Rent Control: Good Vibes But Very Bad Policy
By Stephen Martin-Pinto
We’ve all heard it before.
“The rent is too damn high! We are in the middle of a housing affordability crisis, and landlords are abusing tenants.”
To control housing costs, tenant advocacy groups are always clamoring for stronger tenant protections and expanded rent control. But even as they do so, what they do not realize, perhaps through their own lack of understanding, is that they are advocating for even higher rental costs and restricted housing supply in the long term.
Rent control is popular policy but terrible politics, often sold to people who do not understand economic theory and want a quick fix to the affordable housing crisis.
The Costa-Hawkins act of 1995 limits the ability of municipalities to apply rent control. No city or county can enact rent control on any single-family home and any “new” residential development.
“New” takes on a rather subjective meaning, especially in cities with pre-existing rent control. In San Francisco, this is interpreted as any building built after July 1979. Statewide, the legislation forbids rent control to be applied to any building built after February 1995. The idea behind this legislation was that too much rent control would exacerbate housing costs and limit housing construction, and that is correct.
The majority of economists, regardless of political persuasion, agree that price controls on housing tend to exacerbate housing costs. Furthermore, it changes behaviors and disincentivizes renters from leaving the rental market and purchasing their own home. They become relegated to not having control over their own housing situation and always at risk for possible eviction.
Instead of recognizing the problem of housing affordability and thinking through the issue, many politicians would rather double down on this bad policy to the point at which it creates perverse situations in which renters are subsidized by landlords who earn far less and, in some cases, are even worth less, and which renters often own and live in homes out of town yet keep a rent-controlled unit in San Francisco. This is an abuse of the spirit of rent-control, which is to help residents stay in their units.
However, as we have seen in Argentina, elimination of price controls in the housing market has led up to a 40% decline in rental prices, and it is not hard to understand why.
Landlords, reticent to enter the rental market or more prone to keeping their units only available for short-term vacation rentals, have now flooded the rental markets with newly available units. Going forward, developers will now be more likely to build more housing as they are more likely to get a good return on investment.
In San Francisco, our onerous rental policies that treat landlords like criminals are the reasons why many of them choose to keep units off the market as it becomes too risky for them to rent units.
I am not suggesting an elimination of rent control over night. Unfortunately, the system has created a situation in which it is too late for many tenants to move and afford another unit.
However, if we implement either an absolute expiration date or grandfather all existing tenants with rent control while abolishing it for all new tenants, we can make a significant dent in our affordability crisis without tearing up neighborhoods as well as more accurately ascertain the true need for housing. It will certainly be much less and will give San Francisco a better argument against our absurd 82,000 housing unit requirement by the year 2030.
Stephen Martin-Pinto is a San Francisco firefighter, retired Marine Corps major, and former District 7 supervisor candidate.
Links:
1. https://freakonomics.com/podcast/why-rent-control-doesnt-work-update/
2. https://www.sfchronicle.com/sf/article/San-Francisco-activist-Cleve-Jones-to-vacate-17073733.php
3. https://reason.com/2024/10/11/argentina-ended-rent-control-guess-what-happened-next/
Categories: Commentary
Richmond Review/Sunset Beacon 
And I thought Quentin Kopp was reactionary! Perennial Republican Supervisor candidate Pinto, like all “moderates”, loves to make up stories.
If someone is renting an apartment and not living in it full-time, that is their business! Apartments and flats are rented according the prevailing rate.
The only reason that rate is so much higher now is the government-induced tech-generated housing crisis. Greedy landlords used the prospect of wealthy techies living here by raising rates for everyone.
Which means that it will be harder and harder to get minimum-wage workers, who can not even afford a room in a shared apartment here!
Does the government “treat landlords like criminals”?
Hardly.
They have every advantage!
Does the Argentinian economy bear any resemblance to San Francisco’s?
Absolutely not!
Is Reason.com an illogical “libertarian” website that only wackos would take seriously?
Absolutely!
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What are the author’s qualifications on SF’s rental economics (or economics in general) to make such sweeping and generalized pronouncements? Being a firefighter or a Marine, daresay a landlord? SF is not Argentina. It’s really not too similar even for a macroeconomic analysis. I agree the city makes small landlords jump through unnecessary hoops to an extent, and certainly there are costs associated with being a property owner, but newer non-controlled buildings tend to have significantly higher starting rents and that much should be obvious to any prospective supervisor candidate. It’s certainly a lot more complex than the author seems to comprehend for their one issue “release” here. What prompted this anyway? The market has obviously been much tighter than it currently is, maybe he hasn’t been here long enough to know that? What’s certain though is that without rent control, massive swaths of SF would be forced to move (to where?) and they would be replaced by a much wealthier subgroup that could absorb it. Gentrification, as if by sole design. Those people currently are welcome to buy condos, of which there is an available glut to choose from. The author is also welcome to study the issue in more depth and perhaps refrain from proposing sweeping changes to something so profound to long-term SF residents. I know landlords and tenants play the “us vs them” game ad nauseam but to hear it so watered down from a relatively recent transplant without economic qualifications… spare me, thanks. We know the type.
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I agree that the 82,000 “requirement” that Scott Wiener cooked up (so he could deregulate the planning and development for his developer donors, natch) is ridiculous – as it was designed to fail. Qui bono? Developers, and thus, his pockets and his richest constituents to whom he bows. That was always the plan so they could ram through the construction against local wishes for monster developers and corporate landlords. They know where their bread is buttered and care about nothing else. Low income residents are the farthest thing from their minds, or they would be putting significant % quotas on new construction instead of the 5-10% we typically see. Yes, that cuts into developer profits. If that’s your sole concern, gee, maybe you aren’t serious about keeping rental prices down? Just a hunch.
Bottom line, top of market housing doesn’t cure the housing crisis where it matters. The opposite is true, it furthers gentrification, as we’ve seen over the last 3 decades. Sellouts gonna sell out, but don’t pretend SF renters should want that. No thank you, Mr. Firefighter Landlord guy. Stay in school and may the voters beware.
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