American Consequences - October 2018

As the supply of affordable housing decreased, thousands of tenants ended up paying a lot more than 30% of their gross income for rent. The elderly, the disabled, and the poor were disproportionately expelled from the city. Apartment hoarding contributed to the problem of undersupply, but the main driver of high rents was burgeoning demand and building restrictions. Ending rent control was not a solution to the bigger problem. Nonetheless, affordable housing advocates and political “progressives” called for solving the problem of rising rents with stronger rent controls. While strict rent controls partly catalyzed rising rents in San Francisco, New York, and Los Angeles, the explosion of rental prices around the nation has multiple causes. California needs 1.4 million new housing units to render its market universally affordable, based on families paying 30% of household income for rent. That is not projected to occur at current rates of building, and residents who cannot find housing are fleeing the state. The prognosis in San Francisco is better. According to the city planning department, 60% of renters live in 160,000 rent- controlled units, nearly half the renter and owner-occupied housing stock. (San Francisco is a city of tenants!) But the ratio of controlled units to market rate units is falling as new construction booms . In the face of the housing shortage, the city’s WHAT’S NEXT FOR RENT CONTROL

To the degree that rent controls have caused excess pricing (above normal returns) in non -controlled buildings, those owners likely booked higher rates of profit than their rent- controlled brethren. Between 80%-90% of San Francisco’s rent- controlled units turn over regularly, despite substantial hoarding. The ordinances protect tenants from unjust evictions. Much of the money that rent-controlled tenants save on housing is spent locally, studies show. Rent- controlled neighborhoods tend to be socially stable, and family- and business-friendly. San Francisco’s relatively stable housing situation changed in the late 1990s as the dot-com industry bubbled. Cash-loaded Java programmers paid exorbitant rents in rapidly gentrifying neighborhoods – and that was a tipping point. Landlords legally and illegally began converting rent-controlled apartments into non-rent-controlled condominiums by evicting longtime tenants. Squeezing through loopholes in restrictive zoning and building codes, developers tore down rent-controlled apartments, replacing them with high-priced developments, neighborhood groups fought attempts by city officials to loosen restrictions on housing density and building heights so that regular market-rate family housing could be built. “Not in my backyard” lawsuits, campaign contributions, and the occasional demonstration at City Hall stifled the growth of market-rate units, despite increasing demand as the population swelled. studios suitable for childless folks. Reacting to the flurry of unwanted

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