The “Rent Control” Housing Farce: Part II

by | Feb 10, 2002

Too many people who talk about a lack of “affordable housing” seem to think that this is something the government must build or subsidize. It never seems to occur to them that government activity is itself one of the biggest reasons for housing being unaffordable. Nor are they likely to check out the fact that […]

Too many people who talk about a lack of “affordable housing” seem to think that this is something the government must build or subsidize. It never seems to occur to them that government activity is itself one of the biggest reasons for housing being unaffordable. Nor are they likely to check out the fact that housing is far more affordable in communities where the government is not nearly so active.

The two cities with the highest housing prices in the country are both in California — San Jose and San Francisco. Many other California communities, mostly along the coast or on the San Francisco peninsula, have stratospheric rents and astronomical home prices. Yet, in the same state’s interior valleys, you can rent luxury apartments in developments with their own swimming pools and tennis courts for a fraction of what ordinary apartments cost in places like San Francisco.

A big part of the difference is political. The kind of politics that have earned California the title of “the left coast” pervade the coastal areas and the San Francisco Bay area, while whatever capitalism there is can be found largely in the state’s interior.

The building of housing is severely restricted along the California coast by “open space” laws, severe zoning ordinances and draconian environmentalist rules. Meanwhile, the building of apartments is made unprofitable by rent control laws in places like Berkeley, San Francisco and Santa Monica.

It is in places like these that you can expect to encounter “no vacancy” signs and outrageous housing prices. But, in the interior — in places like Sacramento or Modesto — you can rent a modern luxury apartment for less than a thousand dollars a month or buy a fine new house for less than half of what the same house would cost along the left coast.

At one time, California housing prices were not so out of line with housing prices in the rest of the country. Then, beginning in the 1970s, laws and policies began to severely restrict the building of homes and apartments, especially in areas dominated by affluent yuppies and alumni of 1960s campus radicalism. For example, homes in Palo Alto — adjacent to Stanford University — quadrupled in price in one decade.

As for housing priced low enough to be affordable by the poor, most of that kind of housing was originally built for people who were not poor. People tend to move up the housing ladder as their incomes rise. This means that housing tends to move down the ladder as it ages, with rents declining. That has been one of the main sources of affordable housing for the poor.

Some housing has been built directly for lower-income people, but liberals have waged political warfare against that kind of housing for more than a century, except where the government builds it as housing projects. At one time the object of the reformers’ wrath was the tenement. Today, it is the mobile home, which has been banned from community after community by zoning ordinances.

In short, the kind of people who are crying out for more “affordable housing” have played a major role in banning affordable housing when it emerged in the marketplace. They have also restricted the building of new housing that would free up some of the existing housing to become affordable, after its occupants have moved out into the new housing.

Housing circulates among people as people circulate among housing. But housing shortages and rent control tend to freeze people where they are. It is common in rent-controlled housing for tenants to stay in the same apartment long after their children have grown up and left one or two elderly people occupying far more space than they would occupy if they had to pay the full cost in a free market.

A study in New York City found 175,000 apartments where one person occupied four or more rooms — mostly elderly people in rent-controlled apartments. A recent study in San Francisco found that nearly half the rent-controlled apartments contained only one person and more than three quarters of all rent-controlled apartments had no children.

What is “the solution”? The solution is to stop doing the things that create the problem. But politicians, especially on the left, always like to “do something” — whether that something makes things better or worse.

Thomas Sowell has published a large volume of writing. His dozen books, as well as numerous articles and essays, cover a wide range of topics, from classic economic theory to judicial activism, from civil rights to choosing the right college. Please contact your local newspaper editor if you want to read the THOMAS SOWELL column in your hometown paper.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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