Sunday, May 8, 2011

Rent Controls Work In the People's Republic of San Francisco..... doing what they always do, provide disincentives for suppliers. Couple the price controls with onerous regulations and you really have a mess.

The Bay Citizen's Elizabeth Lesly Stevens reports:
In San Francisco, one of the toughest places in the country to find a place to live, more than 31,000 housing units — one of every 12 — now sit vacant, according to recently released census data. That’s the highest vacancy rate in the region, and a 70 percent increase from a decade ago.
The reason? The city's rent control laws that make it difficult to raise rents or evict a tenant.
Increasingly, small-time landlords are just giving up, like one who has left two large apartments on the second and third floors of her building vacant for more than a decade, after a series of tenant difficulties. It’s just not worth the bother, or the risk, of being legally tied to a tenant for decades.
“Vacancy rates are going up because owners have decided to take their units off the market,” said Ross Mirkarimi, a progressive member of the Board of Supervisors. He attributes that response to “peaking frustrations in dealing with the range of laws that protect tenants in San Francisco that make it difficult for small property owners to thrive.”
Perversely, that is hurting the city’s renters as well, as a large percentage of the city’s housing stock is allowed to just sit vacant, driving up rents that newcomers pay for market-rate housing.
If you want to understand what health services will be like under Obamacare, think the SF real estate market, where price controls and other regulations create disincentives for suppliers to bring product to market.

When people don't understand economics, they tend to think they can micro-manage the economy. They fail to understand that prices are signals that are an important factor in directing activity within an economy and that when price controls are in place, they result in distorting price signals, which results in a lower standard of living.


1 comment:

  1. Can we evict California from the US? Yes we'd lose a few good pieces here and there, but overall I think it would be addition by subtraction. For some reason, the rule of law never seems to apply in, why not let them fend for themselves for a while. As people continue to leave that state in droves, they will soon learn just what Atlas Shrugged was all about. Sometimes, people need to learn their lessons the hard way.