You’re a landlord — one of San Francisco’s “mom-and-pop” investors, who own less than four units and struggle to make a sliver of a profit With rent control, your tenants pay less than market value, and you’re stuck losing money every month. And with rising costs on housing maintenance, rent control has made it harder for you to provide for your tenants. You’re considering selling off your property altogether.
But if you’re a tenant, things are a lot worse. Rent control seemed like a godsend, until your AC broke down and roof threatened to cave in — your landlord doesn’t have the money to help you. And even worse, you can’t move out. Landlords across the Bay Area have increased upfront asking prices untouched by rent control to levels you can’t afford. You’re trapped in your decaying apartment because rent control has made it unaffordable for you to live elsewhere.
See, enacting rent control isn’t like waving a magical wand. Economic forces don’t simply comply to our will. In fact, it’s a bit like messing with a city’s genetic code.
While it seems beneficial for rents to increase at slower rates, rent control’s consequences extend far beyond rental prices. What really happens is a lot worse. Studies show rent-controlled units struggle with maintenance problems: holes in walls, chipped paint, loose railings, leaking pipes, no heating, and even rat and insect infestations.
This happens because landlords need profit. Lower rents hurt landlords’ ability to maintain units because of the costs. In Massachusetts, the Journal of Political Economics found that quality of housing increased when rent control ended, while controlled apartments faced expensive maintenance issues.
So rent control may aim to help tenants keep their apartments, but the increased price of self-maintenance overshadows any decreased rent. In a survey done by U.S. Department of Housing and Urban Development, nearly half of low income families said they had experienced a “major unexpected cost” due to maintenance issues, and over a quarter said they were unable to afford these costs. For the thousands of low-income tenants around the Bay Area, rent control only heightens the likelihood of losing a home.
Along with increasing maintenance costs, rent control also decreases the quantity of housing available. This is one of the most important factors concerning gentrification — the less quantity, the higher the pricing. The Bay Area has an overwhelming demand for housing and a lack of supply (think, the huge mansions of Los Altos that could house dozens of tenants). The imbalance has created rising prices, and the question becomes whether rent control harms or benefits the amount of housing available.
The empirics go against rent control. Cities with rent control lose housing supply. Conversely, cities who end rent control gain housing supply. According to the New York Times, rent control in San Francisco means 1,000 rental units lost per year as landlords seek to sell their property away for full value rather than rent it out. And when Massachusetts took away rent control, developers began to create housing at a much faster pace because they had more money to do so. With lower supply of housing under rent control, the price of new housing increases.
See, rent control stops rent from increasing for tenants who have already settled down. Yet for those looking to move into or around the Bay Area, the pricing of new housing — which rent control doesn’t change — shoots up. Rents for vacancies average $2,600 a month in rent-controlled San Francisco, a number that spiked with rent control and became one of the highest in the Bay Area. If rent control begins in other Bay Area cities, landlords and developers will not only lose the incentive, but the ability to create more housing. Low-income families will find it harder and harder to pay for the increased prices that come with the shrinking supply.
Proponents of rent control may point to the decreased price of controlled properties, and those statistics are undeniably true. However they fail to take into account other factors that increase costs such as maintenance, and they fail to take in the bigger question: will rent control create more or less housing in a market where supply dictates price?
Rent control may try to artificially dampen the price of rent, but it only slows development to a halt, and those with lower incomes will be hurt the most. As families’ maintenance costs increase, they’ll be forced to move out of unlivable conditions, but rent control also renders any new apartment they wish to rent completely unaffordable. And any low-income family looking for the opportunities of the Bay Area will be denied.
The result is a devastating income inequality and economic segregation, where the low-income families are uprooted and kept out of the Bay Area. For those struggling to keep their homes, for those seeking footing in the Bay Area’s wealth, and for those fighting against the barriers of income inequality, we must say no to rent control.
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