Sunday, October 21, 2018

A policy that achieves exactly the opposite of its original goal

Landlords reacted to rent control in San Francisco with three strategies:

  1.  landlords moved into the property themselves, known as move-in eviction;
  2.  landlords evicted tenants to convert the units to condos; and
  3.  landlords offered tenants monetary compensation for leaving.
So who benefitted and who was harmed?
...rent control operated as a transfer between the future renters of San Francisco (who would pay these higher rents due to lower supply) to the renters living in San Francisco in 1994 (who benefited directly from lower rents). 

Ironically, the conversion of rental properties into higher-end, owner occupied housing attracted higher-income residents which actually contributed to the gentrification of San Francicso, "the exact opposite of the policy's goal."

HT:  MarginalRevolution.com

5 comments:

  1. This makes me wonder what effective methods are for creating affordable housing for lower income individuals close to cities/public transit? I would recommend increasing supply to level out prices, but with limited space, that isn't always an option. It's a complicated issue to wrap my mind around, but there is a great podcast called The Promise (produced here in Nashville) that discusses some of the issues around gentrification and affordable housing.

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    1. ^^^ Ben Burkeen by the way. Just noticed it was posted as "Unknown"

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