, local activists tend to demand new buildings be 100% affordable, and the result is generally gridlock where nothing at all gets built.
It does. When you choose to pay a price or not, every emotion you feel is factored in.
Is a place "home" to you? You're probably willing to pay for it. Don't like a place much? You'll be less willing to spend.
This runs out after a point, though. Warm fuzzies are great, but I can't eat them, wear them, or sleep under them. I also can't trade warm fuzzies for any things I can do those with.
I don't follow, privately owned housing is a normal good. It's a Textbook case, as average living standards rise, the total demand for housing expands, as does the demand for more expensive properties as people look to move "up market".
I am misunderstanding your point?
Edit: I think I understand, my degrees in economics so I assumed you were using the term as its used in economics. Apparently you were not.
Words have meanings. In the context of a discussion of economic activity, you really have "no idea" why someone would assume you were using the economic meaning of "normal good?
Yes, because that reading obviously conflicts with what I wrote. Words do have meanings, but they have multiple meanings. If one reading makes no sense, skilled readers will try another.
to be fair I was confused to, because you were making an economics argument so I would presume you were using economics terms. Not saying that you should have or whatever, it's completely realistic that you wouldn't have heard of it, but it is something some people are going to bring in as context, so its understandable why they're confused.
So why not create a lifetime rent control that is tied to the occupancy of the current tenant? One they're gone, it's fair game for anyone at any price and you protect the "right to a home" for the existing resident.
That said, I don't think a rental can ever be a home in the way you describe it. The fact that the property is owned by another party means the resident will always be limited in their sense of place during their tenancy. This example is egregious but as an example, there's nothing to force a landlord to rebuild a property with after a disaster for the tenant with the insurance money.
I'd love a simple explanation as to how rent control is any different than any other form of redistribution. Forcing someone to provide access to an asset they've invested in below market prices seems bad to me.
Generally speaking, that's how rent control is managed. The people who dream up rent control somehow never realize that property owners will change their behavior based on how they expect rent control to affect them. So, when a tenant moves out, for whatever reason, the property owner doesn't set rent based on the current economy, instead rent is based on what the market might look like years down the line.
So, after a few years, rent control effectively guarantees that no apartment is available at an affordable price. At least, you have to live in a controlled apartment for a few years for inflation to erode the value of money you send your landlord every month enough that you can feel like the apartment is affordable. And, of course, the people moving from one rent controlled apartment to another are affected by the market distortion as much as anyone else.
And places all over the world manage to provide affordable housing without rent control, so long as they allow their housing markets to work.
That goes both ways. Nobody will pay if its too high (you will pay another slightly cheaper landlord, then) and thus landlord has to lower prices. Thus rent control apts are, in fact, at market rate. Its just that market rate is higher than you think it is.
When the market is exploding prices will rise regardless of rent control to crazy amounts.
People should disclose if they have an interest in this thread, since last I remember, all landlords are pretty wealthy people without that problem. (they own their place + other places, so, yeah)
Yes rent control apartments are at market rate. But rent control discourages people from ever moving, so the market of available housing is significantly smaller, thereby driving up prices for the few units that are in the market. It is an artificially distorted market.
That's how any sensible rent control ordinance would work, but that's not how it works in San Francisco. Units remain under rent control even if a tenant voluntarily moves out, dies, etc.
It's not your home if you're renting. We're not talking about booting people out of their homes here, were talking about raising rent. You shouldn't expect to be able to stay in your rental in perpetuity, that's why you signed a lease.
Transaction costs. Moving is not free: at a minimum, there are search costs to find a new apartment and moving costs to pack all your stuff up and move it around. Very often, there are also storage needs, and if you move non-locally, there are jobsearch and job termination costs, recruiting costs by their employers, relocation costs, etc.
Many of these are externalities - they're born by people who are not party to the transaction itself. For example, if one of your best employees is priced out of the city where your office is, then you need to find a replacement in a hurry. Replacing a key employee can sometimes cost as much as their yearly salary (this is why the recruiting industry exists, and why startups can get "acquihired" for a million or so per engineer). If the employee has a long tenure and lots of domain knowledge, they may actually be irreplaceable, and their loss could permanently damage the business.
The cynic in me wonders if the reason we have rent control isn't to protect tenants, it's because one powerful constituency (employers) is pitted against another (landlords) and the former is currently more powerful.
Then a better policy would be to price these negative externalities into a single metric that is a multiple of the rent. Want to raise rent by more than max(inflation, 3%)? Offer the renter 2.5x the months rent to leave instead. My cofounder lives in a place that is only $900 / mo with his girlfriend in Toronto because she's been renting there for forever. They are essentially trapped there because their rent would easily double if they moved somewhere else. Meanwhile the landlord doesn't take care of the place at all because there is absolutely no incentive to until they move out. Market warping practices should be eliminated.
A reasonable notice period plus lump-sum fee would be an interesting angle to overcome the transaction-cost issue. Wonder if that's been tried anywhere?
I'm not familiar with the history of SF's rent-control laws, but in Copenhagen another motivation is stability, though. Beyond simply the hassle of moving, there was a decision some decades ago (probably about a century at this point) that it should be possible for people to choose to live somewhere long-term, organize their life around that assumption, customize the space within reason, etc., and not worry that they will be forced to move constantly because of fickle landlords and markets. Rent-control laws and anti-eviction laws (which aren't quite the same, since a landlord might want to evict for reasons unrelated to rental prices) aimed at that stability, so a tenant who has lived in a place for at least 3 years generally has something like "tenure" in the place, protected against both rent increases and eviction.
Now you might say: if you want that kind of stability, you should buy rather than rent. But at least here, the concept of individually owned condos didn't exist until recently. Real-estate was a system of land ownership, along with any improvements on the land. So you could own some land with a house on it, or some land with a 5-story apartment building on it, but you couldn't own only the left half of the 4th floor of a building. You could rent use of that portion of the building, but you couldn't own a floating piece of the building. (Condo ownership now exists, but it really is an odd kind of real estate, since it comes with no land, and your unit is so heavily structurally coupled to neighboring units, that normal decisions regarding real estate, like choosing to build or demolish structures, can't really be exercised.)
Obviously your average worker couldn't buy an entire apartment building, so almost all of the urban working class rented. This system of rental stability was then developed to provide housing stability for them. (There are alternatives also in use, which arguably work better. The two main ones are cooperatively-structured housing, where residents jointly own their own building through a system of shares; and association-owned housing, where an organization such as a union or philanthropic society owns housing and rents it to their members, or to the public, on generally favorable terms.)
> A reasonable notice period plus lump-sum fee would be an interesting angle to overcome the transaction-cost issue. Wonder if that's been tried anywhere?
In California, this exists for certain kinds of evictions. The Ellis Act is much-loathed anyway.
The basic problem in SF is that many decades of very, very strong rent control and building restrictions are colliding with an economic boom.
I couldn't agree more. Rent control originally proposed for these on fixed salary growth (teachers, firemen, etc.) is turned upside down when the inhabitants are not constrained by these caps. That being said the rules of the game are clear and defined on signing of the lease ( by both parties), and property owners are constrained (and game) these rules as much as the tenants. Having an updated provision that allows both parties to win from a conversion makes for amicable relations. I love my rent controlled apartment,but let's face the facts the contract and governance is clear and I could end up with the same situation. I would be more inclined to be bought out of my position giving up my under market rent giving the landlord the option to try for greater revenue. Win win
Agreed, the tenant likely has many bases for recovering any and all costs associated with a move.
When did the owner provide notice that they would attempt to evade rent-control? The tenant has a reasonable assumption that a rent-controlled lease will remain rent-controlled indefinitely.
Your on to some thing here. In some resort communities, with high housing costs and large "seasonal" residents, you'll find rent controlled properties for just the reason you mention: local labor. For example, aspen colorado has a "lottery" for these rent controlled properties, and has duplex housing right outside of town for local workers. An average home in town is in the millions, which is clearly outside the price range for a service or municipal worker, so they have some rent controlled properties. I've seen this in other sky towns as well.
If you are an employer in SF and your employees are getting priced out and moving away, maybe you are not paying enough. If you cannot afford to pay more, it isn't your employees that are being priced out, it's you. Move to any other area with lots of talent and 1/10 of the cost of living, or face this problem again and again.
SF is expensive, but not 10x so compared to other American cities. If you do move to a place like Manila, you might not be able to find the talent you need.
It is 10x expensive. I lived in the RTP area. I paid roughly $800 for a very nice three bedroom house with a 10 minute commute to downtown for work. That's a house I owned. Lots of tech talent there, lots of jobs, lots of startups. That's more than 10x what the rent for this shoddy apartment is being set at. A very nice downtown condo would run you about 1.5 times as much. What does an apartment in downtown SF go for now (to buy?).
That is just rent, not your other non housing expenses which are quite comparable to the rest of the country. SF is not Norway/London/Switzerland/or even Japan expensive, nowhere close!
To get your 10x cheaper location, you aren't looking at RTP, but maybe Cambodia (though much of the south feels like a developing country to me...they still aren't that cheap).
If you own the building, i'd say you should be free to do what you want. Just because you rented out a unit 5 years ago doesn't mean you want to rent it out forever. You own the building after all. Imagine a building with 20+ units, you'd never be able to clear it out.
But, that doesn't make it a fun process to go through for a renter. It sucks. Couldn't the owner just ask the person who is renting the unit to move out in a reasonable amount of time? That seems like the ethical thing to do.
> Couldn't the owner just ask the person who is renting the unit to move out in a reasonable amount of time?
California has a provision for doing this. It's called the Ellis Act and San Francisco's regulations for Ellis Act evictions require payment of $5k-$15k + $3k per senior/disabled tenant. This remodel + rent increase seems a transparent attempt to circumvent that law. Whether legal or not would require a lawyer to weigh in.
> Couldn't the owner just ask the person who is renting the unit to move out in a reasonable amount of time?
Assuming the original $2145 is below market, the answer would be no, wouldn't it? Or, rather, they could ask, but the tenant would never willingly leave, as they are paying below market.
Why can't they tell the tennet to move out? In Australia residential leases have a fixed term (usually 12 months) and after that become month-to-month, and the owner can ask you to leave with 90 days notice when you're not under a contract.
In SF the only real way to kick someone out of a rent controlled unit is via an Ellis Act eviction. The allows the owner to take the building off the market. Issue is, you need to pay a substantial fee to the tenant (many thousands if they've been there a long time) AND you cannot rent the unit out again for 5 years.
I believe there are also provisions in Australian law that allow a landlord to evict in a much shorter time period, at least where a detached house is concerned. I was asked to vacate my previous place within 14 days due to difficulties experienced by the landlord, complete with legal documents and such.
I can't imagine someone going through this trouble instead of just asking. It is a dick move, for sure. I just don't see GGP's point about making this specific action illegal as the solution. Seems to me that it would the just complicate things and in the end negatively affect everyone.
It is fairly standard practice in San Francisco for landlords to offer high tens of thousands of dollars to renters for them to move. I have a friend who paid a tenant $60k to move out. This allows them to avoid the complications and restrictions of the Ellis act or owner move-in (notably restrictions on condo conversion).
> Rent goes down. The market has corrected itself and all is well. What am I missing?
You're missing the fact that rent won't go down -- at least not by much, because living in San Francisco will remain desirable for enough people who are willing to pay very high rents. Only the very wealthy, or those who bought in a long time ago, would be able to live in San Francisco.
Of course, this is increasingly the case anyway. And one could make the case that this is an acceptable outcome. I (like many) believe that it's unacceptable, but this is debatable.
So the SF is just a very expensive place to live. So is NYC, Tokyo, and London. Whether you consider these outcomes acceptable or not, it seems they are inevitable. By keeping rent control, you are actually leading people into believing they can afford to live in a place that is poised to prove them out one way or another.
I personally cannot fathom why one place can be son much more expensive than another. Sure, there is a price differential, but is SF really that much better than Brimingham, or Durham, or Albany?
Besides, if you want to be the master of your destiny and put a root down, buy. Renting is a tool for when you cannot afford to buy yet, or for when you are on the move. It's greatest strength is that it lets you up and move. I never understood why you would rent the same place for more than a few years. If you plan on staying, buy. If you cannot afford to buy, why are you staying in this place?
> I personally cannot fathom why one place can be son much more expensive than another. Sure, there is a price differential, but is SF really that much better than Brimingham, or Durham, or Albany?
If you're a certain type of person, yes. Miles better.
You have rows and rows of blocks catering to specialty commerces, astounding, world-class food for ridiculously reasonable prices that can't be obtained anywhere else, a huge amount of access to employers and jobs that are also nonexistant outside of a few large cities. You don't need car ownership; you're trivially close to international airports, and the cultural scene is, once again, not available in smaller cities.
Having spent almost all my life in large cities, the suburbs are just terrible boring, even if your place to live is 5x bigger.
Obviously if you like the outdoors that situation may be very different, but not all suburbs and small cities have access to outdoors recreation, and not all big cities are that far away from excellent parks.
I was obliged to move from San Francisco to Columbia, South Carolina for work and I desperately miss SF. I miss the energy levels, the buzz on the street and present at practically every event I went to.
To give just one example, I tried signing up for improv comedy lessons --- and I found that my teachers were among the best in the world, and that they had a range of lessons available ranging from beginner to master. In Columbia, there were beginner lessons only, and then the instructor flaked on us -- so now there is nothing.
From my perspective (30s, single), paying SF rent was the best investment I ever met. In SC I do indeed own my home --- but I find myself saving half my salary, not because I am either unusually well off or frugal, but rather because there is nothing I terribly want to spend money on.
Don't get me wrong, I love SF. Probably more than any other city in the world. I just don't see why it's worth that much more. You can get a close approximation of it elsewhere, at a fraction of the cost. That energy, lots of young people doing cool things, etc... it follows places where young people can afford to live. SF is quickly going to phase that out in favor of people who can afford to pay, and the energy will move elsewhere.
Rent control is a shocking idea that makes a small claque of renters rich at the expense of everyone else. It's obscene.
Everyone blames the owners or some lawyer when a protected tenant becomes unprotected. The blame lies in the law that built up an artificial wall around the tenant and protected them from the market.
Rent control creates shortages, sub-standard properties and illegal tenancies. It should be abolished anywhere it exists.
"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.'"
Rent control is one of the small number of policies that economists on the left and right are essentially unanimous (93% in a survey of US economists; 95% in a survey of Canadian ones) in agreeing are always harmful, because they reduce both the quality and quantity of housing available.
It's not even some vague hypothetical either: In the linked story, the rent control laws have resulted in the conversion of a multi-tenant building into a single-family dwelling, which is a reduction in the number of housing units in the city. A reduction in the quantity supplied will, of course, lead to an increase in the equalibrium price. And the high equilibrium price is both why Follingstad's eviction is so painful, and why they were (effectively) evicted in the first place.
It's a textbook example of Why Rent Control Hurts Everyone, in one compact little story.
It seems likely that the owners will "change their mind" and decide to convert the "storage area" back into an apartment once the tenant is gone and they can rent at market rate again.
Remember, according to the link, the landlord has gone through some efforts to make this hard to challenge, including legally changing the status of the building to single-family. That's a very difficult process[1], but the reverse is even harder. (If converting single family dwellings into multi-tenant units was easy, San Francisco wouldn't have much of a housing crisis.)
Given the huge legal obstacles, plus the fact they already removed the bathroom and kitchen (not cheap), plus given the already strong trend of multi-unit dwellings being converted into single-unit dwellings to fuel demand from the rich, it seems unlikely that this building is going to be multi-tenant any time in the foreseeable future.
(Unless the landlord screwed up and didn't get the paperwork done. In which case they won't be able to raise the rent. But that doesn't seem to be the case.)
The market might correct itself, but are you really sure that gentrification is good for the community and people in general? This is basically what is happening.
Not everyone can easily pack up and just move. People are social beings, they have commitments, children and probably a place where they have some sort of personal connection.
A recent study I read suggested that about the only thing worse than gentrification is being bypassed as that redevelopment money goes into other areas.
I'm not sure how that is related to gentrification. And last time I checked, people are not homeless out of choice, but from socioeconomic reasons, mental health problems and just bad luck. I'd argue that rent control and housing stability can go a long way to mitigate those problems in the first place.
And you might be partially right, nobody likes homeless people. But for very different reasons. I don't like that society lets people fall, almost permanently, on the side line.
> They are an eyesore and a burden to the community.
The same could be said about SF's tech workers at $social_network_of_the_month. Just because you think you have value, does not make it so. People matter, period.
Abstractly, yes, you are absolutely correct in every detail.
In practice, how much money should that be expected to translate to? From what I've seen, SF could dump literally it's entire yearly budget at offering care, compassion, and generosity to the homeless without the homeless population shrinking.
Does any economist disagree that free market is more efficient than a price regulated market, i.e. provide more people with more bousing? Its not just about the liquidity at the demand side, at the supply side, rent control makes it harder for market to create more supply to meet the demand.
From a human right perspective, I am not sure I agree that a person have the right to live at the same place forever as long as he maintain the same income just because he used to live there. Maybe a couple of years but it shouldn't be forever.
Let me put it this way: the rents dropped sharply when rent regulation finally ended in my country. After 15 years of doomsayer horror stories from the left how unregulated rents would make the poor homeless, it turned out, within a year, that the exact opposite was happening.
On strictly economic terms, I agree with you. The trouble with the plan you describe is that essentially guts neighborhoods. The very vibrant, interesting neighborhoods that draw people to San Francisco in the first place. By the time the correction occurs, the networks of lower-income people that tend to be the bedrock of the more interesting urban neighborhoods have been disrupted, often fatally. That ship may have sailed, rent control or no.
The trouble though with this view is it always acts as though neighborhoods are static and unchanging. But any large City that's more than 100 years old sees neighborhoods rise and fall economically and/or change dramatically in a social sense over time. Sometimes for the worse, sometimes for the better. When you "protect" these neighborhoods with artificial controls you just end up extorting all kinds of outcomes which are never healthy. The tenant on this FB post is like a Frog in slowly heating water with no sense of temperature. By the time she realizes what's happening it's too late and she's seriously stuck. If the rents in her area were going up 10 - 20% or more every year (and hers along with it) the shock would be less and she'd plan ahead to move.
Please don't conflate the market calamity of 2008 with this issue. The lesson we should have learned from the housing crisis, and all the financial derivative wizardry therein, is not "more government regulations NOW" - it's sensible regulation when necessary. Rent control is neither.
> What if the other unit needed to be knocked down for a reason other than to get rid of rent control?
Let the owner give adequate notice to vacate (where I live it's 60 days notice without cause).
But the rent-control limitation stays on that land parcel for some period of time after a new building is constructed on the site. Don't want to rent it? No problems.
> Newly moved in renters realize that they are paying 10x as much as the rest of the country, leave. Rent goes down
People have a limited ability to live a certain distance away from work - an hour, sure - two, ... okay but that's pushing it. Three? Well now half your waking day is spent commuting. Four? You're probably not driving because you need to sleep.
Property owners who're assholes will continue to push rental prices up (which is what we're seeing in OPs example) to "what the market will bear". Meaning people who're willing to live in some shithole on ramen and minimal lighting and heat for >half their wage can live within a reasonable distance of their workplace.
All so some asshole (which is probably a company), can make more money. Great for the rich.
>All so some asshole (which is probably a company), can make more money. Great for the rich.
Ummm... yeah, that's why I bought the place. That's why I took the risk on the investment. That's why I deal with all of the administration. That's why I keep it up to code. So... now I have to rent it for 25% market value? I'll find any way I can out of that situation, and no, it doesn't make me an asshole.
Maybe it does, maybe it doesn't. Deciding that you need a fatter paycheck at the expense of a renter who can't afford your desire -- yes, desire, not need -- for more money... yeah, in my book that makes you an asshole. Any rent increase that isn't tied to an increase in costs (sure, maybe plus a few percent for profit) or a CPI/inflation increase is just greed, plain and simple. Put another way: landlords who are already making a comfortable profit off their property don't magically stop making a profit just because demand has increased. But that's not enough: people won't say no to a chance at more profits, even if that has a negative impact on other people.
Listen, there's no reason why all the landlords across SF need to raise rents. They do it because they want more money, and know that demand is so high and that the high income earners in the area can afford it, and that there are enough of those types of people to keep the market going, at least for a while.
And, to be frank, I could keep affording an apartment in SF even if it got much worse than it is now. But I wouldn't want to live here. The thought of living in a place populated by only the rich is entirely unpalatable to me. The idea of lining the pockets of people who are displacing families and individuals who have been living in SF for years and decades... that's disgusting. After a while, if things don't get better, I'll give up and move somewhere else, and give my rental money to people more deserving. I'll be sad to leave, but will realize that the city I love has already left me.
So, unless I'm in it to only make as little money as possible for me to have a reasonably comfortable existence (by some standard you have set), I'm a greedy asshole. I disagree. I want to be rich someday. I want to retire at 50 and travel the world, eating at overpriced restaurants along the way. I want to leave some wealth to my children.
That's why I bust my hump working a day job as well as building assets in my spare time; so that someday my investments pay my way with little effort on my end. I am indeed in it to make money; I have no interest in running self-subsidized housing. There's nothing morally wrong with charging market value. It's not that I have no empathy for these people, but circumstances change for a variety of reasons and we all have to adapt. Neighborhoods change over time; rent control won't stop that. My investment finally paid off and you want me to run a charity.
I'm sorry that doesn't jive with your political/world outlook, but that doesn't make me a bad person. There are pros and cons to any economic system, but apparently capitalism is not for you. That's fine, just drop the holier than thou attitude.
> There's nothing morally wrong with charging market value.
How do you define market value?
Because for some landlords it seems to be the highest value that someone will pay to live there.
Taken as a collective action - that results in rents continually going up beyond wages.
I don't know all the circumstances behind the OP's rent increase - but an ~8x increase seems pretty astounding.
Were rental prices left untouched for decades?
Was there some major increase in the cost of maintaining the property or land?
Has the landlord made significant investments in the facilities or amenities?
> My investment finally paid off and you want me to run a charity.
So, can you see any room between asking landlords not to be assholes about squeezing tenants for every last cent, and running a charity?
That's what I'm asking for - I understand you've put in some risk, you've worked hard to earn money. But your tenants are working hard too.
In many cities there's a huge (and growing) demand for properties that are within some reasonable distance to places of employment.
Landlords collectively driving up prices beyond wages and other costs results in a huge flow of wealth from the working class to the wealthy.
This means someone on what would elsewhere be a fantastic wage, is at best mediocre. Those on lower wages may find they're having to share rooms and eat ramen two hours away from work well into their adult lives just to survive.
If you own a rental in San Francisco, you have an effectively zero-risk investment.
Is it a zero-labor investment? Fuck no. But, due to the city's completely batshit insane zoning laws and the militant NIMBY contingent you (as a landlord) are guaranteed an income that increases far more quickly than the cost of maintaining it.
It is for this reason that most landlords in absurdly high-demand areas get no love or sympathy whatsoever.
I was too harsh, and for that I apologize. I more care about the level of the increases: a landlord can certainly pull in more profit with a modest rent increase that doesn't break the tenant's bank (and that's likely even a higher increase than current rent control laws allow). The OP's rent is about to become over 4x what it once was. I certainly won't deny that the cost of owning a property will tend to go up, but it sounds to me like most of that rent increase will end up being pure profit.
I want to be rich someday, too. But I don't want to be rich knowing that I directly made the lives of other people harder in doing so. I don't think wealth and capitalism has to be a zero-sum game; I don't believe that for me to become richer, someone else must become poorer.
All this is precisely why we don't have absolute property ownership rights. We as a society have collectively agreed that land is a limited, public asset, and we're willing to allow people to own it, and receive some benefits from the state, but also have to follow some rules that serve the public's interest... like not kicking people to the curb out of greed. If you own land, then you should know this already: it's not "yours" in the absolute sense. It's an investment, to be sure, but your return on that investment can be limited by law in some cases. This is just one way in how that shakes out.
I'm sorry that doesn't jive with your political/world outlook, but that doesn't make me a bad person. There are pros and cons to any economic system, but apparently capitalism is not for you.
I'm not going to try to define "good person" or "bad person", but I will say that the idea of evicting someone from their home (and sometimes city) because their landlord sees dollar signs in their eyes is just reprehensible to me. That doesn't put me at odds with capitalism; I think that just makes me human.
Why don't you pay some of your neighbors' rent? You admit you could afford an increase, and you want people to sacrifice their disposable income for the benefit of others' housing, right?
I'd say that the onus is more on people not actively screwing over other people for their own gain, versus relying on people like me to somehow choose which of their neighbors is most deserving of charity.
The exact reason why we have legal limitations to property rights in these cases is to require that landowners sacrifice some of their disposable income for the benefit of others -- and the benefit of the public good. I think the law has the intent correct, there, even if the implementation of it leaves something to be desired.
Basically rent in big cities is extremely low risk income. It means if you're lucky enough to be born/married the right places and own a few buildings, you do not need to work, nor will ever need, nor will your children ever need.
So.. it doesn't make landlords assholes or evil, but its not like there wasnt a class issue. The only reason why this thread explodes is because the wealth difference is getting bigger and bigger.
What's the not-asshole thing to do when you find out you could be making a profit literally ten times as big as your current profit? Especially when you know the supply being competed over won't be changing much.
The not-asshole thing to do is to continue making your current profit. Or hell, raise it a little, but not enough to make it financially untenable for your current tenant to live there. You think it's ok to do something that will benefit your bank account but will simultaneously force someone to move out of their home? Enriching yourself at the expense of others is an asshole move, to me at least.
> The not-asshole thing to do is to continue making your current profit. Or hell, raise it a little, but not enough to make it financially untenable for your current tenant to live there.
So every lease becomes a lifetime deal. Hmm. Since rent keeps going up, this means prices are going to have to go up dramatically now so that I'm not completely hosed in ten to twenty years. After all, rent control increase caps are pretty much always below property tax increase caps.
Long-term, me-the-landlord is going to be put in a situation where rent doesn't even cover taxes. Nevermind repairs, maintenance, and insurance.
> You think it's ok to do something that will benefit your bank account but will simultaneously force someone to move out of their home?
Huh. I guess evictions for non-payment are out now. After all, it's their home, and it would be evil for me to evict someone from their home just for the sake of my bank account...
Between this and your previous point, you've made an excellent case that a moral and ethical person who owns property in SF would refuse to rent it under any circumstances. Well done.
> Enriching yourself at the expense of others is an asshole move, to me at least.
Are you aware that you just defined turning a profit as an asshole move? Perhaps you want to rethink your definition.
> Are you aware that you just defined turning a profit as an asshole move? Perhaps you want to rethink your definition.
Nowhere did I say that, and I'll thank you to not put words in my mouth.
Actually, interestingly, you've now also defined profit as a zero-sum game across society. For some to be enriched, others must falter and be brought lower. If that's what profit is, then yes, I do believe profit is an asshole move. (But I don't think that's what profit is!)
It's entirely possible for landlords to raise rents in such a way that continues to cover their costs, continues to provide a tidy profit margin, but does not displace tenants. That's why I said it's possible to maintain your current profit (which you could consider a fixed dollar amount or a percentage, and my argument still holds) and did NOT say maintain your current rent.
> Actually, interestingly, you've now also defined profit as a zero-sum game across society. For some to be enriched, others must falter and be brought lower.
OK. What nuance of your stated position did I mistake? In what way do you make a profit and enrich yourself without it coming at the expense of another? Bear in mind that trading something of yours for money from someone else is very literally a trade taking place at their expense - they are spending money.
> It's entirely possible for landlords to raise rents in such a way that continues to cover their costs, continues to provide a tidy profit margin, but does not displace tenants.
Not when prop 13 caps are generally higher than rent control caps. Over time, a property-owner will lose ground and their margin will shrink as their costs increase faster than their incomes.
In practice, this manifests as landlords deciding not to invest in the upkeep and maintenance so they can preserve their profit margins.
Not when prop 13 caps are generally higher than rent control caps.
I don't believe we're talking about rent control here, or at least not exclusively. The original article is about someone's rent increasing by over 400%. I can't imagine how that could be justified by cost increases on the landlord's side.
I'm not arguing that the current system of rent control and property tax increase limits is working properly and is the best way to do things.
At any rate, you're re-framing the argument here to try to make me look bad. Your original question asked about landlords making 10x of their existing profit. If the landlord is already making a profit (which was the premise of your question), clearly they're not having issues making money in a rent-control+prop 13 environment. There are many multipliers between 0x and 10x, and I would argue that the responsible multiplier in order to maintain non-asshole status is well below 10... and even well below 1... but certainly greater than 0.
Just to be clear, though, to reiterate my initial point and make my position clear: if you're making a $500 profit off a $2000 monthly rental, and decide that you can and should make $5000 (a 10x increase in profit) by raising the rent to $7000, if that's at the expense of the renter's ability to pay... yes, it is my opinion that you're an asshole. That is the original question you asked, and that's the question I answered.
> I don't believe we're talking about rent control here, or at least not exclusively. The original article is about someone's rent increasing by over 400%.
Yes, because the unit is no longer controlled and the landlord wants them out. In your eyes, that makes the landlord an asshole. That may be, but the reality on the ground is that there are few ways to do that... and they found one.
Does it even matter why? What if the landlord wants somewhere for their aging grandmother to live so they can care for her? Would that still make them an asshole? I suspect you'll say yes, because they're looking to push someone out of their home. Maybe the tenant has caused so many headaches that it's not worth putting up with them for the profit anymore. Who knows?
It wouldn't be an issue at all - magical words and warm fuzzies and similar crap aside - if all the various policies supported by not-assholes hadn't created a situation that encourages assholes. It's kind of like well-intentioned policies need to be carefully thought through because they can have consequences other than those intended.
> At any rate, you're re-framing the argument here to try to make me look bad.
Really? I thought I was just exploring the consequences of your position(s), but I'll bow to you on this one.
> There are many multipliers between 0x and 10x, and I would argue that the responsible multiplier in order to maintain non-asshole status is well below 10... and even well below 1... but certainly greater than 0.
OK. Then what is it? What's your happy medium, where you are getting money from someone, providing something in exchange, and making a profit without enriching yourself at their expense?
> Maybe the tenant has caused so many headaches that it's not worth putting up with them for the profit anymore.
Tough. If your tenant isn't doing anything that you can evict them for, that's too bad for you as the landlord. When a landlord rents out his property as a home for another, that property becomes the lessee's castle. In all but a very few aspects, that property is now effectively the lessee's to use in any and all ways that comport with their leasing agreement.
> What if the landlord wants somewhere for their aging grandmother to live so they can care for her?
In California, there is a legal way to do this. It's one of the ways that the Ellis Act permits landlords to evict rent-controlled tenants.
The Ellis Act is a pretty fair and just law. It recognizes that landlords are human, and might have real reasons to get out of the property rental market. (Or that they might need to use their only rental unit to house themselves and their family.) It also recognizes that some all-too-human landlords do try to maximize their profit margins despite the very real damage that they would do to the lives of others.
> In California, there is a legal way to do this. It's one of the ways that the Ellis Act permits landlords to evict rent-controlled tenants.
And pretty much everywhere, you also have the option of increasing their rent to get them to want to move out. Like has happened here.
> The Ellis Act is a pretty fair and just law.
Really? Because if I walk outside and ask around, I'm pretty sure I'm going to be told that it's inherently evil and abusive and needs to be repealed, because a lease should be a lifetime contract for a locked-in low rate.
Of course it does! A big part of whether or not someone is an asshole is about intent.
What if the landlord wants somewhere for their aging grandmother to live so they can care for her? Would that still make them an asshole? I suspect you'll say yes, because they're looking to push someone out of their home.
The Ellis Act provides for landlords who want to take a property off the rental market, so this sort of thing actually is explicitly allowed by law. I think this is a tough thing, because yes, you are pushing someone out of a home, but I think it's a good balance of property ownership rights vs. the public good, as you're saying you want to do something completely different with the property, rather than just finding a way to do the exact same thing but line your pockets more.
Maybe the tenant has caused so many headaches that it's not worth putting up with them for the profit anymore.
The problem with this sort of reasoning is that it's subjective. A landlord could decide that a tenant is a "headache" because the plumbing in the building is terrible and the toilet keeps flooding the bathroom for no reason, and the tenant has decided to withhold a portion of rent until it's fixed. Should the landlord be allowed to evict the tenant because of that? I'd say no. But if the "headache" is that the tenant is constantly violating quiet-time rules and waking people up, then maybe repeated behavior of that sort should be grounds for eviction.
For this sort of thing I'd want the law to stay out of it. A signed lease is a contract between landlord and tenant; enumerate the "headaches" that will lead to eviction. Of course there's room for interpretation, but let the lawyers and courts deal with that.
OK. Then what is it? What's your happy medium, where you are getting money from someone, providing something in exchange, and making a profit without enriching yourself at their expense?
I don't think the exact number is all that important, but there's likely a range of acceptable values for different landlords, properties, and tenants. My position is that a 10x or even 1x increase is crazy and throws the public interest out the window.
When it comes to housing, people tend to buy/rent as much as they think they can afford (and sometimes more). You can argue that this is foolish (and I'd agree!), but that's the reality of the situation. Even doubling someone's rent would likely be catastrophic for their finances. The idea that landowners should be allowed to extract every bit of profit possible out of land -- a public, limited good -- no matter what the consequences, is absolutely reprehensible to me.
> The idea that landowners should be allowed to extract every bit of profit possible out of land -- a public, limited good -- no matter what the consequences, is absolutely reprehensible to me.
And this idea has led to strict rent control, which in turn has led to NIMBYism, which together have led to the clusterfuck that is San Francisco's housing market. Privileged groups act first and foremost to preserve their privilege, and rent control works by creating a privileged group. Hilarity ensues.
You said you wanted to gain in understanding. I think you should internalize that before going on. It's critical to the whole issue.
In short, you need to consider that attempting to put your ideals into policy may have resulted in creating the problems you fear.
What about the other person who really wants to move to SF, is willing to pay more than your current tenant, but now can't because there is so little other supply available the market price on those is through the roof?
If that person's ability to move to SF hinges on someone else getting kicked out of their home and city, then no, I don't care about that person.
But I'd rather be able to care about both people. I'd rather SF's planning process wasn't so idiotic that it's impossible to build at the rate we need to in order to house everyone who wants to live here, at whatever economic level. I'd rather that rent control hadn't helped to foster a culture of NIMBYism that causes all new projects to get shot down, drastically scaled down, or at best delayed several years.
The main priority in getting ourselves out of this housing crisis should be to build like crazy, and accept that neighborhoods will change, and the city will change. Once we've done that, and demand has stabilized, we can do things like eliminate or drastically scale back rent control, or at least make it more sane. But for now I believe it's necessary to avoid screwing people over.
So, your answer is to assert privilege - they were there first, so they deserve it more, go fuck off.
What's been noted repeatedly across history is that rent control tends strongly to encourage a culture of NIMBYIsm. Rent control has contributed heavily to creating the current situation and its persistence increases the political resistance to building more housing.
Have you not noticed the routine grumbling about extending rent control to new housing and different kinds of housing? That scares the crap out of would-be builders and investers. Couple that with moralizing about how profit margins need to be razor-thin to be morally acceptable, and the scenarios you imagine are ones in which no developer is willing to work.
The result is pretty much what we have now - not enough building. If rent control were relaxed now, or even made hugely more difficult to extend, those fears would be reduced.
But right now? Rent control has created a witch's brew for political stasis. That's what you wanted, right? To enable privilege for people who are deserving by virtue of living in sufficiently old housing?
But right now? Rent control has created a witch's brew for political stasis. That's what you wanted, right? To enable privilege for people who are deserving by virtue of living in sufficiently old housing?
Not at all. But that's what we have now. It's easy to say "we shouldn't have done it this way", but simply removing tenant protections isn't going to solve the problem: it's just going to put all the power in the hands of landlords and builders... and of course they're going to abuse that power.
Existing rent control[1] isn't causing a lack of building. A city-enforced lack of building is causing a lack of building. Both the city planning committee and the NIMBY crowd just don't want things to change. On that, I completely agree with you.
Couple that with moralizing about how profit margins need to be razor-thin to be morally acceptable, and the scenarios you imagine are ones in which no developer is willing to work.
It's give and take. I'm not advocating for razor-thin profit margins, and I'm getting a little weary of you suggesting that my position is that the only alternative to the crazy rent increases are no rent increases at all. There has to be a happy medium somewhere, where landlords can increase their profit without driving people out.
[1] For the record, I am not in favor of expanding rent control, but I do believe we're at least temporarily stuck with the rent control we have now. Killing the existing rent control without first drastically increasing the housing supply (coupled with finding a way to allow landlords to raise rents without requiring that their tenants move away) would absolutely destroy lower-income renters.
Because by creating a scenario that encourages assholes, all the not-assholes get pushed out. And thus, by being short-sighted nice people, you wind up with a city of assholes.
Also, you should probably address harryh's excellent question about everyone else. Preferably with something other than an assertion of privilege.
Because by creating a scenario that encourages assholes, all the not-assholes get pushed out. And thus, by being short-sighted nice people, you wind up with a city of assholes.
As a landlord, deciding to raise rent on your units a modest amount, instead of a financially crippling amount, does not put you in a position to be "pushed out" than landlords who choose to be greedy.
Your costs have not increased such that you need to charge your tenant more than what they can afford. With prop 13, property tax increases are capped, the cost of public utilities that a landlord often takes on (like trash and water) don't increase that much year-over-year, and neither does the cost of contractors to maintain the property. Any increases are in-line with non-housing-related cost of living increases.
So what I don't understand about your statement is that you seem to assert that other landlords behaving like assholes somehow causes non-asshole landlords to be unable to maintain their properties and thus have to make the uncomfortable choice between either becoming assholes, or selling their properties to assholes and leaving. That doesn't seem to make sense unless somehow the cost of maintaining properties has started rising by more than single-digit percentage points per year, which doesn't make sense.
Let's assume that property maintenance somehow increases in cost by 5% per year (which I think is at the high end). The apartment in question here would be covered by a $73/mo rent increase. While that's not nothing to most renters, I think it could be considered a reasonable increase, and something that probably wouldn't break the bank. But the apartment in question isn't getting its rent raised by 5%, or even 10%. It's getting raised by 315%. There's no possible way anyone could ever believe that it costs anywhere remotely close to 315% more to maintain that property this year than it did last year.
Remember, we're not talking about profit here. We're just talking about the idea that you're pushing, that only charging a rent increase of 5% will put a landlord out of business, and that somehow the only way to stay in business is to "do what everyone else is doing" and raise rents by much higher numbers. If that's somehow true, I would love to see numbers that suggest that, because it sounds like an outrageous claim to me.
Also, you should probably address harryh's excellent question about everyone else. Preferably with something other than an assertion of privilege.
I find it interesting that you bring up the concept of privilege, as I believe landowners to be a particularly high-privilege group, especially when compared to many of the people who have been losing their homes over the past couple years.
Regardless, I agree that it's an excellent question, and I've already replied. If you feel my response is lacking, please reply to it and I'll try to clarify my position better. I'm really just trying to understand and provide my perspective, and possibly learn a bit in the process.
While this post has some good points it lacks an understanding of capitalism. Mainly that the prices charged are in relation to what the market can bear and NOT just what the costs are. A real estate investor is (just like any investor) is looking to maximize profits based on 1. What tenants can afford and 2. What competitors are charging. Raising rent only works if there are customers willing to pay the increase which is affected by the supply of housing in the same area.
This specific case the tenant raised prices to boot an renter under rent control so its really just a perversion of the rent control law (and another great example of how it doesnt work). When the answer to regulation is more regulation you start seeing an infinite loop. Laws developed -> entrapenuers figure a way around them -> new laws created -> new loopholes found -> repeat
I don't think the problem is that I don't understand capitalism; I just believe that the absolute application of it can be harmful in some cases.
I'll start by saying that I do believe that capitalism is pretty much the best we have right now, and has allowed for greater prosperity than other economic systems up to this point.
However, I do think that the public good needs to be taken into account and act as a balance for capitalism sometimes. Housing is a good example for this, as I don't believe the public good is served by allowing property owners to charge as much as they can. Call that socialist if you want; so be it... I do have some socialist leanings.
If we were to repeal rent control tomorrow, rents would shoot up across the board. Formerly rent-controlled apartments would see their rents go up like crazy. Formerly non-rent-controlled apartments might see rent increases slow, but they would almost certainly not drop, at least not for a year or two. Demand is still high (and is still getting higher), and the bay area increasingly houses people who really want to live in SF, and are able to afford higher rents. SF is limited in land area, so, without a massive increase in the housing supply, we're limited in population expansion. With the average & median rent increasing, many people at the low end will be displaced. SF will become a place where only high earners can live, which means most service workers will need to move out of the city and be bused in, or drive, or just fail to find jobs due to lack of transportation options.
That last bit is an example of why I think the public good needs to (through regulation) balance out capitalism sometimes. Lower-income people being unable to live in SF is IMO a bad thing. Increasing the number of cars/buses on the road is a bad thing; causing people to live farther away from their jobs is economically wasteful. Also note that many of the high-income people moving into SF in this scenario will be moving to SF while keeping their peninsula/south bay jobs, further increasing the commute problem.
Definitely agree that regulation and new laws do sometimes form a feedback loop as unintended consequences and loopholes are discovered. But I don't think that's an excuse not to try, because a lightly- or un-regulated market is not going to help, either.
Long story short, you believe that basic market forces should not apply to housing because that makes some people into assholes.
Bluntly, this is naive. More importantly, it does exactly nothing to actually help address the problems at hand. All it does is give you a way to shake your head and make clucking noises as you feel morally superior.
A few years ago, I would have listened to you and probably even agreed. These days, I'm more interested in solutions than I am in moralizing.
> I'm really just trying to understand and provide my perspective, and possibly learn a bit in the process.
Judging by your furious responses and insistence on labeling anyone making a sizable profit as an asshole, I'd say the only one of those goals you're meeting is the one of providing your perspective. Which is to say that landlords are assholes. Thanks. How about something helpful now?
Hey, this all started with a question by someone asking if making your renters unable to afford their rent to fulfill a profit motive makes one an asshole. I said yes.
So what do we do to address the problem at hand? It sounds like you'd advocate for a repeal of rent control, because landlords should be able to extract all the profit they can from their properties? That's not going to fix the housing supply issue; all it's going to do is turn SF into a rich-people-only city where service workers need to live elsewhere and get bused in every day. That's not a place I want to live, and would be a direct result of "market forces" -- but not really, because government regulation nullifies market forces in many cases. Rent control is only one part of it... prop 13 and the city's byzantine planning process are others, and there are certainly more.
So, looking for suggestions? Here's what we do:
1. Gut the city's construction planning process. Make it more objective and based on zoning laws and building codes, as well as continuing to include provisions for low-income housing. Raise (and in some areas eliminate) building-height restrictions. Also, residents in the area no longer get a veto on new construction projects. As long as a building proposal follows the rules, it gets a rubber stamp. No discussion.
2. Repeal prop 13 for rental properties, and only allow it to apply to an owner's primary residence (obviously this is more difficult since prop 13 is state and not city law). This recognizes that owning a home gives you an illiquid asset, and fluctuations in property taxes (especially in an area like SF with strongly rising property values) can cause people to need to move. Homeownership should at least still offer that kind of security.
3. Repeal rent control city-wide and replace it with a gov't subsidy tied to renters' income. This subsidy can be funded with extra tax revenue from #2, and can likely be phased out over several years as rents stabilize and drop. I expect that rents will initially rise, but will start to lower again after a year or two under the new rules, and even more after a few more years as #1 reduces (and hopefully eliminates) the deficit in the housing supply. The (temporary) subsidy protects existing tenants until there's enough housing to support people of any economic status.
4. This is more subjective, but: make it more attractive for landlords to buy out their tenants (or just keep them) than to use shady practices like finding reclassification loopholes and bullying by doing the bare minimum required by law to maintain their properties. I'm not sure of the exact mechanisms to do this, but incentives should be aligned so that landlords want to keep good, steady, reliable tenants, even if new tenants might net them some extra cash. Basically we want to create an environment where landlords are mostly happy to keep their current tenants, but while tenants are also not afraid of the prospect of needing to move.
No, profit is arranging a voluntary transaction where both parties where both parties trade something they value less for something they value more.
Where did all this 'profit is evil' talk come from anyway? This is a site dedicated to startups and tech talk, and all of a sudden we have activist student slogans passing for comment?
You're just stating things without making any argument. I am aware of consumer surplus, thank you very much.
You said that I value something at 60 cents and the seller values it at 40 cents, therefore I will buy it at 50 cents. Not only is your simple linear model absurdly reductionist, it's just ignorant. If a grocer is willing to sell at 40 cents, I would never pay a 50% markup when I wouldn't have to, your assertion that I would notwithstanding. I would just pay the 40 cents, and therefore the only objective measurement of how what I valued it at would come out at 40 cents. You stating that I actually value it at 60 cents is just you trying to fit a scenario to your fictional model.
Are you dumb? I just made up the numbers. I never said anything was linear and even though the grocer is willing to sell at 40 cents he doesn't because then he wouldn't be able to meet supply so he raises the price until he can.
Maybe the real life numbers are 45, 50 & 55.
Maybe they're 34, 37 & 50.
Maybe you really fucking love apples and it's 34, 37 & 5000 in which case go nuts, buy up the whole orchard, and keep all the doctors away for all time.
Maybe those numbers aren't even close because what exactly does an apple cost these days I don't even know exactly.
But the point holds. There is a price at which the transactions happens. Somewhere below that is the producer willingness to sell. The difference between those numbers is the producer surplus. Somewhere above the price is the consumer willingness to pay. The difference between that number and the price is the consumer surplus.
Go find any economics 101 textbook in the known world and you'll have a downward sloping demand curve, and an upward sloping supply curve. They intersect at a market price. Then you get some shaded in areas for the producer and consumer surplus.
If you don't know what one of these graphs looks like then you aren't qualified to participate in any discussion ever about what things should cost. Just shut up and go back to writing shitty software using the worst programming language in general use today.
Supply/demand curves are literally 4th grade curriculum where I come from. So yeah, mastered that shit 20+ years ago. Thanks for assuming though.
You've gone off the rails and are now confusing 'cost' with 'worth' or 'value'. We can only determine a 'value' or 'worth' when an actual transaction occurs. You can't just extrapolate out on a model curve and expect it to hold in the real world, no matter what your theory tells you.
Bottom line is, if a grocer is currently asking 40 cents for an apple, I will transact at that price no matter how much higher I 'value' that apple. I wouldn't pay 60 cents for an apple that a grocer is selling for 40 cents. I wouldn't pay 50 cents for it either.
BTW, ECMAScript is poised to take over the world. Better strap in.
I think it's sort of obnoxious and should be illegal to force landlords to keep renters ad infinitum just because. That hardly seems fair to the landlord, no?
The idea behind limiting the landlord's profit is that many believe that it is more important for people to be able to afford housing than for others to make larger profits through, literally, rent-seeking. It's not just because, it's a social priority.
Kinda like the comment the other day on HN that was something along the lines of "I don't see why we need the gov't regulating water prices, why can't the free market just sort this out" ... "because water isn't like an iPhone, it's something that everyone needs and there's a huge butterfly effect to this, less crops, less food, etc. on a very large scale -- not to mention supply/demand doesn't work for something with fairly inelastic demand".
What's next, "I think it's sort of obnoxious and should be illegal to force insurance companies to not take into consideration pre-existing health conditions"? "I think it's sort of obnoxious and should be illegal to force politicians and political parties to reveal who gives them money"? "I think it's sort of obnoxious and should be illegal to force people who are working to pay for the retirement of older people via Social Security"? "I think it's sort of obnoxious and should be illegal to force companies to limit the amount they pollute"?
There are plenty of arguments against rent control. But I find it hard to accept "but this guy could be making more money if the government didn't get in the way!" as an argument against rent control (or most other things, for that matter).
How does this legitimize it? A group that votes to dictate what I can do with my property might be doing it by the letter of the law, but that doesn't make it morally right. If I've earned something (e.g., I've gotten it legitimately through trade, as opposed to theft or fraud), that means I've poured some part of my life into earning that thing. Apart from issues where criminality is involved (theft, fraud, etc.), no life should be subject to the arbitrary dictates of any group.
Each of us should be free to make the most of our lives, as best as each of us can. Some of us will achieve more, others less. And there's no getting around that, because no two people can ever be the same in every respect.
To be clear, I am pro-equality in one fundamental respect: we should strive to be equal before the law.
This is essentially a fundamentalist view of property rights. It seems like that for any X, you can find people to assert that X is obviously the most important thing in the world, so anything else doesn't matter. Fundamentalisms are mentally satisfying, because you always have clear answers. But they're practically dangerous, because the ignored concerns don't actually go away.
Land, of course, does not work like you imagine it does. See, e.g.,:
In addition to all that, you ignore that concepts like "trade" and "law" and even "earned" are all intrinsically social concepts. No man is an island. That doesn't mean that property rights aren't useful and important, but if you want everybody to agree on a particular set of rights, you'll have to make a case that is more compelling than, "my particular moral code says you must abide by my particular moral code".
my particular moral code says you must abide by my particular moral code
It's not merely an arbitrary moral code that I'm asserting. What other way is there to live than to use your mind as best you can to make the most of your limited time? What other way is there to live than to treat others neither as masters nor slaves, but as trading partners (in love, friendship, mentorship, business)?
Arbitrariness isn't the issue. Agreement between various moral codes -- often in harmony, often conflicting -- is what matters. And often that means compromising on some things. You don't appear willing to compromise on what seems like an advocation for absolute property ownership rights.
What other way is there to live than to treat others neither as masters nor slaves, but as trading partners (in love, friendship, mentorship, business)?
You're advocating the opposite of that. As a landlord -- assuming a world with absolute property rights -- you have a significant power advantage over your tenant. A 3x-4x rent increase is not treating your tenant as a "trading partner", it's using your status as landowner to your enrichment and their detriment.
Further up you suggest:
A group that votes to dictate what I can do with my property might be doing it by the letter of the law, but that doesn't make it morally right
Not inherently, no. That's only the case if you believe that the voting-majority group is immoral. That certainly can be the case, but I don't believe it's the case often enough to abandon the idea of democracy.
Personally, I'm definitely in favor of limiting property rights. Property is in general not a fungible "product", and its supply is limited. I consider land to be a public good. The state grants you some property rights, but reserves to place some restrictions on what you can do with the property in the name of the public good. I don't think we have the balance down perfectly yet, but I would absolutely not advocate giving property owners carte blanche to do whatever they want with that property.
It's a matter of drawing the line somewhere: I think you might agree that some restrictions are good. Disallowing renting decisions based on discrimination of protected classes is something we might agree is a good thing (sorry, I don't mean to state your position for you, but I don't know you, so I'm just stating a hope, a guess, as to somewhere we might find common ground). If we can take that as a given, then we can agree that the state restricting property owners to some extent does indeed make sense. And from there it's finding a list of things that it's ok to restrict, and it's not ok to restrict. From this discussion I'd guess that my list of things that it's ok to restrict is a bit longer than yours. And that's ok, but at least it's a starting point from which to find a compromise. The final list has more on it than you want, and less on it than I want.
Business deals and compromise are rarely about making one or the other party (or both) 100% happy. I believe there's "common wisdom" floating around that the best deal is one that both sides are slightly uncomfortable with, and I believe that to be pretty true.
If, on the other hand, you do truly believe in giving property owners absolute power and free reign to do whatever they want with it, then I don't know that we can actually have a productive discussion, because our viewpoints may just be too different. That's unfortunate, but that happens sometimes.
A 3x-4x rent increase is not treating your tenant as a "trading partner", it's using your status as landowner to your enrichment and their detriment.
In a romantic relationship, either party can decide to leave without retribution.
In a friendship, either party can prioritize something else they value more, and the friendship wanes.
Students can outgrow mentors, and vice versa. Businesses can fire clients, and clients can go to other busiensses.
It can definitely be detrimental for someone's romantic partner or spouse to leave them (and the same can be said for any of the other relationships in this list). Some people are so distraught when someone leaves them that they attempt suicide.
However, does the fact that this happens in any way justify imposing restrictions on couples? Should a person be forced to endure a romantic relationship that they wish to end because it would be to the detriment of the other person? You can say the same thing about any of the relationships I've listed. For example, should you be forced to buy a brand of soap you don't like because the grocer isn't doing well, and he needs you to buy his unsold inventory?
All relationships are a two-way street, and for a fair trade, both parties have to agree, voluntarily.
These are all just specific cases where one can reasonably make arguments to say "yes" or "no", but have a different opinion for other specific cases.
For your first 3 examples (romantic, friendship, student/mentor), I of course say sure, either party is free to leave whenever they want.
The difference here is an economic one. It's near impossible to make sensible legislation around feelings (though some lawmakers certainly seem to try). While the ending of a romantic relationship may have a huge negative psychological impact on me, it doesn't affect my ability to live on in economic terms. A landlord kicking me out of my apartment can directly affect my livelihood, and the government is trying to protect me there. I think it's also uncommon for that to hurt the landlord (especially in the non-rent-controlled case), so there's an imbalance of pain. In the relationship case, leaving causes me pain, but staying causes the other person pain. Legislating whose pain is worse or less justifiable is, I hope we'd agree, a mess.
The firing topic is interesting, though, because even the law disagrees in different parts of the world. In Europe, for example, many countries have laws that are very employee-centric, and make it very difficult for firms to fire people. I personally don't agree with the extent that they've gone over there, but I can at least appreciate that people in other areas value employee security over employer mobility and lack of overhead. Even different states in the US have different laws that make it easier or harder to fire people, and define different obligations on the employer when they want to fire someone.
All relationships are a two-way street, and for a fair trade, both parties have to agree, voluntarily.
I'd like to agree to that in principle, but that just isn't true. There are plenty of laws on the books that can give one side more rights to make, not make, continue, or terminate an agreement. For example, a landlord may wish to discriminate against people with certain physical disabilities, because otherwise he'll have to spend money to install accessibility features in his building, but the law says... nope, can't do that.
A landlord may also wish to discriminate against an existing tenant who isn't able to fulfill the landlord's newest vision of his property's profit-making abilities, but there are a bunch of laws that also say... nope, can't do that. I happen to agree with a lot of them, or at least the intent behind them.
Our entire legal system is based on the idea that, on an individual level, both parties don't have to agree... only some representatives pulled from the majority do... sorta. There are lots of laws on the books that I never agreed to, and yet I'm bound to follow them just the same.
But all that is fine, I think. Many laws -- renting-related laws in particular -- are designed to weaken inherent power imbalances. The landlord naturally has more power in society than the single mother who is holding down two jobs. The law tries -- often imperfectly -- to protect the mom from people who would ignore her interests and take advantage of her.
Property rights aren't "useful and important." Property rights are the fundamental basis for any other right. What right to life does anyone have if not because they "own" their own life? What right to free speech do they have if they do not "own" their own speech?
Thievery doesn't become acceptable because someone makes a compelling case or a pretty argument. Justice doesn't become "fundamentalism" because it won't compromise with injustice.
That you have found a way to construct all the rights you can think of based on a specific construction chattel property rights is interesting. But it doesn't it make it the only way to think about rights (or ethics or morals), or even a particularly good one.
Your fixation on one thing and your refusal to compromise or even to admit the validity of other views is exactly what fundamentalists do.
I was absolutely serious about that comment. Am I being downvoted because people disagree, or just because the Libertarians here don't like being told that treating lives as property ownership is the basis for slavery? Either way, I'm open to discussion on this point.
> A group that votes to dictate what I can do with my property might be doing it by the letter of the law
Why do you have property? Why does a police force and firefighters exist to protect that property? Why are there courts and contracts? The only reason is because a group of people have decided to set rules that protect your property - the only "natural property" you can have is that which you can fight for, and anything you have beyond that is by the grace and favour of the same society you are so quick to deride.
> To be clear, I am pro-equality in a fundamental way: we should strive to be equal before the law.
And the poor and rich alike have equal right to sleep under the bridges.
"Why does a police force and firefighters exist to protect that property?"
Because the landlord wants to protect their property and pays the property tax towards that goal unlike the renter? (yes it is built into the cost of rent but it's also built into the cost of every business transaction and people don't criticize that point)
It's not society that decided this. Most people in our society recognize the fact that the alternative would be to resolve disputes (including ones where no one intended to cause anyone any harm) through violence. We need courts, police and contracts so that we can live and create without fear of retaliation, without generations of Hatfields feuding with McCoys.
Most property, if you trace out the actual chain of transactions, originates in theft or fraud. Either a monarch or other military force took it from another group by force and parceled out pieces of it (theft) or literally just claimed it from afar (without occupation) and decided who to grant it to (fraud). Just because you are some steps removed from the beginning of the transaction chain, does not mean that you have 'earned something', or as you put it, 'gotten it legitimately'.
- What about the software I wrote in the past year and a half for the schools I work for?
- What about the designs my co-worker painstakingly worked on over the same period?
- What about the reams of reports my wife wrote at her company, which makes heart valves? She gets up at 4:30 in the morning, comes home at around 5 at night, works after dinner. When there's an important deadline coming up (which is almost all the time), she works weekends.
All of these things are property. Each of us poured ourselves into these things. We could have done other things, but we chose to do these things. In a way, we're not special - we're just three people, out of billions.
None of us are thieves. You can casually toss around your equivocations and guilt-tripping for being born, but that doesn't change the fact that many people are honest and have earned what they have.
I believe the person you were replying to was referring to land when he said property (which is a normal term to use, if someone asked me "are you interested in looking at a property?" it would pretty unambiguously mean land / physical building).
Not that it means his stance was correct, but your argument isn't addressing his point.
Property is more than just land. People have titles cars, boats, copyright over books they've written, stocks, bonds, savings accounts, furniture, clothing, timeshares, patents on things they've invented, etc.
At any rate, in all three of my examples, money changed hands for work creating property. That money could be used to buy property, physical or otherwise.
I don't think you understood my point. The word "property" just has two separate definitions in common English, one is the one you are using and the other is verbatim "land" (which happens to be a subset of the first definition).
At least in my dialect of English "a property" would always always refer to land (e.g. "steal a property" is nonsense).
None of that is real property. Attaching the word 'property' to those things is a legal fiction and completely different from what we were talking about.
> not to mention supply/demand doesn't work for something with fairly inelastic demand
lolwut?
The free market works pretty OK for gasoline and food (taken as a whole; obviously specific foods are elastic). When was the last time you heard people clamoring for price controls at the grocery store?
Even more to the point, the free market works just fine for housing in the vast majority of the US that does not have any form of rent control.
That so many units in SF are rent controlled is a huge part of the problem here. It reduces the incentives for landlords to maintain properties (the OP specifically cites these problems) and makes it difficult-to-impossible for people in rent-controlled units to move (again, cited by the OP). It also significantly reduces the supply of housing in SF, driving up market-rate rents. Eventually the market-rate rents are so much higher than the rent-controlled rents that landlords have a strong incentive to pull stunts like what's happening here.
The other big part of the problem is that so many people seem to think that the solution to all their economic problems is more regulation. What we're seeing in SF is not a failure of the free market, but rather the failure of an over- and ineptly-regulated market.
Neither gasoline nor food are "free markets", even approximately.
Government actively intervenes to influence the supply and price of gasoline, and actively intervenes in food, subsidizing both production and consumption.
So, if whatever is being done for gas and food works well, that's not an endorsement of the free market.
But now we've ended up where we always end up, where each side of a debate rejects any alleged historical evidence supporting their opponent's position on the grounds that their opponent's proposal has not been perfectly implemented.
I think the point was that no one is asking for price controls in those markets, despite the fact that we all need those goods to function - not that food/gas represent the text book cases of market equilibrium.
Indeed, just that it's ridiculous to say that supply and demand "don't work" for inelastic goods.
But I feel like people are focusing on the weaker argument, about gas and food, and ignoring the far stronger argument, that the vast majority of this country somehow gets by just fine without rent control.
But that's basically not true, or at least misleading; production subsidies for food are sold as a means of controlling retail prices, as are many policies related to gasoline. That's quite a lot of political pressure which manifests in actual policy for government to actively manage process in both domains, even if the actual policy isn't price controls in the sense of a de jure upper limit on retail prices.
A subsidy is fundamentally different from a price ceiling, both in terms of its economic consequences and its implementation. There's nothing misleading about that. Both have significant political pressures behind them, but price ceilings manifested as rent control are near universally derided among economists.
> When was the last time you heard people clamoring for price controls at the grocery store?
This is, in fact, extremely common, historically and currently. Just within the US in the past several years, look at the demand for price caps on bottled water in the wake of natural disasters.
I wouldn't make the "let the landlord make more money" argument, I would be making the "rent control is a significant distortion of the market which hurts both renters and tenants in the long run" argument. Housing absolutely is a social priority, and while rent control is definitely a well intentioned attempted and addressing the issue, a more effective approach would be to build more - not restrict the price signalling mechanism.
Vacancy decontrol = new construction can have whatever rent they want. So preventing a landlord from screwing over the current tenant does not prevent housing from meeting demand.
New construction does face many other issues, though. NIMBY's, parking regulations, zoning, etc.
I am in a rent controlled apartment. I have been in this apartment for 4.5 years.
I full-throatedly support new, dense residential construction sufficient to meet SF's current and future housing demands. This will continue to be my position for the forseeable future.
For those folks who are concerned about new construction destroying their rent-controlled units, Sangiacomo and his tenants worked out a really good plan: https://news.ycombinator.com/item?id=9209304
> The idea behind limiting the landlord's profit is that many believe that it is more important for people to be able to afford housing than for others to make larger profits through, literally, rent-seeking.
There is a fairly well-accepted economic system that advocates both profit-seeking and making desired goods affordable. Far from being mutually exclusive, they can be mutually reinforcing.
Rent control does not force landlords to keep renters ad infinitum. It protects tenants from price gouging. Landlords can impose rent increases far beyond fair market rents for new tenants because it's costly and inconvenient to move, but (in a sellers' market) cheap to replace tenants. This imbalance of negotiating power necessitates regulations.
Now, you can argue that particular rent control laws are too aggressive, or that the strategy for calculating bounds on rent increases cause excessive opportunity losses. But that's a far cry from the implication of your message.
Landlords can impose rent increases far beyond fair market rents for new tenants because it's costly and inconvenient to move, but (in a sellers' market) cheap to replace tenants.
The market rent is exactly what other potential tenants are willing to pay.
Now, you can argue that particular rent control laws are too aggressive, or that the strategy for calculating bounds on rent increases cause excessive opportunity losses.
Or that the inability to charge market prices causes property owners to refuse to rent in the first place, thereby making housing problems even worse.
> The market rent is exactly what other potential tenants are willing to pay.
You're not understanding the scam. Suppose you move in to a place and pay the then-market rent of $1000 a month. Let's further suppose that it cost you $2400 to move, plus a shitload of time and effort that you'd rather not repeat. If the next year the market price remains $1000/month, the landlord can still raise the rent on you because you'll be reluctant (and possibly unable) to pay moving costs again. The exact amount they can get away with depends on personal tolerance and your time value for money, but given how much moving sucks, in practice it's quite a bit.
> Or that the inability to charge market prices causes property owners to refuse to rent in the first place, thereby making housing problems even worse.
That is definitely a negative side effect, but not a huge one in practice. How many apartments can one person use? Who would really let an apartment building stand empty when you could be charging market rent? In San Francisco, pretty much nobody.
A bigger problem is that it might reduce the supply of new apartments. But that's also not a problem in SF because any building built after rent control was passed is not under rent control.
> Suppose you move in to a place and pay the then-market rent of $1000 a month. Let's further suppose that it cost you $2400 to move, plus a shitload of time and effort that you'd rather not repeat. If the next year the market price remains $1000/month, the landlord can still raise the rent on you because you'll be reluctant (and possibly unable) to pay moving costs again
many cities do not have rent control. the city i live in is one such city. the scenario you're describing does not happen here.
if an owner decides to raise rent above market, now that owner is faced with the possibility of not being able to rent out that space, because now they are renting above market price. even just 1 month of vacancy is already lost revenue that would often dwarf the potential gain of raising the rent.
owners also have costs too. when someone moves out, they have to pay to have the apartment repainted, listed, and brokered.
this is not the reason rent control exists. rent control exists because SF wants to keep prices low without building more housing, making life miserable for everyone.
> A bigger problem is that it might reduce the supply of new apartments. But that's also not a problem in SF
because the city continually refuses to allow new housing developments to be built.
> many cities do not have rent control. the city i live in is one such city. the scenario you're describing does not happen here.
Because -as you mention at the end of the comment- your city builds new housing to meet demand. Rent Control was enacted BECAUSE landlords were raising rents to absurd levels in cities that (for a variety of disgusting reasons) found themselves incapable of building new housing to meet demand. :)
> The exact amount they can get away with depends on personal tolerance and your time value for money, but given how much moving sucks, in practice it's quite a bit.
It is my experience, as you say, that rent tends to increase by a small amount each year, usually about 2%. Even people on fixed incomes tend to get cost of living adjustments, though, and the range is about the same as typical rent increases.
I do not see rents increasing by the amounts you suggest, which suggests that either all landlords since I started renting in 1991 have been leaving money on the table, or they can't actually do this reliably.
I think there are several reasons why they can't raise rents by 10% a year in order to keep people there, even though that extra money would be about what it costs to move:
Since the money it would cost to move grows only at inflation, by the second or third year it would suddenly be profitable to move, even for renters who really hated moving. In order to avoid this, landlords would have to apply the rise only once. But if they do this, then the market rate is just the higher one, and you could look at the initial lower rate as a promotion. In fact, this is quite common in rental advertising! Often it comes in the form of "first month free", which is about of the same scale.
More importantly, people who rent probably do not expect to stay in the same house or apartment for many years. In non-rent-controlled areas, rent is more expensive per month than buying the same sort of place, so if you intend to stay in the same location for more than a few years, there's no reason not to buy. As a renter, I've never lived in the same dwelling for more than three years, and when I move somewhere, I assume that I'll be moving again in a year or two, as conditions change (job, relationships, etc).
I just moved out of a non-rent-controlled 1 bedroom in NYC, where my landlord wanted to raise the rent from $2550 to $3100 per month. I've spoken with the new tenant, who moved in at a rate of $2400 per month. I turned in my keys on Friday, they painted the apartment on Saturday, and the new tenant moved in on Sunday. Despite this being February, they rented the place so fast that the second half of the month was paid for twice.
The dollar and timeline figures here tells me one of two things:
1) they wanted to get rid of me, particularly, or...
2) they took a calculated risk based on their experience managing a great number of units
I'd bet heavily on #2, since this is a pretty typical story in NYC.
They tried to raise the rent 22% to something 29% above market rate. They weren't able to get anything close to that rate for a new tenant. They will pull the same crap on this tenant next year too.
> More importantly, people who rent probably do not expect to stay in the same house or apartment for many years.
> In non-rent-controlled areas, rent is more expensive per month than buying the same sort of place...
Federal intervention has seriously distorted the home buying market with a variety of subsidies and tax writeoffs. Without this assistance, it would likely be substantially more expensive to buy than rent.
That scam isn't that common or the reasoning for these laws. Let's just assume that most renters and most landlords are fair actors. Sure they both want a better deal but most landlords don't try to factor moving costs in to the equation. Fact of the matter, and I own rental properties, you generally want to keep great renters, at least in our market, want to keep them almost to the point of not raising rent to risk losing them
That would be an insane decision on the part of the landlord though. An increase in price is either tolerable or intolerable. If the tenant is willing to pay an additional $1,000 a month, that's the new market price. If the tenant is willing to move, the landlord loses out on $500-2,000 as it takes time to bring in a new renter in even the hottest market.
The total loss of income is enough incentive for the landlord to keep rent increases reasonable. If your example held true, there would be violence in the streets across the globe but there aren't. The incentives keep increases in check in markets less insane than those in San Francisco and California at large. The policies of that city and state are the largest differentiator between them and areas with healthy markets/ Maybe we should be looking at policy beyond the veil of partisan rhetoric?
> If the tenant is willing to pay an additional $1,000 a month, that's the new market price.
That is incorrect. That is the new price of that unit for that tenant, as if it were a market of size 1. A similar unit on the market would rent for a different rate paid by similar tenants in the market.
Property owners took a risk by purchasing property, just as anyone does purchasing shares of a public company for instance. The value of your asset can go up and you find yourself in an advantageous position (a seller's market as you put it), or prices can fall and recurring buyers (like renters) are at the advantage. Rent control only distorts the market and is unfair to everyone.
1) Landlords can diversify their properties, renters only get one. Everyone needs to live somewhere, nobody needs to be a landlord.
2) You've missed my point about moving costs. Even when the market favors renters, the lease renewal negotiation favors landlords. This is because moving costs time and money payable to third parties. As a result, the landlord can charge higher rents for renewals than they can for new leases.
I actually know a few homeowners in San Francisco in this situation right now. They have extra units in their building (which is also where they live), and choose to leave it vacant rather than deal with the hassle of rent control. They do not need the income and would rather not bother with possibly getting a tenant who never leaves. It's not economically rational, but people are not always rational, especially when dealing with their homes.
The building I live in is also in the situation currently where a unit is being left vacant in anticipation of a condo conversion in a couple years.. San Francisco has a very complicated condo conversion law but part of it is that during conversion some existing tenants have to be offered lifetime leases which can never be increased. Leaving units vacant is a rational way of dealing with that.
> They have extra units in their building (which is also where they live), and choose to leave it vacant rather than deal with the hassle of rent control.
Good for them. Better that they do this than take the rental income, and later whine about how terribly unfair renter protection laws are. :)
Based on my immensely scientific[0] survey of Internet Message Boards (and personal experience in the American Southeast), it seems that potential landlords sometimes forget that when they rent their property to others for use as the renters' home, the landlord loses almost all control over that property. This is right and just: everyone deserves a safe, secure, private place to live.
> Leaving units vacant is a rational way of dealing with SF's condo conversion laws.
Again, it's good for the landlords that they showed this much restraint.
The condo conversion laws prevent landlords from turning their apartment stock (that pays off smaller amounts over time) into condo stock (that pays off one large lump sum). These are sane and rational laws to have in cities that (for a variety of disgusting reasons) find themselves unable to create sufficient housing to meet demand.
The problem with leaving units vacant though is it takes those units off the market, driving rents up for the remaining units. That is the end result of overly aggressive rent control, and one of the big problems in San francisco right now.
1 - first, so what? second, nobody needs to live "there". They can move to a different rental.
2 - moving isn't "that" expensive. It's a pain in the ass, but you can do it in a weekend with a few hundred dollar moving truck. You might be able to raise rates a few percent, but you can't just move them significantly above market.
> It's a pain in the ass, but you can do it in a weekend with a few hundred dollar moving truck.
Let me guess: no kids, haven't lived in your place very long, don't know your neighbors, don't have family nearby, don't live in a city with substantial pressure on housing, and you make over the median income.
> You might be able to raise rates a few percent, but you can't just move them significantly above market.
That you can't imagine something doesn't always mean it's not possible. It can mean the world is more complex than you expect.
I'm glad that you have such an easy and comfortable life that moving is no big deal, but that's just not true for everyone on the planet.
Let's see. I moved last summer, from a place I lived in for seven years. Check. I'm married, kid on the way, I knew my neighbors, and I have family nearby. You were so close. (I do make over the median income, so you did get that one.)
If your landlord raises their rates to double the market value, move. If you don't, that just means you're doing it wrong.
So you're telling me that in one weekend with one truck, you packed everything for a family, moved it, unpacked it, and had total expenses of a few hundred bucks? Congrats on being a minimalist. When I see most people do it, though, they take a couple of months of spare time to prep and months more to get everything situated and recover.
Yes, sure, if the rent is doubled, one should probably move despite the hassle. But the point is that landlords can take advantage of the asymmetry in cost/difficulty of changing places to hike rents. Nobody would move because the landlord was charging them $1/yr above what they could pay elsewhere. Most would move if it were double. The landlord's advantage is somewhere in between.
Most people don't have $12,500 sitting around in the bank, or often even enough to rent a truck for the weekend. Some people work multiple jobs and can't even carve out a full day to move houses. Some people aren't in the best physical health (due to age or disability) and cannot actually move their own stuff.
You've described the typical SF tech worker and decided that everyone is like that. Might want to broaden your horizons a bit.
Regardless, you don't get the security deposit back until a few weeks after you've moved out. Never seen a truck rental or moving company who is all like "sure, you can pay us in a month". A bit of a chicken-and-egg problem, there.
I need to be a landlord because my other mortgage is so far underwater I could either foreclose and not be able to buy a suitable place for my family, or be a landlord and be able to pay both mortgages. It seems there would be people around to criticize me no matter which option I chose.
The law was passed in 1979. It's hard to seriously claim landlords could possibly be unaware of the law before becoming a landlord. If for some reason they just can't possibly see themselves in any other career, they may also choose to solely invest in buildings built since 1980.
You most definitely should not be buying rental property without familiarizing yourself with the local rental laws. That's simply awful, awful business.
I don't feel a lot of sympathy for the landlords in SF. If they want to own property that isn't rent controlled, there's a whole big country out there, the vast majority of which isn't rent controlled. They chose to buy under the restrictions that exist. That's their responsibility.
It doesn't take long to learn the basic laws about something that are most likely to affect you. And then consult a lawyer for anything you are not sure about.
>If I wanted to rent my apartment out I wouldn't go searching for laws...
This is a dangerous level of ignorance.
When you rent a space that you own to another for residential use, you forfeit the vast majority of your privileges as a property owner. Pretty much every jurisdiction recognizes that a person requires a secure space to come home to in order to have a chance at a decent life.
If you're thinking about renting out your property, you're setting yourself up to be royally fucked if you don't familiarize yourself with the relevant laws.
"A bit" is an understatement. You're incredibly, dangerously ignorant. Yes, I know, that sounds harsh, but "doing your homework" is a necessary precondition for doing, well... anything.
If they think it's unfair, they could just... not rent their buildings out. There's plenty of buildings in the US that don't come under rent control laws that they could buy and rent out.
Landlords have the right to change their mind when it comes time for lease renewal. You're arguing that landlords should be forced to always rent their property to the same tenant once they begin. That's how ownership, not rental, works. Rentals are for a limited time by definition.
I know people (in fact, every branch of my family, along with many of my friends) who have rented their entire lives, because they can't own - they've never been able to amass enough capital or convince someone else to lend them it. Should they be uprooted every year (or more often) because someone wants to make a bit more money?
Rentals are whatever the combination of the contract and the local law say they are, by definition.
> Should they be uprooted every year (or more often) because someone wants to make a bit more money?
No, they shouldn't be, but that's not really the issue. The issue is: should landlords be legally allowed to uproot them?
My answer is a decisive yes. For whatever the reason, they should be able to not renew a contract once it expires.
I don't see why laws should be in place to restrict how much someone makes. Nobody has to have that particular apartment, or live in that particular place, etc. There's always options.
> No, they shouldn't be, but that's not really the issue.
Yes, it really is. Which does the most harm - uprooting people and families every year, forcing them to deal with the stress of moving and finding new life patterns which match wherever they live now, or disallowing landlords from making a bit more money?
I guess you mean "disallowing landlords to make more money."
Again I think that's a red herring. There are plenty of reasons an owner might want to remove a tenant outside of profit. But again, it's not the issue--this is really straight to the heart of property rights.
Someone owns a property, and by and large, should be able to do what they want with that property.
Living on someone else's property is part of the risk of renting. Similar to working for someone else--would you also argue an employer should have to keep paying a worker who is underperforming (or any of a litany of legitimate reasons), because if they didn't that worker might have to deal with the stress of moving & finding new life patterns?
Property rights only exist because of the law, otherwise, in general, property amounts to "what you can personally protect from people using force". It makes sense that alternate property models from "full ownership" can be implemented without the world crumbling.
As I say in another comment, when you rent out a house to a tenant, you already lose certain property rights, at least while the tenant is living there. You can't write a contract which allows you to keep them, by law. You usually even have certain duties to the tenant, as much as landlords like to shirk these. This is the same in many developed countries, and the world's yet to fall apart for it.
In many countries it's quite difficult for an employer to fire a worker, and if they do, they have to provide some financial support to help them, as you say, move and find new life patterns. I do not live in one of those countries, so I cannot vouch for the advantages and disadvantages of this system, but it's hardly unthinkable.
My answer is a decisive yes. For whatever the reason, they should be able to not renew a contract once it expires.
And therein lies some of the disconnect: my answer is a decisive no. I think there are some reasons for which a landlord should be able to kick out a tenant, but I do not believe that any reason will suffice.
And that's why we have (imperfect) laws such as the Ellis Act, and a raft of other things that protect tenants from capricious, rent-seeking landlords.
>Should they be uprooted every year (or more often) because someone wants to make a bit more money?
If they are living on someone else's property, and that person wishes to sell the property, and the lease and any other contractual or statutory guarantees have lapsed, then yes? This is really not a new thing. You can't do away with property ownership as a concept just because San Francisco is ridiculous.
Property ownership is an abstract concept enforced by law in the first place. There are theoretical economic models which do away with it to varying extents, or implement alternative ownership models. Why is it so mind-boggling to modify how it works in one specific instance?
Actually, almost everywhere, when you have a tenant, you lose some ownership rights already, by law. For example, except in an emergency, you generally can't enter the building without prior notice.
The issue is not that acquiring a tenant restricts some rights that the owner would otherwise have; this is a compromise that the landlord knowingly makes when he rents. That control is relinquished for a pre-agreed, limited period of time, after which control will be returned to the owner, is the essence of renting. The issue is that some people seem to believe that once they are on someone's property, that person loses the future ability to determine how that property is used; i.e., it's not that they have to wait until the current contract expires, but rather that you seem to be arguing that the landlord should never be able to remove a tenant from his property if the tenant does not consent, even at points when the lease on the property has lapsed. That's a permanent deprivation of the core of ownership -- the ability to determine and direct the utilization or exploitation of the property, even if you have to fill existing contractual obligations first, like an active lease.
> The issue is that some people seem to believe that once they are on someone's property, that person loses the future ability to determine how that property is used...
Here's the thing, though. It's not as if existing rent control regulation catches landlords by surprise. If a prospective landlord is so unprepared as to be unaware of the rent control status of a property that he's planning on purchasing, then he's likely to do very poorly with pretty much all of the tasks that being a landlord requires of him.
In short, the fact that landlords rent out rent-controlled units is proof positive that they understand and accept the restraints imposed on them by rent control regulations. The fact that rent controlled apartments continue to be rented in SF (rather than withdrawn from the market for five years and converted into condos, as the law allows) is proof that rent control is not draining the lifeblood out of landlords.
The insane rents in SF are not due to rent control (how could they be?), but due to the pathological lack of new residential construction.
Rent control doesn't grant tenants a permanent interest in the property, even if some rent control regulations make it annoying and/or arduous to remove tenants. The person I replied to suggested that landlords should be required to let their tenants stay in their property eternally if the tenant so chose, i.e., that tenants should have permanent control of the property.
You absolutely can alter the concept of property ownership; to think otherwise is a failure of imagination, historical perspective, or both. (For instance: who owned the land under the buildings at 8th and Market three million years ago? What would an early Christian think of our complex system of interest-bearing loans? Have you ever read any sci-fi novels depicting societies in which property rights took fundamentally different forms? Should landlords be allowed to kill or enslave tenants if that would increase their profits? What if the government knocks on your door and claims eminent domain? And so on.)
Whether you should do so is another question, one to which I don't have the answer.
I think your view of property ownership is a bit out of touch with reality. It's pretty rare that having a deed to a piece of land lets you do whatever you want with it. Or even close to whatever you want.
On the other hand, the owner of this building would have benefitted from the intended effect of rent control on the price of the property when they bought it. There's no doubt that a rent controlled apartment building would fetch less at sale time than a non-rent-controlled equivalent.
Sure, landlords "have the right to change their mind", but only within the legal/regulatory framework in which they've chosen to invest.
But hey, "Uber, but for residential rentals". There's clearly _some_ people who'd benefit from doing end-runs around the rules by which everybody _else_ plays...
(Just think for a minute about how surge pricing for apartment rentals in SF would look... All the "locals" moving out to Oakland or Pleasanton while WWDC or Google IO is on, and moving back in again during Burningman...)
I think there's actually even more to the comparison you've made than you've said: the reason Uber is generally ok, even though it does make an end-run around some transportation regulation, is that the existence of Uber doesn't take anything away from anyone. Taxis still exist, people can ride in them. If existing taxi drivers are losing business, there are avenues they can take to recover that business (often imperfectly). Making an end-run around housing laws almost unilaterally benefits an already-privileged group (land owners), at the expense of others.
If you're going to trot out an absolutist term like "by definition", I'd like to inform you that "limited time" is by no means a condition for being defined as "rent": http://dictionary.reference.com/browse/rent
I know that sounds a bit pedantic and splitting hairs, but if you're going to base your argument on re-defining what words mean... that's a bit of a problem.
"A bit" is an understatement. You're overtly, obnoxiously pedantic when you reference a single dictionary and ignore common usage, particularly in this thread. Yes, I know, that sounds harsh, but "doing your homework" is a necessary precondition for being a pedant.
In common use, it's always in conjunction with a temporary agreement. You don't "rent (a home) forever." GP didn't make up some new usage to further his argument.
Touché, though I don't agree with you on the "common usage" bit. People do in fact "rent (a home) forever", and from what I've gathered it's not that uncommon, at least for cases where "forever" is a person's adult life span.
Even considering the temporary case, what does "temporary" mean? 1 year? 2? 5? 10? Where's the cut-off where you've rented for "too long" and it's ok to be kicked out of your home? Even if you can pick a number for that yourself, I hope you can agree that others might have different numbers, and that the selection of such a number is somewhat arbitrary.
I think the fact that all of this is a problem proves the point that people do expect to be able to rent a home for some value of "forever" (or even some value of "temporary") that is larger than a landlord's profit motive would allow.
Look, if I want to rent a power saw from a hardware store that offers rentals, me keeping that saw for a long time isn't a problem, assuming I'm continuing to make payments[1]. If the hardware store finds there are more people wanting saws, and they're running out, they'll just buy more; there's a ready supply. The same thing doesn't work for housing because land is a limited public resource. In SF's case it's even more limited due to the arbitrary new-construction planning process and disappointing level of NIMBYism in the city that means we can never keep up with demand, Mayor Lee's housing initiatives notwithstanding. This is why real property law doesn't give absolute power to the owner of that property. There are rules. You can't discriminate based on protected classes, for one. Rent control is another rule. The Ellis act is yet another. These rules aren't perfect, but they do tend to protect people who would otherwise be at the short end of a very unpleasant landlord-tenant power dynamic.
[1] It might be stupid for me to do so, financially, since I'd fairly quickly pay more than the cost of a new saw, but let's assume that, like housing in SF, the cost of a new saw is several hundred times the cost to rent it. This also serves to point out that owning a house is financially impossible for many people, while renting -- up until recently -- was much more doable.
>I think the fact that all of this is a problem proves the point that people do expect to be able to rent a home for some value of "forever" (or even some value of "temporary") that is larger than a landlord's profit motive would allow.
The only value that should be expected is the duration of the lease. Yes, it's true that many landlords are satisfied with their rental arrangements and want to continue renting (I have personally done several lease renewals with the same landlord, and I have relatives that lived in the same rental for 20+ years), but a tenant should never take that renewal for granted. Leases are usually in 12 month increments, and at each renewal point, the relationship is re-evaluated by both parties and one or the other moves on or alters the terms of the rental contract if he/she is dissatisfied. Is it really that hard to figure out how this works?
I'm a tenant now and I will hold no ill will to the landlords if they do not wish to renew our lease. I do not feel entitled to their property beyond the contractual and legal stipulations outlined in our lease and in the state's landlord-tenant law, nor do I feel that it's my right to force them to rent to me in perpetuity.
I'm more surprised that some adults believe renting a home grants them a perpetual interest in it than anything. That's literally the difference between renting and owning. If you have a permanent interest in the land, you are at least part-owner. When people want to keep things forever, they buy them.
I think that's a matter of status quo and what's considered standard/common. In SF there's usually no new lease agreement after the initial 12 month (or whatever) lease is up. Most revert to month-to-month after that. There's certainly nothing stopping a landlord or tenant asking for a new agreement that covers more time, but in my experience it's not that common in SF.
You could interpret that either way, I guess, as reinforcement of what you're saying, or as against. People should get the fact that it's always month-to-month after the initial period, and just deal with the uncertainty surrounding that.
But the expectation is that the initial lease functions more for the landlord than the tenant (protects the landlord from a flaky tenant who is going to move out after a few months, causing the landlord to have to bear the cost of re-cleaning and re-listing the property after a very short time). SF's laws are very tenant-friendly, so it's hard to get rid of a tenant even on a month-to-month agreement. That certainly breeds an environment that makes people think that "forever unless I want to leave" is normal.
I'm more surprised that some adults believe renting a home grants them a perpetual interest in it than anything. That's literally the difference between renting and owning. If you have a permanent interest in the land, you are at least part-owner. When people want to keep things forever, they buy them.
That reasoning holds tons of merit, I think. A problem, though, is that the cost to buy in SF is out of reach for most tenants. When a 20% down-payment pushes $150k for some of the "cheaper" houses, buying becomes difficult for the majority of people. It can even be a stretch for the high-flying, well-paid tech worker who has actually been able to put money away for several years.
Sorry, and I know you're probably predisposed to disbelieve me since I started off with a crappy tone, but I'm honestly not trying to be a pedant here.
I truly believe that most people (at least who live in SF; I can't speak for other cities) would not consider a rental "temporary" to the degree that you seem to be thinking. Whether or not they should is another matter, but I think the state of rentals here -- especially among rent-controlled units -- serves only to reinforce the belief that a rental can (and "should") be as permanent as the renter wants it to be. And it's a feedback loop: people believe this because of renter protections, which causes them to believe and fight for (and often get) even stronger renter protections, which allows their rental status to become even more "permanent", and so on.
Again, not saying it's right (or wrong), but I can easily see how the sentiment in SF is that renting need not be a permanent thing.
In a rent controlled area, they don't have that right, by definition. Rent controlled rentals aren't for a limited time, with various exceptions, by definition.
Yes, they do have that right. They can use the building themselves, rent it to someone more trusted (family/friends), or sell it. They don't have to rent it out in the first place, so the building never has to come under rent control.
Yes, you technically can rent it for a limited time of zero, meaning they do have the right to rent it for a limited time, in some weird mathematical field theory of rental treating that as the additive identity element or something.
It's those exceptions that you glossed over in your initial comment that cause your assertion to be incorrect.
Landlords have a variety of legal options to terminate a rent-controlled lease. Those options are almost always less palatable than continuing the lease. This is by design, and -in areas with obscene housing supply issues- good for society. Housing security is far more important for societal well-being than the fullness of a landlord's wallet.
You are totally correct that landlords have this option.
People who are opposed to rent control argue, quite convincingly, that things like the situation you describe lead to bad outcomes for the community at large. A dwelling sitting unoccupied because an owner doesn't want to subject themselves to rent control laws decreases supply and increases rents for everyone.
If it's sitting unoccupied and the owner has no plans to do anything with it, the owner is being irrational. If the owner does have plans to do something with it, they have to kick the tenant out, meaning that any additional supply as a result of renting out these houses is short-term, thus just pushing the problem back a bit. You'd still have to deal with the problem in the future.
1) Maybe they don't have plans to do anything with it today, but they don't want to get locked into renting to a tenant for decades. That's not irrational.
2) No, that's not just pushing the problem back a bit. That is wrong. There will always be owners who want do do something with their property somewhere down the road. If you allow them to rent it out in the meantime (without getting locked into a forever contract) you can permanently increase the total rental stock in a community.
Owners may evict a tenant in an owner move in. There are a variety of regulations that you can get caught up in, designed to protect from abuse by commercial landlords, but practically speaking, if you own a single building and wish to evict rent controlled tenants live in one of the units, you'll be able to. Your objections continue to demonstrate an unfamiliarity with rent control in sf.
@harryh: your complaint is rent control prevents owners from renting out their property (while doing something in the meantime) without getting locking into a forever rental. For small landlords, it does not, at least not in this enumerated (most likely the most important) instance. As a small landlord, most importantly of a single unit, you may rent it out as you wish and move back in later, evicting a rent controlled tenant if necessary.
Well, this assumes that renting out a house has no costs; if income is less than costs over the course of the lease, it's rational to keep a property off the market.
At the extreme end, one thing that they'll do is become a slumlord - have noncompliant housing that isn't registered.
Yes, it's illegal, and the penalties are severe if the person is caught. But it's an option. And if the current owner is sitting there thinking, "Shit, I can't rent this building out and make it worth my while," (property tax, cost of keeping it up to code, etc) he'll sell it to a slumlord who can make a profit out of it.
Someone could do arbitrage on this by creating a pipeline of "high quality" tenants that they can market to landlords as less likely to skip out on rent or become problem tenants: Ivy-League graduates, employees of well-known companies, etc.
Not really. The property quoted in the article was purchased in 1974 and California brought in strict limits on property tax increases in 1978.
So the property taxes are probably trivial. The house acts as an investment with high returns and favorable tax status. They can sell it or take out a mortgage if they ever need money.
Given that burning down the property to avoid a long eviction struggle isn't unheard of, the owner is perfectly rational to decide not to rent it out.
Highly unlikely that 10,000 landlords with an extraordinary desire to maximize their return are being "irrational". If you rent out the property in San Francisco, you effectively lose control of what you can do with it. By not renting it out, you maintain control, and you can rent to family, make use of it yourself. I'm guessing that airbnb also is an attractive option now to get around the price-control laws.
<cynical thought>
But I suspect renting it to family/AirBnB - and not declaring the income - ends up looking very much like "leaving the building vacant" on official records...
If you rent out property for residential use anywhere in the US, you do lose control of what you can do with it, outside the bounds of your leasing agreement and local law regarding the topic.
Most jurisdictions recognize the need for a person to have a safe, personal, private space in order to have a happy and productive life. It is a recognition of this fact that causes most places to agree that a man's home is his castle, even if he is renting his home from another.
What is your definition of moral then? Laws, but particularly the Law described in those tradition's holy books, describe what is acceptable behavior in that society and is often associated with eternal and everlasting punishment after death for breaking them, in addition to sacraments that must be performed to be absolved of various attachments that are made to the person for their behavior.
I didn't think we were talking about "holy law" and afterlife punishment.
In that sense, I guess you're correct.
There's still lots of flaws in the theory, for instance morality has changed--slavery was not outlawed by holy laws, and seemingly was considered okay morally.
I don't personally equate legality with anything except written law enforced by people on earth, typically a government. Even in older times, "earth law" did not match "holy law." I don't think that, even at the time of its writing, the holy bible (for instance) described all immoral activity.
I'm not sure if you're just being a pedant or something, but as a for instance, it's not illegal in my US state to drink alcohol to excess in the privacy of one's home, yet a great number of people find it immoral. This can be said for some act or another throughout history--frowned upon, not illegal.
rent increases are almost always less than prop 13 increases. prop 13 increases are capped at 2%. In the last decade, only once was rent control greater than 2% and once it was 2%. The other 8 years, it has been less, including 0.1% one year.
Why does it have to be fair to the landlord? How is the current situation fair the the renters? What makes fairness to one a higher priority than the other? If we have a limited amount of "fairness" to go around, I would rather hand it out to the people who would otherwise be displaced from their home, and possibly their city, than to the landlord who is already making a profit... just less of one than he/she could theoretically be making. Or does having money and property ownership entitle you to more fairness?
Remember that property is also a limited resource, and all plots of property are not created equal. Property ownership is an agreement between individuals and the state. The state gives the individual some rights to the property, but is empowered to restrict use of that properly when it believes the public good is better served. In theory, both sides benefit from that. But, for now, landlords are trying to throw aside what many (myself included) would consider the public good, in the name of higher profits.
I'm personally not a big fan of rent control, but simply dropping it (and allowing landlords to drive trucks through loopholes such as this) alone is not a way to get ourselves out of our current housing mess.
But prospective landlords tend not to build new units (or maintain old ones) when they don't feel they are getting a fair deal. It leads directly to the situation they have in San Francisco, where property owners only rent to family, coalesce many smaller units in to few larger ones and sometimes withdraw their units from the market entirely.
Landlords are investing capital and their own labor in their properties. If the expected return on that investment is less than what they could get from government bonds and a 9-5 job, don't plan on a big expansion in housing stock.
A very good point, but I think it has to go both ways. Both renters and landlords need to feel like they're getting a good deal. Kill rent control without increasing supply or enacting other protections, and suddenly the fairness scale tips over to the landlords and completely away from many (most?) residents.
Definitely agree that the current situation is broken, but I was only suggesting that "it wouldn't be fair to landlords" is a bit too simple a consideration to make things right.
It's plenty fair. This is why we have lease contracts. The lease protects both the tenant and the landlord for the lease's duration, and contractually obligates the landlord to prevent habitable premises while the lease is in force, but the landlord is under no obligation to renew if he wishes to do something else with his property. That's how ownership works. You don't lose ownership just because you choose to rent to a tenant.
For at least the past thousand years, the bedrock principal of law has been "restraints on alienation of property are generally considered invalid".
That is, property owners are free to do what they want with their property.
Another is: Your rights cannot exceed those of who you got them from
(IE tenants cannot have greater rights to land than landlords)
Tenants are tenants for a reason.
The whole point of ownership is to have exactly the ability to have these rights.
Why should somebody who has no title to the land, be able to control what happens to the land?
The fact that someone lives somewhere doesn't give them magical rights to the place, and it shouldn't.
(Most landlord/tenant law exists to ensure everyone plays fair and doesn't flat out abuse each other, but doing something within your rights, tough shit)
Interestingly, the idea that it's your property and you can do what you want with it was often the justification not to rent to people of color, the disabled, and other disadvantaged groups.
The counter argument is, that the governments of regions, (cities, counties, states, etc) have to account for externalities that businesses don't consider or care about.
Governments see benefits in keeping housing affordable. Do you like having restaurants with waiters, stores with clerks, streets that are swept, trash collected, and so on? then those people need places to live too.
"Interestingly, the idea that it's your property and you can do what you want with it was often the justification not to rent to people of color, the disabled, and other disadvantaged groups."
Rent, maybe.
Sell, no, since that would be a restraint on alienation :)
"Governments see benefits in keeping housing affordable. Do you like having restaurants with waiters, stores with clerks, streets that are swept, trash collected, and so on? then those people need places to live too."
Sorry, but I don't see how this problem doesn't solve itself without any intervention.
If none of these people can afford to live in your area, and they aren't getting paid enough to commute, they'll go elsewhere where they can.
In turn, your area will start to suck, so you'll either pay them enough to commute, etc.
Sure, and in a purely capitalist system high food prices in the market are ostensibly "solved" by people dying of starvation or doing poorly because of malnutrition, but maybe there is a better way then pricing people out of a market.
Also that is the best case. Consider older people. I mean there is not really an economic incentive to help old people on fixed income afford homes. Maybe they should be turned out on the street to die, because if it was an issue, the market would have fixed it.
Blind market forces should eventually bring about a reverse, but you will get bubbles and depressions, and there are things which have social, ecological or other utility beyond dollars and cents which won't necessarily be accounted for.
Rent control is in play here I believe to prevent price gouging. Some companies are not very moral/ethical when it comes to tenants. I would argue that the fairer thing (when Rent Control is in place) for owners might be that they can discontinue the contract when it expires but they also forfeit the right to rent that unit for a period of time (like 6 mo or 1 yr). Owners have some right to reclaim the property for own use but then are discouraged from flipping the unit and just reusing it the same way with different people.
When I rented in Boston from operating companies, they always increased rent the maximum allowed every opportunity allowed. This encouraged a lot of churn in the area I lived which I don't think was good for the area. I also had a lot of problems with them never fixing appliances so I moved out. When I started renting directly from personal owners and allowed to go month-to-month then we were both happy and the owners generally never increased rent unless when their costs also increased.
Sure, i understand the moral/ethical part, and i'm generally in favor of preventing price gouging. But the vast majority of complaints i've seen are more "my rent increased from 3000 to 4000", when all the other rents in the area are $4000.
I had a bad experience myself renting in boston, that involved the health inspector fining the operating company about 20k.
Wait, really? You're in favor of artificial pricing constraints to avoid "gouging"? Doesn't virtually every reputable economist believe that those constraints decrease the supply of housing? The moral dimension to rent control seems just as dubious as the legal one!
When I say price gouging, i mean the economic definition, which is a very very specific thing:
IE when a coercive monopoly raise prices to levels that wouldn't exist if there was competition.
This does not decrease the supply of housing, because it's a monopoly, they are doing it because they can, not because supply is low.
Just because i've lived somewhere, means i get to live there as long as i want?
So once someone's got theirs, nobody else gets a chance?
As I mentioned in another thread, i'm 100% not a fan of people having some magical right to continue to live somewhere just because they've lived in that place, or their parents have lived in that place, a while.
It's essentially "blood right", and I emphatically believe it's not a great way to decide who gets to live where.
Not that i'm a fan of just kicking people around continuously, mind you, but things that end up doing the above (like endless rent control), are not societal good to me.
What you are calling 'simple' is actually an absolutist position based on neoliberal principles that serve those with power and capital. That's far from the only way to think. By introducing terms like "Blood Right", you are also exaggerating to create a straw man.
Being part of a social fabric is a basic human need. In the past the strong would displace the week from their communities through violence. Now we do that through the law, which seems like a great improvement.
Nevertheless there is no getting around the harm that you do to someone when you displace them from their community and support networks. This is why the law is not as absolute as you and others with your viewpoint would like.
By all means let's consider by what means we can balance this against other important human needs, but I don't think it's reasonable to claim that the freedoms to deploy capital without restriction trumps the need of humans for stable community.
I'd expect you, an expert lawyer , to know better. There are many laws that grant rights to people just for living somewhere long enough. Zoning laws exist. And eminent domain privileges are enshrined in the USA. Usury laws go back centuries. Law is a social contract, there is no inherent natural right of one person obeer another when multiple individuals live together in society.
Foreclosure is part of the voluntary agreement you signed with the bank when they loaned you the money to voluntarily purchase the property. It's not government intervention.
You're missing the point that if a more empowered party than you wants your property, they're likely to get it.
Terms of mortgages in the past decade or so have been in tremendous flux, fraudulently granted (on the part of both lender and borrower, yes, in cases), and changed unilaterally. They've also been transferred with little or no documentation. Cases in which homes that were not even under any mortgage being seized are fairly easy to find.
It seems that at some point, the property holder's right to dispose of their property as they wish ought to trump any claims that a temporary tenant might have.
That said, I don't know enough about California law to say what 'point' might be.
i take it you are under 25 and never have to move a family into a rental house?
when you do that, i'd love to see your opinion then about living in a place where every month you need to set aside a weekend to find a plan-b place just in case your rent jump to a price you can't afford next month.
> when you do that, i'd love to see your opinion then about living in a place where every month you need to set aside a weekend to find a plan-b place just in case your rent jump to a price you can't afford next month.
Do they not offer long term leases? It seems figuring out a more long term solution would be prudent.
that don't exist anywhere, and is exactly what rent-control tries to solve.
rent is either 1 or 2yr contracts and then month-by-month. everywhere in the world. you can try to renegotiate a new 1yr or 2yr each time with a discount (or lower increase) but that is the same as negotiating all over again.
You are aware that you made this comment on a post that was at the top of the site with over 100 points, just because it sorta-kinda looked like justification for SF renter butthurt?
The overall lack of self awareness is what is nauseating about HN.
1. Apparently this family has tried this once before and failed, but learned from their mistakes.
2. The lawyer is a real estate broker.
3. This bypasses having to pay for the tenant to be evicted through Ellis.
4. This bypasses other provisions in Ellis and preserves rentability: If they used Ellis, they could not evict the tenant and then rent the place out for 5 years without offering the tenant the option of renting the place at the previous price (other companies bypass this through voluntary evictions by buying out tenants, for, say $30k)
At the end of the day: This bypasses the intent of the law but follows the letter of the law. The intent is to sell the house. They pay less by not buying out the tenant. They preserve the rentability. Reclassifying while a tenant is protected under rent control should be prohibited.
This is a perfect example of why rent control is a terrible system that leads to market inefficiencies and worse outcomes for a community. The law has made it more profitable for this landlord to remove housing stock and charge market rate for the remaining unit than to rent out both units in the building under rent control laws. Cities with low vacancy rates like SF need to rethink their approach to housing if they want to remain attractive places to live.
Completely agree with you. However, I think SF has already ceased to be an attractive place to live.
I don't live there, so maybe it's not a fair comment, but I would not want to live there for the same reason I don't like flushing money down the toilet.
Many people think they should be able to live in a place they can afford with the reasonable expectation that it will be their home for the foreseeable future. Many benefits, to both the economy and society at large, come from ensuring the populace in general is able to find stable housing. While San Francisco's rent control may be too stringent for its own good, there are many reasons to support a more reasonable rent stabilization policy in a jurisdiction with unstable rental prices.
Rent control increases the pressure on the housing market by increasing the price of rent for non-rent controlled properties and reducing incentives to create more supply.
That's when you purchase property and stop being a renter. As a renter you should have no expectations of being able to live somewhere beyond the length of your lease.
The problem is San Francisco and many other cities haven't encouraged developers enough to build housing to make ownership an affordable option.
You are correct that removing rent control would not completely solve the problem. The underlying reason for the increase in rent prices (and thus the need for rent control) is that there is a fixed supply of housing. The city has strict zoning laws that have limited the ability to build up[1]. Without a way to increase the supply of housing the only way for the market to reach equilibrium is for prices to rise.
So to make prices reasonable, both zoning laws and rent control will have to be reworked.
Rent control in San Francisco only applies to buildings built before June 1979. Landlords of buildings built after that are free to increase rent as they wish. If anything, it should promote more construction.
Unfortunately tenant unions and some politicians have been threatening to expand the definition of rent control for quite some time. This increases the risk that buildings built after that period are going to get locked down into rent control after the fact.
Do you believe that that's a contributing factor to the lack of new construction in San Francisco?
If so, is it a larger factor than the insane city-wide height restrictions and strong anti-development lobby?
(If you'd like to point a finger at the folks who obstruct demolition of rent-controlled units to construct new units, I point you to this: https://news.ycombinator.com/item?id=9210429 ) :)
It's definitely a factor in new construction in San Francisco. I wouldn't say it's a larger factor than the anti-development lobby but I think the anti-development lobby and the rent control lobby are closely aligned.
Height restrictions are another factor, as is the requirements around affordable housing.
San Francisco's Sangiacomo ("AKA 'The Father of Rent Control'") and his tenants came up with a really great solution for this:
1) Buy a rent-controlled building.
1a) If there's no room for the first phase of your building plan, destroy some of it it and displace the affected tenants.
2) Build the first phase of construction as quickly as humanly possible.
3) Move the displaced tenants back in at the rate that they were paying when they were displaced. These tenants also retain their rent control privileges for as long as they stay in that unit.
4) Build the remainder of the building and rent it out at "market rate".
This works, and works well, as Trinity Place (1190 Mission) has shown us.
Taxes are 11,043 with a value of 904,085. $2145 looks like an EXTREMELY low rent for a house of this size in San Francisco. (half of the rent is just property taxes.) The landlord was likely losing money keeping it rented at $2145 even if he owned it free and clear.
I understand the nature of supply and demand and the appeal of living in an area full of like minded people, but as someone in a flyover state, this absolutely blows my mind.
Shoot, in the Midwest I have an apartment with about that much square footage, two full baths, and I think I'm getting ripped off at $1400/mo. Did I mention I moved in less than a year ago, and was the first resident in the building, so it's brand new?
I understand San Francisco is the home of technology, but get your stuff sorted out, seriously. Is it worth being in a city that absolutely hates you? A city that would do anything to make your lives miserable? I wonder what would happen if Apple and Google packed up and moved to, I dunno, Milwaukee?
I lived in Chicago before moving to SF a few years ago, and I can't imagine ever going back. There is an argument about jobs, people, and companies that's complex, but people pay so much for so little space because it really is that valuable. The weather is near perfect year round, the food/beer/wine is astounding, the landscape is glorious, and so on. Midwest winters, particularly as climate change is making them worse, would be enough to keep me here, but my quality of life has gone up in about every other way possible.
People pay the premium because it really is that good. If a big tech company decided to move to Milwaukee, every other tech company would just soak up all the people lost.
Is the weather, food/beer/wine, and landscape really that much better than Santa Cruz? Is it that much better than Raleigh? Or Austin? Or any other city that isn't San Francisco?
Besides the benefits you might get from SF, let's be realistic: the city doesn't want you. It doesn't want any of you. The only benefit you're getting is the people who moved there just like you, and the city doesn't want them, either. If they wanted you, they would let you build houses, or let you run buses without getting rocks thrown at you. They would welcome you and do what it takes to make your stay pleasant.
I don't live in SF, but I frequent HN so I hear all the stories. If half of what I hear here is true, you're a bunch of people living in a city where you have massively overstayed your welcome. And it seems like no one has realized it yet.
Please, tell me I'm wrong. Take a look at your rent, at your city policies, your Senator, and at the people around you (not the tech workers, but the other residents of SF), take a look at them and tell me I'm wrong. I don't want to be right, but that's the only impression I can get from stories like this.
I think the people "that don't want you" are a small, although vocal, minority of San Francisco. Most San Franciscans prefer gentrification and tech workers to slums and everything that entails. The silent majority, is just that- silent. There is construction happening all over the city now, I think people are starting to "get it"- if you want lower rents, you have to build more hosing.
I've been in SF since I was 9 years old, so feel that I can comment as a near native.
What about the recent story here where the Mountain View politicians were saying they wouldn't build houses for Google employees because they didn't want Google employees voting in their city? And Dianne Feinstein is still your senator...
I think what he means is the cost and burden of daily life in SF demonstrates a place that doesn't want you - not so much that the long-time residents don't want you (though that's true in some cases).
Santa Cruz? Have you been there? It's definitely a love it or hate it kind of place. The food is better in SF. It's something like 78 miles down the coast, so the beer and wine are the same. The landscape is about the same. The big problem is going to be your commute over hwy 17. I did it for years and liked it, but it's not for the faint of heart or the skittish in car. Never been to Raleigh or Austin, but today was high 60's low 70's, and went for a walk on the beach. The weather will likely be the same in the dog days of summer. Can you say the same of the south/texas?
As for San Francisco not wanting people. It is over blown in my opinion. San Francisco did not want the gays, hippies, beats, Hispanics (even the one's who were originally living here), Chinese, Japanese or any other group who moved in to the city. Never stopped anyone and everyone gets over it eventually...
A lot of what you are saying rings true, but you may be underestimating just how small San Francisco is and how large the tech entrepreneur population is here. The number of new companies being started here is what makes San Francisco feel special. There is no other city on earth where you can overhear someone's new business idea at the cafe, the bakery, a restaurant, and the subway. And the crazy thing is that no one rolls their eyes at these ideas like they would in Chicago. It's pretty bizarre, sometimes unsettling, sometimes wonderful. It wouldn't happen at this frequency in Santa Cruz or Raleigh, or even New York or Austin or Boulder.
I think it would. Is there something special about SF in particular, or is it just the people? If you moved the people to Chicago or even Detroit, I have a feeling it would be exactly the same. If it's an issue of city size relative to the number of tech workers, look at smaller cities like Knoxville, Grand Rapids, or Madison. These conversations don't happen there because the people holding them don't live there. San Fran is almost a million people. The last two cities I've lived in clocked in around 200k. I think you're underestimating just how big San Francisco is.
I would gladly live in Silicon Valley if it weren't in San Fransisco. I don't think I would have the stomach to live in a city where the local people and politicians were that hostile to me.
And I still haven't heard anyone say that the local population doesn't totally hate everyone who works in tech. All I'm hearing is "yeah they hate us but look at how good it is for me". That's pretty awful.
The major issue with SF is the lack of new housing being built at the first rung of the property ladder. Plenty of 1 million dollar plus units being built, but nothing for first time buyers. Worse the developers actively resist building affordable housing even when the city bends over backwards to accommodate them. Even worse is the amount of new office space being built. There simply isn't enough housing in the Bay Area to cope with the number of new jobs the cities want to add.
At some point the bubble will burst. Companies will be forced to relocate away. But sadly there is enough crazy in the market to keep it going on for a while yet.
> Plenty of 1 million dollar plus units being built, but nothing for first time buyers.
What is affordable? I'm not in SF (or the U.S.), but as I understand salaries of $150k+ in tech are common. Mortgage repayments on a $1mm property work out to be ~$5,000 a month for a 35 year mortgage, which you can easily pay if you are earning that much.
Normally mortgage payments aren't allowed to be more than 38% of gross income for someone with no debt which works out to $4750 for $1M/yr, and you generally have to have a 20% down payment, and even then, it's still going to have to be a jumbo mortgage.
It's a good question. It's clearly worth it for some. For me, I own a 1800 sq. ft. home on 4 acres outside of Cleveland valued at $170k, in an area with excellent schools. The career prospects in NY and SF are far better, but I'd have a really hard time giving this up.
> The landlord was likely losing money keeping it rented at $2145 even if he owned it free and clear.
This conveniently omits the fact that there used to be two units in that house, so the actual rent would certainly have been closer to double that amount.
It also conveniently omitted any calculation about how the owner is 'losing money', despite there being a ~$14,000 positive difference between what the tenant is paying per year and the taxes due.
Do you imply that someone should be able to be a millionaire, or even 'rich', solely by collecting rent on real property? Real property that is apparently not even properly maintained?
Looks like something worth exactly as much as a day's rental of bulldozers, excavators, and dump trucks. I'm not sure if San Franciscans are aware of how horribly they are being abused. Go somewhere else.
Zillow has it going up in tax last year from $1,500 a year but it hasn't been sold since 1976. Either the sale is slow to show up or someone just inherited the house without a trust. In which case getting the renters out and selling is not surprising.
Simply way around Prop 13. The property is owned by a company not a person. To sell the property you sell the company. As far as property tax was concerned the property hasn't changed hands. Profit.
Prop 13 was never about making sure Grandma didn't get taxed out of her home, it was about making sure corporations didn't pay property tax.
From the link (click see more on her post), this was a 2-unit house where the owners removed the second bathroom and claimed that they had converted the second unit into storage space, thus allowing them to say that the building was a single unit and exempt from rent control.
It's totally legal, and done all the time: it's why people lease houses rather than go month to month.
It's not a reflection of the market in SF. This happens everywhere a landlord who isn't getting on with their month-to-month tenants and want them out, for whatever reason. It happened to me in 2005. It's not a necessarily a reflection of anything outside of the personal situation of the poster, and their relationship with their landlord.
If this had happened anywhere but SF, there wouldn't be the flurry of hysterical outrage that's exploding on Twitter and Facebook: there would be crickets.
They converted the other unit in the building to storage (after hassling that tenant out).
I don't think it's anything like 'isn't getting on', the landlord wants to convert the building to some other use and simply doesn't care about the tenants, which isn't the same as finding them disagreeable or whatever (one imagines they might want to do something like sell it as a private home).
I feel for the renter, but shouldn't the landlord be able to do whatever they want with their property?
Rent is going way up because there aren't enough homes in sf for the amount of people who want to live there. The city is to blame for this problem. Why is sf such a flat city? There should be a lot more tall condo buildings but as I've read it seems the city blocks any structure over 4 stories.
Raising rent will cause lots of low income people in sf to have to move. That's not a good thing--but what is the answer here? How do other large cities deal with this problem?
It is the law, but to utilize their property how they see fit they have to use a loop hole.
The city is basically making land owners give section 8 rent welfare to tenants, in a bid to keep the city affordable to long time residents during a housing shortage. You'd hope that the city would open up building more high rise housing (high end) to open up more space for the lower end of the community.
I don't know what they will do with the building. I brought up the storage because it makes their motivation clearer, they weren't getting rid of the tenants for any sort of personal reason, it's about using the building for something else (or as you say, putting it back on the market at higher rates).
The news isn't about the legality of the rent increase - it's clearly legal - it's about the sanity of a world (or rather a city) in which this happens, and of the people who choose to live there.
Part of the outrage is that the owner is apparently being dishonest and provides no justification (and it's hard to imagine any reasonable justification) for suddenly demanding a 3x and security deposit increase.
What additional value has the owner provided the tenant to justify such a large increase?
If the owner wants the tenant out, the owner should say so, not hide behind some ridiculous attorney letter and extortionist rent increase.
I think it's pretty clear in this situation that the justification is "We don't want to rent our house to you anymore so we are raising the price to a point where you will move out."
Hah yes. I almost didn't leave this comment due to tempting that other flame war. But it was the best example I could think of off the top of my head of an unstated but clear communication.
I am not completely familiar with SF's laws, but typically rent-control laws state that an owner may only evict a tenant for good cause and that leases are otherwise indefinite, at the tenant's discretion.
In this case, the owner has evaded rent-control to extrajudicially evict the tenant through extortionist pricing.
The law as it pertains to these contracts or all residential tenancy contracts in the US?
Are 3-, 6- and 12-month leases common? All the residential arrangements I know of here in Australia would be 6- or 12-monthly. Gives a tenant some certainty, but also enables a property owner to move back in, sell, redevelop, etc.
The law as it pertains to rent-controlled jurisdictions.
All lengths are common, though 12-month is perhaps the most common. In rent-controlled jurisdictions, when a lease expires it converts to a month-to-month tenancy where the owner may only evict for good cause (failure to pay rent, gross negligence, illegal activities, etc), but a tenant must provide 30 days notice of intent to abandon.
Often an owner is allowed to require a lease extension be signed, only if the extended lease is materially identical to the current lease except in expiration date (including length of the lease).
Almost everywhere in the US the standard is 12 month leases. Sometimes a landlord will do a 6 month lease. When these leases lapse (or if no lease was signed), the relationship is governed by landlord-tenant law, which usually states that the landlord must provide 14 or 30 days of notice when removing a month-to-month tenant.
I'm not very familiar with rent control practices, but in 99.9% of the US, this thing where the tenant is allowed to indefinitely block the usage of your own home is not done.
Ironically, rent control is exactly why there is so little housing available in SF. Iirc, only 30% of the voting population owns property. So how is it that the rest of us (70%) don't vote to build more? Well, because 3/4 renters are under rent control, and essentially don't care. So only 70%/4 < 30% of people are motivated to push the market towards more housing. The rest profit handsomely from increased home prices due to high demand. This is the real tragedy of rent control in San Francisco IMO.
Funny thing is that rent control is one of these issues that is non controversial among economists, from the most Keynesians to the most libertarians, they all agree that it's a bad idea. In fact, socialist economist from Sweden Assar Lindbeck said: “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”.
Rent control is usually pushed by ruthless politicians to buy votes and end up being catastrophic for the cities victim of such policies.
Exactly. Current homeowners don't want more housing because it will lower the value of their homes. They also vote against property tax increases for the same reason.
Rent control doesn't prevent me from desiring more high-density residential construction in the city.
Thing, is, even folks in rent controlled units have major life events. You get tired of the person you're living with, get sick of the changing neighborhood, have a baby, or a new Significant Other. In a city that has such an extreme lack of housing, changing your living arrangement to reflect your changing life is somewhere between extremely difficult and impossible.
Folks who are preventing new development aren't folks that are motivated by a desire to protect their rent controlled apartments. They're folks who are motivated by a desire to see greatly increased year-over-year rents on their non-rent-controlled units, greatly increased year-over-year leverage on their existing property, and/or the continued preservation of the look and feel of the neighborhood (read: those with a strong resistance to change.).
If the majority of owners don't wish to personally utilize their property and instead choose to extract rent from it, what exactly are the renters supposed to buy?
Owners can apparently force renters to bleed ever more money, but renters can't force a squatting owner to sell, they just have to accept it or, as this letter exemplifies, GTFO.
> If the majority of owners don't wish to personally utilize their property, and to extract rent from it, what exactly are the renters supposed to buy?
If you offer to pay at least as much for the building as the landlord would expect to make from renting it out then any rational landlord will sell you the building.
> Owners can apparently force renters to bleed ever more money
If they raise the rent significantly above what typical apartments go for in the area then the tenant will move out and they'll have to spend money to find a new tenant and go without rent in the meantime.
Rental housing is one of the most efficient markets in existence. Landlords have nothing to gain by gouging tenants who will only move across the street to keep paying what they are now, which is why that rarely if ever happens. But when the local market price of housing changes, adjusting rents to meet the market is completely reasonable and natural.
Rental housing (like garbage collection) is only efficient when there is more than enough housing (or memory) available to meet demand (of tenants, or of the garbage collection machinery). In obscenely undersupplied cities like SF, rents become absurdly high very, very fast.
Case in point. In 1998 (At about the height of the Dot Com bubble) a one-bedroom apartment in my building rented out for ~$500/month. In 2010 (While the real-estate market was still recovering from its enormous collapse) that same apartment rented out for ~$1500/month.
That's a 3X increase in "market price" of a good from the height of a superheated bubble to shortly after the collapse of another one.
SF's rental market is seriously fucked by undersupply.
> In obscenely undersupplied cities like SF, rents become absurdly high very, very fast.
That's what an efficient market is supposed to do. The high price then encourages the construction of more housing.
There isn't enough supply because of rent control and other regulations that discourage or outright prohibit the construction of new or higher density housing. The market is doing exactly what an efficient market is supposed to do under those conditions: Increase the price until demand at that price no longer exceeds the artificially constrained supply.
Rent control isn't the source of the undersupply in SF.
Restrictions on new construction (both legal and social) are the source of the undersupply in the city.
Do you live in SF? If you did, you would know that in the few new residential buildings that have been constructed, rents are somewhere between $3000 and
$4000 per bedroom. What developer could possibly refuse that income? Do you think that rent control is driving rents in newly construction apartments that high? Likewise, do you think that -with rental rates like that- developers are failing to build new stock because of existing rent controlled stock in SF?
As an aside, if you didn't know how rent control works in SF, here's a quick intro. Buildings built before 1979 and rented as residential housing are covered by rent control. No other buildings -unless (as is happening in Trinity Place on Market Street) the landlord enters into a special agreement with his tenants- are covered by rent control. This means that new construction is NOT covered by rent control.
Because new construction is not covered by the rent control ordinances, in a market with extreme undersupply, like SF's, there is no economic reason for a developer not to build new housing stock.
> Rent control isn't the source of the undersupply in SF.
It's a contributing factor.
> Because new construction is not covered by the rent control ordinances, in a market with extreme undersupply, like SF's, there is no economic reason for a developer not to build new housing stock.
That isn't entirely true. A developer has to build new housing stock somewhere. In a developed area that commonly means demolishing old low density housing to build new higher density housing. But if the low density housing has tenants that won't leave because they're paying below market rents, developers can't do that.
Rent control also contributes to high rents in another way: No matter how constrained supply becomes, tenants in rent controlled apartments don't feel any pressure to free up supply by moving somewhere else. Those units are effectively off the market, which requires new tenants to pay that much more to get one of the remaining units.
Rental housing can't be particularly efficient because neither renters nor landlords are fungible, and there's loads of information asymmetry.
IME (London) what typically happens is you get a bit gouged for rent when you first move in to a place, then, as the landlord gains trust in you as a tenant, the rent is "sticky" - it doesn't go up very quickly. You can use the risk of a new tenant as a negotiation lever to keep rent down.
> If you offer to pay at least as much for the building as the landlord would expect to make from renting it out then any rational landlord will sell you the building.
Which rational tenant would pay the same amount he'd pay as rent to buy the property, when that incurs additional costs (property tax, for example)?
"The rest profit handsomely from increased home prices due to high demand."
The irony is, they would probably profit even more, if they allowed the city to grow naturally. New York City had a population of 800k (like San Francisco has now) some time in the 1850's. Do you think a piece of land in NYC would be more valuable now, if they had decided to stop the city's population to 800k back then?
One of the problems is that San Francisco in the 60s and 70s passed rather strict zoning ordinances to prevent "Manhattanization". So, this city that has a very limited amount of space cannot grow upwards to help meet demand.
This is the real problem. SF is loathe to build out skyscrapers even though it's been proven that dense urban areas are the most efficient way to live. The earthquake argument isn't really a sound one in this day and age so the only thing left is "we don't like change."
Build more high rises possibly? Part of the charm of living in SF is that it feels "small" and homely, compared to a city like Chicago or NYC, where almost everyone lives in a flat in a building 20-30 stories high.
The mayor's goal, which we're not on track to hit, is to add 30,000 new homes by 2020. Meanwhile, the city's chief economist says we need at least 100,000 homes to start having a real impact on prices.
He said that we need 100 000 new homes to have an impact equivalent to a $75 000 down-payment grant. He said the 30 000 homes would also have an impact but not as great.
Landlord finds loophole to end rent control on a unit. Shocker.
To those who say it's unfair to the landlord to force rent control on them I say two things:
1. Yes it is. There are cases when legally allowed rents are below the taxes the landlord needs to pay. If the government really thinks affordable housing is a public good, let the government build or buy apartment buildings and offer it rather than having forced income distribution essentially; and
2. To the landlords: it's not so funny when the shoe's on the other foot is it? I'm talking of course about Prop 13. This allows long term owners to pay basically nothing in property taxes with those taxes only resetting when the property is sold.
So the state of California screwed up in creating rent control and Prop 13. Great. Repeal them both.
The problem with massive rent control is it creates a dysfunctional market and a huge disincentive to rent out or build new housing supply [1].
New York City ended issuing new rent control leases in 1973. There are very few left. NYC has a functional housing market (in comparison). There are affordable places to live 30 minutes from Manhattan thanks to pretty good infrastructure.
SF specifically and South Bay in general are basically an object lesson in NIMBYism gone insane.
Honestly, the sooner the startup figures out that the only thing the Valley has got going for it is the weather because everything else sucks, the better.
> There are cases when legally allowed rents are below the taxes the landlord needs to pay.
This does not happen in California. Prop 13 ensures it. Property taxes pretty much never increase. One of the ways that they do is when a property changes hands.
Either this landlord purchased the property with the intent of kicking out the tenants whose rent he knew would be less than the re-assessed property tax, or he's being a dickbag and is throwing out a tenant because he feels that he deserves more money from his long-term investment.
> The few of us who still remain in San Francisco have no choice but to live in sub-par conditions like mold, windows that don't shut, rodents and countless other issues because there is no other choice, because the rents are so high you can't move so you don't.
Yes. But the solution isn't more rent controls. That just increases the gap in price between market-rate apartments and rent-controlled apartments. This makes it even harder to move, and it further increases the incentives for landlords not to maintain their rent-controlled apartments or pull stunts like this.
The solution is to add supply to meet demand. We should be furious at the forces that have kept supply in SF so absurdly low.
I totally agree that SF needs to build like crazy. Every new residential construction that goes up fills me with a little joy. :)
> The rent control creates the mold and stuck windows. That's the point.
Bullshit.
1) Friends down the block from me live in a tall "market rate" tower that is in substantially poorer condition than the rent-controlled building that I call home.
2) In SF, stuck windows and mold are must-repair items for landlords, regardless of rent control status. If you as a tenant can't get satisfaction from your landlord, do the repair yourself and present him with a bill. The law guarantees that you'll be reimbursed in circumstances like these.
YC sings the praises of San Fransisco, and they're right about the culture and the startup scene there. But things like this, and the cost of living overall, make me hesitate to start something out there.
It really blows my mind that young people starting new companies want to live and work out there. There are other places to live that are less expensive and have venture capital! My hometown of San Antonio, while nowhere near as inexpensive as it was 10 years ago, is a great example of this. The startup scene in SAT is blowing up and you can get a gorgeous, brand-new apartment for under $2K.
See also pg's "Cities and Ambition" http://paulgraham.com/cities.html. People move to SV to do startups because everyone else moves to SV to do startups. The field of economic geography studies this phenomenon.
So, there's no mention of the tenant's salary in this story. Does rent control in SF or the US in general not stipulate that rent control is also a function of the tenant's ability to pay? Here, in The Netherlands, this is an important criterion in determining what the maximum increase is in rent for a given property [1].
My general understanding of the law in The Netherlands based on having rented once during university is that it heavily favours tenants. The bottomline is that no one is allowed to end up on the street, with the main exception being if the landlord is in dire financial straits. Apart from that, the law sides with the tenant. This even goes to the extent that fixed-term contracts are more or less useless, because if a tenant doesn't want to leave, they don't have to.
Is it considered reasonable in SF that the tenant will be able to find alternative accommodation within 60 days?
In San Francisco, only residential units constructed prior to 1979 are subject to the local rent control law. This is for market housing, government subsided housing follows different (and differing) regulations, which often do take income into account.
http://www.sftu.org/rentcontrol.html
if only SF rent control was linked to the income of the renter! Plenty of well paid engineers and execs living in significantly below market apartments when they could easily afford market-priced housing.
If the aim is to create affordable housing for low income earners, rent control is not the solution.
Most new places (and some old places in desirable areas) in SF are going for ~$3000->$4000/month.
In order to cover $3000/month rent, average power, internet access, and $400/week spending cash, you need to gross $100k/year.
If you pull in less than that, then you run out of money and get evicted. Notice that no provision has been made for savings.
I know of a great many programmers working for successful Bay Area companies who would just barely have enough money to pay market rents on their apartment.
Here's the thing - imagine what it's like if you're making median income in the city of $75k. Or if you're one of the thousands of service workers who are earning sub-$50k yet people on $100k+ also get access to $1000pm apartments.
Doesn't make sense if we're trying to achieve equality (I still don't know what it's really trying to achieve - some kind of nativism)
There is an argument that removing rent control would actually reduce the price of rent through San Francisco but it would take a few years to stabilize.
This person should be grateful they were able to live in a place in such high demand so cheaply due to unfair rent control laws. If a 4x increase in rent is bearable by the market then it's not a sign of landlord greed, it's a sign of a broken system. I'm sure if this person was offered the opportunity to make an extra 5k a month with little to no change in effort on their part they would do so and be offended if people labelled them as "greedy." I support some form of rent control but if you are in a situation where there is that large of a gap between market rates and tenant rent then things are fucked -- you are basically creating a privileged class: those who managed to lock up rent controlled space as tenants.
> If a 4x increase in rent is bearable by the market then it's not a sign of landlord greed, it's a sign of a broken system.
It's not bearable by the market. $2145 is low but market rate is nowhere near $8900 for a place like this; not even half that. This is clearly an attempt to force the tenant out with an inflated rate.
I'm not going to comment on either sides rights here but this rate is not simply "what the market will bear".
Fair point, I was under the assumption this was similar to situation in some parts of NYC where rent control results in huge gap between market and tenant rate.
> If a 4x increase in rent is bearable by the market... it's a sign of a broken system
This person thinks the rent increase wouldn't actually be borne by the market. Maybe the landlord has no actual expectation of making that much, and setting the price so high is just to get rid of this renter. Whether that's an OK tactic is debatable I guess, but legal trickery around zoning laws and lying about prices sound like signs of a broken system too.
The reason this article is trending at the top of HN is the reason this person is going through this. The idea that great start-ups must exist on an 47 sq mile piece of land with utterly mediocre weather (the literal definition of mediocre, that is - one many of us love, myself included) in perfect coexistence with a quaint aging population below the poverty line, drug addicts, and the last generation that sought to live there in the last boom is patently absurd.
Why so many globally reaching, internet based, in every home in the world companies think that they absolutely must be positioned in the mecca of startupdom is why I just can't take my own career seriously for too long. There's no reason we all need to be on that tiny peninsula! If you need to be there for "reach to investors", "proximity to the startup culture", guess what, your product probably sucks. If it were any good, you could do it from anywhere, without having to sit on the great lords of tech investment's front door begging every day.
You want to disrupt something? Why not start with disrupting the idea that being part of "start-up culture" is required to be successful.
>>> Why so many globally reaching, internet based, in every home in the world companies think that they absolutely must be positioned in the mecca of startupdom
Why people join twitter or facebook or any other virtual social network? I think both have similar answers.
Contrary to popular belief, there are other places to live than San Francisco. Almost all of them are more affordable. If you don't want to pay absurd cost of living, move. There are in fact jobs in other parts of the world.
I think it is just a scary way of stating that you must have $12,500 deposited with the owner for the entire month you are leasing. It just rolls over each month.
While this is inconvenient for the tenant, it's not unfair. Rent control is unfair. Now, with the proceeds, the landlord might invest in new flats which will mean more housing for everyone.
I get that. But the concept of a security deposit is that you get it back when you leave, so long as you haven't damaged the place. Having to pay an additional security deposit each month doesn't make logistical or logical sense. Do they hand you a check for $1M when you leave after ten years? Does the number of damageable surfaces in the apartment increase each month?
Not necessarily. I've had security deposits where only a certain percentage is refunded after any necessary deductions. Depends on what they signed in the lease. But still, it was never designed to actually be collected, just a number to scare someone away. Not much more to look into it.
The other option landlords always have is to withdraw the unit from the market. You can Ellis Act anyone you want; the price you pay is $18k per person or so plus waiting 366 days, and a stained title. You can still renovate then TIC the building though, and you'll find plenty of takers.
ps -- having been in a legal fight with an sf landlord, the fact of the matter is despite all the pretty bullshit sf claims, there are vanishingly few actual tenant protections that work against a malicious landlord. At best, you can leave and sue after the fact, but be prepared to spend years on a fight.
@harry: an ellis act eviction, or other no-fault evictions, permanently prevents the building from utilizing the 2-unit lottery bypass to condo the building, so it will have to remain a TIC. TICs have a variety of negative implications, including complicating mortgages. The lottery, which is still necessary for larger units, is suspended until 2024.
If you read the thread it sounds like the landlord used several loopholes and had previous litigation against them and they toughened up their approach after previous failed evictions.
I'm glad my rent only went up 20% since I'm in Sunnyvale and not the city.
I'm coming very late to this (540 comments and counting), but I do want to make one point about the term "NIMBY". While it's a reasonable observation about housing politics, it does invite potentially false equivalence. A kind of equivalence is built into the term itself - "not in my backyard" means everyone recognizes something is needed, but nobody wants it near them. In this case, everyone wants to live in the low density section of a high density area.
Still, this term encompasses everyone from bernal heights hippies who want to keep density at 18,311/sq mi to atherton billionaires who want to keep it at 1,400. It includes noe valley "activists" who don't want to tear down 100 year old houses and mountain view city council members who voted to allow massive new corporate construction bringing tens (hundreds?) of thousands of new workers to their region but specifically banned new residential construction near those places of business.
All in all, yeah, I hear you on the noe/bernal/mission activists. They are a bit nimbytastic, no doubt. But to me, the actions of the anti-housing forces in some peninsula towns are such an order of magnitude worse (and are causing many of the problems you see in SF) that simply applying the NIMBY label to both without further analysis is an exercise in false equivalence.
It's an incredible statement on the depth of the bay area talent pool and VC money network that so much tech concentrates in such a tiny place (and thus drives up the rent, as in the article). Nowhere else in the world can compete.
It's not for lack of trying. Louisiana, for example, will pay 35% of a programmers salary indefinitely[1]; other states and cities have similar programs. That's serious competition. But the talent/money vortex of the bay area is not just winning, it's actually getting stronger.
The other areas with real companies, like Austin, Seattle, and New York, still feel like also-rans compared to SF and the valley. If you want to raise money, it's still the place to go.
It's just incredible to think about. Is there any other field where there's just one geographical place that's just so far ahead of anywhere else? Especially fields like biotech, where geography isn't directly related to the business?
I find it interesting that we can, with almost 95%+ success, determine who on these threads owns Real Estate in San Francisco, versus those who don't.
There are admittedly some comments that are in the margins, but the number of false positives/negatives is probably pretty close to zero.
In particular, those who rant about the evils of uncontrolled rental markets are 99% likely to not own real estate in San Francisco.
Therefore, those commentors aren't commenting on the objective good or bad of such issues, so much as they are just explaining what their personal situation is. As soon as those people who cried the evils of uncontrolled rental markets came into possession of San Francisco property, they would immediately change their tune.
Should we place any value in ethical principles which are so immediately seen to be self-serving?
You haven't made any comments about Real Estate ownership, so I can't make any guesses.
I really like Warren Buffet's perspective, the rules one believes are right, should be created without you knowing what your circumstance will be. That is, if you are trying to determine what is right, or not, about rent controls, you should create without knowing whether you will be renter, or an owner.
I've never met a real estate owner in San Francisco who was rabidly opposed to uncontrolled rent markets - so, with 99% certainly (I'm sure there are some edge cases), anybody who is highly opposed to uncontrolled rent markets is, with a high level of certainty, not a real estate owner in San Francisco.
I agree with you that we should agree to a set of rules without knowing our circumstances.
But the rest of your argument doesn't make sense. You've never met an SF real estate owner with a certain opinion, so you know something about most of them? There are at least 10,000 SF real estate owners. Have you talked to more than 0.1% of them? And even if you had, how would that help with your original claim that you can identify whether commenters in this thread were SF real estate owners or not?
The meta point that I was trying to make, and I think is really important, not only in this context, but in a vast number of contentious threads, in HN and other arenas, is so often when we are voicing what we propose is a moral, or ethical position, is no more than a declaration of what our particular situation happens to be at that time.
Someone living in a rent-controlled apartment will be a strong believer in rent control. Someone owning real estate will be opposed to rent control. What I find fascinating is that the same person with the same knowledge, background, and education might hold two diametrically opposite positions.
Mostly agreed about your meta point. I think you're omitting the possibility that someone might be opposed to something that benefits them.
But in the non-meta discussion, all I'm saying is that you don't know which commenters are in which situation, and especially not with 95% certainty, like you claimed. Some of the commenters might oppose rent control, even though they benefit from it. Other commenters might strongly support rent control in San Francisco, even though they live in Wyoming. We just don't know.
So - I grant you that I don't have epistemological knowledge of these commentors positions. And yes, you're right, for people that don't have any skin in the game (people outside the bay area) - it's much more difficult to understand what their position is.
I guess my only hope is that when people voice a very strong opinion on this topic (or, for that matter, any topic) - that they might consider whether they are holding that position with a "veil of ignorance", or whether they are just projecting from their own situation.
>Should we place any value in ethical principles which are so immediately seen to be self-serving?
Are you also including those who own property in SF also included in this? They too would immediately change their tune if they had to sell the property and begin renting.
One party in this made the conscious choice to buy property with these restrictions on it, and receives the benefits of being a property owner (Equity, income from rent, etc) whereas the renter is only receiving benefits intended to protect them from price gouging.
I currently rent because I'm not sure if I want to keep living in my current city, and don't want to go through the troubles of having to sell property if I do decide to move. The last few years, my landlord has raised rent more than would be possible under a SF style rent control. I don't particularly care, because I can afford it and if it reaches a level where I do not think it is a fair price for what I receive, I will move elsewhere. I have no vested interest in this, as I have no desire to rent or buy property in SF.
But your comment seems just as biased as those you are singling out for wanting to protect their own interests.
It's not just owners who are hurt by rent control -- it's also market-rate renters. If rent control were removed, market-rate rents would drop from where they are today. That said, I'm not sure why you think people only argue based on self-interest. Virtually every economist agrees that rent control is objectively bad.
Look at this from another perspective. Being a landlord is great. You sign a piece of paper making you the owner of a property. Then other people do actual work and pay you just for having your name on that piece of paper.
If we lived in a perfect (or even just a "better") society, this would be fine. But the problem is that we live in a society with different classes. If your parents owned a home or two, you probably will as well. If your parents didn't, you probably won't either.
In reality, "rent" is just another way to keep the rich rich and the poor poor. Rent Control is an attempt to mitigate the damage. Personally, I think it's a terrible band-aid that exists because we aren't willing to face the real issues at hand.
There seems to be a lot of discussion in this topic around the idea that "IF San Francisco did away with rent control, THEN the market would correct the problem."
Given that SF hasn't had rent control since 1980 (it only applies to buildings constructed before that), and the market has thus had 25 years to correct, which of the following is true:
1. There is no housing problem
2. Removing rent control didn't make a difference.
I'm actually curious to know the opinion of people blaming rent control...
This sort of thing has been building up for a long time. This is mainly due to the Greed of the SF tenants to who prevent developers from building more units with local politics NIMBY. By constricting the supply artificially it prevents new buildings from going up. Also, the mayor is to blame as well, for incentivizing more companies to come to SF making the situation even worse.
The typical false-wise answer to the housing crisis is something like "build more housing, supply & demand, read an Econ 101 textbook, DUH."
The reality is more complex.
The real Economics 101 answer is: You can't know the effect of more supply on prices without knowing the demand curve. No one truly knows that, but consider this. The current market price is basically what a startup employee can support on their salary without kids, much savings, etc. If there's a large supply of people willing to move into SF for jobs like this and pay that price, but unable to pay more, then that whole worldwide supply needs to be exhausted before the market price comes down. That could take years or even decades depending on how the startup boom goes.
In the meantime, the macroeconomic effects of widespread losses in housing for blue collar, service industry workers, the middle class, artists, etc. can have very undesirable long term effects on a city. There is good reason for city governments to consider managing this growth.
The 8900 is just to get her out. Once she is out, they will reconvert the other unit and get two new tenants without priority claims on controlled rent.
Hopefully the rising prices will encourage investment and lead to a greater supply of housing options in the future. The fact that this kind of thing is happening probably means the rent control laws have been too strict in the past.
[Meta] Why has this dropped off the first page? It currently #32 and has 443 points, 447 comments and was posted 4 hours ago - there aren't any other stories more popular than this on the first page.
Affordable housing is something that would actually be solved by free markets. It's the heavily regulated (almost socialistic) systems when building new homes to new people in a growing city is not allowed (because the old residents don't want their city to grow), so supply is now allowed to meet the demand, when we have these problems.
Everything could be solved by a perfect free marker where everyone had perfect information, zero latency in decision making and where making a decision cost nothing. Trouble is, IRL, none of those assumptions is even remotely true. Just as the renter signs an agreement, so does the landlord; rent controls skew the bargain but they do it for both parties. If the landloard didn't want to have a rent-controlled tenant for 10 years, then they should have magically known (using their perfect market information, duh!) that that tenant would be there 10 years and rented to someone else who wouldn't.
A desirable city with very limited new construction will lead to increasing prices. You can use rent control to give cheaper housing to a smallish number of people, who kind of win in this lottery and get cheaper housing the others. But there will be those others, lots of them, who were not among the "lottery winners" and who will have to resort ti living with a much longer commute.
If demand is high, building new homes for people should be allowed.
It's supposed to be a part of basic income to pay enough for someone to be able to afford rent and to and choose where to live that's within their budget. If it was a separate thing, perhaps people could be given a choice among places with a low cost of living, and then the amount needed for basic income would be lower. http://marshallbrain.com/manna1.htm
Edit: Manna was more relevant than I thought:
> The government had finally figured out that giving choices to people on welfare was not such a great idea, and it was also expensive. Instead of giving people a welfare check, they started putting welfare recipients directly into government housing and serving them meals in a cafeteria. If the government could drive the cost of that housing and food down, it minimized the amount of money they had to spend per welfare recipient.
If the VCs weren't there, it'd be a third-rate city, and much of what the VCs are funding isn't even technology but the post-apocalyptic sort of "attempt to engage in one of the short-term natural monopolies that technology sometimes creates" gambits that bloom in the caldera of an imploded technology industry. Yet it has become a more expensive place to live than New York, despite being dysfunctional in every measure other than tech salaries.
I cannot see why California hasn't done something about Prop 13 NIMBYs. All that those useless parasites do is block progress, drive up the rents by preventing new housing from being built, and cause measles epidemics with their anti-vax nonsense. It's really time to call in some Texans on that shit and fix the NIMBY problem. If California can't do that, then how are we supposed to take them seriously? If they can't get their heads out of the ass of the past that the NIMBYs claim that they are preserving, how can we trust them to build the future?
"much of what the VCs are funding isn't even technology but the post-apocalyptic sort of "attempt to engage in one of the short-term natural monopolies that technology sometimes creates" gambits that bloom in the caldera of an imploded technology industry"
Regardless of legality, this is obviously wrong. The owner of the property clearly has no understanding of reality; they're going to be financially destroyed by this move, so no additional action necessary on that front. Glad to see someone so evil fall on hard times; pity they won't suffer more.
As for the tenant(s); if you want to relocate, I'll put you up in Minneapolis for free for a couple months if you want. No conditions, just let me know.
From the records on Zillow, assuming they owned the unit free and clear, the landlord was likely losing money at the current rent: it's less than the current taxes on the unit.
Should they have been forced to continue to rent the unit out at a loss?
The tenant was paying $2,145/month = $25,470/year.
According to the letter, they forced out another tenant. IF that tenant was paying a similar amount, the landlord was making >4x taxes in rent, not less than the current taxes.
Also, the current owners bought the property on 12/30/2014. Why should anyone have sympathy for them having tenants? They knew they were buying a rent-controlled building. They aren't some owners for the past 30 years being held victim to tenants who won't move out.
correction to myself on "buying", it appears the previous owner was "SHUKRY & VERA LAMA RVC LVG TR" and the new owner is "LAMA NADIA V", so it probably was an inheritance, not a purchase.
If you read the facebook post, it claims they transferred the house from one couple to a sibling as part of the process that allowed them to increase rent.
This should obviously not be legal; if you're going to have a rent control, you can't let landlords take a unit that should have rent control and make it not rent controlled. At the very least, these kinds of changes shouldn't allow the landlord to escape an active rent control obligation to a current tenant.