Backward Thinking in Silicon Valley
It's not the rent, it's the zoning, the urban services boundary, and the huge amount of land off limits to development.
"The San Francisco Bay Area has faced skyrocketing housing costs over the last several years, fueled by the intersection of the tech boom and the region’s onerous land-use restrictions kept in place by politically powerful homeowner coalitions intent on blocking new development. Middle and working class residents are being squeezed hard, and anger is finally boiling over. But instead of directing their populist energies at the root of the problem—zoning restrictions that keep housing supply well below demand—affordable housing activists are pushing for rent control."
Reality Isn't Changed Simply by Renaming It - Cafe Hayek
"Here’s another comment (slightly edited) that I left on this EconLog post by David Henderson:
Isn’t that the whole point of rent control? Without rent control, only the richest renters get to live in the city.
Jon’s defense of – or, at least, summary of – rent control is indeed what rent-control advocates believe. But it is mistaken.
One way to highlight the mistake is to point out that in the United States we have no price ceilings on food, yet it is not only the richest families who get to shop in supermarkets. We have no price ceilings on clothing, yet it is not only the richest Americans who have closets full of shirts, blouses, pants, dresses, coats, underwear, and shoes. We have no price ceilings on cell phones, yet it is not only the richest individuals who have mobile telephones. We have no price ceilings on household appliances, and yet even poor American households today are, on average, equipped with more modern appliances than was the average American household of 40 years ago."
You should read the entire post, it is very good, just as you should read the David Henderson post linked therein.
One of the real problems is the existing homeowners are loath to expand the housing since this is likely to strongly reduce land values. The SF area needs at least tens of thousands of acres of developable land, instead the vast majority of land in the area is permanently off limits to development.
I wrote about a similar issue here:
San Franciscans were not the first to realize the city was a mistake . . .
And again here:
Talk about missing the 900 lb gorilla in the room . . .
"San Francisco bay area has a huge amount of land, 4.5 million square acres in total, and all of the development is only on about 0.8 million square acres. But nearly all of the rest of the land is off limits for development. There is apparently between 300-500 thousand square acres which could be developed but which lunatics are attempting to make into land permanently unavailable for development.
The reason San Francisco's property values are insanely high, is lack of land to build more housing, and this is purely a man made catastrophe. Releasing 400,000 acres of land for development would quickly return the San Francisco housing market to rational pricing, but it would also cause the interstellar individual house prices to fall, likely by half or more, and then remain low. And existing homeowners would be apoplectic with that outcome."
With less than 20% of the total land in the San Francisco bay area developed, "There is no more land for housing" is a lunatic allegation. But that seems to be the claim.
The upper middle, and upper classes, however, realize that there are some in the middle classes who they need to remain and live in the Wealthy Wonderland of San Francisco, including teachers, and firefighters."
Rent control is a way for the political progressives to act, while maintaining the maximum access to graft, and corruption, while still allowing the current land owners to maintain their hugely inflated housing prices, and while making progressives feel good for doing "something," er, actually, doing great damage to the people they say they are protecting.
Once again the Boomers protect the wealthy Boomers from the marauding Millennials, this will not end well.