the rent is too damn high
Backward Thinking in Silicon Valley

When it comes to technology, Silicon Valley is known for being forward-thinking. When it comes to housing policy, not so much.

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. The New York Times reports:

After years of punishing rent increases, activists across Silicon Valley and the San Francisco Bay Area are pushing a spate of rent control proposals, driven by outrage over soaring housing prices and fears that the growing income gap is turning middle-class families into an endangered species. Those campaigns, if successful, would lead to the largest expansion of tenant laws since the 1970s.

Rent control is always and everywhere a destructive policy. It exacerbates housing shortages, reduces housing quality, drives up costs even more steeply in non-controlled units, and favors wealthy property owners at the expense of upwardly mobile people trying to move in. What’s worse, as Tyler Cowen has pointed out, rent control policies will “limit the incentive for prospective builders to fight to overturn current building restrictions.” It will also naturally limit the incentive for current residents to vote to liberalize land use policies because their own housing costs will have moderated. (The people shut out of the region won’t be so lucky).

Building new units is always a challenge politically. There is always some interest group opposed to new housing in any given location. But rent control is popular, and easy to sell to residents who are more concerned with their own immediate costs than the health of the housing market more broadly. So instead of opening up its building codes to allow for more construction and bring down prices in a sustainable way, Silicon Valley looks poised to bury its existing units under regressive and unsustainable regulations. Surely the region that brought us Google and the iPhone can do better than that.

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