In the People's Republic of Berkeley, our City Council patted themselves on the back in March 2025 when they passed similar laws.
Then they got sued by the company that was targeted, and immediately waffled and canceled the ban.
What's insane about all of this is that we also have Rent Control. There is no greater price fixing mechanism than Rent Control. Rent Control ensures that all landlords must seek the highest possible rent, because they are (potentially) tethered to it for life (of the tenant).
So if you create an economic system where sellers never will allow prices to go down, why bother banning price fixing -- its practically baked into the housing code.
Under rent control the highest possible rent is set by laws. If you fall behind on the allowed rent increase you’re usually not allowed to catch up to market rate later, such as when your tenant leaves and you put the unit back on the market. So to avoid getting stuck at below market rate with no legal way to catch up, you have to take the maximum allowable rent increase every year. In some situations it’s better to leave a unit empty and wait for someone be willing to rent at the rate than it is to lower rent, because the consequences of lowering rent will stick with the unit for years.
Without rent control, rents can be kept constant, moved up, or moved down without having to consider the consequences for years to come. The ceiling is set by the market rate, but there isn’t a function driving all of the landlords to raise by the annually permissible maximum so they try to discover it instead.
Rent control is instituted in cities that have constrained housing supplies, so the demand is there. Landlords switch to raising rents in unison by the maximum allowable amount every year because that’s the only way to operate.
I live in NYC, which has rent control, and the idea that a landlord would otherwise lower rent is hilarious.
Landlords raise rent by the max allowed because they can. There is no “catch up” because the purpose is to protect renters against huge jumps.
I think rent controlled units that sit empty should be subject to a tax based on an escalating percentage of the market rent. You can own property to rent out, but in a city with a tremendous shortage of housing, you need to rent it out.
I lived in a building with affordable housing units and management decided they would rather not rent them out at all. Horrible.
New York’s rent control works differently from the Bay Area’s. It’s absolutely worth it to just raise the rent on a Bay Area unit if it’s rent controlled even if that means it runs empty. That isn’t usually the case in New York.
> I think rent controlled units that sit empty should be subject to a tax based on an escalating percentage of the market rent
They would just be taken off the market and then relisted later.
Forcing people to rent their properties and also forcing the price isn’t something I can get behind. People need to be able to choose what they do with their property.
> People need to be able to choose what they do with their property.
We have a severe housing shortage and these are developers building high-rise apartments. This isn’t me saying you should be forced to rent your second bedroom.
They are getting permits and incentives _to build housing_.
Why is this so difficult? We will try absolutely anything except to allow enough housing to be built, and then ask why there isn't enough housing. It's madness.
If there isn't enough housing, no amount of shenanigans can overcome that inconvenient fact, except to build more housing. That's it. That is the only thing which can alleviate a housing shortage.
Particularly in NYC you can’t just build housing - there’s nowhere to put it! The city is already incredibly dense and most land is already used for housing. Your best bet is demolishing lower rise buildings and replacing them with high rises.
Which, they do all the time, even in places like Brooklyn. It’s been happening for decades. But as you can imagine, it’s a long and arduous process. It’s not like erecting an apartment complex in the middle of a big plain of land in Texas.
Just as well I’m not arguing for rent control or any particular policy then isn’t it?
I’m pointing out that the “it’s my property I can do what I want” attitude needs to be balanced with public needs for housing, because society isn’t purely about optimising the content of your wallet, and extreme deregulation results in slums.
(Your linked paper there also says that rent control results in more properties having affordable rent at the low end of the market, but less overall rental property supply, indicating a reduction at the higher end. I’m good with that as a consequence, those who are better off can usually afford to get into purchasing a property. In some markets, like much of Australia, having fewer landlords and wannabe landlords competing to purchase properties would be a bonus. This actually looks like a win all round TBH.
tl;dr - congrats, you’ve used science to sell me on rent control)
> (Your linked paper there also says that rent control results in more properties having affordable rent at the low end of the market, but less overall rental property supply, indicating a reduction at the higher end.
Your conclusion is completely wrong.
What happens when you reduce the higher end of the rental property range? Do you think the people who would have been renting those properties simply vanish? Disappear from the rental market?
No, obviously they don't. So what are they doing instead? They're renting those mid-end properties instead. And what happens to the people who would have rented those mid-end properties that are now occupied by the wealthier renters? They get pushed to the low-end properties. What happens to the people who were trying to get into the low-end properties? They're pushed into being roommates or leaving the city.
Any policy that reduces overall housing supply is a loss for the low end. The way you're bending over backwards to try to imagine this as a good thing indicates something very wrong with your assumptions.
This is a case where someone has become so narrowly focused on hurting the people they perceive as wealthy (people who rent the expensive units) that even solutions that hurt the poor (policies which reduce housing supply) look like a good idea. This isn’t a good way to think.
> Do you think the people who would have been renting those properties simply vanish? Disappear from the rental market?
Actually yes, entirely unironically.
We even have evidence of this dynamic in Melbourne. When various tax measures were taken that sucked some of the profit out of investment properties, making landlordism less attractive, we saw there was less competition for house purchasing from well-funded investors. This in turn allowed would-be owner-occupiers to buy more houses, as they were no longer forced into rentals they didn't want, no longer outcompeted by those with easier access to larger lines of credit. This reduces the population of people seeking rentals.
Result - decline in the absolute numbers of rental properties in the city, but an increase in rental property vacancy and a slight decrease in rents.
> Any policy that reduces overall housing supply is a loss for the low end.
Except it doesn't reduce the overall housing supply, because overall housing supply includes both rental properties and owner-occupied properties. Those houses don't just disappear.
You're making the (false) assumptions that there is no interplay between the two markets and that everyone that lives in a rented house wants to live in a rented house.
The same paper specifically notes that the increase of units affordable to very low income levels depends on there being any significant number of units affordable to very low income levels in the first place, and that's something that's functionally nonexistent in places like San Francisco and NYC.
If the thing you own happens to be essential for other people's lives, and in short supply to boot, it would be irresponsible to leave all the decisions to you.
If the maximum allowable rent under rent control is bearable by the market, why would a landlord not do that in the absence of rent control? Are there landlords that are stupid and hate money?
> Landlords switch to raising rents in unison by the maximum allowable amount every year
Blaming this on rent control? This entire take is absurd. Because of the simple fact that landlords, especially using this software, do this in cities without rent control.
Unless now type arguing that Berkley rent control forces landlords in cities without rent control to seek maximum rents...
Rent control is flawed, limiting housing stock is flawed. But blaming landlord's pricing behavior on this is obviously false. Simply because it happens without rent control.
> Blaming this on rent control? This entire take is absurd
Rent control is one of the few topics where the vast majority of economists agree on something. It makes people who don't understand second-order effects really angry when the conclusion doesn't match what they want to see, but it's been proven out across the world so many times that anyone who refuses to acknowledge the real problems with rent control is either uninformed or denying reality at this point.
None of this is relevant to Berkeley since California law prohibits rent control on vacant units (and has for decades). When renting ti a new tenant landlords can charge whatever they like.
It's honestly absurd to read this thread because everyone who has ever rented in the SF bay area knows this, yet there's a whole discussion based on some half-assumed idea of what the system is.
Sounds like we should prevent rent increases. Fix the law, don't throw it away. Landlords that cannot afford to be landlords need to sell and go get a real job.
No one is entitled to be a lazy landlord taxing other people's existence and its extremely rare for a landlord to have built new houses, they mostly gatekeep the existing housing.
People in california need to take advantage of a populace willing to vote for constitutional amendments and override the politicians.
They would. But second order effects ensure that this very act leads to the decline of housing prices. These effects being eliminated by rent control makes it the premier anti-tenant policy.
What second-order effects...? Feels like such an oddly opqaue way to talk about them. And how do you ignore the effect of the fact that rent no longer rises during the life of the tenant, making it lower after a while than it would otherwise be...? (How) is it so obvious that that is dwarfed by the second-order effects of uncontrolled rent that it doesn't even warrant a mention? Because it isn't to me.
> And how do you ignore the effect of the fact that rent no longer rises during the life of the tenant,
Rent control schemes don’t work like this, except in completely broken policies.
Landlords are given an allowance for rent control increases year over year. The point is that they basically have to take the maximum allowed every year to avoid getting stuck.
If rent no longer rises then the profit doesn't rise commensurately with demand, so the money isn't there to build supply.
Rent control crushes supply to the degree that the rent control caps rents below the actual market rate.
If you're lucky enough to get rent controlled housing then you're in good shape. But good luck getting it when things get far enough down the timeline.
Rent fixing is the other side where supply is manipulated to extract the maximum profit. In this case the coordinated rent pricing action behaves like an oligopoly.
If rents can’t rise quickly, then the expected profit of a building goes down, which means prices for land go down, which means it is cheaper to build, which means it balances out.
If the balance is far enough off that everything turns into commercial real estate, that can be solved, too.
You’re misunderstanding 2 fundamental things. First is that it’s very expensive to build anything in major US cities with the high cost of labor, materials, and permitting. Rent control completely tips the balance against building housing that you’ll rent out. Second is that the value of land is not going to depreciate in these premier US cities just because it’s not profitable to build rental units. There’s many valuable things you can do with that land, rental units will just stop getting built in favor of other things.
Prices are a signal, and price changes are how market participants can determine which way supply and demand curves are moving.
By legislating prices and price changes, the signal is muddied, and market participants cannot take action to match the movements of the supply and demand curves.
Prop 13’s property tax rate increase cap is also price fixing. These kinds of laws are mostly ways to enrich and reward those who got or were born somewhere first, and run counter to the vaunted meritocracy that a so called free market can encourage.
Edit: The most helpful thing the government can do is maximize price transparency, so the smaller entity can be on equal footing with the bigger entity about which way prices are moving. Tenant agreements should be public record, like land sales are, and that would not only help cops with kicking out squatters, but also give renters more power in negotiations.
These side effects of these dynamics are not going to be evident or resolved in the short term. It took decades for prop 13’s (and other effects) to compound and become visible, and it will take decades to undo.
There is no shortcut though, the incentives have to be set right, and there has to be patience for the results to show. Unfortunately, long term benefit at the expense of the short term is a core weakness in democracy.
I don't think that's true. Prop 13 for example is priced into the market. Buyers bid higher because their taxes are frozen. This doesn't take decades to correct.
Market reactions are instant. Once the policy is fixed we don't have to wait for a generation
Buyers bid higher because sellers are giving up their low property tax, not because the buyer will have a low property tax in a decade or two. Sellers are hesitant to sell because they are giving up a lot, California had to pass a special law just to let old people downsize without losing their low property tax on the big home they raised a family in.
With rent control, you are limited in how you can increase rent later, so it’s to your benefit to let the apartment sit vacant longer until you get a desirable rent. Without rent control, because you can just increase rent next year by whatever, you can rent it at the market rate right away without waiting.
You might prefer to have the vacancy filled faster rather than waiting for the highest possible price. These algorithmic pricing cases kind of revolve around this concept.
It is the value that the service provided the companies.
Landlord input a desired vacancy rate or time on Market, and service suggests the right price.
Fun fact: in RealPage's brief about the Berkeley law they cited my work that shows rents in Berkeley declining. They never had the power to artificially set rents.
Every rental unit in the city I live in is rent controlled — the government sets a maximum rental increase per unit per year. This is here in the People’s Republic of … checks notes … Dubai. It works great.
The Dubai rent control system has some important differences compared to Berkeley. Dubai’s rent change is indexed to the rental market but Berkeley’s isn’t. Berkeley’s max change in a year is like 1% while Dubai’s could be as high as 20% in some cases.
Also, in Dubai if the owner wants to sell and not renew the lease they can. In Berkeley it’s not nearly so simple.
In San Francisco, I’m not a fan of Aaron Peskin’s ban on algorithmic rent-setting (Admin Code 37.10C https://codelibrary.amlegal.com/codes/san_francisco/latest/s...) (which is probably similar to the other cities) because 1) it goes beyond antitrust law in just banning data gathering for no good reason, and 2) it rewards bounty hunters.
1. It goes beyond antitrust guidelines by banning rent prediction using any “non-public competitor data”, which is stricter than the former antitrust guidelines which prohibited sharing “competitively sensitive variables” (https://www.ftc.gov/sites/default/files/attachments/dealings...). To the extent that it differs from banning competitively sensitive data, it is just banning the use of data to make rentals more efficient. If landlords are pricing accurately but not monopolistically, this should reduce turnover, reduce vacancy, and reduce the occasions where a listing gets a crowd of applicants, which is good for both landlord and tenant. It’s bad to try to ban accurate data.
2. It provides a private right of action for tenants and nonprofits to sue, just like Proposition 65 (Known by the State of California to cause cancer) incentivizes bounty hunters to sue. The point seems to be to punish landlords more than it is to establish fair rules.
And it seems that these lawsuits are just piggybacking on the DOJ settlement by punishing anyone who uses RealPage as soon as the ordinance becomes effective in 30 days while RealPage was already working to settle federally. The complaints (e.g. the SF one https://www.courtlistener.com/docket/73573242/gomez-v-greyst...) don’t have any new violations; just companies who are already settling. I don’t think that’s justice for a city to frontrun the federal settlement with new violations for the same program.
SF as a city has the fundamental problem that there's a huge part of the electorate will blame the housing shortage on absolutely anything they can find that's not the actual fundamental physical shortage of housing. That leads to an endless tangle of local laws and organizations supposedly trying to "do something about it", that are fundamentally just making the problem worse by adding marginal cost to every new already-difficult-to-pencil housing unit.
Yes, you would think that a city with such a rent crisis would be begging for development e.g. incentivizing homeowners to redevelop into townhouses and apartments. But instead, the so-called “Progressive” wing has very little interest in reducing market rents and prefers to chase fringe issues (to take one example, they spent the year 2015 very publicly attacking the “Moderate” David Chiu’s short-term rental law, only to arrive at substantively the same place that they started at the end of the year. And suddenly the issue disappeared).
There’s proportional punishment based on harm, and then there are abusive booby-traps. If a landlord uses a nonpublic dataset (e.g., a vendor’s model based on year-old data that would not harm competition under the antitrust settlement), then a tenant and nonprofit can each sue for civil penalties plus attorney fees even though there is no harm.
> If landlords are pricing accurately but not monopolistically, this should reduce turnover, reduce vacancy, and...
Ah yes one of my favorite lines of argument: "We don't need laws, if companies are just behaving properly and against their financial interests to behave in a way that harms legit market pricing..."
Except as we know companies won't behave well without incentives. Which is why we need laws on it.
> Ah yes one of my favorite lines of argument: "We don't need laws
That’s not my argument at all. We do have federal antitrust law. My question was what does the ordinance do that differs from antitrust. The answer is that the ordinance rewards bounty hunters chasing the same federal case, and also bans non-“competitively sensitive” datasets.
I’d imagine it’s not so simple, especially without a functional legislative branch, but we could really use a “digital bill of rights” that could provide a comprehensive set of baseline protections and standards for things like this, online privacy, data protection, whatever stops Meta/X/et al from being maximally harmful, etc..
> Our work against algorithmic rent-fixing is starting to bear real fruit. Multiple cities have passed laws prohibiting corporate landlords from using rent-fixing software, including San Francisco, San Diego, Seattle, Philadelphia, and Providence, RI. These laws aren’t complex and don’t require unwieldy market definition, you just have to show that the defendant is using nonpublic information in an algorithm to set prices. And they are being enforced, with six different lawsuits now pending.
A bunch of landlords all use the same software to tell them how to price rents. The software continually pushes prices higher and higher. The software requires landlords to use their pricing as a condition of use. Now you have a price-fixing cartel for rent.
And those corporations can decide that they'd rather the apartment sit vacant than be rented at below exactly what they'd like to get for it, bolstered in part by the fact they can claim the non-occupancy as a loss on their taxes.
Well, governments have successfully enabled wealth disparity to the point where corporations are buying up several tens of thousands of homes. Maybe free range capitalism isn't the amazing utopia it's cracked up to be?
1. There are 90 million single family homes in the US
2. If you want to live in a house, but for less than 5 years, it is better to rent
3. If corporations really want to buy all the houses, there's a business opportunity for you. Build houses and sell them to the corporations at exorbitant prices.
4. Nobody is making anybody sell their home to a corporation.
5. Renting out homes does not reduce the supply of housing.
6. Homes are crummy investments.
Capitalist countries are indeed quite amazing compared to socialist countries. That's why people flee socialist countries and try to get in the US.
1. And? Most are occupied. How many unoccupied SFHs are there?
2. I am a home owner. There is a certain subset of the populace that likes to act as though renters have it so easy, because owning a home is a never ending stream of credit card swipes for the next four (or five) digit maintenance expense - when they're not posting memes talking about not having to pay property tax or insurance or even utilities, as if landlords absorb those out of the goodness of their heart.
These corporations, if you read the article in the first place are colluding across other corporate landlords because if they don't get the rent they want, they would rather keep the occupancy vacant, because then they also get to claim it as a tax loss.
> Capitalist countries are indeed quite amazing compared to socialist countries. That's why people flee socialist countries and try to get in the US.
People don't generally flee socialism, but corruption. But hey, here we are in the US where we're doing a spectacular job of showing what a corrupt capitalist society looks like. And hey, look, the number of people trying "to get in here" is dropping like a rock.
Tens of thousands is not significant wrt 94 million.
> 2.
If you ever owned a vacant home, not only are you still going to have to pay all the usual bills, you'll be dealing with vandalism, squatters, and that undetected roof leak that ruins the interior. Thinking that "tax losses" are the way to make money does not work. If you don't believe me, buy a rental and see how it goes as a landlord. Personally, I want nothing to do with being a landlord.
> People don't generally flee socialism, but corruption
In the People's Republic of Berkeley, our City Council patted themselves on the back in March 2025 when they passed similar laws.
Then they got sued by the company that was targeted, and immediately waffled and canceled the ban.
What's insane about all of this is that we also have Rent Control. There is no greater price fixing mechanism than Rent Control. Rent Control ensures that all landlords must seek the highest possible rent, because they are (potentially) tethered to it for life (of the tenant).
So if you create an economic system where sellers never will allow prices to go down, why bother banning price fixing -- its practically baked into the housing code.
Why would landlords not seek the highest possible rent without rent control?
Under rent control the highest possible rent is set by laws. If you fall behind on the allowed rent increase you’re usually not allowed to catch up to market rate later, such as when your tenant leaves and you put the unit back on the market. So to avoid getting stuck at below market rate with no legal way to catch up, you have to take the maximum allowable rent increase every year. In some situations it’s better to leave a unit empty and wait for someone be willing to rent at the rate than it is to lower rent, because the consequences of lowering rent will stick with the unit for years.
Without rent control, rents can be kept constant, moved up, or moved down without having to consider the consequences for years to come. The ceiling is set by the market rate, but there isn’t a function driving all of the landlords to raise by the annually permissible maximum so they try to discover it instead.
Rent control is instituted in cities that have constrained housing supplies, so the demand is there. Landlords switch to raising rents in unison by the maximum allowable amount every year because that’s the only way to operate.
I live in NYC, which has rent control, and the idea that a landlord would otherwise lower rent is hilarious.
Landlords raise rent by the max allowed because they can. There is no “catch up” because the purpose is to protect renters against huge jumps.
I think rent controlled units that sit empty should be subject to a tax based on an escalating percentage of the market rent. You can own property to rent out, but in a city with a tremendous shortage of housing, you need to rent it out.
I lived in a building with affordable housing units and management decided they would rather not rent them out at all. Horrible.
New York’s rent control works differently from the Bay Area’s. It’s absolutely worth it to just raise the rent on a Bay Area unit if it’s rent controlled even if that means it runs empty. That isn’t usually the case in New York.
Fix it.
> I think rent controlled units that sit empty should be subject to a tax based on an escalating percentage of the market rent
They would just be taken off the market and then relisted later.
Forcing people to rent their properties and also forcing the price isn’t something I can get behind. People need to be able to choose what they do with their property.
> People need to be able to choose what they do with their property.
We have a severe housing shortage and these are developers building high-rise apartments. This isn’t me saying you should be forced to rent your second bedroom.
They are getting permits and incentives _to build housing_.
In a city or country with housing shortages or a very tight market, that’s asking a lot.
People need homes, and there is a balance to be struck for the public good.
So let them build enough housing!
Why is this so difficult? We will try absolutely anything except to allow enough housing to be built, and then ask why there isn't enough housing. It's madness.
If there isn't enough housing, no amount of shenanigans can overcome that inconvenient fact, except to build more housing. That's it. That is the only thing which can alleviate a housing shortage.
Particularly in NYC you can’t just build housing - there’s nowhere to put it! The city is already incredibly dense and most land is already used for housing. Your best bet is demolishing lower rise buildings and replacing them with high rises.
Which, they do all the time, even in places like Brooklyn. It’s been happening for decades. But as you can imagine, it’s a long and arduous process. It’s not like erecting an apartment complex in the middle of a big plain of land in Texas.
Housing shortages are a result of local policies, and rent control makes housing shortages worse (https://www.sciencedirect.com/science/article/pii/S105113772...).
Just as well I’m not arguing for rent control or any particular policy then isn’t it?
I’m pointing out that the “it’s my property I can do what I want” attitude needs to be balanced with public needs for housing, because society isn’t purely about optimising the content of your wallet, and extreme deregulation results in slums.
(Your linked paper there also says that rent control results in more properties having affordable rent at the low end of the market, but less overall rental property supply, indicating a reduction at the higher end. I’m good with that as a consequence, those who are better off can usually afford to get into purchasing a property. In some markets, like much of Australia, having fewer landlords and wannabe landlords competing to purchase properties would be a bonus. This actually looks like a win all round TBH.
tl;dr - congrats, you’ve used science to sell me on rent control)
> (Your linked paper there also says that rent control results in more properties having affordable rent at the low end of the market, but less overall rental property supply, indicating a reduction at the higher end.
Your conclusion is completely wrong.
What happens when you reduce the higher end of the rental property range? Do you think the people who would have been renting those properties simply vanish? Disappear from the rental market?
No, obviously they don't. So what are they doing instead? They're renting those mid-end properties instead. And what happens to the people who would have rented those mid-end properties that are now occupied by the wealthier renters? They get pushed to the low-end properties. What happens to the people who were trying to get into the low-end properties? They're pushed into being roommates or leaving the city.
Any policy that reduces overall housing supply is a loss for the low end. The way you're bending over backwards to try to imagine this as a good thing indicates something very wrong with your assumptions.
This is a case where someone has become so narrowly focused on hurting the people they perceive as wealthy (people who rent the expensive units) that even solutions that hurt the poor (policies which reduce housing supply) look like a good idea. This isn’t a good way to think.
> Do you think the people who would have been renting those properties simply vanish? Disappear from the rental market?
Actually yes, entirely unironically.
We even have evidence of this dynamic in Melbourne. When various tax measures were taken that sucked some of the profit out of investment properties, making landlordism less attractive, we saw there was less competition for house purchasing from well-funded investors. This in turn allowed would-be owner-occupiers to buy more houses, as they were no longer forced into rentals they didn't want, no longer outcompeted by those with easier access to larger lines of credit. This reduces the population of people seeking rentals.
Result - decline in the absolute numbers of rental properties in the city, but an increase in rental property vacancy and a slight decrease in rents.
> Any policy that reduces overall housing supply is a loss for the low end.
Except it doesn't reduce the overall housing supply, because overall housing supply includes both rental properties and owner-occupied properties. Those houses don't just disappear.
You're making the (false) assumptions that there is no interplay between the two markets and that everyone that lives in a rented house wants to live in a rented house.
The same paper specifically notes that the increase of units affordable to very low income levels depends on there being any significant number of units affordable to very low income levels in the first place, and that's something that's functionally nonexistent in places like San Francisco and NYC.
The people imposing the rent control are the same people responsible for the shortage, so I just can't get behind that.
If the thing you own happens to be essential for other people's lives, and in short supply to boot, it would be irresponsible to leave all the decisions to you.
Just charge a tax on the value of the land.
Underrated comment.
If the maximum allowable rent under rent control is bearable by the market, why would a landlord not do that in the absence of rent control? Are there landlords that are stupid and hate money?
> Landlords switch to raising rents in unison by the maximum allowable amount every year
Blaming this on rent control? This entire take is absurd. Because of the simple fact that landlords, especially using this software, do this in cities without rent control.
Unless now type arguing that Berkley rent control forces landlords in cities without rent control to seek maximum rents...
Rent control is flawed, limiting housing stock is flawed. But blaming landlord's pricing behavior on this is obviously false. Simply because it happens without rent control.
> Blaming this on rent control? This entire take is absurd
Rent control is one of the few topics where the vast majority of economists agree on something. It makes people who don't understand second-order effects really angry when the conclusion doesn't match what they want to see, but it's been proven out across the world so many times that anyone who refuses to acknowledge the real problems with rent control is either uninformed or denying reality at this point.
None of this is relevant to Berkeley since California law prohibits rent control on vacant units (and has for decades). When renting ti a new tenant landlords can charge whatever they like.
It's honestly absurd to read this thread because everyone who has ever rented in the SF bay area knows this, yet there's a whole discussion based on some half-assumed idea of what the system is.
Sounds like we should prevent rent increases. Fix the law, don't throw it away. Landlords that cannot afford to be landlords need to sell and go get a real job.
No one is entitled to be a lazy landlord taxing other people's existence and its extremely rare for a landlord to have built new houses, they mostly gatekeep the existing housing.
People in california need to take advantage of a populace willing to vote for constitutional amendments and override the politicians.
They would. But second order effects ensure that this very act leads to the decline of housing prices. These effects being eliminated by rent control makes it the premier anti-tenant policy.
What second-order effects...? Feels like such an oddly opqaue way to talk about them. And how do you ignore the effect of the fact that rent no longer rises during the life of the tenant, making it lower after a while than it would otherwise be...? (How) is it so obvious that that is dwarfed by the second-order effects of uncontrolled rent that it doesn't even warrant a mention? Because it isn't to me.
> And how do you ignore the effect of the fact that rent no longer rises during the life of the tenant,
Rent control schemes don’t work like this, except in completely broken policies.
Landlords are given an allowance for rent control increases year over year. The point is that they basically have to take the maximum allowed every year to avoid getting stuck.
In CA many cities allow landlords to "bank" rent increases in some way. For example, in SF:
https://www.sf.gov/information--banked-rent-increases
If rent no longer rises then the profit doesn't rise commensurately with demand, so the money isn't there to build supply.
Rent control crushes supply to the degree that the rent control caps rents below the actual market rate.
If you're lucky enough to get rent controlled housing then you're in good shape. But good luck getting it when things get far enough down the timeline.
Rent fixing is the other side where supply is manipulated to extract the maximum profit. In this case the coordinated rent pricing action behaves like an oligopoly.
If rents can’t rise quickly, then the expected profit of a building goes down, which means prices for land go down, which means it is cheaper to build, which means it balances out.
If the balance is far enough off that everything turns into commercial real estate, that can be solved, too.
You’re misunderstanding 2 fundamental things. First is that it’s very expensive to build anything in major US cities with the high cost of labor, materials, and permitting. Rent control completely tips the balance against building housing that you’ll rent out. Second is that the value of land is not going to depreciate in these premier US cities just because it’s not profitable to build rental units. There’s many valuable things you can do with that land, rental units will just stop getting built in favor of other things.
Not if we zone them for residential.
> prices for land go down, which means it is cheaper to build
By this logic San Francisco should be one of the cheapest places in the world to build
If there is not enough supply for the demand in housing then nothing but meeting demand with new supply will solve that.
Prices are a signal, and price changes are how market participants can determine which way supply and demand curves are moving.
By legislating prices and price changes, the signal is muddied, and market participants cannot take action to match the movements of the supply and demand curves.
Prop 13’s property tax rate increase cap is also price fixing. These kinds of laws are mostly ways to enrich and reward those who got or were born somewhere first, and run counter to the vaunted meritocracy that a so called free market can encourage.
Edit: The most helpful thing the government can do is maximize price transparency, so the smaller entity can be on equal footing with the bigger entity about which way prices are moving. Tenant agreements should be public record, like land sales are, and that would not only help cops with kicking out squatters, but also give renters more power in negotiations.
When people are trying to afford living, “price transparency” is not the most helpful thing a government can provide.
I agree that Prop 13 is god awful.
These side effects of these dynamics are not going to be evident or resolved in the short term. It took decades for prop 13’s (and other effects) to compound and become visible, and it will take decades to undo.
There is no shortcut though, the incentives have to be set right, and there has to be patience for the results to show. Unfortunately, long term benefit at the expense of the short term is a core weakness in democracy.
I don't think that's true. Prop 13 for example is priced into the market. Buyers bid higher because their taxes are frozen. This doesn't take decades to correct.
Market reactions are instant. Once the policy is fixed we don't have to wait for a generation
Buyers bid higher because sellers are giving up their low property tax, not because the buyer will have a low property tax in a decade or two. Sellers are hesitant to sell because they are giving up a lot, California had to pass a special law just to let old people downsize without losing their low property tax on the big home they raised a family in.
With rent control, you are limited in how you can increase rent later, so it’s to your benefit to let the apartment sit vacant longer until you get a desirable rent. Without rent control, because you can just increase rent next year by whatever, you can rent it at the market rate right away without waiting.
TL;DR => Sowell, "Basic Economics".
A.K.A creationism for economics.
supply and demand is about as basic as things get, and its never been proven wrong.
The market is 2-sided. They can "seek" whatever they want but they are going to get the clearing price.
You might prefer to have the vacancy filled faster rather than waiting for the highest possible price. These algorithmic pricing cases kind of revolve around this concept. It is the value that the service provided the companies.
Landlord input a desired vacancy rate or time on Market, and service suggests the right price.
There are arguments against rent control as an analgesic, but it being a disincentive for landlord/investor altruism isn’t one of them.
Fun fact: in RealPage's brief about the Berkeley law they cited my work that shows rents in Berkeley declining. They never had the power to artificially set rents.
Every rental unit in the city I live in is rent controlled — the government sets a maximum rental increase per unit per year. This is here in the People’s Republic of … checks notes … Dubai. It works great.
The Dubai rent control system has some important differences compared to Berkeley. Dubai’s rent change is indexed to the rental market but Berkeley’s isn’t. Berkeley’s max change in a year is like 1% while Dubai’s could be as high as 20% in some cases.
Also, in Dubai if the owner wants to sell and not renew the lease they can. In Berkeley it’s not nearly so simple.
I would not want to be a landlord in Berkeley.
In San Francisco, I’m not a fan of Aaron Peskin’s ban on algorithmic rent-setting (Admin Code 37.10C https://codelibrary.amlegal.com/codes/san_francisco/latest/s...) (which is probably similar to the other cities) because 1) it goes beyond antitrust law in just banning data gathering for no good reason, and 2) it rewards bounty hunters.
1. It goes beyond antitrust guidelines by banning rent prediction using any “non-public competitor data”, which is stricter than the former antitrust guidelines which prohibited sharing “competitively sensitive variables” (https://www.ftc.gov/sites/default/files/attachments/dealings...). To the extent that it differs from banning competitively sensitive data, it is just banning the use of data to make rentals more efficient. If landlords are pricing accurately but not monopolistically, this should reduce turnover, reduce vacancy, and reduce the occasions where a listing gets a crowd of applicants, which is good for both landlord and tenant. It’s bad to try to ban accurate data.
2. It provides a private right of action for tenants and nonprofits to sue, just like Proposition 65 (Known by the State of California to cause cancer) incentivizes bounty hunters to sue. The point seems to be to punish landlords more than it is to establish fair rules.
And it seems that these lawsuits are just piggybacking on the DOJ settlement by punishing anyone who uses RealPage as soon as the ordinance becomes effective in 30 days while RealPage was already working to settle federally. The complaints (e.g. the SF one https://www.courtlistener.com/docket/73573242/gomez-v-greyst...) don’t have any new violations; just companies who are already settling. I don’t think that’s justice for a city to frontrun the federal settlement with new violations for the same program.
SF as a city has the fundamental problem that there's a huge part of the electorate will blame the housing shortage on absolutely anything they can find that's not the actual fundamental physical shortage of housing. That leads to an endless tangle of local laws and organizations supposedly trying to "do something about it", that are fundamentally just making the problem worse by adding marginal cost to every new already-difficult-to-pencil housing unit.
Yes, you would think that a city with such a rent crisis would be begging for development e.g. incentivizing homeowners to redevelop into townhouses and apartments. But instead, the so-called “Progressive” wing has very little interest in reducing market rents and prefers to chase fringe issues (to take one example, they spent the year 2015 very publicly attacking the “Moderate” David Chiu’s short-term rental law, only to arrive at substantively the same place that they started at the end of the year. And suddenly the issue disappeared).
> The point seems to be to punish landlords more than it is to establish fair rules.
Rules without punishments are useless though.
> Rules without punishments are useless though.
There’s proportional punishment based on harm, and then there are abusive booby-traps. If a landlord uses a nonpublic dataset (e.g., a vendor’s model based on year-old data that would not harm competition under the antitrust settlement), then a tenant and nonprofit can each sue for civil penalties plus attorney fees even though there is no harm.
> There’s proportional punishment […], and then there are abusive booby-traps.
Don't worry, no landlord will die or be maimed in the process.
> based on harm
Most laws don't require direct harm to have already occurred, fortunately.
If one landlord is violating the law, then they deserve due punishment. Law and orders shouldn't stop at landlord.
> If landlords are pricing accurately but not monopolistically, this should reduce turnover, reduce vacancy, and...
Ah yes one of my favorite lines of argument: "We don't need laws, if companies are just behaving properly and against their financial interests to behave in a way that harms legit market pricing..."
Except as we know companies won't behave well without incentives. Which is why we need laws on it.
> Ah yes one of my favorite lines of argument: "We don't need laws
That’s not my argument at all. We do have federal antitrust law. My question was what does the ordinance do that differs from antitrust. The answer is that the ordinance rewards bounty hunters chasing the same federal case, and also bans non-“competitively sensitive” datasets.
I’d imagine it’s not so simple, especially without a functional legislative branch, but we could really use a “digital bill of rights” that could provide a comprehensive set of baseline protections and standards for things like this, online privacy, data protection, whatever stops Meta/X/et al from being maximally harmful, etc..
Sadly, you can not legislate a culture of decency.
From https://www.thebignewsletter.com/p/monopoly-round-up-time-ba...
> Our work against algorithmic rent-fixing is starting to bear real fruit. Multiple cities have passed laws prohibiting corporate landlords from using rent-fixing software, including San Francisco, San Diego, Seattle, Philadelphia, and Providence, RI. These laws aren’t complex and don’t require unwieldy market definition, you just have to show that the defendant is using nonpublic information in an algorithm to set prices. And they are being enforced, with six different lawsuits now pending.
Will they just stop using an ‘algorithm’ and have a mathematician sit there and state numbers that are of unknown origin?
Can you elaborate on what is meant by “rent-fixing”?
A bunch of landlords all use the same software to tell them how to price rents. The software continually pushes prices higher and higher. The software requires landlords to use their pricing as a condition of use. Now you have a price-fixing cartel for rent.
And those corporations can decide that they'd rather the apartment sit vacant than be rented at below exactly what they'd like to get for it, bolstered in part by the fact they can claim the non-occupancy as a loss on their taxes.
https://en.wikipedia.org/wiki/Price_fixing#:~:text=Rent%20al...
https://www.legis.ga.gov/api/legislation/document/20252026/2...
See Section 3
Like "price fixing". Landlords illegally colluding to artificially inflate the price of housing.
Do car dealerships next...
Governments are always unsuccessfully trying to repeal the Law of Supply and Demand. They've been trying to do it for the last 4,000 years.
https://www.amazon.com/dp/1610161408/
Helium tanks famously represent the Law of Gravity.
Well, governments have successfully enabled wealth disparity to the point where corporations are buying up several tens of thousands of homes. Maybe free range capitalism isn't the amazing utopia it's cracked up to be?
1. There are 90 million single family homes in the US
2. If you want to live in a house, but for less than 5 years, it is better to rent
3. If corporations really want to buy all the houses, there's a business opportunity for you. Build houses and sell them to the corporations at exorbitant prices.
4. Nobody is making anybody sell their home to a corporation.
5. Renting out homes does not reduce the supply of housing.
6. Homes are crummy investments.
Capitalist countries are indeed quite amazing compared to socialist countries. That's why people flee socialist countries and try to get in the US.
1. And? Most are occupied. How many unoccupied SFHs are there?
2. I am a home owner. There is a certain subset of the populace that likes to act as though renters have it so easy, because owning a home is a never ending stream of credit card swipes for the next four (or five) digit maintenance expense - when they're not posting memes talking about not having to pay property tax or insurance or even utilities, as if landlords absorb those out of the goodness of their heart.
These corporations, if you read the article in the first place are colluding across other corporate landlords because if they don't get the rent they want, they would rather keep the occupancy vacant, because then they also get to claim it as a tax loss.
> Capitalist countries are indeed quite amazing compared to socialist countries. That's why people flee socialist countries and try to get in the US.
People don't generally flee socialism, but corruption. But hey, here we are in the US where we're doing a spectacular job of showing what a corrupt capitalist society looks like. And hey, look, the number of people trying "to get in here" is dropping like a rock.
> And?
Tens of thousands is not significant wrt 94 million.
> 2.
If you ever owned a vacant home, not only are you still going to have to pay all the usual bills, you'll be dealing with vandalism, squatters, and that undetected roof leak that ruins the interior. Thinking that "tax losses" are the way to make money does not work. If you don't believe me, buy a rental and see how it goes as a landlord. Personally, I want nothing to do with being a landlord.
> People don't generally flee socialism, but corruption
The two go hand in hand. See "Learing Centers".
Except by creating supply, like socialist run countries do by building social housing.
They generally become expensive slums. Including the slums in America built by the government.