Why Rent Control is Important to SF
And why it isn’t what’s driving rents up
The rumblings have begun, and they’re starting to trickle forward into the discourse. “San Francisco would be cheaper without rent control.” It’s uttering forth from the lips of different folks around the city, and it can mean only one thing:
San Francisco is pricing itself out.
This happens regularly, as the city has always been a boom-and-bust town. We build, it gets popular, more and more people show up, then rumblings about how much better the city would be if it wasn’t for the poor people. Then the bubble bursts, the affluent move off to greener pastures and San Francisco’s working poor and artist communities breathe a temporary sigh of relief.
This time, we have a wealthy, young generation of tech-made-affluent youngsters who are starting to feel the pinch. They drove up rent by offering hundreds to thousands more per month for apartments and rooms in the city, not wanting to deal with the hassle of looking for housing or getting rejected in their search. These offers were made under the assumption that their income would be increasing and the rent burden would lessen, or that they’d easily find something better, or perhaps they simply weren’t thinking. But here we are.
What we have now is the price-out. It’s a part of the same cycle, and there’s nothing new in how it repeats here. A motivated industry is born within the city and grows quickly, enticing others to come out. People with talent in the industry move here for the lifestyle, and businesses chasing after them move here to make use of their talent. Then prices rise. More people want to come in, but rather than work their way into the city, they offer more money to landlords. Landlords begin to expect more money. Prices go up. Landlords who own commercial property see how much things are worth, and price out their existing businesses to lure new ones in. But eventually, it all hits a hilt, when it becomes too expensive to rent new property for new ideas. Then the bubble bursts, the tide ebbs and it all flows away.
The rumblings over rent control begin during the price-out. “Rent would be cheaper if it wasn’t for rent control,” they grumble. They make arguments about housing supply and how a few renters with artificially low rents are pushing up rents for those who are coming here for the first time. As if that has any basis in reality.
To the people grumbling about rent control pushing up prices, I ask you, when was the last time deregulating an industry actually lead to lower prices? The idea that landlords or any other entrepreneur would lower prices is patently silly. Companies don’t lower prices even when their production costs go down, unless they’re forced to. But in a city like San Francisco, where people are willing to pay $4,000+ a month to rent an apartment, what makes anyone think that cutting the legs out from under San Francisco’s poorest citizens will somehow cause landlords to make apartments available for less than the full weight of what the market will bear?
“Rent control disrupts the market,” which is always an interesting viewpoint, considering I never hear those same people complaining about Prop 13, which is actually the market disruptor. In fact the Board of Supervisors passed rent control in response to Prop 13, as they feared (rightly) that freezing property values would create a moneyed aristocracy and price out new home buyers. So someone who’s owned their building since 1978 is paying the same property taxes, but charging renters market rate. If you want to know why it’s so difficult to buy a house here, that’s why. Nobody wants to sell because it’s literally the easiest money on the planet — all you had to do was buy a house 20 years before most of these people were born. Prop 13 does that. Renters are paying $2,500 a month for a 1-bedroom, while the landlord who owns the building pays $500 a month for mortgage and property taxes.
Rent control, on the other hand, is not stifling the market. People are jumping at the bit to pay $5,000 a month for a two-bedroom apartment (or less). Rent control’s real purpose is to protect a working community during booms and bubbles, so that the city doesn’t collapse when the bubble bursts. When the gaggle of Google employees decide they want to live in the suburbs and have babies, when the mobile app market pops up in some other city, or when companies like Facebook build their own cities for their employees, the community surviving in their rent controlled apartments will continue living in the city and prop it up in the bust times. That’s why rent control is important to San Francisco.
What we have now are the rumblings of a young generation who, in their haste to plant their feet in San Francisco, negotiated terrible rent deals for themselves and figure that if they, with the help of city landlords, push out the poor and working class, they can secure better deals for themselves. Not only is it a short-sighted goal set by a group of people who already have a massive entitlement problem, but if they actually succeeded in doing so, there would be no San Francisco left for anybody after the next bubble bursts.
Rent control grumblings are more a response to the broken expectation of increased income. The people who find themselves upset at protected tenants are the people who are actually upset that their own income isn’t keeping up with their expectations. They’re upset that a year or two after negotiating high rent to secure a place, that it hasn’t gotten any easier because they’re not making the money they’d expected to be making. They’re upset that the promises of easy money are getting filtered to the wayside by reality and the fact that businesses are getting priced out, and don’t have the money to compete to employ them. The days of hopping on at a fresh start-up with millions in the bank are coming to a close, and the walls of opulence are closing in.
The grumblings at rent control are just the notion that these people can sacrifice San Francisco’s poorest to buy themselves more time and a nicer place. Unfortunately, that’s not going to help them. Killing off rent control wouldn’t decrease prices because the people who are willing to pay more than everybody else now will continue to be willing to pay more than everybody else, and making San Francisco more exclusive for the affluent would raise prices anyways. And how would anybody be able to get any work done if your landlord is constantly showing off your apartment to prospective tenants who are willing to pay more than you are? Nothing would get done.
Rent control has its purpose, and its purpose is protecting what makes San Francisco what it is. That needs to be protected, too, no matter how loud the grumblings against rent control get. When the businesses and startups get priced out and start making waves outside of the city, the community of San Francisco will still be here. When the bubble bursts and the people paying those thousands per month for rent decide to go with it, the community of San Francisco will still be here. When the $6/toast cafés disappear, the community will still be here. That’s why rent control is important to San Francisco.
