I'll take the apartment with plywood boards instead of windows, please.
Sure, I’ll sublet your apartment with plywood boards instead of windows, please.

As I mentioned, Kshama Sawant has come out for rent control, which is a bad idea (I am, however, very appreciative of Sawant for bringing low-income and poverty issues to the front of the debate). I would now like to turn my attention to Sawant’s arguments for rent control, talk about why they are weak, and show why her method of defending her position is a cause for concern. STB asked the Sawant campaign to clarify her position on rent control after the debate last week, and I’ve quoted a few parts of that response.

According to Federal standards, housing qualifies as affordable if its total cost does not exceed 30% of the household’s gross income. By this standard, a single parent working full-time, year-round at Washington’s minimum wage of $9.19/hr can afford no more than $477.88/month in rent. At $15/hour, the minimum wage we are demanding in our campaign, this threshold of affordability jumps to $780/month. Even this is a far cry from $2100/month, the figure that represents the median rent of a two-bedroom apartment in Capitol Hill.

A single-parent who works full time at minimum wage qualifies as “extremely low-income” and would move to the top of the waiting list for low-income housing in the city. They would also receive a housing voucher worth a non-trivial amount, some cases as much as rent. So hopefully this person would not try to find an apartment on Capitol Hill on their own without subsidy. Hopefully this person can also improve their finances by getting EBT. I don’t believe this system is perfect or that we have enough low-income housing or resources for all involved, but I believe this is the way to attack the problem of low-incomes using existing programmes and has nothing to do with rent control. A great way to get more money for these programmes is to increase the property tax base by allowing more construction, as the local funds for these programmes largely come from property-tax levies.

It’s worth noting that the data suggest that rent control benefits the well-connected much better than it benefits the very poor.

In response to the fact that the vast majority economists are against price control, Sawant’s answer is this:

Unfortunately, economics as a discipline tends to provide academic cover for policies that mainly benefit corporations and the wealthy and hurt the majority of working people. For example, many economists are critical of even the existence of a minimum wage. Most oppose public health care systems, in spite of enormous historical evidence that single-payer healthcare is more cost effective and creates decisively better outcomes. As unbelievable as it may sound, several also oppose restrictions against child labor.

Economics and economists have their share of quirks and silly ideas, but in general, basic microeconomics is one area that has shown to be solid, and price controls are something tackled in Micro-econ 101. I mean, the jury’s still out on string theory, but we all agree about the Earth revolves around the Sun, right? And surely no one things physics is one great big load of twattle. Imagine if a candidate had said that human-caused climate change was suspicious because not all Earth and Climate scientists agreed that it was largely caused by humans, and that earth and climate scientists tend to provide academic cover for polices that mainly hurt corporations and the wealthy. I think we’d all agree that position was idiotic. Rent control is even less controversial among economists than climate change appears to be among climatologists, more than  95% of economists agree rent controls are bad policy.

The well-known Swedish leftist economist Assar Lindbeck, said in his book, The Political Economy of the New Left “next to bombing, rent control seems in many cases to be the most efficient technique so far known for destroying cities”. Paul Krugman, the famous liberal New York times columnist and Nobel laureate has said “In uncontrolled housing markets, landlords don’t want grovelling. They would rather have money.” Here’s liberal blogger and UC Berkeley econ professor Brad DeLong on rent control. Gunnar Myrdal, the architect of the Swedish welfare state said “Rent control has in certain Western countries constituted, maybe, the worst example of poor planning by governments lacking courage and vision.” That’s what left-wing economists say about rent control. None of these people is for child labour, against public health schemes (Lindbeck and Myrdal helped build one of the most generous in the world), or against a minimum wage. This is just changing the subject, because it’s so hard to defend rent control, it’s easier to attack the people who oppose it.

The Sawant campaign continues:

A commonly made argument against rent control is that it would take away incentives and development would slow or halt. In reality, in cities where rent control has been implemented there has been no such stagnation of development. Real estate development will not cease to be viable because of the creation of a cap on rental rates, any more than the creation of a minimum wage or an eight hour day devastated overall economic development, as was once predicted.

Again, this is changing the topic from rent control. I’m sure some people predicted a minimum wage would cause economic problems, and it should be obvious that setting a $1 billion an hour minimum wage would cause mass unemployment. However, there’s a huge difference between a theoretical policy, and one that has been proven to cause problems in reality. Real estate development didn’t cease in San Francisco – the Sawant campaign’s idea of a rent control success story, but San Francisco has added a significantly lower than number of units than Seattle has over the past decades, and Seattle had a much smaller base to begin with, so as a percentage, the increase is even lower. San Francisco also had much larger increases in rent over the same period. If you need more data, peruse this review of literature around rent control. You can find interesting data on the effects of rent controls on uncontrolled rents (it raises them), the effects of rent controls on the the supply of units (it lowers overall supply, though some units are converted to condos), who gets the benefits of rent-control (not the usually the poorest or most disadvantaged), among many others. There is also a lot of literature around how to improve the supply of affordable housing (this is a good start, but as is this).

I think nearly everyone wished climate change wasn’t a real thing. It’d be great if we could just burn all the fossil fuels in the world for as long as we wanted with no consequences. Similarly, it’d be wonderful if solving affordable housing was as simple as implementing rent controls, the world would be a much simpler place. Sadly, rent controls don’t work, and the data show that the Sawant campaign’s answer to how to deal with the affordable housing problems is misguided, likely to do more harm than good, and based on poor reasoning.  The Sawant campaign’s entire response below the fold.

1. Why do we need rent control in Seattle (if possible, why do we need it in Capitol Hill?)
According to Federal standards, housing qualifies as affordable if its total cost does not exceed 30% of the household’s gross income. By this standard, a single parent working full-time, year-round at Washington’s minimum wage of $9.19/hr can afford no more than $477.88/month in rent.
At $15/hour, the minimum wage we are demanding in our campaign, this threshold of affordability jumps to $780/month. Even this is a far cry from $2100/month, the figure that represents the median rent of a two-bedroom apartment in Capitol Hill.
In the second quarter of 2013, Seattle area rent grew at an annualized pace of 6%, more than twice the national average of 2.6%, and among the highest of any metropolitan area in the nation.
The National Low Income Housing Coalition released a report titled Out of Reach in March 2013. According to the report, there were only 27 affordable units available for every 100 extremely low-income households in Washington. This figure places Washington below the national average.
 The minimum wage in Washington, $9.19 per hour, is less than half of what a renter needs to
 be able to afford a two-bedroom apartment.
In Washington, a renter must earn an hourly wage of $18.58 in order to spend no more than 30 percent of his or her income on housing, based on housing available. In Seattle’s city center, that goes up to over $21/hour. At the current minimum wage, a Seattle worker would have to work a roughly 92 hours a week to afford rent in the city center.
For decades now, the city has seen a two-tier development program from the  government wherein working people are steadily losing out and the wealthiest  benefit. Market rate housing is becoming increasingly expensive, in keeping with a minority of higher-salary people moving into the city. Low-income and middle-income people are being forced to move out into the farther reaches of the city or outside city limits, and have to commute long distances for their city jobs. People  are further burdened by expensive bus fares and cuts to transit services.
Policymaking on the City Council is deeply skewed to the interests of real estate and other corporations. The land giveaway in the South Lake Union rezoning, with my opponent Richard Conlin leading the opposition against modest costs to be imposed on developers to finance affordable housing, is a recent clear example.
Many who oppose rent control say that the real problem in Seattle is inadequate supply, and that the solution is to give real estate developers free rein to build everywhere so that housing stock is increased.
While no doubt supply needs to be addressed, the primary question is not supply per se, but supply of units that are prices at an affordable rate for the majority of households. In fact, Seattle lags behind many cities in the amount of affordable housing built as a percentage of total building permits issued annually.
Increased building has not guaranteed increase in affordable housing units. In fact, despite thousands of new units being built, affordable housing stock is being lost at the rate of 700 to a 1,000 units annually. Real estate developers have every incentive to mainly cater to high-salaried renters. A public mandate such as rent control, to ensure that rents are affordable to the majority, is necessary in addition to building new units.
2. Can you offer some specifics on what you would like a rent control policy to look like in Seattle?
Rent control does not eliminate rental cost increases, but it limits the rate of increase in rents so that it is in proportion with the overall cost of living (CPI), and at an amount that is affordable to tenants. In a rent control program, the percent increase in rent would be determined by economic analysis that would include variables such as cost of living, mortgage expenses, prevailing interest rates, borrowing costs, and maintenance costs. Because of this model, rent control would still enable unit owners to keep pace with inflation and maintain housing. What it would prevent is the astronomical rate of returns to big real estate companies (something that small owners rarely receive anyway).
What rent control would do is provide housing security for tenants, who are at present continually forced to move due to rent increases demanded by price-gouging real estate companies. It would also address the serious income and race segregation in Seattle housing and enable low-income people, people of color, and immigrant communities to not be red-lined out of the city. Tenant stability also helps small owners.
Many of the problems with the way rent control has been implemented in some cities stem from rent control applying only to a certain number of units. This is problematic, because it makes rent controlled units accessible only to a small number of tenants who were incidentally lucky enough to live in them. That way of implementing it also does not eliminate the main problem, which is of speculative, price-gouging real estate investors.
Rent control is a price ceiling, just like a minimum wage is a price floor. It needs to be applied broadly to housing in Seattle.
3. Apparently many economists agree that rent control does more harm than good. What is your primary critique of your fellow colleagues on this issue?
Unfortunately, economics as a discipline tends to provide academic cover for policies that mainly benefit corporations and the wealthy and hurt the majority of working people. For example, many economists are critical of even the existence of a minimum wage. Most oppose public health care systems, in spite of enormous historical evidence that single-payer healthcare is more cost effective and creates decisively better outcomes. As unbelievable as it may sound, several also oppose restrictions against child labor.
Among more progressive economists, however, there are many who agree that rent control is an important and effective policy.
A commonly made argument against rent control is that it would take away incentives and development would slow or halt. In reality, in cities where rent control has been implemented there has been no such stagnation of development. Real estate development will not cease to be viable because of the creation of a cap on rental rates, any more than the creation of a minimum wage or an eight hour day devastated overall economic development, as was once predicted.
Another common reason people oppose rent control is the idea that it would lead to lack of maintenance. In fact, whether or not units are maintained is primarily a reflection of tenants’ rights. In the absence of consistently enforced legal protections, units inhabited by low-income people tend to be poorly maintained, because low-income people are less able to relocate or to access the legal system when their rights are abused by a landlord. Effective rent control legislation can and should also empower tenants to secure regular maintenance of units. Our campaign is also calling for a tenant’s hotline with established timelines and substantial penalties for landlords failing to maintain residences or respect tenant rights.
Another claim is that rent control causes homelessness. There is zero evidence for this. The reality is that homelessness is increasing because of unemployment, lack of healthcare, cuts to social programs, and the rapidly rising cost of housing. Homelessness and urban blight are consequences of the way the capitalist economy functions when in crisis. During periods of economic crisis, corporations and the wealthy act to cut labor costs and limit investment – creating unemployment and even greater inequalities, while seeking to lay the burden of recession on working families and the poor.
In fact, the claim that rent control leads to homelessness is actually based mainly on one study by William Tucker. Tucker’s study has been roundly discredited due to its flawed methodology and statistical analysis.
In fact there are many successful examples of rent control, including San Francisco. Contrary to the popular myth, rent control in San Francisco is a veritable lifeline for tenants who would otherwise be completely priced out of the city. The problem is that it is not broadly applied, and therefore many tenants aren’t able to obtain rent controlled units. While the way rent control was implemented  in San Francisco has not eliminated high rents there, it has still played a major role in keeping rents lower than they would otherwise be. The example of Boston illustrates this all too well. When its rent control laws were eliminated in 1997, apartment rates nearly doubled within the months that followed.

68 Replies to “Sawant on Rent Control”

  1. This strange obsession with rent control would be more understandable if you were offering some other answer to the problem of people getting thrown out of their homes because rents are rising too quickly for them to afford it. And while more supply will help, that doesn’t solve people’s needs right now. So what’s your solution?

    1. Have you read the post? Increase supply, expand the voucher programmes, build more affordable housing. That’s actually a lot easier to do (remember, rent control is illegal in washington) and uses programmes already exising.

      1. I’m for all of those things, but those don’t address the people who are at this very moment facing unaffordable rent increases. Those are medium and long term solutions. We need solutions for the next 6 to 12 months that address the rent crisis.

      2. You realise that, if elect, Sawant wouldn’t start until January (three months from now) and wouldn’t be able to do anything for rent control until after the state legislature passed it, and the governor signed it. Usually those laws are given some time to be put through some administrative process as well.

        That’s your best case scenario, and it’s not in your 6-12 month time frame. So why are you fighting me for proposing ideas that can actually be passed in the city and enacted sooner?

      3. those don’t address the people who are at this very moment facing unaffordable rent increases.

        Any rent control scheme must be preceded by an effort that successfully convinces the legislature (as in: Rodney Tom) to change state law. That’s going to take quite a while.

  2. The other thing to keep in mind here is that SF linked rent control to a very restrictive set of anti-development policies. It would be worth examining a city where rent control, or at least rent stabilization that doesn’t get reset at vacancy, was not imposed at the same time as rules limiting new development.

    Finally, realize that appeals to market logic will not win over a socialist.

    1. Finally, realize that appeals to market logic will not win over a socialist.

      Deny evolution, deny climate change, deny gravity if you want. If you want to be ignorant and backward, all the best.
      I wonder what Marx (an economist) would say?

      1. The belief that economics is a science as rigorous as physics and that those who question it are the same as climate change deniers or flat earthers is, well, interesting.

      2. The belief that economics is a science as rigorous as physics and that those who question it are the same as climate change deniers or flat earthers is, well, interesting.

        I’m not saying that economics is as rigourous as physics, I’m just saying the basic parts have been proven to be as correct as, for example, current theories of gravity. We know we’re wrong about gravity, but our current models are good enough for what we’re doing now.

        Computer Science isn’t as rigourous as physic is either, but we don’t deny computers. Economics actually exists, and denying it is akin to saying the earth is flat.

      3. Many economists believe people are paid for what they produce. Many economists believe that two extra dollars for a rich person is more desirable/efficient than an extra dollar for a poor person and no extra money for a rich person.

        I am not denying that economists have done studies, or that economics exists. I am denying that much of what is produced by the field is useful for designing humane public policy.

        http://www.tenantsandneighbors.org/pdf/Myths%20and%20Facts%20Final.pdf

      4. Many economists believe people are paid for what they produce. Many economists believe that two extra dollars for a rich person is more desirable/efficient than an extra dollar for a poor person and no extra money for a rich person.

        As a discipline, economists are almost in complete agreement that certain policies will produce higher efficiency (i.e. higher production), and certain other policies will produce higher equity (i.e. greater fairness). The trade-off between efficiency and equity is well-understood.

        I’m not aware of any reputable economists who think that we should maximize efficiency at the expense of equity, nor am I aware of any reputable economists who believe the converse. It’s easy to come up with perverse examples to show that the extreme of maximizing either equity or efficiency will produce a world that few people will want to live in.

        It’s certainly true that economists differ on the extent to which they value equity over efficiency. And they also disagree on the empirical effects of certain policies, given real-world behaviors. If the demand for labor is highly elastic, then a policy like the minimum wage is likely to hurt more than it helps. If the demand for labor is highly inelastic, then a policy like the minimum wage is likely to help more than it hurts. It’s only recently that there has been sufficient data to provide a high-confidence answer to this question. (And for what it’s worth, the data suggests that the minimum wage is worth it.)

        The field of economics does not exist just to make policy prescriptions. Fundamentally, it’s about understanding and modeling human behavior in the presence of scarce resources. Physics can tell you the amount of force that will be transferred between two colliding bodies, and neuroscience can tell you how quickly a human can react to a visual stimulus, but that doesn’t mean that all physicists and neuroscientists agree on the appropriate speed limit for freeways. It’s a mistake to reject economics based on low-confidence policy predictions, when the core of the discipline, and the vast majority of the literature, is not controversial at all.

    2. appeals to market logic will not win over a socialist.

      I’d call myself a socialist. But that’s no reason to ignore empirical evidence about how different kinds of interventions in markets actually work in practice, and deciding which ones to pursue based on actual evidence about what happens when we do.

      1. This. That is why I ascribe to Keynesian economic philosophy. The evidence shows that Capitalism doesn’t work for the needs of the average person. That the middle class would not have existed except for the “interventions” in the early 20th Century because the empirical evidence shows that Capitalism’s unfettered effect is to concentrate wealth in fewer and fewer hands.

      2. I don’t see how you can then exclude the “intervention” of population control.

        Look at what are considered the models of Socialism in Scandinavia.

        While US population surged out of control post-1960, Sweden, for example, went from 7.5 million to 9.5 million.

      3. There’s nothing wrong with the “Swedish model” of population control: comprehensive sex education, cheap contraceptives, and enough economic independence for women that they don’t have to become brood mares.

  3. I will admit that it’s disappointing to hear that the Sawant campaign praises San Francisco’s model of rent control, and that she doesn’t cite any examples of the economists whom she claims support rent control. I do think that such economists exist, but I don’t think that any of them are supporting the model used in San Francisco. (It’s also disappointing, and surprising, to hear her criticize economics as a discipline, especially for someone who is a professor of economics.)

    As far as Boston goes, even the most ardent opponents of rent control generally acknowledge that completely abolishing it at once, as Massachusetts did, is not an appropriate strategy. Eliminating rent control means phasing it out over an extended period of time, precisely to avoid the situation where rents suddenly skyrocket.

    Effectively, it sounds like Sawant is making a distributional argument. Her claim is that total welfare across society is less interesting than the lower bound on personal welfare; she is willing to give up some amount of efficiency in exchange for greater equity. That’s a reasonable argument, though I don’t agree with her that the San Francisco model would be a particularly effective way to achieve that end.

    1. As far as Boston goes, even the most ardent opponents of rent control generally acknowledge that completely abolishing it at once, as Massachusetts did, is not an appropriate strategy

      Abolishing things all at once is rough, but that is democracy, sadly.

      Her claim is that total welfare across society is less interesting than the lower bound on personal welfare; she is willing to give up some amount of efficiency in exchange for greater equity. That’s a reasonable argument, though I don’t agree with her that the San Francisco model would be a particularly effective way to achieve that end.

      I don’t think it’s a reasonable argument, only because rent control has not been show to help the poor or the disadvantaged. Instead, in both SF and NY, it’s been a boon to upper middle class white people. I guess that’s better than the true 1%, but it’s not exactly social justice.

  4. A single-parent who works full time at minimum wage qualifies as “extremely low-income” and would move to the top of the waiting list for low-income housing in the city.

    As me and my wife discovered, in practice this actually means that the only people who actually ever get off of that waiting list are long-term unemployed single parents who have gotten a DSHS social worker assigned to them by some other state program (which counts for qualification #2 in the homeless provision).

    1. Well, that’s the issue. Rent control won’t put you in front of that person. We need to sort out why our benefits schemes are fucked.

      1. At the Legislative Transportation day last spring, Frank Chopp mentioned that there is an estimated 50,000 unit unmet demand for “Affordable Housing” and that the waiting list for what little public housing is available is in excess of 3 years and growing.

        I do not believe there is any form of intervention such as rent control or rent subsidy that will solve the problem of this kind of shortage of supply. The only practical solution that I can see is the government purposefully building and operating those 50,000 units.

      2. “The only practical solution that I can see is the government purposefully building and operating those 50,000 units.”

        This is, in fact, what used to be legally required of local governments in the UK from the late Victorian period onward.

      3. As someone else pointed out on this thread, extremely basic economics suggests that flooding the market for market-rate housing will lower the price of such housing, even if it’s not subsidized in any way. That is, even if public housing is priced at a level which requires no subsidy (i.e. cash-flow positive), it will still improve housing affordability just by existing. The trick is that government needs to actually provide the housing, rather than paying other people to build housing that they might have built anyway.

    2. Call 211. If you are a family, singly headed or not, call Solid Ground, 694-6700, and see what they’ve got. There is a system in place — it’s imperfect but it does accomplish a great deal.

      1. Too late, Fnarf. We discovered that mortgage brokers were far more willing to work with us than apartment managers (who were only interested in renting to tenants with 2 or 3x our income), and we now have a condo in Burien, with monthly payments smaller than any rental price we could find.

    3. soooo PRO TIP!
      Don’t wait in line. By far the best way to get a low income apartment is to fill out all the paperwork, get on the waitlist, and then cut in line. Low income housing is like any bureaucracy. Half the people in it don’t want to be, and are willing to cut corners. Just find the person who makes the decision and call them. A lot. In a professional way, but really a lot. Like twice a week.

      At some point the decider makes a decision, and they will either be thinking of you as a very serious applicant, or a very serious bother, or as being on the phone right then(this has happened to me).
      This seriously works like a charm. Find that persons number and put it on speed-dial.

  5. Rent control in NYC is what allows older white well-off people to stay in their classic apartments forever and ever at ludicrously low rents, while poor people shuttle around from expensive apartment to increasingly expensive and further out apartment. If your version of social justice includes every apartment on Capitol Hill to stay in the same hands for the next forty years, as they get wealthier and wealthier while their rents stay the same, while zero new units are built anywhere in the city, and the poor are continued to be shoved out to the outskirts — pretty much the same situation we have now, only locked in place forever. Your rents will never, ever go down.

    Where rents might go down is in the outskirts, where rent control doesn’t apply, where development — hideous, crappy development, sure, but affordable — gets built. Driven out of the city. Andall those units that could have been in the city will be an hour and a half drive away.

    Sounds like a terrible idea. Even socialists have to recognize the power of the market. It’s real.

    It’s also stupid because Sawant hasn’t got a prayer of getting even a second vote on anything, let alone a majority.

  6. Andrew, you are wrong on micro-economics. In fact it is a house of cards, based on false assumptions, sometimes even bad logic. Just read Steve Keen’s “Debunking Economics – the Naked Emperor of the Social Sciences” or “The Economics Anti-Textbook – A Critical Thinker’s Guide to Micro-economics”. That is why Sawant is corrent to dismiss the opinions of economists when their opinions are based on neo-classical theory (as is normally the case).

    You must look at how rent control would be implemented in a particular context. For example, Sawant’s proposal would allow rents to increase at the same rate as inflation. This means that if landlords are doing OK at the start, then they should keep doing OK, and so should be able to do adequate maintenance and keep a modest profit (if the measure of inflation is correct, which is another matter).

    But would limiting the rents mean that developers would reduce or stop new developments? That might depend a lot on the local situation, such as the costs of new buildings or obstacles ot new development. In the ideal case it might spread out development in time (mitigating the typical boom and bust real estate cycle) and in space (with more building in lower cost neighborhoods), while also preventing some lucky developers from walking off with huge profits at the expense of renters. Or we could end up like San Francisco. I’d want some very though analysis of how it might play out in Seattle.

    Personally I don’t see “skyrocketing rents”, though they are rising (more in hot neighborhoods like Capitol Hill) due in part to national forces (people switching from home ownership to renting) and in part to economic growth in Seattle. But there is also a big spurt in apartment building, which may catch up with demand in a couple of years if the NIMBY’s don’t succeed in putting up too many obstacles (one of the hidden agendas behind district eletions, one of many reasons to oppose them).

    1. It’s true, econ 101 is mostly garbage and Andrew would be better off leaving it out of the discussion. Also, Lindbeck departed the left about thirty years ago. You might want to leave him out of this too. He’s a neoliberal now (in the Mont Pelerin Society sense).

      1. I’d like to add that
        1) The theory say rent control is bad
        2) the experts say the rent control is bad
        3) the data say that rent control is bad

        What is there to say it’s good?

    2. “You must look at how rent control would be implemented in a particular context.”

      That might make sense if rent control had anything other than a uniform history of failure.

      Sawant’s proposal would allow rents to increase at the same rate as inflation. This means that if landlords are doing OK at the start, then they should keep doing OK, and so should be able to do adequate maintenance and keep a modest profit (if the measure of inflation is correct, which is another matter).

      Unless land values suddenly go up in a particular area, propelling property taxes through the roof. Or unless there is a sudden spike in the cost of maintenance services, as happened during the housing boom. Or unless buildings suddenly develop unforeseen repair needs. Or unless virtually anything unexpected happens.

      Rent control is a recipe for creating a privileged class of tenants and increasing costs for everyone outside of that privileged class. In all cases so far, that privileged class intersects only slightly, if at all, with people who are actually poor or working-class. A much better way to give poor and working-class tenants a leg up is to straightforwardly provide housing subsidies. In cash, so Section 8-type issues are avoided.

    3. A larger number of units will open next year, so that could satiate the market. However, that’s what they thought for this year and they underestimated the demand, so what’s to say they won’t underestimate the demand again? The issue is really lingering denial: people don’t believe renting can be so popular, that mortgages are so hard to get, that people are unwilling to buy until their job is more guaranteed, and that people would want to expensive urban units rather than a yard. Also, apparently, people are underestimating the number of high-paying jobs that are being generated. Given all these strong forces, we really need to build a ton more housing now. Eventually it will slightly overshoot the market and there will be a small excess of inventory — but then we’ll know for sure that the market is saturated. That’s better than rapidly rising rents that cause stress and push people out.

  7. “According to Federal standards, housing qualifies as affordable if its total cost does not exceed 30% of the household’s gross income.”

    Where does the 30% figure come from? Given that this is a one-size-fits-all Federal standard, is there an assumption here that everyone has to own a car and, therefore, there has to be enough money left over after food and housing to cover auto insurance, car payments, gas, car repair, etc.? In neighborhoods that are walkable and have good transit, perhaps his 30% figure could be raised due to all the money that isn’t needed for car expenses. Especially if the person in question works for an employer that offers subsidized transit passes.

    1. It can go higher without car expenses, and I’ve been waiting for a well-researched opinion on what that level should be. For now I assume 50%, mainly because that’s what many people are actually paying. But there’s another issue beyond it. As the economy has changed to direct income toward the wealthy, landlords and homeowners have gained a windfall. So even if we accept that 50% is the natural value going forward, it still represents a steal by one segment of society from another, with so far no responsibility to mitigate the hardships this creates.

      1. For lower incomes the 30% figure is probably a reasonable benchmark as there are many things like food, utilities, medical expenses, and taxes competing for each paycheck.

        Someone with higher income is able to put a proportionately larger share of their income toward housing and still maintain a decent lifestyle.

        FWIW many lenders use the 30% figure as well and will refuse to issue a mortgage where the monthly payments exceed 30% of the borrower’s monthly income.

      2. Transportation is still a big wildcard, and the lower the income, the bigger the impact. Someone who doesn’t have car expenses can afford a significantly bigger mortgage than someone with the same income who does.

        Of course, from the lender’s perspective, considering car ownership in coming up with income thresholds for a loan would probably be far more trouble than it’s worth. At a minimum, it would involve formulating lots of policies and rules to prevent people from gaming the system for something that only a tiny minority of applications would be able to legitimately benefit from. Also, people’s needs change with time and even someone who is carless at the time of the loan application may feel obligated to go buy a car anyway after a few years when kids are born, employer moves workplace location, etc.

        From the lender’s perspective, where the goal is to ensure the loan is unlikely to default, the lender probably needs to error on the side of caution and assume car payments anyway, over the life of the loan, whether they are actually being made now or not.

        There is also the general principle that a flat-out blanket percentage number is much easier to apply uniformly than a bunch of if’s and special cases.

  8. It is clear that capping rent hikes at a rate lower than inflation would tend to lead to delapidation of the housing stock.

    It is also clear that capping rent increases at a rate lower than the rate of inflation could remove profitability for existing landlords currently renting out at reasonable rates.

    However, when original rent can be set as high as the owner of a new apartment complex wants to set it, and the rental laws allow the flexibility for rent to increase at the rate of inflation or more, then there isn’t a clear case that rental hike controls would lead to a reduction of apartment unit construction.

    To control for the effect of zoning laws, we’d have to look at cities without zoning or similar land-use proscriptions and with rental hike controls. Does anyone know where these two conditions coincide?

    1. If the original rent can be set as high as the owner of a new apartment complex wants to set it, how exactly is this going to help the lack of supply of affordable housing?

      1. The paper by Jenkins that Andrew linked to actually studied this explicitly. They found that, for two apartments that were equivalent except for rent stabilization, the stabilized apartment actually had a significantly *higher* starting rent. Essentially, the landlord “priced in” the first few years of rent increases. Therefore, you would have to stay in a rent-stabilized unit for a few years just to break even, compared to renting the equivalent uncontrolled apartment.

  9. from the Sawant camp: “affordable housing stock is being lost at the rate of 700 to a 1,000 units annually”.
    I would be interested to know where this came from. Having worked on the Seatte Planning Commission’s report Housing Seattle, I believe Seatle has been adding affordable rental units steadily for at least the past decade. What Seattle has failed to do is hit its target of 25% of all new units built being affordable (more like 12%). Buildings containing lower rent units still get torn down, but the overall effect has been a net increase in rent-restricted affordable units, due in large part to the number of low income housing developers in Seattle (CHH, LIHI, SHA, etc), and due also to the generous multifamily housing tax abatement program that gives a break on taxes in exchange for some rent restricted affordable units in new buildings. So let’s not frame the issue as loss-aversion, at least not a loss of affordable units. What is being lost is lower income families living near the center of the city. That has to do with housing types beign built (most are too small for more than 1 or 2 people), the rising number of people in the region making more than minimum wage (more people competing with low wage earners for low rent apartments, so being “connected” really helps), the rising number of jobs paying more than minimum wage in Seattle (not inherently a bad thing, but people with more money tend to spend more money on housing), and other factors.
    My friends in NY who have held onto rent-controlled apartments for decades are very happy with the laws there. They now can afford second homes in the country, world travel, and other luxuries, on less than 6-figure incomes. Though I love my friends, I doubt they think about the fact that their rent control has meant a damper on housing supply that has raised rents for others who did not get in early, like they did. In a way, they are like homeowners whose cost of living has not risen as fast as inflation because they own their home – the “I’ve got mine” crowd, that is often the most vocal about preventing change and accomodating more people ina neighborhood.

  10. No need for rent control: build a bunch of slums a la Mumbai. Cheap rents, very social neighborhoods and density to make aPodments blush!

    1. As if that would be legal in Seattle…. I’ve heard Nickelsville is still moving every 90 days, and the police are still periodically raiding people who live under the freeway.

  11. Sorry, I can’t get past a basic logic problem near the beginning of the article. Did Sawant just complain that minimum wage workers can’t afford median priced homes?

    1. I know I focused on the wrong things in these posts. That entire piece is full of bad ideas and misinformation

  12. Cap Hill is the most expensive neighborhood in the city. Even if you went to college and had a moderately well paying job you could barely afford to live there. I don’t know why you’d want to spend tax money subsidizing the poor when even the middle class can’t afford it. Maybe if we just started with changing zoning laws so we could have reasonably priced, income-integrated neighborhoods we wouldn’t need to be having this discussion. With rent control, Seattle will just end up a city with highly taxed rich NIMBYs subsidizing poor people on housing vouchers.

    In the meantime, move to Ballard/Fremont/Columbia City. As long as Cap Hill refuses to raise height limits (ESPECIALLY AROUND THE LIGHT RAIL! WTF?) those places will be cheaper/

    1. You can strike Ballard and Fremont off your list. The parts of Seattle with below-average rents are Rainier Valley (further from Columbia City), Delridge, Lake City, and Broadview. All of these except Rainier Valley have below-average transit.

      1. Delridge doesn’t have such bad transit, especially if you’re working downtown. It does have fewer services within walking distance, but you can still get to a grocery store by transit. They also recently improved the bike infrastructure quite a bit.

        I used to live there, so I know! Compared to where I live now, in Fremont, there isn’t as much connection to other nearby neighborhoods, but I would say it’s still above average for Seattle neighborhoods.

  13. There are low rent apartments in this city. They are just in neighborhoods where the self-entitled urban hipster doesn’t want to live…

    1. Hipsterism is totally irrelevant. Those neighborhoods have real problems with transit access, which can lead to a 60- or 90-minute commute, and the same for all other trips to other parts of the city and county. That adds up to several hours a month in lost time — a whole 20 hours in some cases. That would be expected if you’re living in Covington, but these are “inner city” neighborhoods. The neighborhoods are also heavily residential-only and single-family, so even going to the store or laundromat requires a bus trip — a half-hourly bus that goes hourly evenings/Sundays.

      1. Then get a bike, smart car, whatever. Or does the government have to hold your hand every step of the way?

    2. There are low rent apartments in this city. They are just in neighborhoods where the self-entitled urban hipster doesn’t want to live

      That what it appears like if all you do is read apartment listings. Actually try and apply for one of these apartments as a lower-income person, and you will see things differently. Anything “low rent” that’s not charitably operated as “low income housing” has a competitive application process, where the manager selects the highest income tenant out of dozens of applicants (and also collects thousands of dollars in application fees during the application window).

      Trust me, the service industry wage-slaves fighting over these apartments are not in the least squicked out about living in unhip neighborhoods; it comes with the territory. That’s what makes it so much worse when a naive Amazon contractor from out of state swoops in and snatches the apartment sight unseen.

  14. Rent control is not the answer. It will eventually even out, the question is when. As long as Amazon keeps growing and keeps hiring young single urban professionals who make 60,000/year and up, move here from other areas that make Seattle apartments look cheap by comparison, and are willing to shell out $1,600/ month or more average rents, more people will continually get outbid for rents in close in neighborhoods. However, I know of two people that are looking to buy or have bought recently since if you are paying $1,700 a month on rent, you as might as well buy at that price. So even the people that can afford it are getting sick of the rent increases.

    The pain is not being on that path, and seeing places that once were affordable and decently priced now renting for 50-75 percent higher per month than they were just 4 years ago and being forced to move because its just too much out of pocket costs each month. Everyone cries that something should be done, but sometimes the result of doing something would be worse.

    1. You could do rent control with property taxes.

      For example, if you imposed very steep and progressive taxes above a certain square footage owned or on properties which are 2nd and 3rd homes, you would limit the amount of property being used for “investment” and put it back into general use, decreasing prices and creating homeowners who are more immune to price fluctuations.

      Of course, rent control per se also does that by making it less attractive to be a landlord, but in a less palatable fashion.

      If in fact, you are sincere about your desire to benefit the majority of workers, so they can retain more of their buying power, then you might reconsider your stance.

      1. Homes for investment is not necessarily such a bad thing, as they do contribute to the rental supply, thereby increasing supply and reducing rents. Saying everyone should just own their home instead is not necessarily such a good thing. It leaves no good option for people who are only going to be in town for a few years. It also creates awkward situations for people whose job changes location – suddenly, the home that was within walking distance of work is far away, leaving you stuck with the choice of a 45 minute drive or a 90 minute, 3-seat bus ride.

        Also, your arguments about home-ownership insulating oneself from rent increases as the area gets more desirable become completely inverted if the area becomes less desirable. If you rent, rents will drop and it will be easy to move out, if you choose when the lease runs out. Own, and if the area becomes less desirable, you’re stuck with big and possibly underwater mortgage that you still have to pay. Selling requires taking a loss and, if the mortgage is underwater, may not even be possible.

  15. Sawant’s favored policies make her the left’s Tea Party…basically advocating objectively discredited ideas with little chance of being implemented, and selling those notions in an emotionally charged way.

    I am a liberal and I don’t want my brand tarnished by solidly debunked and damaging policies. The free market is not great at everything, but when it is the best approach to certain things, it shouldn’t be rejected out of hand. An effective socialist (think Nordic countries) makes the middle and upper middle class its strongest allies, instead of portraying them as the villains.

    1. Here the dynamics are between the longtimer and the newcomer. Between the local and the global. Between the skilled and the entitled.

  16. This to me is the case of trying to solve two equations f(x,y) having the value of only x.

    The more you pull on one string, the more it pulls away from the other side.

    You can’t have the total quality of life, and affordability while cramming more people into the same space. You either have to limit population (end our state’s status of being a sanctuary), or start to use up more of it for population (rescind the GMA and build out transit, allowing some “urban sprawl”).

    Unfortunately, our society has become so disparate that we are in a state where rather than lifting all boats, each action will benefit or harm segments disproportionately. We’ve made our bed, and we’re lying in it. Uncomfortably.

  17. I find it humorous how unconvincing the sentence “95% of economists agree rent controls are bad policy” is to me. They could be right, but economists overwhelming support of the opinion doesn’t seem to sway me for some reason…

  18. I enjoyed hearing this little anecdote at lunch today, after reading this post:

    My friend’s friend on a whim sold most of his possessions and drove to San Francisco, where he was living in his car (although not really trying in ernest to find a place to live, get a job, etc.). At a party, he met a couple who lived in a rent-controlled apartment on Haight Street, who were about to go live abroad for 3 years. They invited him to sublet the furnished apartment for a screaming deal so they could hold onto the place.

    I’m sure all those involved deserve a good, affordable place to live, but not exactly the single-mother with two children on minimum wage story.

    1. Not sure if this was the case in your particular situation, but it does bring up that yet another problem with rent control – under-the-table subletting. If you live in a rent-controlled apartment, it becomes very tempting to sublet at something in between your rent and the market rate, rather than live in the apartment yourself, even if such subletting is technically illegal.

      In other words, the occupant is still paying market rate (or close to it), only the primary renter, not the owner, is getting the profits.

      1. Maybe this is just me but
        “the occupant is still paying market rate (or close to it), only the primary renter, not the owner, is getting the profits.”
        just doesn’t really seem like a big problem.
        You’re allowed to speculate on oil you could never possibly possess, why not this?

      2. Jon: What is the purpose of rent control? If the goal of rent control is to reduce the amount that renters pay, then clearly this system fails the test, as renters end up paying the market rate. If the goal of rent control is to reduce the amount of profit that property owners earn, then I guess it succeeds, but why is that an important public policy goal?

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