Author Topic: Landlord Who Supports Rent Control  (Read 7923 times)

Bakari

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Landlord Who Supports Rent Control
« on: September 23, 2016, 05:56:28 PM »
[taken from my blog, which in turn was taken from a social media post.  Not directly mustacian related in the strictest sense, except that since I bought this place it has become my primary source of income, and is what allowed my to successfully become FI]

[Background - the city council of my town, Richmond CA, has had a very heated political debate for a couple years now over whether or not to institute rent control.
Richmond is currently one of the more affordable pockets in the San Francisco Bay Area, especially for being close enough to the center to have its own BART stop, but like rents everywhere in this popular and rapidly growing area, they are climbing fast.
With rent control measures, landlords would only be able to raise rents they charge by a certain percentage (generally close to inflation levels) each year, and could only evict tenants if those tenants actually did something wrong (or if the landlord wants to move in), not just as a way to get new tenants to pay higher rent (rents can be increased between tenants, assuming they move out voluntarily or are evicted for a legitimate reason).

In the public discourse around the issue, those against it are constantly making the claim that it would "hurt small-time landlords".
I posted the following to a couple neighborhood discussion groups on the topic:

Not that any one cares about one random individual's opinion, nor that they should...
...but since so many who talk about the subject feel entitled to speak on my behalf, I just wanted to set the record straight.
I grew up in Richmond, and I live here now. I worked for the downpayment money for our triplex home from scratch, on an ordinary working class salary (averaging around 20k a year). I was able to save money by living in trailer parks most of my adult life.

Today I am a "small time" landlord. I own just a couple of units, which share the same land as my own home is on. I put a lot of money and time and work into upgrading it and making it a nice place for my tenants to live, and I still have a giant mortgage on it.

And there is absolutely no way I could honestly claim that rent control would "hurt" me.

My mortgage is a fixed amount, and repairs and vacancies are reasonably predictable. I make a profit on my rentals - that's why I got them - even though I charge my tenants below "market" rent.

There is no specific dollar amount or percentage of profit that I am "entitled" to. While being a landlord does require more than zero work, so does managing a stock portfolio. The fact is I am making unearned income. No one has any right to claim to be entitled to unearned income.

Further, rent control does not require me to LOWER my existing rents.
All it does is prevent us from arbitrarily raising rents to whatever the highest bidder is willing to pay.
Not getting MORE money is not the equivalent of having money taken away.

As land holders, we are controlling a basic human necessity.
In other human necessities, for example, clean water and other utilities, the companies that control the supply are not allowed to make up whatever prices they think some people will pay. The government steps in in the form of the public utility commission, and caps what they can charge.
With the affordable care act, there are limits to how much individuals can be charged for access to basic and emergency health care. That's a human rights issue.

Living on the street, or in a park, or in a doorway, is considered a crime, so even if we wanted to pretend that was a reasonable way to live, it isn't a legitimate option in our society. That means every individual HAS to have housing. We don't need to make unlimited profit from having control over a basic human necessity.

It is entirely possible that some, or even all, of my tenants make more money than I do. I actually wouldn't be surprised if that were the case. That is irrelevant. Nobody proposes that people who make more money should have to pay more than everyone else for food or furniture or computers or anything else. If someone who can afford a bigger place or one in a better location, and chooses not to (to save money to buy their own place, or any other reason), that's their choice.

All rent control does is say that I can't arbitrarily kick people out of their home just so I can make more profit than I am already making, nor arbitrarily jack up the price from what we originally agreed to, just because silicon valley hired a bunch of people from out of state.

One last thing: I am opposed to building more housing too.
There is a reason I have never lived in San Francisco, and it isn't just the cost of housing. There are 17,000 humans per square foot there (10 times the density of Richmond). As a result the city has 24 hour gridlock, $50 per day parking garages, and an ocean of garbage is cleaned off the street every day. For all the negative reputation Richmond has, San Francisco's crime rate is higher.
It has been found by researchers that the single biggest variable in crime rate is population density. The more people, the worse life.
Instead of trying to accommodate every single person from out of the area who wants to live here - either by pricing out existing residents or building infinitely more housing, what if we simply *don't* accommodate all the new people who want to move in? Demand will be high - and go partially unfulfilled - and that's ok.
« Last Edit: September 24, 2016, 09:32:02 AM by Bakari »

alsoknownasDean

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Re: Landlord Who Supports Rent Control
« Reply #1 on: September 24, 2016, 02:25:16 AM »
I've wondered with Bay Area rents being so high, why there hasn't been a construction boom? Surely there's a huge incentive to build a shitload of new apartments/condos?

Increasing supply to meet demand and all of that.

Blackout736

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Re: Landlord Who Supports Rent Control
« Reply #2 on: September 24, 2016, 04:57:07 AM »
"There are 17,000 humans per square foot there"

Have to build pretty high to accommodate that.

Rent control turns good land lords into slum lords.  In this case, you have a great disincentive to keep your current tenant because if they move out, you can increase your rent to market.  If you cannot raise rent to market between tenants, you have no incentive to put any money into upgrading the building, beyond making sure the roof doesn't fall in and the foundation crumble.  Depending on how it is implemented, rent control also leads to a housing shortage in those areas- If rent is incredibly inexpensive relative to the rate the market is willing to pay, more people will want to live there making difficult to impossible to move / find housing there.  If you increase the rent to market levels, there will be less demand for the housing, making it easier for someone to move to the area, assuming that he / she values living in that location more than the rent paid.

human

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Re: Landlord Who Supports Rent Control
« Reply #3 on: September 24, 2016, 05:50:14 AM »
Ontario has a limit on how much rent can increase and I don't think it's falling apart. The landlord can apply to raise it if they have actually made improvements.

I'm not sure I agree that population density is the complete bane of civilization, if planned properly it can be quite efficient in terms of services. BIG IF there!

Now I'm sure some landlords in Ontario will come on in here and say the limit on rent increases (which they knew about before getting into the business) are just horrible.

Paul der Krake

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Re: Landlord Who Supports Rent Control
« Reply #4 on: September 24, 2016, 06:19:36 AM »
I respectfully disagree with the premise that renters have a right to remain in their homes because they were here first. There are mechanisms in place in secure a foothold in the property market- buying your home. Nobody has an inherent right to live in one of the most sought-after cities in the world by virtue of getting in first at a price that suits them.

For such a rent control scheme to be successful, it needs to be enforced uniformly across a wide geographic area. The United States is a patchwork of jurisdictions where competing political forces zig and zag every day. You can't have rent control in one neighborhood without having some severe market distortions rippling across the nearby areas.

Bakari

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Re: Landlord Who Supports Rent Control
« Reply #5 on: September 24, 2016, 09:11:50 AM »
Rent control turns good land lords into slum lords.  In this case, you have a great disincentive to keep your current tenant because if they move out, you can increase your rent to market.
True.  Which is why it has to always be coupled with a "just cause" eviction policy.


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If you cannot raise rent to market between tenants,
I've never heard of any version where you couldn't.  Certainly none of the ones in the Bay Area, nor the ones proposed for my city, have that restriction.  Furthermore new construction is always exempted, and usually even all SFRs.


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you have no incentive to put any money into upgrading the building,
There is also an exemption for if the landlord spends a certain amount on repairs, maintenance, or needed upgrades (like to meet updated codes).  I believe it is in terms of a percent multiplier of the rent.


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Depending on how it is implemented, rent control also leads to a housing shortage in those areas- If rent is incredibly inexpensive relative to the rate the market is willing to pay, more people will want to live there making difficult to impossible to move / find housing there.
No, because (as mentioned above), landlords CAN raise rent between tenants.  That means anyone moving into the area (or even moving between locations) if faced with market rents.


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If you increase the rent to market levels, there will be less demand for the housing, making it easier for someone to move to the area, assuming that he / she values living in that location more than the rent paid.
If that were really the case, then the places with the highest rents wouldn't also be the places with the fastest growing populations! 
Though any degree to which its true is why I am ok with market rate supposedly increasing faster under rent control (because people are supposedly less inclined to leave, making for a shortage - in reality relatively low rent for their area rarely stops people from moving out of state, and if they move to a new house in the same area no new housing is available)






Bakari

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Re: Landlord Who Supports Rent Control
« Reply #6 on: September 24, 2016, 09:30:48 AM »
I respectfully disagree with the premise that renters have a right to remain in their homes because they were here first. There are mechanisms in place in secure a foothold in the property market- buying your home.
Well, we will probably never agree fully on that one... but, see, if we didn't treat the basic human necessity of having a space in which to exist as a for profit commodity, allowing one person to "own" not only their own property but also property that other people live on, then buying a home would not be so ridiculously expensive.
Being a "landlord" is a hold over from medieval Europe, lords and peasants and such, where a person is assumed to be an important and worthy person by virtue of having inherited land.  I get into that more in this log post: http://www.randomthoughts.fyi/2014/04/free-market-vs-capitalism-market.html







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Nobody has an inherent right to live in one of the most sought-after cities in the world
up to there I totally agree with you!  Hence my being against building infinitely more housing to try to keep market rates low for all the new transplants.  If it were up to me, in addition to the border wall to the south, we'd have one to the North and East too, and all the people from Kansas and Ohio and everywhere else would have to submit an application and wait until someone else moves out of the state before they could move in.  As a bonus to the rest of the county, they stop losing all their young motivated talent.


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by virtue of getting in first at a price that suits them.
I can't think of any good analogies here.  Having your car payments double because of "market rates" in your last year of financing would be sort of similar, but then there are cheaper alternatives to buying new, and a car isn't a basic life necessity anyway.  Having the price of tap water double would be similar in terms of being a basic necessity, but it isn't so expensive to begin with that nearly everyone needs to either rent it or take out a loan to buy it, and there certainly aren't areas where buying it costs 100 thousand dollars up front and half a million all together.  Being evicted from your home is kind of a big deal.  If you have a family, and a job, and friends, and your kids have friends, and then one day you have to move over 100 miles away because the guy who owns your house decides he wants even more unearned income?
Sure, that's how are system is set up, but really doesn't seem ethical to me.

Quote
For such a rent control scheme to be successful, it needs to be enforced uniformly across a wide geographic area. The United States is a patchwork of jurisdictions where competing political forces zig and zag every day. You can't have rent control in one neighborhood without having some severe market distortions rippling across the nearby areas.
True, which is why my city, which is a bit of an outlier from the San Francisco / Oakland / Berkeley core  is considering it.
However, I don't think its really necessary in, say Memphis, where a similarly sized apartment is almost $4000 less expensive per month than SF (a factor of about 6 1/2)

Cathy

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Re: Landlord Who Supports Rent Control
« Reply #7 on: September 24, 2016, 11:24:06 AM »
The fact is I am making unearned income. No one has any right to claim to be entitled to unearned income. ...

This argument is a classic instance of the logical fallacy of petitio principii, assuming that which is to be proven. Contrary to your assertion, the actual "fact" is that "the People of the State of California" (CA Constitution, Preamble) have determined that the owner of a fee simple interest in real property is generally entitled to convey to another person a leasehold interest in that property and to collect rents therefrom. See, e.g., Howard v. County of Amador, 220 Cal App 3d 962, 971 (Ct App 1990) ("the enjoyment of [fee simple] property may be divided temporally through the creation of an ... estate for years"); Tenhet v. Boswell, 18 Cal 3d 150, 159 (1976) (joint owner had "the right to lease" the property to the extent of her own interest in the property).

Of course, the right to enjoy the property (including by leasing it out) is subject to any valid restrictions on that right, including, for example, a requirement to pay certain taxes, or a requirement to limit rent increases to certain annual ratios ("rent control"). However, in the absence of rent control, and subject to any other relevant laws, the owner of property is indeed "entitled to unearned income" derived from leasing out that property at whatever rates have been agreed between the landlord and tenant. That's the "fact" of the status quo.

Your argument is literally:

1. I say that no one has any right to claim to be entitled to unearned income.
2. Therefore, no one has any right to claim to be entitled to unearned income.

That argument is unpersuasive.


Nobody proposes that people who make more money should have to pay more than everyone else for food or furniture or computers or anything else. ...

Actually, most people in the United States propose such a system -- it's generally referred to as "income tax". In particular, section 1 of the Internal Revenue Code establishes a system under which citizens and residents of the United States must pay different amounts for the same services, based in large part on how much money they earn. In effect, people who earn more money in a given taxable year must in turn generally pay more money for the privilege of being a citizen or resident of the United States. Since money is fungible, the income tax system is equivalent to charging people more for food, furniture, computers, housing, and almost everything else, based on their level of income.
« Last Edit: September 24, 2016, 11:39:34 AM by Cathy »

ender

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Re: Landlord Who Supports Rent Control
« Reply #8 on: September 24, 2016, 03:07:47 PM »
Why do you feel people have a right to live anywhere they want?

Bakari

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Re: Landlord Who Supports Rent Control
« Reply #9 on: September 24, 2016, 06:29:28 PM »
The fact is I am making unearned income. No one has any right to claim to be entitled to unearned income. ...

This argument is a classic instance of the logical fallacy of petitio principii, assuming that which is to be proven. Contrary to your assertion, the actual "fact" is that "the People of the State of California" (CA Constitution, Preamble) have determined that the owner of a fee simple interest in real property is generally entitled to convey to another person a leasehold interest in that property and to collect rents therefrom. See, e.g., Howard v. County of Amador, 220 Cal App 3d 962, 971 (Ct App 1990) ("the enjoyment of [fee simple] property may be divided temporally through the creation of an ... estate for years"); Tenhet v. Boswell, 18 Cal 3d 150, 159 (1976) (joint owner had "the right to lease" the property to the extent of her own interest in the property).


I suppose perhaps I was unclear.  I was not using the term "entitled" as a legal term.  I meant it more in a ethical sense, the way conservatives often say that people should not feel "entitled to handouts".  Obviously if those people are getting checks from the government, they are legally entitled to it, but that is an entirely separate question.
Now, if you are trying to use a court case to prove what is ethical, I would say that is an unpersuasive argument.  By that standard Dred Scott v. Sandford "proves" that slavery is valid, and the Constock Act proves that contraceptives are immoral.


Laws are things made up by humans, with all their various cultures and fads, assumptions, biases, and personal motives.  While they are the best system we have to try to organize a huge society, they do not define right and wrong.

Quote
Your argument is literally:

1. I say that no one has any right to claim to be entitled to unearned income.
2. Therefore, no one has any right to claim to be entitled to unearned income.


Not because I say so, but rather because it is self-evident from the meaning of the words.
Entitled: believing oneself to be inherently deserving of privileges or special treatment.
Earn: gain or incur deservedly in return for one's behavior or achievements.


Without invoking some sort of natural order handed down by God, like the Indian caste system or European nobility, how could one justify the idea that some particular group of people is entitled to anything they did not earn?


Bakari

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Re: Landlord Who Supports Rent Control
« Reply #10 on: September 24, 2016, 06:31:47 PM »
Why do you feel people have a right to live anywhere they want?


Who is this question directed to?
I only recall seeing someone explicitly say they don't, which I agree with.
That's why, while I support rent control (i.e. not uprooting people from their existing home), I do not support the building of  "affordable housing" (generally meaning subsidized by either the government, or the developer)

Gronnie

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Re: Landlord Who Supports Rent Control
« Reply #11 on: September 24, 2016, 09:39:31 PM »
Not getting MORE money is not the equivalent of having money taken away.

If there are people willing to pay more, then that is exactly what it is.

I'd love to see a logical argument why it isn't.

NorCal

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Re: Landlord Who Supports Rent Control
« Reply #12 on: September 24, 2016, 09:55:57 PM »
I've wondered with Bay Area rents being so high, why there hasn't been a construction boom? Surely there's a huge incentive to build a shitload of new apartments/condos?

Increasing supply to meet demand and all of that.

It varies somewhat city to city, although the general reason is always similar.  Various state and local laws have made construction incredibly difficult and expensive.  In most cities, you have to acquire property and literally go through years and many thousands of dollars (millions for big developments) before the city tells you whether you're allowed to build or not..  Most cities are actually just saying "no" to any new development that would be dense enough to put a dent in the local housing crisis.

San Francisco is particularly bad.  SF has mandates for construction of "Below Market Cost" units for every regular housing unit built.  Also, city hall is organized so that any local activist group can stop construction in its path as long as they have the right connections at city hall.  This has led to a practice of developers having to effectively buy-off the local "no construction" protesters.

I once saw an estimate that basic land acquisition, permitting, and other city hall costs were over $500K per new housing unit built.  I don't know how accurate this is, but it certainly explains why the only new construction is luxury condos.

I once tried to build a house in the east-bay, and I would have easily had $100-$200K in costs related to permitting, sewer connections (this was the biggy), and other inspections.

NoNonsenseLandlord

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Re: Landlord Who Supports Rent Control
« Reply #13 on: September 25, 2016, 09:02:01 AM »
Rent Control limits entry into the housing market.  Once you have a property, you have a tenant for life.  Tenant turnover, and vacancy, is your number one expense as a landlord.

Yes, rent control is great, once you are established.

Bakari

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Re: Landlord Who Supports Rent Control
« Reply #14 on: September 25, 2016, 09:14:34 AM »
Not getting MORE money is not the equivalent of having money taken away.

If there are people willing to pay more, then that is exactly what it is.

I'd love to see a logical argument why it isn't.

Say you are 10.  You have two pieces of candy.  Someone is willing to give you two more pieces of candy, but your parent says "no, you have enough".
You still have two pieces of candy. 
Alternatively, say you have two pieces of candy.  Your parent says all candy is bad for you, and takes them both and throws them away.
Now you have zero pieces of candy.

I'm kind of at a loss of how to provide a logical argument that zero is not equivalent to two.

Wait, I know, how about this: x+0 =! x-1

What you could hypothetically get is not a variable in that equation.
What other people around you are getting isn't either.
That's like the kid who's sibling gets three pieces of candy, and they say "thats not fair! why does he get 3?".
What your brother gets has nothing to do with you.  You still have what you have.


Rent Control limits entry into the housing market.  Once you have a property, you have a tenant for life.  Tenant turnover, and vacancy, is your number one expense as a landlord.

Yes, rent control is great, once you are established.

I like the spin you put on it there!?  Most of the objections are surrounding not being able to get rid of tenants, or being able to charge them more which would increase your bottom line, but you raise a good point about how if you have a good tenant that you don't want to get rid of, you save the money that vacancy would cost you. 
Of course, as a landlord you could just make the choice to not increase rents, which would have the same effect...

I'm unclear on what you mean by limiting entry into the market - do you mean for renters or owners?  It certainly does for renters, but because your next sentence is "once you have a property" I get the impression you are referring to buying.  The more typical argument is that no one would want to buy investment property in an area with rent control because of the hassles, which in theory would make it easier to buy.

If I'm interpreting you correctly, could you explain that?
« Last Edit: September 25, 2016, 10:56:37 AM by Bakari »

Paul der Krake

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Re: Landlord Who Supports Rent Control
« Reply #15 on: September 25, 2016, 09:58:16 AM »
up to there I totally agree with you!  Hence my being against building infinitely more housing to try to keep market rates low for all the new transplants.  If it were up to me, in addition to the border wall to the south, we'd have one to the North and East too, and all the people from Kansas and Ohio and everywhere else would have to submit an application and wait until someone else moves out of the state before they could move in.  As a bonus to the rest of the county, they stop losing all their young motivated talent.
Quote
I'm not sure if you're serious or joking. Freedom of movement within the United States is a right guaranteed by the Constitution, and virtually the same in every jurisdiction worth living in. By restricting movement you are opening a can of worms larger than the Grand Canyon.



Another argument that just came to me is another example of the law of unintended consequences. Let's say that I land a job in San Francisco as a software developer, and my wife and I decide to move there. Rent control was on the ballot the previous election cycle and the entire Bay Area is now under rent control. For illustration purposes, let's just say that a 2 BR apartment in one of the most desirable areas is now $2,000/month. Now I'm a highly paid professional with a household income pushing 250k+, and lots of capital in the bank. Let's say that the same apartment would be renting for $4,000/month without rent control.

Do we:
1) Wait patiently for a current tenant to move out or die, and hope we are selected among the 1337 other applicants, or
2) Offer $20,000 to a current low-income tenant to move out and reboot their lives in Kansas, along with a $20,000 bribe to the landlord to make sure we get selected?

For a low $40,000 one time payment, I secure a dwelling well under "market price" with a virtually unlimited renew option. Sure that makes me a scumbag, but I get to live in one of the most desirable places on earth. Heck, make that a $200,000 payment, it's still worth it if I plan on staying over 10 years. $100,000 buys a very nice life in Kansas and I could even argue that I am the previous tenant's lottery ticket to the middle class. Now you could pass laws that make this passable of very high fines, but I will find another way to get what I want because my money buys influence. This strikes me as much more unfair than letting the market dictate prices.

Bakari

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Re: Landlord Who Supports Rent Control
« Reply #16 on: September 25, 2016, 10:55:28 AM »

I'm not sure if you're serious or joking. Freedom of movement within the United States is a right guaranteed by the Constitution, and virtually the same in every jurisdiction worth living in. By restricting movement you are opening a can of worms larger than the Grand Canyon.


I'm half joking.  Of course I know it could never happen! 
But the size of units we choose for political boundaries is an entirely arbitrary accident of history.
Most nations are closer to the size of our "states".  Why is it any more or less reasonable to restrict movement by "national" boundaries?  Would you propose allowing unrestricted immigration from all countries?  What would happen to both our economy and those of "3rd world" nations if every single motivated citizen of those places all came to the US?




Quote
Another argument that just came to me is another example of the law of unintended consequences. Let's say that I land a job in San Francisco as a software developer, and my wife and I decide to move there. Rent control was on the ballot the previous election cycle and the entire Bay Area is now under rent control. For illustration purposes, let's just say that a 2 BR apartment in one of the most desirable areas is now $2,000/month. Now I'm a highly paid professional with a household income pushing 250k+, and lots of capital in the bank. Let's say that the same apartment would be renting for $4,000/month without rent control.

Do we:
1) Wait patiently for a current tenant to move out or die, and hope we are selected among the 1337 other applicants, or
2) Offer $20,000 to a current low-income tenant to move out and reboot their lives in Kansas, along with a $20,000 bribe to the landlord to make sure we get selected?

For a low $40,000 one time payment, I secure a dwelling well under "market price" with a virtually unlimited renew option. Sure that makes me a scumbag, but I get to live in one of the most desirable places on earth. Heck, make that a $200,000 payment, it's still worth it if I plan on staying over 10 years. $100,000 buys a very nice life in Kansas and I could even argue that I am the previous tenant's lottery ticket to the middle class. Now you could pass laws that make this passable of very high fines, but I will find another way to get what I want because my money buys influence. This strikes me as much more unfair than letting the market dictate prices.


I could see your point if that was in fact how rent control worked, but it isn't.
"Rent control was on the ballot the previous election cycle and the entire Bay Area is now under rent control. For illustration purposes, let's just say that a 2 BR apartment in one of the most desirable areas is now $2,000/month. "

If rent control was on the ballot in the last election cycle, it would have (close to) zero effect on current rates.
Rent control does not dictate what a landlord can charge in a dollar amount, nor is there any circumstance in which it makes you lower existing rents.  It just limits the amount you can raise existing rent any given year.
Unless the market actually went up 100% within a year or two, then your example simply could not possibly happen.
(for reference, the average in the Bay Area is 5-10% - 2-5 times as much as inflation, however still a very far way from the 100% in your example)

The only way the apartment would rent for $2000 within an "election cycle" of rent control passing is if the market value was $2000 at the time the measure passed.  If the market value was $4000 at the time, the rent would continue to be $4000. 


Regarding scenario one; a real life example: Most people don't particularly want to live in trailer parks... but some people do.
In the city of El Cerrito, (next city over from mine), there is one of the nicest urban trailer parks I've ever seen.  The rents are low (rent control does not apply if a person is renting land but living in a trailer that they own, the rents are just naturally low), the city and neighborhood are very nice - and the park is small and has no where to expand.
I called several times over several years, and they always said to try again in a few months, as not only did they have no vacancies, but the waiting list was full.
They could have raised the rent, both legally and from market forces, however they valued good stable quiet always-pay-on-time tenants to the riffraff you often get in urban trailer parks.
Sucked for me, but that's kind of just too bad.

Regarding scenario two: that does happen under rent control, its legal, and I see no problem with it.  For one thing in your scenario that current low-income tenant has a choice about whether to take the money and reboot their life, as opposed to just being evicted by force.
For another thing, they get that $20,000 which they would not have gotten otherwise - enough for a downpayment for their own house in Kansas.

" I secure a dwelling well under "market price" "
No, you are still going to be paying that $4000 market rent - under rent control landlords get to raise rent to current market levels (or whatever they want) in between tenants.
Landlords tend to be the ones offering that $20,000 to low-income tenants to move out (so that they can legally raise rent), they are unlikely to accept your bribe if it is contingent on maintaining the current below market rent.
« Last Edit: September 25, 2016, 11:02:38 AM by Bakari »

NoNonsenseLandlord

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Re: Landlord Who Supports Rent Control
« Reply #17 on: September 25, 2016, 11:32:21 AM »

Rent Control limits entry into the housing market.  Once you have a property, you have a tenant for life.  Tenant turnover, and vacancy, is your number one expense as a landlord.

Yes, rent control is great, once you are established.

I like the spin you put on it there!?  Most of the objections are surrounding not being able to get rid of tenants, or being able to charge them more which would increase your bottom line, but you raise a good point about how if you have a good tenant that you don't want to get rid of, you save the money that vacancy would cost you. 
Of course, as a landlord you could just make the choice to not increase rents, which would have the same effect...

I'm unclear on what you mean by limiting entry into the market - do you mean for renters or owners?  It certainly does for renters, but because your next sentence is "once you have a property" I get the impression you are referring to buying.  The more typical argument is that no one would want to buy investment property in an area with rent control because of the hassles, which in theory would make it easier to buy.

If I'm interpreting you correctly, could you explain that?

Once a landlord buys a property, and rent control is established after, no new owners want to buy.  There becomes a shortage of housing, and values go up.  Look at the values of property where there is rent control.  NYC is a prime one.

If you understand how to screen tenants, it is easy to get a good one.  If you do not understand that fact, you should not be in the landlord business.  The new tenants options are limited wen they move out, as any new apartment is adjusted to market.  Your place, which they live in, is only adjusted by inflation.  Since you are making money, you are not allowed to get greedy, but will have a permanent income stream.

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Re: Landlord Who Supports Rent Control
« Reply #18 on: September 25, 2016, 12:24:53 PM »

Rent Control limits entry into the housing market.  Once you have a property, you have a tenant for life.  Tenant turnover, and vacancy, is your number one expense as a landlord.

Yes, rent control is great, once you are established.

I like the spin you put on it there!?  Most of the objections are surrounding not being able to get rid of tenants, or being able to charge them more which would increase your bottom line, but you raise a good point about how if you have a good tenant that you don't want to get rid of, you save the money that vacancy would cost you. 
Of course, as a landlord you could just make the choice to not increase rents, which would have the same effect...

I'm unclear on what you mean by limiting entry into the market - do you mean for renters or owners?  It certainly does for renters, but because your next sentence is "once you have a property" I get the impression you are referring to buying.  The more typical argument is that no one would want to buy investment property in an area with rent control because of the hassles, which in theory would make it easier to buy.

If I'm interpreting you correctly, could you explain that?

Once a landlord buys a property, and rent control is established after, no new owners want to buy.  There becomes a shortage of housing, and values go up.  Look at the values of property where there is rent control.  NYC is a prime one.

If you understand how to screen tenants, it is easy to get a good one.  If you do not understand that fact, you should not be in the landlord business.  The new tenants options are limited wen they move out, as any new apartment is adjusted to market.  Your place, which they live in, is only adjusted by inflation.  Since you are making money, you are not allowed to get greedy, but will have a permanent income stream.

The problem with this is good tenants can evolve into bad tenants and under rent control it is difficult to get them out.  Every eviction is challenged as being retaliatory or an attempt to bring the rent up to market.  It can take months or years to get the tenant out.  Meanwhile, your property is destroyed and your other tenants are not happy.

Gronnie

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Re: Landlord Who Supports Rent Control
« Reply #19 on: September 25, 2016, 02:50:20 PM »
Not getting MORE money is not the equivalent of having money taken away.

If there are people willing to pay more, then that is exactly what it is.

I'd love to see a logical argument why it isn't.

Say you are 10.  You have two pieces of candy.  Someone is willing to give you two more pieces of candy, but your parent says "no, you have enough".
You still have two pieces of candy. 
Alternatively, say you have two pieces of candy.  Your parent says all candy is bad for you, and takes them both and throws them away.
Now you have zero pieces of candy.

I'm kind of at a loss of how to provide a logical argument that zero is not equivalent to two.

Wait, I know, how about this: x+0 =! x-1

What you could hypothetically get is not a variable in that equation.
What other people around you are getting isn't either.
That's like the kid who's sibling gets three pieces of candy, and they say "thats not fair! why does he get 3?".
What your brother gets has nothing to do with you.  You still have what you have.

This whole argument doesn't make any sense. You are basically saying what you could get doesn't count, because you say so.

And the argument about the siblings makes even less sense because it isn't even in any way related.

Bakari

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Re: Landlord Who Supports Rent Control
« Reply #20 on: September 25, 2016, 03:37:14 PM »
Once a landlord buys a property, and rent control is established after, no new owners want to buy.  There becomes a shortage of housing,


This would only be true if landlords were building their own buildings, which is rarely the case.  Most landlords buy a house, either one which has existed for years or was built by developers.  In that case, whether investors want to buy or not, the same housing is there.
If a landlord did build new housing, they would be exempt from rent control, making it a moot point.


If investors don't want to buy existing homes, that makes a relative surplus, which should lower values.  That would make it cheaper for an owner-occupier to buy (which I see as a positive outcome).





Quote
and values go up.  Look at the values of property where there is rent control.  NYC is a prime one.


But perhaps the cause and effect is the opposite of what your proposing: both purchase prices and rents become high in areas which are very popular, and especially when there is limited room in which to expand (for example, both SF and Manhattan are surrounded by water, and therefor can never get any bigger, yet they are more sought after to live in than the surrounding metro areas).
Rent control is unnecessary in markets where supply meets or exceeds demand, and therefor it only gets instituted in those areas where rents where already rapidly increasing.  Since it does not restrict rental rates to a dollar amount, or increases in between tenants or for new construction, rents will continue to rise rapidly, just as they did before rent control.  At the same time, not because of cause and effect but because of the correlation of the area's popularity, purchase prices also rise.

Quote
If you understand how to screen tenants, it is easy to get a good one.  If you do not understand that fact, you should not be in the landlord business.  The new tenants options are limited wen they move out, as any new apartment is adjusted to market.  Your place, which they live in, is only adjusted by inflation.  Since you are making money, you are not allowed to get greedy, but will have a permanent income stream.
Agreed.  Hence my entry into the game. 
If you have pointers on screening tenants, I would be very happy to hear them!  I have all good tenants now, but they came with the place, I just got lucky.  None show any signs of leaving any time soon, but I'm sure they will some day.



This whole argument doesn't make any sense. You are basically saying what you could get doesn't count, because you say so.


No, like I pointed out, reality says so:
x+0 =! x-1
x plus zero does not equal x minus one.
Would you say the courts and police are taking money away from you because they don't allow you to rob a bank, and robbing a bank could hypothetically make you a million dollars?
Would you say your boss is taking away money from you for not giving you a 100% pay increase?
Would you say the companies you have stock in are taking away money from you if they don't make monthly dividends?

There is a difference between what actually is and what could be not "because I say so", but because this is the real world, not all possible fantasy worlds.

...I guess, unless maybe you believe in some of the literal interpretations of certain quantum physics experiments, like the double slit particle wave thing, or the quantum entanglement quandary

I guess also there are those who equate birth control with abortion (and abortion with murder, therefor birth control with murder) because a potential person could have hypothetically existed, but I think most of them would not argue that preventing someone from being born is not literally the equivalent of killing someone who already exists.

Its actually you whose whole argument seems to be:
"I consider the amount of money I could potentially get in the future as the amount I actually have right now, therefor preventing me from getting more money in the future is taking away money from me.  Because I say so."
Come to think of it, that sounds very similar to Donald Trump Accounting!
http://forum.mrmoneymustache.com/welcome-to-the-forum/robots-and-their-impact-on-the-future/msg1213631/#msg1213631
« Last Edit: September 25, 2016, 03:39:58 PM by Bakari »

Bakari

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Re: Landlord Who Supports Rent Control
« Reply #21 on: September 25, 2016, 03:55:42 PM »
The problem with this is good tenants can evolve into bad tenants and under rent control it is difficult to get them out.  Every eviction is challenged as being retaliatory or an attempt to bring the rent up to market.  It can take months or years to get the tenant out.  Meanwhile, your property is destroyed and your other tenants are not happy.


I agree that can be an annoying, and even potentially expensive problem.
I've been in some way involved with at least 4 evictions (as a property manager, as the friend who served papers, as a security guard called in to testify against the tenants, and as the neighbor who was requesting the eviction).
In no case did it actually go to trial - that landlord either paid them to leave, or they settled outside of court (in the court building negotiation room), usually for something like not paying back rent plus having 30 days to find a new place.
I don't know what the statistics are overall, but the eviction lawyer my friend talked to said that the majority of cases go one of those two ways.


Despite that, landlords still make a whole lot of money overall, even in rent control cities.


I feel like more to my original (moral) point, in America people are supposed to get the benefit of the doubt, be assumed innocent until proved guilty, in a court of law, by a jury of peers.
That's the standard we use before the life disruption of jail. 
If someone is supposedly breaking lease or committing crimes or some other eviction worthy thing, shouldn't all citizens be entitled to a similar minimum standard before the potentially life disrupting event of being evicted in an area where they will not be able to afford a new, market rate, place?
I mean, if it turns out they really were dealing drugs or having loud parties twice a week until 3am or whatever, then sooner or later (and it may be months, but very rarely years), they are going to get evicted, and in that case F- them, I don't give a flying **** if they have trouble finding a new place to live,
but the mere fact of owning property hardly qualifies someone as an ethical and impartial judge of who deserves that fate.


So, just like if you own a business that gets robbed you may have to wait for a trial before you get restitution, thats just another part of the cost of doing business.  Sure, it would be great if, as a store owner, you could just cut off the hand of a shoplifter, take back your stuff he stole, and keep his wallet as a fine for your trouble, but would it really be worth it to live in that world?  What about when the shop owner is 100% sure, but turns out to be wrong?  What if you happen to be the falsely accused? 


Similarly, what if you were the one whose neighbors called the police with false reports of drug dealing just because they don't like you.  Wouldn't you want to have a chance to present a defense before being forced to move?

Gronnie

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Re: Landlord Who Supports Rent Control
« Reply #22 on: September 25, 2016, 05:06:48 PM »

1. Would you say the courts and police are taking money away from you because they don't allow you to rob a bank, and robbing a bank could hypothetically make you a million dollars?

2. Would you say your boss is taking away money from you for not giving you a 100% pay increase?

3. Would you say the companies you have stock in are taking away money from you if they don't make monthly dividends?

There is a difference between what actually is and what could be not "because I say so", but because this is the real world, not all possible fantasy worlds.

1. Does not apply, not relevant. Robbing a bank is not even remotely the same as having a free market economy.
2. Does not apply, in this case if I can get more money I am free to find another job. Same does not apply for a landlord finding a new tenant that is willing to pay more under rent control.
3. Does not apply, paying a dividend comes out of the stock price. If I want that money I can just sell the stock.

It's not hypothetical extra money, it is real extra money that the landlord is being prevented from getting by not being able to bring in a tenant willing to pay more money or being able to charge the current tenant market rent at the end of contract period.

205guy

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Re: Landlord Who Supports Rent Control
« Reply #23 on: September 25, 2016, 07:55:58 PM »
Thank you Bakari for being speaking out about this, both in your local politics and here on the forum, especially as a landlord. I pretty much agree with your point of view, though I'd agree some of your analogies are flawed. The best I can come up with is that it's not about money or markets, it's a social decision enshrined in law. In some parts of the country you cannot buy alcohol, or if you're a store owner, you cannot sell it--and thus make more profit--in others you can. Elected representatives have decided the community is better off restricting alcohol or making it harder to buy. Same with rent control, in some parts of the country, a landlord can reap all profits from rising demand for rentals, and in rent controlled areas, representatives have passed laws saying it's better for the community if they don't.

I've lived in the Bay Area before always as a renter, but never under rent control. Neverheless, my landlord didn't raise the rent on me, then again, I sought out undervalued locations that were less desireable to most of the market. But I could see the many problems the area was having with limited housing, in-migration, and desireable neihborhoods where the local population was getting pushed out. The multiple tech booms were driving rental prices sky high, and I feel the rent control is totally justified.

Yes, the people who arrived first, struggled in their own time, and established a thriving and interesting community deserve to have that protected so they can stay. They should not be pushed out by newcomers who happen to work for a booming industry 30-miles away, and who want to live in an artsy and vibrant community they have not created. Do they even realize they would change the nature of the neighborhood if they all moved in? And yes, I'm referring to the Google buses--which I think contributed unfairly to the rent and real-estate pressure in San Francisco proper.

Building new housing, mostly higher density, is a mixed bag. There is actually a fair amount of it in the Bay Area, but it tends to be out of the way and more sterile (just think of park Merced or Santana row). People want to move into the nice little neighborhoods, and they would if they could outbid the current tenants. People need to move into the newer places and make their own communities around them. Then there is the problem of the towns who welcome all the big corporations not having enough housin for their employees (and not allowing new development--employers pay more taxes than property owners), and thus going to the neighboring towns. And then there is the entire issue of the service sector, which in the Bay Area essentially means the Mexican-American population. The people with cleaning and cooking jobs can hardly make ends meet because most of the Bay Area is not rent protected. They get crammed into the old and crumbling undesirable parts of town, soon to be competing with newly arrived developers. So now they drive in 2hours from Tracy or the Central Valley.

I think this is where the "walls" come in. I've seen similar sentiments when visiting Hawaii: it's very desirable, lots of people move, locals get priced out. The land areas are small and then there's no other option but to move away. For people tied to their distinct culture, this can be like exile. But it's part of the US, so anyone with mainland money can go there and speculate on real-estate (or for those without money, become a real-estate agent) and flip properties. In the small local economies, this really drives up prices and puts strain on the limited land (that they'd rather preserve for agriculture and beauty). It seemed like everyone there had an apartment over (or in) the garage, so homeowners can afford high mortgages and locals can find a small place to live--until the apartment gets airBnB'd. But unpermitted density and unregulated vacation rentals are stopgap measures that will make the issue worse in the long run. Most vacation destinations are struggling with these issues as well--I saw anti-Airbnb posters in Europe this summer (and no, I stayed in regular hotels).

Finally, no article about rent control in California would be complete without mentioning proposition 13: it is essentially property tax control (can't go up more than general inflation). So landlords who have a fixed mortgage and generally fixed cost, also have fixed taxes that can't go up even if the area booms and their property value goes up. And to think that the entire state has this, not just the areas with rent control. Note that this was passed to help elderly on fixed incomes not be taxed out of their homes.

So in the end, I agree, it should be a human right not to be priced out of one's primary residence, whether a property owner or a renter. I feel that those who fail to see this are blinded by greed. Yes, there are a lot of problems around legislating for this, but let's fix the problems, not get rid of rent control.

Paul der Krake

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Re: Landlord Who Supports Rent Control
« Reply #24 on: September 25, 2016, 08:06:09 PM »
Yes, the people who arrived first, struggled in their own time, and established a thriving and interesting community deserve to have that protected so they can stay. They should not be pushed out by newcomers who happen to work for a booming industry 30-miles away, and who want to live in an artsy and vibrant community they have not created. Do they even realize they would change the nature of the neighborhood if they all moved in? And yes, I'm referring to the Google buses--which I think contributed unfairly to the rent and real-estate pressure in San Francisco proper.
How do you determine who is contributing to the artsy character of the neighborhood?

TheOldestYoungMan

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Re: Landlord Who Supports Rent Control
« Reply #25 on: September 27, 2016, 02:00:51 PM »
Rent control causes a housing shortage which ultimately leads to higher rents and higher property values if the area is growing.

That's just a fact based on everywhere with rent control (that I've ever heard of).  I would love to see a counterfactual because I am all about affordable housing (even going so far as to always make sure I rent out extra space I have for what I consider reasonable amounts, ignoring that the local market says I could get more).  This is one of those things that is incredibly counter-intuitive, but is just demonstrably true.

It has a short term benefit that is marginally helpful to existing renters and marginally hurtful to existing landlords.

Most existing landlords are fine because they were loaning the property out at a rate that made it a worthwhile venture.  Locking that rate doesn't really hurt them as OP mentions.  Sometimes a landlord might make a mistake (particularly a new landlord) or have been renting at a "special" or "discounted" rate temporarily to a family member or something, and they end up sort of getting fucked.

So as an example with numbers, if I usually rented a house at $2,000 for the last ten years, and then my sister needed a place to stay so I rented it to her for $1400 (enough that I can still claim the deductions and so forth but not making any money), then rent control comes in, I could be looking at a decade or more until I can get the place back to profitable.  Or I might never manage it if property taxes start to run away with increasing property values (CA is wierd on this so maybe no relevant to OP's question).  There's ways to craft the specific rent control policy to mitigate these things, but the negative externalities with rent control are vast and staggering in their magnitudes.

Again, personally, I am disgusted when I see a lack of affordable housing, and it's a big reason I went into becoming a landlord myself.  I have this dream of making a modest amount of money providing decent places to live, and employing folks who otherwise might have a hard time holding down a job.  I just don't know of anywhere that has rent control and hasn't totally fucked over the people they were trying to help.

It seems like a better way to help (although it takes time) is to increase the supply of housing, dramatically and soon.  This is easy to do from the city side, particularly if you have zoning control.  And it is relatively cheap.  Borrowing or cash incentives to developers for multifamily housing, serious ones, can make it more attractive to build in a city where your plumber is going to be 2 hours late to the job because of traffic.

This article explains it pretty well: http://www.economist.com/blogs/economist-explains/2015/08/economist-explains-19

TL;DR:  Existing landlords with cashflowing properties who understand the full effect and want to make the most selfish decision possible should be 100% in favor of rent control, as it virtually guarantees plenty of tenants and solid, regular increases in rent forever, and solid, regular increases in property value.  Owning property in an area that institutes rent control is like hitting the fucking jackpot.  It isn't something that the socially conscious should favor though.  As in all things, the key to affordable housing is for everyone involved to make every effort to keep their costs as low as possible.

Bakari

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Re: Landlord Who Supports Rent Control
« Reply #26 on: September 27, 2016, 09:51:21 PM »
Rent control causes a housing shortage which ultimately leads to higher rents and higher property values if the area is growing.

That's just a fact based on everywhere with rent control (that I've ever heard of).  I would love to see a counterfactual because I am all about affordable housing ...  This is one of those things that is incredibly counter-intuitive, but is just demonstrably true.


What evidence do you have which is cause and which is effect?
Correlation does not imply causation. 
If an area grows rapidly, faster than housing can be built, either because there's really no where to build it (San Francisco, Manhattan, Honolulu, 3 of the most expensive cities in the US, are all surrounded by water), or because of zoning restrictions, or lack of funds for infrastructure, or whatever reason, then supply and demand automatically cause higher rents.
Then increasing rents motivate people to get rent control passed.


There are plenty of situations where there are price restrictions on market rates - water, power, labor (minimum wage), yet there doesn't end up being a shortage and consequent price increase.  So clearly the mere fact of a price ceiling does not lead to higher prices (with the exception of markets with only a few seller who may form an illegal cartel!)


On the other hand, in the 10 most expensive urban areas in the US, 4 (Boston, Honolulu, Philadelphia, Seattle) do not have rent control ordinances, yet remain more expensive than the rest of the country.  So clearly very high rents can happen in a popular urban area without rent control.


What sort of counter factual would you propose beyond that?

Quote
It has a short term benefit that is marginally helpful to existing renters and marginally hurtful to existing landlords.

Most existing landlords are fine because they were loaning the property out at a rate that made it a worthwhile venture.  Locking that rate doesn't really hurt them as OP mentions.  Sometimes a landlord might make a mistake (particularly a new landlord) or have been renting at a "special" or "discounted" rate temporarily to a family member or something, and they end up sort of getting fucked.

So as an example with numbers, if I usually rented a house at $2,000 for the last ten years, and then my sister needed a place to stay so I rented it to her for $1400 (enough that I can still claim the deductions and so forth but not making any money), then rent control comes in, I could be looking at a decade or more until I can get the place back to profitable.
As I mentioned before, under rent control you can always (at least every manifestation I've ever heard of) raise rent to whatever market will bear between tenants.  So this scenario is totally unrealistic and couldn't happen.  Unless of course the sister stayed there 10 years, but in that case you probably wouldn't have evicted her anyway.  As soon as she is back on her feet and finds a place of her own, you go back to charging whatever then market rent is (probably even more than 2000 by then).


Quote
  Or I might never manage it if property taxes start to run away with increasing property values (CA is weird on this so maybe no relevant to OP's question).
True.  Prop 13 does hurt our school system a bit, since they are funded primarily by property taxes, and those don't keep up with market (again - only until a sale occurs, at which point it reverts to new market price)



Quote
It seems like a better way to help (although it takes time) is to increase the supply of housing, dramatically and soon.
There is plenty of housing.
Its just in Illinois, West Virginia, Connecticut, Mississippi, Maine, and Vermont, as well as Reading, New Haven, South Bend, Toledo, Philadelphia, Minneapolis, Albany, Hartford, Syracuse and Akron.
All of these places the population is shrinking.


This whole housing cost issue is because of the fact that everyone all over the country wants to move to the coasts, and there simply isn't room for the entire 3 million square mile country to fit in the 68 square miles of SF and Manhattan.

doug111

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Re: Landlord Who Supports Rent Control
« Reply #27 on: September 27, 2016, 11:19:51 PM »
[taken from my blog, which in turn was taken from a social media post.  Not directly mustacian related in the strictest sense, except that since I bought this place it has become my primary source of income, and is what allowed my to successfully become FI]

[Background - the city council of my town, Richmond CA, has had a very heated political debate for a couple years now over whether or not to institute rent control.
Richmond is currently one of the more affordable pockets in the San Francisco Bay Area, especially for being close enough to the center to have its own BART stop, but like rents everywhere in this popular and rapidly growing area, they are climbing fast.
With rent control measures, landlords would only be able to raise rents they charge by a certain percentage (generally close to inflation levels) each year, and could only evict tenants if those tenants actually did something wrong (or if the landlord wants to move in), not just as a way to get new tenants to pay higher rent (rents can be increased between tenants, assuming they move out voluntarily or are evicted for a legitimate reason).

In the public discourse around the issue, those against it are constantly making the claim that it would "hurt small-time landlords".
I posted the following to a couple neighborhood discussion groups on the topic:

Not that any one cares about one random individual's opinion, nor that they should...
...but since so many who talk about the subject feel entitled to speak on my behalf, I just wanted to set the record straight.
I grew up in Richmond, and I live here now. I worked for the downpayment money for our triplex home from scratch, on an ordinary working class salary (averaging around 20k a year). I was able to save money by living in trailer parks most of my adult life.

Today I am a "small time" landlord. I own just a couple of units, which share the same land as my own home is on. I put a lot of money and time and work into upgrading it and making it a nice place for my tenants to live, and I still have a giant mortgage on it.

And there is absolutely no way I could honestly claim that rent control would "hurt" me.

My mortgage is a fixed amount, and repairs and vacancies are reasonably predictable. I make a profit on my rentals - that's why I got them - even though I charge my tenants below "market" rent.

There is no specific dollar amount or percentage of profit that I am "entitled" to. While being a landlord does require more than zero work, so does managing a stock portfolio. The fact is I am making unearned income. No one has any right to claim to be entitled to unearned income.

Further, rent control does not require me to LOWER my existing rents.
All it does is prevent us from arbitrarily raising rents to whatever the highest bidder is willing to pay.
Not getting MORE money is not the equivalent of having money taken away.

As land holders, we are controlling a basic human necessity.
In other human necessities, for example, clean water and other utilities, the companies that control the supply are not allowed to make up whatever prices they think some people will pay. The government steps in in the form of the public utility commission, and caps what they can charge.
With the affordable care act, there are limits to how much individuals can be charged for access to basic and emergency health care. That's a human rights issue.

Living on the street, or in a park, or in a doorway, is considered a crime, so even if we wanted to pretend that was a reasonable way to live, it isn't a legitimate option in our society. That means every individual HAS to have housing. We don't need to make unlimited profit from having control over a basic human necessity.

It is entirely possible that some, or even all, of my tenants make more money than I do. I actually wouldn't be surprised if that were the case. That is irrelevant. Nobody proposes that people who make more money should have to pay more than everyone else for food or furniture or computers or anything else. If someone who can afford a bigger place or one in a better location, and chooses not to (to save money to buy their own place, or any other reason), that's their choice.

All rent control does is say that I can't arbitrarily kick people out of their home just so I can make more profit than I am already making, nor arbitrarily jack up the price from what we originally agreed to, just because silicon valley hired a bunch of people from out of state.

One last thing: I am opposed to building more housing too.
There is a reason I have never lived in San Francisco, and it isn't just the cost of housing. There are 17,000 humans per square foot there (10 times the density of Richmond). As a result the city has 24 hour gridlock, $50 per day parking garages, and an ocean of garbage is cleaned off the street every day. For all the negative reputation Richmond has, San Francisco's crime rate is higher.
It has been found by researchers that the single biggest variable in crime rate is population density. The more people, the worse life.
Instead of trying to accommodate every single person from out of the area who wants to live here - either by pricing out existing residents or building infinitely more housing, what if we simply *don't* accommodate all the new people who want to move in? Demand will be high - and go partially unfulfilled - and that's ok.
Ive always believed that the best way to get a raise as a Landlord without bothering your tenants is by paying off the mortgage.  The next one that I pay off in a few years will be around $840 a month. So after I get it paid off 100% I will get a $840 a month raise !!!!! YooHoo it pays to pay off rentals !!!!!

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Re: Landlord Who Supports Rent Control
« Reply #28 on: September 28, 2016, 09:25:02 AM »
I always believed that the best way to get a raise as a Landlord without bothering your tenants is by paying off the mortgage.  The next one that I pay off in a few years will be around $840 a month. So after I get it paid off 100% I will get a $840 a month raise !!!!! YooHoo it pays to pay off rentals !!!!!


totally! mine will be an extra $1580 - the total net will be more than I bring in from employment.  It was my early retirement plan, and I expected I could do it in 7 years instead of 30 with prepayments.  But then I accidentally discovered that I can actually make basic necessities without working even with the mortgage!  So for now I'm focusing on saving up a buffer for when I have kids and am a SAHP instead of making prepayments with extra cash

doug111

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Re: Landlord Who Supports Rent Control
« Reply #29 on: September 28, 2016, 10:28:18 AM »
I always believed that the best way to get a raise as a Landlord without bothering your tenants is by paying off the mortgage.  The next one that I pay off in a few years will be around $840 a month. So after I get it paid off 100% I will get a $840 a month raise !!!!! YooHoo it pays to pay off rentals !!!!!


totally! mine will be an extra $1580 - the total net will be more than I bring in from employment.  It was my early retirement plan, and I expected I could do it in 7 years instead of 30 with prepayments.  But then I accidentally discovered that I can actually make basic necessities without working even with the mortgage!  So for now I'm focusing on saving up a buffer for when I have kids and am a SAHP instead of making prepayments with extra cash
Go under the section on the forum "SHARING YOUR BADASSITY" and look for the article that I wrote towards the top called "    
HOW I PAID OFF MY $115,000 3O YEAR MORTGAGE IN 23 MONTHS !!!!!"   look at the ways that I knocked out my mortgage in 23 short months !!!!  By the way once you get yours paid off that $1,580 would be one heck of a rent increase or a raise !!!!! JUST DO IT !!!!! I make a payment on my CHASE BANK mortgage everyday of the week accept Sundays when they are closed. I dont care if I make a 5 dollar payment to a $2000 payment. lol

TheOldestYoungMan

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Re: Landlord Who Supports Rent Control
« Reply #30 on: September 28, 2016, 10:57:34 AM »
What evidence do you have which is cause and which is effect?
Correlation does not imply causation. 
If an area grows rapidly, faster than housing can be built, either because there's really no where to build it (San Francisco, Manhattan, Honolulu, 3 of the most expensive cities in the US, are all surrounded by water), or because of zoning restrictions, or lack of funds for infrastructure, or whatever reason, then supply and demand automatically cause higher rents.
Then increasing rents motivate people to get rent control passed.

There are plenty of situations where there are price restrictions on market rates - water, power, labor (minimum wage), yet there doesn't end up being a shortage and consequent price increase.  So clearly the mere fact of a price ceiling does not lead to higher prices (with the exception of markets with only a few seller who may form an illegal cartel!)

On the other hand, in the 10 most expensive urban areas in the US, 4 (Boston, Honolulu, Philadelphia, Seattle) do not have rent control ordinances, yet remain more expensive than the rest of the country.  So clearly very high rents can happen in a popular urban area without rent control.

What sort of counter factual would you propose beyond that?

The counter factual would be a place where rent control actually lead to affordable housing.  I agree with everything you say that rent control ought to have the effects you hope for.  It just doesn't.  And while I do enjoy a good economics discussion on all topics, the examples you give of water, power, and labor, all have their own sets of issues, but really are just fundamentally different from housing in a few key ways.

Maybe there's a way to implement rent control in a way that does lead to the desired effects.  Nobody has done it though.  It invariably benefits the property owners much more so than the potential residents.

Here's the text from wikipedia:
--------------------------
In a 1992 survey,[40] 93.5% of economists agreed with the statement that "a ceiling on rents reduces the quantity and quality of housing available". A more recent survey[41] of the economic literature found that "the literature points to a conclusion against rent control". This view is based on analysis of empirical evidence as well as the understanding generated by theoretical models.[42] Economists from differing sides of the political spectrum, such as Paul Krugman[43] and Thomas Sowell,[44] have criticized rent regulation as poor economics which, despite its good intentions, leads to the creation of less housing, raises prices, and increases urban blight. A survey of articles on EconLit regarding rent control finds that economists consistently and predominantly agree that rent control does more harm than good. The survey encompasses particular issues, such as housing availability, maintenance and housing quality, rental rates, political and administrative costs, and redistribution.[41]
---------------------------

Here's one way of looking at it.  Rent control, fundamentally, brutally, reveals the nature of the true causes of high housing costs.  It is not the landlords and property owners driving up rents.  It is the people who want to live where you want to live who are willing to spend more than you.

Rent control shifts the balance from those who have the most resources to spend (time and/or money) to those who got there first.  In neither situation was it the fault of the landlord or property owner.  So with respect to the OP's point, a landlord supporting rent control is really just saying that he/she/it is OK with letting the risk associated with occupancy shift from current tenants to potential tenants.

You who currently have a place to stay get to relax.  For now.  As long as you never need to move.  Everyone else is now at peril.

If you frame the arguments in terms of the "hapless victims" the occupants vs. the "greedy landlords" the property owners, you arrive at the fallacious conclusion that rent control reduces the cost of housing or improves its affordability.  Your enemy here is not the people who provide what limited housing is available.  It is the people who are competing with you for that housing.

The only way you can reduce housing costs in highly desirable areas is to increase the supply or decrease the desirability.  Price controls haven't worked.  It is a cause vs. correlation argument to say that they can't work, true.  But clearly there are issues with their implementation, and that should probably be resolved before just implementing it in new places and hoping for the best.

What would definitely work is offering permitting and zoning incentives to developers to build efficient housing near mass transit.  But again, the NIMBY folks (who are also the ones who benefit most from rent control) stop those things from happening.


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Re: Landlord Who Supports Rent Control
« Reply #31 on: September 28, 2016, 01:42:58 PM »
So I'm guessing that in rent controlled areas there is no such thing as a one-year lease.  So I can't decide not to rent once the contract period runs its course.  This means REALLY getting good at screening tenants because you can't kick them easily.  I don't think I'd ever invest in that silly area.

Brian

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Re: Landlord Who Supports Rent Control
« Reply #32 on: September 28, 2016, 02:02:48 PM »
Why do you feel people have a right to live anywhere they want?


Who is this question directed to?
I only recall seeing someone explicitly say they don't, which I agree with.
That's why, while I support rent control (i.e. not uprooting people from their existing home), I do not support the building of  "affordable housing" (generally meaning subsidized by either the government, or the developer)

Er... so you want a giant housing shortage then?

Without affordable housing, you lose a lot of diversity.

If you have no rent control, only people who work in a few high income industries can afford to live there.

If you have rent control, landlords only accept "perfect" tenants: income 5x rent, no pets, no negative interactions with previous landlords (ever), 800 FICO, no more than a parking ticket on their record (ever). This is because price controls leave too many people trying to buy a limited resource. Also, the landlord's incentive for intensive screening increases dramatically when leases are for life.

As a side note, I don't see much rent control impact in Richmond. In California, homes built after 1980 and single-family homes are exempt from rent control regardless of what a locality decides. Only old multi-unit properties can be included.

I suppose that rent control could discourage owners of single-family homes from converting them to 2-unit properties, but thats about it.

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Re: Landlord Who Supports Rent Control
« Reply #33 on: September 28, 2016, 06:49:12 PM »
The counter factual would be a place where rent control actually lead to affordable housing.


Nobody is claiming rent control would make overall rents drop for new people moving in, that isn't the intention.
For everyone who already had an apartment prior to gentrification, rent control provides affordable housing in every place it exists!
The point is to prevent evictions, not to make it cheap for everyone to move into the city.




Quote
Here's the text from wikipedia:
--------------------------
In a 1992 survey,[40] 93.5% of economists agreed with the statement that "a ceiling on rents reduces the quantity and quality of housing available". A more recent survey[41] of the economic literature found that "the literature points to a conclusion against rent control". This view is based on analysis of empirical evidence as well as the understanding generated by theoretical models.[42] Economists from differing sides of the political spectrum, such as Paul Krugman[43] and Thomas Sowell,[44] have criticized rent regulation as poor economics which, despite its good intentions, leads to the creation of less housing, raises prices, and increases urban blight. A survey of articles on EconLit regarding rent control finds that economists consistently and predominantly agree that rent control does more harm than good. The survey encompasses particular issues, such as housing availability, maintenance and housing quality, rental rates, political and administrative costs, and redistribution.[41]
---------------------------


Aside from the fact that "93% of economists agree" is no more inherently compelling than "84% of climate scientists agree that climate change is anthropogenic" or "4 out of 5 dentists recommend trident" - Credentials are the classic argument from authority - but more to my point: the conclusion for or against depends on the goals.  If your goals are maximizing availability, quality, and rental rates for new arrivals is the goal, the most certainly rent control doesn't further those goals.  But if your goal is stability, security, and avoiding the displacement of a cities already present long-time residents, you can't measure that goal using the same criteria.

Quote
Here's one way of looking at it.  Rent control, fundamentally, brutally, reveals the nature of the true causes of high housing costs.  It is not the landlords and property owners driving up rents.  It is the people who want to live where you want to live who are willing to spend more than you.
agreed, 100%

Quote
Rent control shifts the balance from those who have the most resources to spend (time and/or money) to those who got there first.  In neither situation was it the fault of the landlord or property owner.  So with respect to the OP's point, a landlord supporting rent control is really just saying that he/she/it is OK with letting the risk associated with occupancy shift from current tenants to potential tenants.

You who currently have a place to stay get to relax.  For now.  As long as you never need to move.  Everyone else is now at peril.


Who is this "everyone else"?  There are only really only two big categories of people who don't have a current place to stay: the homeless, and people who currently live somewhere else.  Those 3 categories include everyone.  Either you live in the city currently, you live in a different city, or you live "nowhere" (on the streets).
The homeless are not homeless due to a lack of available housing, its because of a lack of money.  Rarely is that just a few dollars short of rent, either - if that were the case it would be a simple matter of relocating to a lower cost of living area.  Most of the chronic homeless have incomes of barely above zero, frequently due to mental and/or drug issues.  That's a whole different story.  So the whole argument is irrelevant for them.
So that leaves people coming in from other cities and states and countries to make up "everyone else".
And yes, exactly as you said, I think it is better to prioritize those who "got there first" - or were born there, and in any event have established history, jobs, friends, family, etc. - over people wanting to relocate and who have the resources to do so.
It is for those people that rent control pushes rents up, and that is perfectly ok.  They can take that into consideration before making the decision to uproot their current life and relocate to somewhere that is already saturated with people.

Quote
If you frame the arguments in terms of the "hapless victims" the occupants vs. the "greedy landlords" the property owners, you arrive at the fallacious conclusion that rent control reduces the cost of housing or improves its affordability.  Your enemy here is not the people who provide what limited housing is available.  It is the people who are competing with you for that housing.
exactly!  And I don't care to cater to those people who are doing the competing.

Quote
The only way you can reduce housing costs in highly desirable areas is to increase the supply or decrease the desirability.
...
What would definitely work is offering permitting and zoning incentives to developers to build efficient housing near mass transit.  But again, the NIMBY folks (who are also the ones who benefit most from rent control) stop those things from happening.


Reducing cost will increase demand.  So then you have to increase supply even more.  Which then all gets filled.  And you end up with population density like Manhattan.  Have you ever tried to live in Manhattan?  It sucks.  Not because of the cost.  Because of all the GD people.
But that's not as bad as it gets.  There's Manila, Delhi, and Guttenberg NJ, with 58k people per square mile.  And hell, Guttenberg has rent control!  So much for it limiting available housing...


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Re: Landlord Who Supports Rent Control
« Reply #34 on: September 28, 2016, 06:58:24 PM »
Er... so you want a giant housing shortage then?


There is plenty of housing.
Its just in Illinois, West Virginia, Connecticut, Mississippi, Maine, and Vermont, as well as Reading, New Haven, South Bend, Toledo, Philadelphia, Minneapolis, Albany, Hartford, Syracuse and Akron.
All of these places the population is shrinking.

The entire country can not live in NYC and the SF Bay Area.
There's three choices: 1) let only the rich live there, and displace everyone else 2) keep building housing until the population density rivals that of Manila, and people no longer want to move there because every aspect of life sucks, or 3) make it possible for exsiting residents to stay while making it expensive to relocate there.

Quote
Without affordable housing, you lose a lot of diversity.
If you have no rent control, only people who work in a few high income industries can afford to live there.
hence my support of rent control.

Quote
If you have rent control, landlords only accept "perfect" tenants: income 5x rent, no pets, no negative interactions with previous landlords (ever), 800 FICO, no more than a parking ticket on their record (ever). This is because price controls leave too many people trying to buy a limited resource. Also, the landlord's incentive for intensive screening increases dramatically when leases are for life.
That is simply not true in practice.  First of all, no decent landlord selects on a first come first served basis on the grounds that its always easy to evict (if a resident chooses to ignore an eviction notice, for example, it can be a nightmare.  If a tenant destroys stuff on the way out, it can be a nightmare.)  Second of all, nearly everyone I know has lived in rent controlled cities most of our lives, and don't fit that list of perfect tenants.  I've been a property manager, and that list was not the criteria my boss/landlord had.  Sometimes I wished their standards were a little higher...

Quote
As a side note, I don't see much rent control impact in Richmond. In California, homes built after 1980 and single-family homes are exempt from rent control regardless of what a locality decides. Only old multi-unit properties can be included.

I suppose that rent control could discourage owners of single-family homes from converting them to 2-unit properties, but thats about it.
It hasn't passed yet, so we can't know the details, but those would most likely be exempt too.
And this caveat doesn't just apply to Richmond - in SF, Oakland, Berkeley and LA (which are all in CA), all new construction is exempt, which means the common argument of rent control limiting new construction is obviously false.

doug111

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Re: Landlord Who Supports Rent Control
« Reply #35 on: September 28, 2016, 08:15:22 PM »

Rent Control limits entry into the housing market.  Once you have a property, you have a tenant for life.  Tenant turnover, and vacancy, is your number one expense as a landlord.

Yes, rent control is great, once you are established.

I like the spin you put on it there!?  Most of the objections are surrounding not being able to get rid of tenants, or being able to charge them more which would increase your bottom line, but you raise a good point about how if you have a good tenant that you don't want to get rid of, you save the money that vacancy would cost you. 
Of course, as a landlord you could just make the choice to not increase rents, which would have the same effect...

I'm unclear on what you mean by limiting entry into the market - do you mean for renters or owners?  It certainly does for renters, but because your next sentence is "once you have a property" I get the impression you are referring to buying.  The more typical argument is that no one would want to buy investment property in an area with rent control because of the hassles, which in theory would make it easier to buy.

If I'm interpreting you correctly, could you explain that?

Once a landlord buys a property, and rent control is established after, no new owners want to buy.  There becomes a shortage of housing, and values go up.  Look at the values of property where there is rent control.  NYC is a prime one.

If you understand how to screen tenants, it is easy to get a good one.  If you do not understand that fact, you should not be in the landlord business.  The new tenants options are limited wen they move out, as any new apartment is adjusted to market.  Your place, which they live in, is only adjusted by inflation.  Since you are making money, you are not allowed to get greedy, but will have a permanent income stream.
I really like what you had to say about values going up even though I always hate it when the values go up because I am a buy , hold, and never sell kind of a guy and I like cheaper prices.

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Re: Landlord Who Supports Rent Control
« Reply #36 on: September 28, 2016, 09:06:02 PM »
Go under the section on the forum "SHARING YOUR BADASSITY" and look for the article that I wrote towards the top called "   
HOW I PAID OFF MY $115,000 3O YEAR MORTGAGE IN 23 MONTHS !!!!!"   look at the ways that I knocked out my mortgage in 23 short months !!!!  By the way once you get yours paid off that $1,580 would be one heck of a rent increase or a raise !!!!! JUST DO IT !!!!! I make a payment on my CHASE BANK mortgage everyday of the week accept Sundays when they are closed. I dont care if I make a 5 dollar payment to a $2000 payment. lol


by the day seems a bit much, but you did remind me to make my monthly additional principal payment today :-)

doug111

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Re: Landlord Who Supports Rent Control
« Reply #37 on: September 28, 2016, 10:34:50 PM »
Go under the section on the forum "SHARING YOUR BADASSITY" and look for the article that I wrote towards the top called "   
HOW I PAID OFF MY $115,000 3O YEAR MORTGAGE IN 23 MONTHS !!!!!"   look at the ways that I knocked out my mortgage in 23 short months !!!!  By the way once you get yours paid off that $1,580 would be one heck of a rent increase or a raise !!!!! JUST DO IT !!!!! I make a payment on my CHASE BANK mortgage everyday of the week accept Sundays when they are closed. I dont care if I make a 5 dollar payment to a $2000 payment. lol


by the day seems a bit much, but you did remind me to make my monthly additional principal payment today :-)
See people are MISSING the enjoyment of the daily payment debt reduction thing !!!! People go to work daily !!!! So why not hurry up and pay off the main reason that all people go to work for and get out of debt like their hair is on fire like MMM suggests !!!! MMM states that debt is an emergency !!!! NOW AN EMERGENCY MEANS PAY NOW !!!!! PAY EVERY SECOND THAT YOU HAVE AVAILABLE !!!! LIKE YOUR LIFE DEPENDS ON IT !!!!!

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Re: Landlord Who Supports Rent Control
« Reply #38 on: September 29, 2016, 08:49:13 AM »
lol, fair point - but... I don't go to work every day!  I work like maybe 10-20 hours a week

TheOldestYoungMan

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Re: Landlord Who Supports Rent Control
« Reply #39 on: September 29, 2016, 09:17:07 AM »
OK, I understand now.  Bakari and I were arguing the same thing.  B just thinks its a good outcome and I think it's a bad outcome.

I suppose putting myself in the shoes of someone who for sure was living exactly where they wanted (and knew that would never change) and could easily afford it (now and forever) rent control makes a lot of sense.  It's a vote in your self interest, if you make the assumption that things always stay the same.

I agree with all of that.  I just also know that it is incredibly shortsighted.  It hasn't ever turned out well, the failure to provide an example of it working to do any of the above is proof of sorts.  Again it's a situation of the details of the policy (and every other policy) being aligned to make it work might be possible, but it's been tried all over and failed every time.  If you could do it, that would be great. It won't happen though.  The places you mention with rent control still get more people.  The least able to afford it still get forced out.  Rents still go up, and they demonstrably begin to go up faster (it's difficult to say for sure rent control was the cause, but rent control sure as shit hasn't slowed it down).

Fundamentally, you shouldn't mess with price.  It is a short term balm (and so maybe you can make an argument for a short-term manipulation of price).  But the idea of reaching out from a central planning perspective and deciding what a price should be seems to be irresistible for some, despite the historical record of such acts being appalling.

It's amusing to me that you keep citing SF and NY as examples of where the problem is worst, and those are two classic examples of where rent control accelerated the problem.

This is one of those topics where dozens of scenarios are playing out in real time, and all of your careful reasoning as to why it ought to happen a certain way should be reconciled with how it is actually playing out.

http://www.landlord.com/rent_control_laws_by_state.htm

https://www.apartmentlist.com/rentonomics/national-rent-data/

What's interesting is you see certain places, like Colorado, where an unexpected surge in population is driving up rents (which is expected).  The surge in population wasn't expected, so the financing wasn't there to build apartment buildings, the developers weren't already working on it at the scale they should have.  They sure as shit are on it now though.  That's the problem with San Francisco, the totally expected surge of population wasn't able to be planned for because of rent control and zoning regulations (and NIMBY folks like you) who prevented developers and financiers from building the housing for the new folks.  So shortsighted people reap what shortsighted people fail to sow.  And your landlord, unable to evict you or raise your rent, sells out to the developer who decides to tear down your apartment building, because now the $2000/mo you were paying is worth $10000/mo and he doesn't have to evict you if the building gets condemned.

What would be fun is if one of those cities, say Denver, enacted rent control, while another, say Colorado Springs, specifically prohibited rent control.  That would give us a natural experiment (identical to plenty of others) that would show Denver's economy start to stagnate, rents still go up, property values skyrocket, and an exodus of lower income folks compared to Colorado Springs which would continue to benefit from a housing boom, have rents still go up (but not as fast as Denver) and property values go up, but with that balance of a booming economy so that the opportunity is there to be able to afford to live and work there.

The problem, Bakari, is that you want to live in 1960 San Francisco forever, but plenty of the people who also already live in San Francisco want to live in SF as it exists today.  They want to make the best decisions they can for the future of the city.  They want their kids to be able to afford to live there, they want their grandkids to be able to afford to live there.  And rent control makes it an absolute certainty that instead of getting what you want, you get a horrible mess like Manhattan.

In particular, I don't like San Francisco as an example for a whole bunch of reasons.  I personally feel like it is the most comfortable place on the planet (I've been to a wide swath of the planet so far and SF was just amazing).  If the garden of eden was anywhere, it was SF bay.  So SF should be an expensive place to live.  The first come first served mentality is great and all, but over time the people who already have a claim there ought to be able to sell that claim.  And it isn't their fault if the buyers compete and the price naturally falls out of my reach.

I'm not going to go vote to enact a restriction to prevent that exchange from happening.  It might be in my best interest to do so, but it won't actually work so it's fairly silly to advocate for it.

Your goals/Will rent control meet that goal:
I want to stay in my house with the same quality of life at a price I can afford/No
I want my neighbors to not be forced out due to increasing costs/No
I want to keep new people from moving in (and taking our jerbs?)/No
I want to keep my community economically strong./No
I want to continue to grow the local economy./No
I want to make it so the least able among us can still afford a decent quality of life/No
I want to provide an environmentally friendly community where people can live close to work/No
I want my rent to not go up next year/YES

It's just shortsighted.  That's your privilege though.  Thank you for arguing with me, I have enjoyed it.

doug111

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Re: Landlord Who Supports Rent Control
« Reply #40 on: September 29, 2016, 09:19:42 AM »
lol, fair point - but... I don't go to work every day!  I work like maybe 10-20 hours a week
HAHA !!!! See now you really have no excuse not to pay daily. You have another 20 hours a week to pay daily lol !!!!! See I like to pay daily because I call it the money walk, lucky my Chase Mortgage is about 5 blocks away from my house and I call it the money walk. That very walk is healthy and I am releasing healthy feel good endorphins in my head and relieving debt stress !!!!! DUMPING DEBT is so good for your health !!!! Who cares about that I could risk that money in the markets. I dont even care about the extra few % that I could make in the markets. lol !!!! Id rather DUMP THE DEBT and then move on !!!!

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Re: Landlord Who Supports Rent Control
« Reply #41 on: September 29, 2016, 10:34:13 AM »

Its actually you whose whole argument seems to be:
"I consider the amount of money I could potentially get in the future as the amount I actually have right now, therefor preventing me from getting more money in the future is taking away money from me.  Because I say so."
Come to think of it, that sounds very similar to Donald Trump Accounting!
http://forum.mrmoneymustache.com/welcome-to-the-forum/robots-and-their-impact-on-the-future/msg1213631/#msg1213631

The money you can get in the future is basically the amount you have right now, subject to a discount rate.  When you limit the income stream of a rental unit, you are immediately reducing the amount of money that rental unit is worth.  A landlord may not have to realize it immediately, but it is a loss none the less and that value has been taken from the landlord in a very real sense. 

electriceagle

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Re: Landlord Who Supports Rent Control
« Reply #42 on: September 29, 2016, 04:34:26 PM »
Er... so you want a giant housing shortage then?


There is plenty of housing.
Its just in Illinois, West Virginia, Connecticut, Mississippi, Maine, and Vermont, as well as Reading, New Haven, South Bend, Toledo, Philadelphia, Minneapolis, Albany, Hartford, Syracuse and Akron.
All of these places the population is shrinking.

Housing is local. If there is a shortage of housing in a place where people want to live, there is a housing shortage. Telling people to go back where they came from isn't too helpful.


The entire country can not live in NYC and the SF Bay Area.
There's three choices: 1) let only the rich live there, and displace everyone else 2) keep building housing until the population density rivals that of Manila, and people no longer want to move there because every aspect of life sucks, or 3) make it possible for exsiting residents to stay while making it expensive to relocate there.

I don't think that having more people would make life "suck". With more people, you get better public transit and the ability to support a wider range of businesses. Those things make me happy. Of course, you have to be willing to give up your car.


Quote
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If you have rent control, landlords only accept "perfect" tenants: income 5x rent, no pets, no negative interactions with previous landlords (ever), 800 FICO, no more than a parking ticket on their record (ever). This is because price controls leave too many people trying to buy a limited resource. Also, the landlord's incentive for intensive screening increases dramatically when leases are for life.
That is simply not true in practice.  First of all, no decent landlord selects on a first come first served basis on the grounds that its always easy to evict (if a resident chooses to ignore an eviction notice, for example, it can be a nightmare.  If a tenant destroys stuff on the way out, it can be a nightmare.)  Second of all, nearly everyone I know has lived in rent controlled cities most of our lives, and don't fit that list of perfect tenants.  I've been a property manager, and that list was not the criteria my boss/landlord had.  Sometimes I wished their standards were a little higher...

Landlords certainly do vary their requirements based on the difficulty of eviction. This is especially true of small landlords in places where leases for life are the norm.

Sure, some landlords will continue to use ordinary requirements. Not many/for long, though. It takes 5-10 years for rents to diverge such that people really start fighting over evictions. Once that happens, the incentive to avoid risk goes from big to enormous.

Imagine how picky people would be about partners if divorce were outlawed. Thats how picky small landlords get about tenants when leases don't end.

Incidentally, the combination of big zoning/permitting roadblocks and rent control is the reason for SF's wacky real estate market. If housing construction were easier, new construction could meet demand. If rent control were not in place, current residents would immediately feel the effect of rising rents and elect local representatives who support more housing.

Bakari

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Re: Landlord Who Supports Rent Control
« Reply #43 on: September 29, 2016, 09:15:35 PM »
OK, I understand now.  Bakari and I were arguing the same thing.  B just thinks its a good outcome and I think it's a bad outcome.

I suppose putting myself in the shoes of someone who for sure was living exactly where they wanted (and knew that would never change) and could easily afford it (now and forever) rent control makes a lot of sense.  It's a vote in your self interest, if you make the assumption that things always stay the same.

I agree with all of that.  I just also know that it is incredibly shortsighted.  It hasn't ever turned out well, the failure to provide an example of it working to do any of the above is proof of sorts.
It has, and continues to work out well for the millions of people who live in rent controlled apartments.


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The least able to afford it still get forced out.
?
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Rents still go up, and they demonstrably begin to go up faster (it's difficult to say for sure rent control was the cause, but rent control sure as shit hasn't slowed it down).
it slows it down to local inflation rates for the people in those particular units.



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But the idea of reaching out from a central planning perspective and deciding what a price should be seems to be irresistible for some, despite the historical record of such acts being appalling.
Except it does not, and never has, set price.  It restricts the rate at which price can be increased, with no accompanying increase in services or value.  It simply says you can not auction to the highest bidder a basic human necessity after having already agreed to a price with one person. 
And there is a perfectly good example of price regulation working successfully: utilities.  Even privately owned utilities have to have prices approved by local government. The local water company can not suddenly decide to charge $100 a gallon, even if the market would bear it.



This is one of those topics where dozens of scenarios are playing out in real time, and all of your careful reasoning as to why it ought to happen a certain way should be reconciled with how it is actually playing out.

http://www.landlord.com/rent_control_laws_by_state.htm

https://www.apartmentlist.com/rentonomics/national-rent-data/
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I'm not sure what you are getting at here.  The link shows the fastest rent increases happening in places that aren't rent controlled




What's interesting is you see certain places, like Colorado, where an unexpected surge in population is driving up rents (which is expected).  The surge in population wasn't expected, so the financing wasn't there to build apartment buildings, the developers weren't already working on it at the scale they should have.  They sure as shit are on it now though.  That's the problem with San Francisco, the totally expected surge of population wasn't able to be planned for because of rent control and zoning regulations (and NIMBY folks like you) who prevented developers and financiers from building the housing for the new folks.
You seem to still be arguing against a hypothetical form of rent control which applies across the board to all housing units.
New construction is exempt.
So rent control has ZERO effect on incentive to develop and finance new construction.
I've pointed this out already.  I'm not sure why you keep ignoring it.


There are 11,625 residential rental construction projects of 60 units or more currently under way in SF, with another 29,000 units with approved plans which have not yet begun construction.
http://paragon-re.com/San_Francisco_Housing_Development_Report


11,625 new units under construction is not compatible with zoning regulations preventing developers from building new housing.


To paraphrase a generally clever guy: "This is one of those topics where dozens of scenarios are playing out in real time, and all of your careful reasoning as to why it ought to happen a certain way should be reconciled with how it is actually playing out."








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So shortsighted people reap what shortsighted people fail to sow.  And your landlord, unable to evict you or raise your rent, sells out to the developer who decides to tear down your apartment building, because now the $2000/mo you were paying is worth $10000/mo and he doesn't have to evict you if the building gets condemned.
so, in that worst case scenario, you are no better off than you would have been with no rent control - but no worse off either.

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What would be fun is if one of those cities, say Denver, enacted rent control, while another, say Colorado Springs, specifically prohibited rent control.  That would give us a natural experiment (identical to plenty of others) that would show Denver's economy start to stagnate, rents still go up, property values skyrocket, and an exodus of lower income folks compared to Colorado Springs which would continue to benefit from a housing boom, have rents still go up (but not as fast as Denver) and property values go up, but with that balance of a booming economy so that the opportunity is there to be able to afford to live and work there.
Or it might play out like here, where the booming economy happens in Colorado Springs (or, in our case, silicon valley), while all the construction took place in Denver (or, in our case, San Francisco), and all the new jobs of that booming economy get filled by people from all over the world who can afford all the new (non-rent controlled) apartments.

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The problem, Bakari, is that you want to live in 1960 San Francisco forever, but plenty of the people who also already live in San Francisco want to live in SF as it exists today. 
Actually, I don't want to live in SF at all!  I'm just hoping my own city never becomes as dense as 1960 San Francisco.


However, rent control allows for change.  Landlords can raise rent.  They are only limited to the rate of inflation, and can reset to market between tenants.  Those two things mean change will happen.  New construction is exempt - hence the giant housing construction boom of 11k units in 2016 alone. That means more change.


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They want to make the best decisions they can for the future of the city.
But as you noted correctly in the beginning of the last post, not everyone agrees on what that means.




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In particular, I don't like San Francisco as an example for a whole bunch of reasons.  I personally feel like it is the most comfortable place on the planet (I've been to a wide swath of the planet so far and SF was just amazing).  If the garden of eden was anywhere, it was SF bay.  So SF should be an expensive place to live.
agreed.  and it is!


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The first come first served mentality is great and all, but over time the people who already have a claim there ought to be able to sell that claim.  And it isn't their fault if the buyers compete and the price naturally falls out of my reach.
Not following you.  What's stopping anyone from selling a claim?  Renters have nothing to sell, but they can move away if they want, and get lower rent elsewhere.  Owners can sell for a whole hell of a lot more than they paid!


I want to stay in my house with the same quality of life at a price I can afford - I own my house.  The mortgage is fixed.

I want my neighbors to not be forced out due to increasing costs - this is literally the one thing rent control does.

I want to keep new people from moving in (and taking our jerbs? - and increasing crime, and traffic, and generally anti-socialness among all residents) - I'd love that, but I never imagined rent control would accomplish it.  If rent control really does push up prices for new residents, it certainly isn't going to make people move in faster.

I want to keep my community economically strong. - though not at the cost of simply replacing the community with new people with better finances.

I want to continue to grow the local economy - No, not really.  I think growth has a time and place, but infinite growth is neither possible nor desirable.  Once a point of enough is met, stability and sustainability are more valuable than growth.  Kind of like the bank account of a Mustashian.

I want to make it so the least able among us can still afford a decent quality of life - Housing is the single biggest cost, and in the most popular areas it can be more than half of the income of low wage people.

I want to provide an environmentally friendly community where people can live close to work - Sure, though I don't see rent control having a very strong impact either way. 

I want my rent to not go up next year - rents can be increased under rent control.  Both annually, by a percentage, often tied to inflation, as well as if the landlord does any major upgrades or remodeling.  This exception helps encourage improvements, even above the level there would be naturally with no rent control.

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Thank you for arguing with me, I have enjoyed it.
Likewise!

Bakari

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Re: Landlord Who Supports Rent Control
« Reply #44 on: September 29, 2016, 10:10:12 PM »
If there is a shortage of housing in a place where people want to live, there is a housing shortage. Telling people to go back where they came from isn't too helpful.
There may be exceptions, but most people look for a place to live before they pack their stuff and take off across the country.  If there you come up empty on Craigslist and Zillow, you are much more likely to start looking in other cities than if you find 100s of vacancies.


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I don't think that having more people would make life "suck". With more people, you get better public transit and the ability to support a wider range of businesses. Those things make me happy. Of course, you have to be willing to give up your car.


https://www.youtube.com/watch?v=1Ym9I77dZoI (LA is # 3 of 10!)
https://www.youtube.com/watch?v=AuDrh6gieDc

https://www.youtube.com/watch?v=jI83lIw99u0 (we haven't gone that far... yet)

http://sf.streetsblog.org/2014/06/05/munis-absymal-breakdown-rate-one-reason-sf-needs-a-vehicle-license-fee/
http://archives.sfexaminer.com/sanfrancisco/report-muni-travels-slower-costs-more-to-operate-than-peer-cities-transit/Content?oid=2735586




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Landlords certainly do vary their requirements based on the difficulty of eviction. This is especially true of small landlords in places where leases for life are the norm.

Sure, some landlords will continue to use ordinary requirements. Not many/for long, though. It takes 5-10 years for rents to diverge such that people really start fighting over evictions. Once that happens, the incentive to avoid risk goes from big to enormous.
Rent control isn't new here.  We might all want to pick your super tenants, problem is there just aren't that many of them, and someone who doesn't meet that criteria is a whole lot better than an empty apartment.  As evidence: there isn't a population of homeless people who have enough income to pay market rents.

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Imagine how picky people would be about partners if divorce were outlawed.
Actually, the marriage rate in the Philipeans (where there is no divorce), is higher (58%) than it is in the US (49%)


http://worldfamilymap.ifstudies.org/2014/wp-content/uploads/2012/11/WFM-Figure42.jpg


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Incidentally, the combination of big zoning/permitting roadblocks and rent control is the reason for SF's wacky real estate market. If housing construction were easier, new construction could meet demand. If rent control were not in place, current residents would immediately feel the effect of rising rents and elect local representatives who support more housing.


As I said (again) to the Oldest Young Man, rent control does not apply to new construction, therefor it has exactly zero negative effect on developers.  If anything, by (supposedly) restricting supply (of units that people might otherwise move out of) which (supposedly) raises market rent rates in the area, rent control should encourage the creation of more housing units.
Also, as I mentioned in the last response, there are 10s of thousands of new units of housing being constructed in SF right now.
There is no empty land in SF, and nowhere to expand, so the only possible projects involve tearing down existing housing and building bigger buildings in their place.  That takes lots of time and money.  Building a skyscraper is not like putting up four walls and a roof with Habitat for Humanity.  It took them 10 years to build a new bridge.  The bus station has been in progress even longer.  No amount of residents wanting it can make skyscrapers magically instantly appear.

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Re: Landlord Who Supports Rent Control
« Reply #45 on: October 03, 2016, 11:08:34 AM »

As I said (again) to the Oldest Young Man, rent control does not apply to new construction, therefor it has exactly zero negative effect on developers.  If anything, by (supposedly) restricting supply (of units that people might otherwise move out of) which (supposedly) raises market rent rates in the area, rent control should encourage the creation of more housing units.
Also, as I mentioned in the last response, there are 10s of thousands of new units of housing being constructed in SF right now.
There is no empty land in SF, and nowhere to expand, so the only possible projects involve tearing down existing housing and building bigger buildings in their place.  That takes lots of time and money.  Building a skyscraper is not like putting up four walls and a roof with Habitat for Humanity.  It took them 10 years to build a new bridge.  The bus station has been in progress even longer.  No amount of residents wanting it can make skyscrapers magically instantly appear.

Saying it should have zero negative effect doesn't mean it doesn't.  It demonstrably does.  It overwhelmingly does.  And you won't start to understand the reasons why until you acknowledge that fact.  It's all right there in your own words.  The initial enactment of rent control caused the problem.  It caused a stall in the development, and it will take generations (if ever) to catch up.  It is a vicious cycle of 0% vacancy making landlords reluctant to tear down their old stuff (and making it harder for them to do it if tenants refuse to leave) and owner-occupiers to be unable to afford to leave.  You have this massive sub-optimal situation of people not living in the right spot because the housing shortage caused by rent control made it impossible to move.  Prices for land have to get so high that you can afford to sell your house for 4 million dollars, and then leave town, which forces the developer to go straight from SFH to huge skyscraper because of the cost of the land.  You mess with these forces and things get out of hand quickly, which is what has happened.  Every time.

Using your numbers, about the SF new housing construction.  You are making the contention that because there is new construction of housing that it hasn't negatively affected that industry.

But, that is dependent on a number of factors:

1.  The total amount of new housing being constructed vs. the amount of old housing being retired (net housing gain).
2.  The total amount of net housing gain vs. total population change.
3.  The value (on a per room or per sq. ft.) of the housing, both property and market rental rates.

Of course there will be new construction of housing.  It's just, will it be decent two bedroom apartments that a family of four at a wage job can afford?  Or will it be $10,000/mo luxury stuff or 2 million dollar townhomes?  Rent control causes the latter, and de-facto helps the wealthiest in society.  If you are for that, than be for rent control.  It's just the tone of the OP and those who seem to support rent control in general don't usually come across as pro-rich-people.

You need to go and actually read about the actual effects.  You keep talking about how it ought to work.

"Rent only goes up between tenants"

And who is most likely to suddenly need to find a new place to live?  The wage worker who can't afford a car.  You have to live close to work.  If your job moves or you lose it, then you have to move, losing your rent controlled apartment.  You aren't a "newcomer" to the city, but rent control has spiked what any other landlord will offer you, so suddenly, you are forced out of the city.

Wealthy people have the time and resources to find rent controlled housing and camp out in it for long enough to benefit from it.  Young people and lower income earners do not.  This has proven to be the case time and time again.  If that's in line with the people you think rent control should help, great!  If not, then you are in favor of something you do not understand.

"Rent control isn't fixing prices, it's limiting increases to local inflation rates."

Rent control is fixing prices.  It is.  That's what it is.  All that is needed to fix the price is to constrain what the price can be.  If the price isn't free to move then it is constrained, and that doesn't work out well in virtually 100% of cases.

"Price fixing works for utilities so it can work for everything else."

The reason utilities work is an interesting economic discussion.  A public housing utility would be a great experiment.  One we've tried.  Neither you, nor anybody you know, lives in a public housing project.  And you'd be hard pressed to find someone that aspires to living there.  They are awful, miserable places.  Better than being homeless, true.  But only just.  I wish it worked better, but it doesn't.  Absolutely nothing is stopping you from setting up a not-for-profit housing concern and trying it for yourself.  When you get shit all over by the people you're helping you'll start to understand why there's a difference between providing a pipe with water flowing through it and providing housing.

"Rent control prevents crime increases."

Crime will spike anytime cost of living in an area starts to outstrip economic opportunity in that area.  Rent control assures this will happen as it spikes the cost of housing, the one thing that is almost impossible to avoid (and certainly seems impossible to avoid to many people).  As people find it harder and harder to get by despite doing all the right things (working a job, not indulging) and then find themselves in dire straights, they are more likely to turn to criminal behavior as a supplemental way to make ends meat.  Also, with more people, there's just more opportunity to commit a crime and more chances that the crime gets reported and documented.  In any case, rent control is about the most dumbass retard way to prevent crime I've ever heard of.  Economic prosperity actually works to reduce crime.  So does education.  Rent control will only make things worse.  Show an area that enacted rent control and had crime go down.  Even one.

The idea of rent control should work.  It just doesn't.

This claim:

"It has, and continues to work out well for the millions of people who live in rent controlled apartments."

Has two big (and demonstrably erroneous assumptions):

1.  Those millions of people are living in an apartment that is affordable by any reasonable definition.

2.  Those millions of people would choose to remain where they were if there were reasonably priced alternatives.

That's the problem with rent control.  It's great.  Until you need to move.  And the people that need to move are the working, the poor, and the young (because you're working AND poor).

So you can absolutely be a landlord that supports rent control.  You just can't be that and be someone who pretends to care about the quality of the community.

Here's the effect of rent control on housing production.  This is just 2015.  The pattern is the same pretty much every year and I'll put together a graph if I remember later and ever figure out how to post graphs.

New housing units (#).  These are "metropolitan areas" and yes these cities are incomparable for lots of reasons but whatever...
Houston - 56,901
San Francisco - 13,386
New York - 86,424
Los Angeles - 34,084
Denver - 18,326


So that data means nothing right?  By itself, the numbers are all over the place.  And I think the SF one is low just because there's a bunch of cities crammed up next to each other there and does San Francisco-Hayland-Oakland metro area mean all of them or not?  I'm not from there.  But lets just roll with it since it's about what Bakari was saying is going on there.

Then lets look at (and I apologize for how brutally simple this analysis is, housing is much more complicated I know, just trying to illustrate one aspect here) population increases:

Houston: 40,032
San Francisco: 12,279
New York: 55,211
Denver: 15,582
Los Angeles: 34,943

Then we do some math, new housing units per new resident:
Houston: 1.42
San Francisco: 1.09
Denver: 1.17
Los Angeles: 0.97
New York: 1.56

So this tells us not as much as you might think.  Nothing really.  It is one data point among many, where if you dig around you'll find out more about what affects the housing market in your area.  And when you combine all of them, the actual effects of rent control start to make sense.   And you stop coming up with speculative ideas about why it ought to work differently, and start to understand how it actually works and why.  You end up at the following points, the details vary depending on the data set but included just for funsies:

You need more than one new unit of housing per new resident.  Especially in land-locked areas, the rate needs to be closer to 1.6-1.8 per new resident to keep up with retirement of old housing stock and space-flation (everyone seems to want just a little more space).  The new room is got vertically and that costs a little more, so housing costs will (and should) go up.  Denying this physical reality is the core problem with the philosophy of rent control.  It doesn't keep greed in check, it seeks to deny physical reality.

You need that housing spread out over the whole area (zoning restrictions can seriously drive housing crunches all on their own).

You need to have building codes and enforcement to provide high quality safe housing, but you have to spend enough on your permitting/inspections department so projects can proceed on pace.

You need infrastructure (especially public transportation, water, power, sewer) to accommodate that.

If any of the above gets out of whack, you end up with runaway increases in price because of the various externalities.  Housing all in one area?  Existing units in other areas become a scarce good and price jumps.  Not enough permitting/inspections?  Slows down the process, you blow your ratio.  Not enough new construction because of zoning and finding land for sale?  Slows down the process, you blow your ratio.

Blow your ratio year after year with no end in sight?  You end up San Francisco.

Now, what could you do to actually address the problem?  Supplement the cost of rent with direct payments to qualified tenants, paid for with taxes on luxury unit rental income.  Discourages fancy-pants housing while increasing the supply of tenants who can afford your reasonable apartment building.

Here's an interesting tidbit too:
In 2015 alone, 11% of the population moved.  35% of those were at or near the poverty line in terms of income nationwide.  It is higher if you adjust for local poverty thresholds which vary dramatically, particularly in places with high cost of living, like rent control areas.

Source:  http://www.census.gov/data/tables/2015/demo/geographic-mobility/cps-2015.html

Bakari

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Re: Landlord Who Supports Rent Control
« Reply #46 on: October 03, 2016, 10:30:03 PM »
Saying it should have zero negative effect doesn't mean it doesn't.  It demonstrably does.


Yes, you keep making these absolute claims that everything is demonstrable, except you don't actually demonstrate anything.  You have no explanation for mechanism of action, and you offer no evidence or sources. 
On what basis do you claim that rent control discourages developers?
Why would it?
New construction is exempt from rent control.
Rent control on existing apartments (supposedly) causes rents to increase faster than it otherwise would.
So there is increased demand, at artificially high prices - and this makes developers less inclined to build?


That makes absolutely no sense.  Yet you keep insisting it is true and undeniable, and even "demonstrable". 
You even go so far as to say it is a "fact", and that understanding the rest of your argument is dependent on acknowledging it.


Why?  Why would an investor be less inclined to build where there is MORE of a market at artificially HIGH prices?




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It is a vicious cycle of 0% vacancy making landlords reluctant to tear down their old stuff
Again, you are just making claims which not only have no evidence, they don't even make any sense.
If the one way a landlord can increase rent is to tear down and rebuild, how does that make them less inclined to do so?
Without rent control, tearing down and rebuilding might increase rent because of more units or increased value, but with it they ALSO get the benefit of no longer being bound by rent control.
This is the whole reason that loophole was put in, to encourage development.  And it is demonstrably effective, as I pointed out last time - construction is actually happening.


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(and making it harder for them to do it if tenants refuse to leave)
False.  It is entirely legal to evict if a unit is being taken off the market.


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and owner-occupiers to be unable to afford to leave.
again, you are making a categorical statement with both zero evidence and which does not even make any sense.
The only situation in which an owner-occupier can not afford to leave is when they are "underwater" on their mortgage.
That happens when one of two things happen: they get an adjustable rate or interest only loan during a bubble, or the local real estate market becomes depressed.
If  a population is growing rapidly, so much so that new construction can barely keep up, then by definition it is not a depressed real estate market.
You are trying to claim that in NY and SF and LA etc people "can't afford" to sell their houses if they want?
You want a "demonstrably" false claim!  Come on, are you even being serious anymore?  Do you have any idea what the real estate market is like?  Average property values for homes in SF have more than doubled in the past 4 years.  How, in your mind, does that translate to "can't afford to sell?" 
What percentage of people who own homes in areas with skyrocketing property values do you think want to sell so that they can start renting an apartment in the same city?!!?!?!?!?  You really believe that it is only because rents are so high that people aren't selling their houses and then moving into apartments in the same city? 





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forces the developer to go straight from SFH to huge skyscraper because of the cost of the land
???????????????????????????????????????????
Replacing a SFR with another SFR is obviously not going to increase housing stock!!!! 
So now you are saying that (because of rent control) developers will build massively more housing.  Which is literally the exact opposite of what you claimed just above. 






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Of course there will be new construction of housing.  It's just, will it be decent two bedroom apartments that a family of four at a wage job can afford? 
  How do you define "decent"?  The standard today is kids don't share a bedroom... 
Anyway, you are saying basically "we have to increase the rent more, because otherwise rents might get expensive".
How is raising the rent on that family of four in the 2-bedroom to a price they can't afford causing them to move out better than building new apartments that they can't afford to begin with? 


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Or will it be $10,000/mo luxury stuff or 2 million dollar townhomes?
If the market could bear 10k luxury stuff, that will ALWAYS be the developers first choice, regardless of rent control.  The people who can afford those units don't want to live in Omaha or Cleveland, they want to live in SF and LA and NY.  So that's where they get built.
No one will be building 10k units in Richmond, because rich people have no interest in living here.
And no one is building a significant amount of new townhomes in SF, because there is no where for them to go.


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You need to go and actually read about the actual effects.
I have.  There is a lot of debate about it.  There is no way to determine conclusively which effects are due to which input, but there are no effects that can not be fully explained by the actual popularity of a given area.


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"Rent only goes up between tenants"
And who is most likely to suddenly need to find a new place to live?  The wage worker who can't afford a car.  You have to live close to work.  If your job moves or you lose it, then you have to move, losing your rent controlled apartment.  You aren't a "newcomer" to the city, but rent control has spiked what any other landlord will offer you, so suddenly, you are forced out of the city.
If you are staying in the same city, then how does a new job force you to move?
If your job moved any further than city limits, you already had to move out of the city.
If you are jobless, and other apartments cost more than the one you are in, why would you then move?
I can envision hypothetical scenarios where someone might want to move within the same city (most significantly, an expanding family), but your examples make no sense.




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Wealthy people have the time and resources to find rent controlled housing and camp out in it for long enough to benefit from it.  Young people and lower income earners do not.  This has proven to be the case time and time again.
OK great.  Show when and how this is proven.




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"Rent control prevents crime increases."
huh?
Who made that claim?
I said crime increases with increased population density.  This is actually one of those "demonstrable facts".  I put up some links before.
I never made any claim that rent control would effect density one way or the other, that was in reference to my suggesting not trying to infinitely increase housing stock.


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Show an area that enacted rent control and had crime go down.  Even one.
Well, like I said, I wasn't making that claim to begin with, but since you asked:

SF enacted it in 79.  Shortly there after, the massive crime wave peaked, and then subsided as quick as it came.


Although, (again), I'm not claiming a cause and effect relationship.  Just pointing out that, well, you say a lot of stuff with confidence that just doesn't pan out in reality.




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"It has, and continues to work out well for the millions of people who live in rent controlled apartments."

Has two big (and demonstrably erroneous assumptions):
There's that word again!  So, go ahead, demonstrate it!!

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1.  Those millions of people are living in an apartment that is affordable by any reasonable definition.
So you are claiming that if the rent on those apartments was HIGHER than it is now, it would then be more affordable, by any reasonable definition?  At some point you have to... wait.... I get it... I feel like an idiot.  You are trolling me.  I'm not sure if you have been all along, but with this line you are obviously trolling me.  Why do I get sucked in so easily be internet trolls?





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New housing units (#).  These are "metropolitan areas" and yes these cities are incomparable for lots of reasons but whatever...
Houston - 56,901
San Francisco - 13,386
New York - 86,424
Los Angeles - 34,084
Denver - 18,326
So that data means nothing right?  By itself, the numbers are all over the place.  And I think the SF one is low just because there's a bunch of cities crammed up next to each other there and does San Francisco-Hayland-Oakland metro area mean all of them or not?  I'm not from there.  But lets just roll with it since it's about what Bakari was saying is going on there.
Then lets look at (and I apologize for how brutally simple this analysis is, housing is much more complicated I know, just trying to illustrate one aspect here) population increases:
Houston: 40,032
San Francisco: 12,279
New York: 55,211
Denver: 15,582
Los Angeles: 34,943
Umm... you are trying to gloss over a pretty enormous factor.  The entire SF Bay Area over 145 times as large as the city.  7.65 million people vs 800,000.  The Bay Area's population increases 90,000 in a year.  So this 2nd number must be SF only.  But SF proper only is producing about 4000 units a year.  So your first number is probably Bay Area wide. 
The majority of the Bay Area's 100 cities over 9 counties does not have rent control.
So, in other words, unless you can get some better labeled data (sources would be nice), then it is pretty pointless and meaningless to then analyze numbers

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Then we do some math, new housing units per new resident:
Houston: 1.42
San Francisco: 1.09
Denver: 1.17
Los Angeles: 0.97
New York: 1.56

So this tells us not as much as you might think.  Nothing really.
Yes.  Exactly.




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You need more than one new unit of housing per new resident.  Especially in land-locked areas, the rate needs to be closer to 1.6-1.8 per new resident to keep up with retirement of old housing stock
are you not counting replacing an old building with a new one as new housing?  You can't have it both ways.


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and space-flation (everyone seems to want just a little more space).
That's a want, not a need.  If you choose to move to an already dense city, you are going to sacrifice space over what you could afford somewhere else.  That's just physical reality.


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The new room is got vertically and that costs a little more,
Yes, right.  Which is why the skyscrapers get built.  The same ones you just a moment ago claimed were a result of rent control.


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so housing costs will (and should) go up.
Right.  The cost of those newly built skyscrapers.  The ones that are exempt from rent control.


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You need that housing spread out over the whole area (zoning restrictions can seriously drive housing crunches all on their own).
which whole area?  the city?  the county?  the metropolitan region?  What if a disproportionate number of people only want to live in a few neighborhood in a few cities?  Should you still spread out evenly, even though it still means a deficit in those neighborhoods?




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Now, what could you do to actually address the problem?  Supplement the cost of rent with direct payments to qualified tenants, paid for with taxes on luxury unit rental income.  Discourages fancy-pants housing while increasing the supply of tenants who can afford your reasonable apartment building.
We already have that.  Its called "section 8".  A lot of landlords won't accept it, because, well: "When you get shit all over by the people you're helping you'll start to understand"




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In 2015 alone, 11% of the population moved.  35% of those were at or near the poverty line in terms of income nationwide.  It is higher if you adjust for local poverty thresholds which vary dramatically, particularly in places with high cost of living, like rent control areas.

Source:  http://www.census.gov/data/tables/2015/demo/geographic-mobility/cps-2015.html


"at or near"
More than 35% of American's are considered at or near the poverty line.  Up to 50% by some estimates:
http://www.salon.com/2013/05/30/half_of_americans_living_below_or_near_poverty_line_partner/


https://www.mailman.columbia.edu/public-health-now/news/nearly-half-american-children-living-near-poverty-line


So your data doesn't exactly support your argument that poor people move disproportionately[/quote]
« Last Edit: October 03, 2016, 10:32:55 PM by Bakari »

TheOldestYoungMan

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Re: Landlord Who Supports Rent Control
« Reply #47 on: October 05, 2016, 09:05:54 AM »
I am not trolling you.  I did post a source, which would lead you down the trail of knowledge if you wanted to go down it.  You dismissed it as "93% of economists agree" is meaningless.  While you are perfectly right to doubt one article, there are of course thousands of articles and scholarly papers available which you are free to avail yourself of.  I have.  That is why I say it is demonstrable.  Because it is.  I haven't personally done the primary research though, many others have, people who do it for a living.  You pointed out some very real problems with the data I posted.  I pointed out the problems as well.  Parsing through all of that data would've taken me hours, and as others have already done it and you dismissed their work out of hand I wasn't going to expend the effort.  That is very different from the information not existing, or the information not being available.  If you expend any effort at all into a serious study of the topic you will find it.  That's why I know you haven't.

I was like you once, until I looked at the actual data.  So I recommend again, if you really want to understand why rent control hasn't worked yet the information is there.  If all you want to do is argue that it should work, well, I agree, there probably is a way to do it, but it isn't as simple as you think.

I have provided many examples of how the mechanisms by which rent control achieves the opposite effect works, you just refuse to acknowledge that those mechanisms happen, despite being able to see the evidence of it everywhere a rent-controlled unit still exists.  By your own arguments, the rational thing to do would be to demolish all of those units and build new ones as soon as the surrounding rents go up, and yet, that hasn't happened.  I don't know what else to say except that everywhere with rent control and population growth has much lower housing affordability as a result of these effects.  So they are real, even if you can't understand why it would be that way.  These actual real-world economics do not rely on your understanding.  It's brutal, I know.

The experts agree rent control does more harm than good.  The only dissenting opinions do not dispute that historical examples of rent control have caused more harm than good, the dissension lies in ways to implement it so that it might not.  There is something to be said for the history of everything that ever worked containing a period where it didn't work, but the first step is to acknowledge the known faults.  You can't fix the issues if you won't even acknowledge they exist.  I have provided a source, with notable economists directly quoted.  I know of no current active economist supporting rent control as a good idea, or defending past rent control policies as good policy well enacted.

I do not argue that rent control causes housing prices to go up and lack of rent control does not.  I always, in every example, compare the rates.  Long term.  The rate of rise will change once you have rent control.  The fact that rent goes up in certain areas is related to a number of factors.  Rent control increases the rate of rise.  That is my argument, choosing to express my argument differently as proof of my argument being irrational betrays a deeper fault in your understanding of the issue.

You contend that just because a landlord could get higher rent by tearing down their property they will.  That is not true.  There is a time factor here.  I have a rental property.  It is cashflowing.  The property value is appreciating.  I have a tenant that has incentives to stay (lack of alternatives+price security).  I'm making great returns.  This is locked in and incredibly low risk.  Just because I could replace it with a skyscraper, doesn't mean I will.  I won't necessarily forgo guaranteed, steady return, from a property I understand and can afford to maintain, for the multiple month/year of no income while the new property is built.  Particularly because there are added risks that construction will not go well, the housing market could change, and to the extent that I have additional capital I could invest in such a venture, I might prefer to diversify and invest elsewhere.

Also, just because someone can, doesn't mean they can.  You can own a piece of property valued at a million dollars and be unable to build a huge skyscraper.  Or unwilling to make that sort of leap in management requirements.  Not everyone is comfortable with leverage and not everyone is actually all that greedy.

Owner-occupiers that want to live in a city can get stuck not just because they are underwater.  That was a poorly-thought out rebuttal.  Where does the owner occupier move to once they sell?  Property values have gone up so much that unless their income has kept pace they'll have issues with the property taxes, even if they can do a like for like substitution.  You can understand that right?  That there are people in California right now that due to property tax control and rent control they find themselves in an encumbered position, where the legacy of their long residency has become their most valuable asset?  It's not bad.  But it is economically inefficient.  Economic inefficiencies express themselves with shortages and price spikes.

It's part of why your arguments based on the assumption that everyone will be a rational actor doesn't work out, because you are failing to really understand that to be a rational actor all of these factors must be a part of the decision model you use.  Once you account for all of these factors, you see that the individual is behaving as a rational actor, which is why rent control isn't having the effect you thought it should.

This aspect of the perversion of the market forces affecting price is completely ignored by your analysis of the housing situation.  You repeatedly argue that an investor is going to seek the highest possible rent, despite the fact that you know:

1.  Investors seek the highest possible return
2.  Investors seek to manage risk
3.  Investors seek to get the highest possible return while managing risk.

So no, it isn't silly for someone to sit on a high value property with a rent controlled tenant who cannot afford to move, and to be making total bank off of the deal.  Particularly where property taxes are also locked at a low amount.  The idea that this wouldn't artificially spike the value of the remaining available land for development is willful ignorance.

Your assertion that a developer is always going to build the highest price unit is also flawed.  The highest price unit will also usually be the most capital intensive to build, and so you need something like a significant shortage in housing coupled with a lack of alternatives to drive demand for any housing, regardless of price.  There's also a hierarchy, there are only so many developers.  When you choke off the turnover in housing, the developers with the most money get the land.  They were always going to get the land they needed.  It's the other developers that never get to come in.  I wasn't saying SFH to skyscraper would reduce housing.  I was saying that the number of SFH that become available all get turned into skyscrapers.  Instead of first becoming low-rise apartment buildings.  The intermediate step, where affordable housing lies, gets skipped.  That's the casualty of rent control.  It isn't cost effective to build a 25 unit apartment complex on the 4 SFH lots you just bought, if it costs you 8 million dollars for the lot.  The idea that rent control doesn't affect new construction totally ignores that it affects existing construction price and property price in the area.  It is false.  Out of everything you've claimed, that is clearly false.  I can say demonstrable, because I just demonstrated the connection between the two.   Rent control isn't some magical thing that only affects the cost of rent just because you insist that it is so.  PRICE is not something to be trifled with.  It is a subtle thing, price.  Until you understand it there's a lot of economics that is going to just go right over your head.

My definition of reasonable housing is the same as everyone else, children having their own bedroom is a luxury, one many of us are fortunate enough to enjoy, but not one that needs to be protected with a government mandated rent control.  Especially when rent control will erode the ability of lower income folks to afford housing at all (again, it shouldn't, but it always has).

Your first chart on crime was as a rebuttal to having more people in an area.  My response was making the assumption that you believed rent control would help prevent crime.  That was a mistake on my part and I apologize.

As for the demographics, that analysis is rock solid.  That you can't distinguish between people at the poverty line and people at the poverty line who moved last year isn't something I know how to fix.  My argument isn't that more poor people move than anyone else, my argument is that the higher rental prices caused by rent control is least able to be dealt with by poor people.

Likewise, if you refuse to understand that a job could move within the same city and put a residence outside of walking/biking distance within that same city, well, look at a map sometime.  I'm glad you've never had to move across town for a job, but its something millions of people do every year.  Every year.

But if we add up the effects of all of these things that you refuse to acknowledge are things, we end up with the set of reasons why rent control doesn't work, despite the fact that it really should work.  And so we are where we are.  Here's the water.  Drink it if you want.

I say good day sir!

electriceagle

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Re: Landlord Who Supports Rent Control
« Reply #48 on: October 06, 2016, 03:19:40 AM »

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Incidentally, the combination of big zoning/permitting roadblocks and rent control is the reason for SF's wacky real estate market. If housing construction were easier, new construction could meet demand. If rent control were not in place, current residents would immediately feel the effect of rising rents and elect local representatives who support more housing.


As I said (again) to the Oldest Young Man, rent control does not apply to new construction, therefor it has exactly zero negative effect on developers.  If anything, by (supposedly) restricting supply (of units that people might otherwise move out of) which (supposedly) raises market rent rates in the area, rent control should encourage the creation of more housing units.
[/quote]

I referenced the combination of rent control and big zoning/permitting roadblocks. The zoning/permitting roadblocks, which you said that you support, are the primary reason that new construction doesn't happen in a timely manner.

SF produced just a few hundred new units per year until about 2011. It took a big political change to take the foot off the brakes on construction and completely reverse course.

Rent control is only a factor in that it delayed the political change needed for new construction.

The new construction is working: SF rents are finally starting to fall.

http://sf.curbed.com/2016/9/1/12755264/bay-area-rents-drop-september-august-2016

"Real estate site Trulia reports San Francisco rents down significantly, dropping to $2,737/month for a one bedroom, 5.6 percent off from last month and an incredible 18 percent off from last year."

Odds are that the tech boom will slow and as much of that new housing finally comes online, bringing rents down even more.

Incidentally, there is plenty of empty land in SF. It just happens to have white lines painted on it for temporary storage of cars.

Bakari

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Re: Landlord Who Supports Rent Control
« Reply #49 on: October 07, 2016, 07:23:51 PM »
I am not trolling you.  I did post a source, which would lead you down the trail of knowledge if you wanted to go down it.  You dismissed it as "93% of economists agree" is meaningless.  While you are perfectly right to doubt one article, there are of course thousands of articles and scholarly papers available which you are free to avail yourself of.  I have.  That is why I say it is demonstrable.  Because it is.  I haven't personally done the primary research though, many others have, people who do it for a living.  You pointed out some very real problems with the data I posted.  I pointed out the problems as well.  Parsing through all of that data would've taken me hours, and as others have already done it and you dismissed their work out of hand I wasn't going to expend the effort.  That is very different from the information not existing, or the information not being available.  If you expend any effort at all into a serious study of the topic you will find it.  That's why I know you haven't.
I did read all of the sources you posted.  They have lots of conditional or hedging words like "may" or "could".
There was also no actual data in them.
And most of what economists discuss is literal rent "control", (i.e. a fixed price ceiling), where what most people (and politicians) call rent control today is what economists call rent "stabilization".  In other words, we're talking about two different things.
Not to mention what Freakonomics showed us about the group think of economists...
But most of all,  they also don't make any mention of many of the claims you have made (for example landlords being unable to sell as a result). 

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  I don't know what else to say except that everywhere with rent control and population growth has much lower housing affordability
Never disputed that, just pointed out that it is also true that  everywhere with population growth has much lower housing affordability, and places with declining populations almost never, if ever, have rent control.

Also, like I pointed out before, different goals.


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Owner-occupiers that want to live in a city can get stuck not just because they are underwater.  That was a poorly-thought out rebuttal.  Where does the owner occupier move to once they sell?  Property values have gone up so much that unless their income has kept pace they'll have issues with the property taxes, even if they can do a like for like substitution.
That is equally true regardless of rent control.  That's why a home you live in is not really an investment.  Not understanding that was a piece of the 2008 thing.
« Last Edit: October 07, 2016, 07:41:15 PM by Bakari »