Photo by Brian Addison. Above: construction on a housing development at Broadway and Pacific takes shape.
Many housing advocates are cheering on the process of getting an initiative on November 2018’s ballot that will enact some form of rent control in Long Beach—and those advocates are dismayed when they hear that I am weary if not outright skeptical of rent control. After all, I consider myself a proponent of the poor, affordability, and diversity; of progress and accessibility—and on the surface, dissenting against rent control seems antithetical to upholding those values.
But I have major concerns with rent control—and that’s because the blunt reality is that rent control has, in all frankness, helped to create the most expensive markets in the nation: San Francisco, New York, Los Angeles, Santa Monica…
In other words, it doesn’t create affordability in the long-term; it does, admittedly, create affordability for those lucky enough to already be living in apartments but, when it comes to the future—those momentarily evicted and seeking new housing, those experiencing homelessness and trying to attain stable housing, students moving out of their parents homes, families seeking California as their new home…—it isn’t so bright.
However, much of this conversation has been driven by market sources, the types of sources that pay more heed to the benefits of property owners rather than the respect renters should be given—so I’ve been hesitant with the data provided.
According to a new study from Stanford, not only does rent control destabilize affordability in cities, it actually spurred the gentrification that has caused countless displacements and a lack of affordability in San Francisco.
In 1994, San Francisco voters passed one of the nation’s most aggressive rent control policies: rent control protections were expanded on buildings built before 1980, or 30% of the city’s rental supply.
According to the study, forcing landlords to provide the insurance tenants need in order to continue living actually leads to large losses for one group only: the renters rent control is seeking to protect.
While it did save those already living in San Francisco thousands of dollars in rent, researchers behind the new study, Rebecca Diamond and Tim McQuade, claim that it also had an adverse effect.
Property owners began using tactics to remove renters in order to cover the lost costs: move-in eviction by moving into the spaces themselves, using the Ellis Act to evict tenants if they intend to convert the units to market rate, offer their tenants compensation to leave… Then, following the removal of tenants, landlords no longer rented out the spaces. They would then re-build or convert the spaces and, thanks to the controversial Costa-Hawkins Rental Housing Act passed in 1995 that prohibited rent control on any building built after that year, put the property in the clear from having to face those rent control laws again.
“We find tenants covered by rent control do place a substantial value on the benefit, as revealed by their migration patterns,” the study said. “However, landlords of properties impacted by the law change respond over the long term by substituting to other types of real estate, in particular by converting to condos and redeveloping buildings so as to exempt them from rent control. This substitution toward owner occupied and high-end new construction rental housing likely fueled the gentrification of San Francisco, as these types of properties cater to higher income individuals.”
The paper goes on to point out that, because of rent controls becoming stricter following the 1994 vote, landlords actively redeveloped their buildings, prompting a 15% reduction in the rental supply.
The end result? A loss “to all renters [totaling] $5B due to rent control’s effect on decreasing the rental housing and raising market rents,” according to the study. In other words, forcing landlords to provide the insurance tenants need in order to continue living actually leads to large losses for one group only: the renters rent control is seeking to protect.
So, here I am, railing against the lack of affordable housing (and housing in general) but also railing against possible solutions to prevent thousands of hardworking folks from getting displaced.
What is the answer? We do have other options—mainly leaning toward more public housing, rent stabilization over rent control, and examples of more inclusionary zoning policies rather than just focusing on “bad examples” like San Francisco.
But the full truth is that I really don’t know en tout outside the aforementioned options but I do feel our focus should be on long-term affordability rather than band aids to rising housing costs.
The study further suggests that the burden be removed from the backs of landlords and onto the state through subsidies and tax credits for renters, therefore allowing the landlord to maintain their properties, keep tenants, and be swayed away from converting their precious rentals into market-rate housing. However, this suggestion has no data to back up its plausibility; there is no research on such a tactic.
The ultimate questions we face as a society when it comes to housing are the same ones myself and many other writers, researchers, advocates, and journalists brought up in our City Rising series: is housing a human right and, if so, who should that financial burden fall on in order to support that right?