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but it exempted new construction and buildings with five or fewer units (although the five-unit exemption was repealed in 1994). A study conducted in 2018 by three Stanford University economists found that rent-regulated buildings in San Francisco were 8 percent more likely to convert to condominiums than unregulated buildings and that there had been a reduction of 25 percent in the number of renters living under regulation. It also concluded that residents of the newly created condos had incomes 18 percent higher than their predecessors. In short, the study suggested that rent control was bringing more gentrification to San Francisco, adding to its continually rising costs of housing.
But given the sluggish condo market of the past few years, condo conversion is not the threat to regulated apartments that it may have been earlier in this decade. The condo market nationwide clearly failed to keep pace with rental prices in 2020. Condos may be coming back a bit this year, but the contention that landlords will flock to condo conversion to escape the strictures of rent regulation seems a bit out of date.
And even with some 60 percent of San Francisco’s apartments under some form of regulation, the rents remain startlingly high: The average rent on a one-bedroom unit in the city earlier this year was more than $2,800. That can be treated as evidence that rent regulation isn’t working very well. Or it can be seen as evidence that things would be much worse without it and that this is no time to take it away.
OF COURSE, THERE ARE OTHER SUGGESTIONS for how to
deal with galloping rent inflation. One would be for local governments to simply subsidize the rent payments of tenants with low incomes. Another would be to provide the tenants with a new rental tax credit. Both of those would come out of the public treasury and would impose on it a significant fiscal burden. They would also likely prove less attractive to voters than taking a chunk out of landlords’ substantial profits. The voters would have a point.
But the most compelling case for rent regulation goes beyond the research and the statistics. It is that continuity and stability are vital elements of any neighborhood’s social health. They are weapons against the alienation and loneliness that prevail in any community in which nothing, not personal relationships nor physical familiarity, ever seems permanent. J.W. Mason put it eloquently a couple of years ago. “I don’t see security of tenure for renters as charity for the needy,” he wrote, “but as a basic feature of a civilized country.” I can’t say it better than that. Most economists don’t get this, and never will, because they can’t slap a number on it.
You may remember the old joke about the two economics professors, one a fresh-faced novice and the other a tenured veteran. The novice comes up with a promising new idea. The older man sneers at him. “That may be all right in practice,” he says, “but it will never work in theory.”
OK, it’s a joke. But it’s also a reminder not to take economists too seriously when they start talking about things like the regulation of rent.
mcla
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