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Rent Control? Sounds Like Socialism to Me…

May 7, 2008
By Ezra.
Politics & Current Events

There is a ballot measure in the June election that seeks to (in a backdoor manner) eliminate rent control in California. Needless to say, this is an incredibly bad idea, unless you are rich. Although, I really didn’t even have to look at the bill to be againstit. It fell under the Howard Jarvis rule. Anything supported by the Howard Jarvis Taxpayers Association, I am automatically against (I’ve never forgiven them for Prop 13, the worst thing to happen to California. It  destroyed our tax base.)

The measure is ostensibly a control on eminent domain, but tucked away in the language is a section that would “ban government-imposed limits on what landlords can charge tenants.” This would have a massive impact on tenants in several cities in California. Often times, rent control is the only thing that makes living in these cities possible (of course, Patrick would probably suggest they should just move…)

Of course, the Jarvis folks see this as a beautiful opportunity for capitalism to work it’s magic yet again! See, without rent control, landlords would actually charge less, according to them. Yeah, I see that happening. “There’s no longer this huge incentive or fear that he will set the rent too low; he can price it low and raise it later if necessary,” said Jon Coupal, the President of the HJTA. Yeah, I’m sure that the lions share of landlords won’t immediately jack rents up as soon as they can.

Now, in fairness to good landlords, some actually do keep their rents low. Mine, for instance, wants tenants to stay long term, and charges a below market rate to keep you there. However, I can tell you that that is not the usual drill. Rents in the Bay Area are ridiculous, and rent control is one of the few things that help poor families here. For instance, a rent controlled apartment in SF averages $1094 a month, while the market rate is $1350.

As if eliminating rent control wasn’t good enough, the measure would potentially allow landlords to sneak around just cause laws (that make evicting tenants frivolously quite difficult) and evict folks just to raise the rent (although, that would be a fairly wide interpretation of some of the wording..) Not necessarily a done deal, but still not the sort of loophole we want to be opening up.

So, there’s the sneak preview of my annual how am I voting piece. I’m definitely against prop. 98.

Last 5 posts by Ezra

11 Comments
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11 Comments

  1. Patrick  •  May 7, 2008 @4:24 pm

    Actually Ezra, I’d merely suggest that landlords be permitted to put less upkeep into their rent-controlled properties, which is what they already do. I would observe that complaints about substandard housing by rent-controlled tenants and their advocates are rather silly, but I’ve heard sillier things, and will hear siller things in the future.

    Why you people take the referendum process as far as you do, now that’s a silly thing I’d like to see justified.

  2. Ezra  •  May 7, 2008 @4:27 pm

    Don’t get me started on California’s referendum policy. It’s insane. Anybody that can get several thousand signatures can get something on the ballot. It often leads to voter confusion (for instance, this year, prop 99 was created to directly combat prop 98, and will supercede it if it gets more votes. Oy!)

  3. PLW  •  May 7, 2008 @4:34 pm

    Are we putting together a list of terrible economic policies supported by Ezra? What’s next, Tariffs?

  4. tgb  •  May 7, 2008 @5:02 pm

    Just the facts, without prejudice. I lived in a rent-controlled studio apartment in San Francisco’s Noe Valley neighborhood for 18 years. In that time, thanks to rent control, my rent went from $250 to $425. Good for me, bad for the landlord. I’m sure when I moved to Phoenix the landlord tripled the rent for the next tenant. OTOH, I had no repairs or service in the 18 years I was there.

    You be the judge.

  5. Ezra  •  May 7, 2008 @7:21 pm

    Look, I don’t think rent control is perfect, I mean the rich can get just as much benefit from it as the poor. I just don’t know what other option there is to allow working class and poor (increasingly becoming synonymous these days..) to live in places like the Bay Area. The subsidy idea floated in the article? I don’t think the subsidy would ever keep pace with the increase in rents. I mean check out the data on what has happened in Cambridge since they got rid of rent control.

  6. PLW  •  May 7, 2008 @8:25 pm

    If you are really interested in learning the dynamics of urban planning, housing prices, and rent control you should check out some of the work done by Ed Glaeser: http://www.economics.harvard.edu/faculty/glaeser/papers_glaeser

    He specifically looks at Cambridge and San Francisco and NYC and argues that the central reason for high rents (and housing prices) is the strict zoning.

    Look around Cambridge and count the number of residential buildings over 10 stories. It won’t take long. I promise that the lack isn’t from the lack of people wanting to build them, but rather that it’s impossible to get a permit, because they would destroy the “character” of the community. And so we have a pretty common phenomenon, excessive government intervention in the market (this time a quantity cap on housing supply) causes a problem (high prices) and the proposed solution is (Surprise!) more regulation, this time a price cap.

  7. Chris  •  May 8, 2008 @6:48 am

    Spend any amount of time talking to people in NYC and you’ll rapidly realize that the people benefiting from rent control there are generally not the working poor. I’m not familiar with SF, but I don’t expect it’s that different.

  8. Ezra  •  May 8, 2008 @10:45 am

    So the solution is to increase the density of ugly highrises? I tend to agree with cities that want to limit the height of buildings. And, using San Francisco as an example, even when developers make those highrises, they don’t want to offer affordable (which in SF should really be in ironic quotation marks..) units. They have to be forced by law to mandate a certain paltry percentage of the total units as affordable. I don’t think allowing the developers to do what they want is a good answer? All the invisible hand does is help developers get rich, and screw poor people. Come to think of it, that’s really Capitalism in a nutshell.

  9. PLW  •  May 8, 2008 @2:18 pm

    If you cap supply, you get high prices. If you cap prices, you get small supply. If you cap both, and can actually enforce those caps, you get excess demand, poor quality, and housing allocated according to some mechanism other than the market. Some likely possibilities:
    1. Knowing someone
    2. Bribing someone
    3. Random Chance
    4. Tenure
    5. ?

    Unlikely possibilities:
    1. Moral worth
    2. “need”

  10. Patrick  •  May 8, 2008 @2:31 pm

    I learned most of what I know about the efficiency with which government manages supply and demand when I had to use newspapers in place of toilet paper. In a city where the average education level equals or exceeds that of Ezra’s beloved bay area, a city which is in close proximity to some of the largest forests on earth.

  11. Joshua  •  May 10, 2008 @4:37 pm

    Skyscrapers go up, efficiency goes up.
    In a city, people walk/take the bus/ride the train, shipping is centralized (reducing gas use and truck production), and living space is minimized.

    Arguably, the market (without zoning restrictions on building height and positioning) would improve living conditions and the environment.

    The highways were a public works project – would trains necessarily have failed as commuter transit if the government hadn’t subsidized them?