Rent Control

Rent control, and the high price of Bay Area real estate has odd, and potentially unintended social consequences. Take relationships.

I moved into the Tenderloin, a notoriously crack-infested neighborhood, at the peak of the dot-com boom, so my rent was $1000/mo. My girlfriend had lived in one of the nicest neighborhoods in the city for fourteen years, so with rent control, she was paying the same amount for a view of the Golden Gate Bridge as I was paying to have people shitting on the street on my front doorstep.

After the bust, my landlord reduced rents in the building. I was out of work for a few months, so I moved into a crummier apartment in the building for $775. My girlfriend's rent stayed the same, because market-rate apartments in her building rent for $1800 or so. She's got a bargain, and would be foolish to give it up (too small for two people there).

Me ? My building is undervalued, because the landlord's cash flow shrunk after the bust. There are more so-so buildings without views than nicer buildings with views, less turnover in the lower-rent buildings, so there are more people taking advantage of rent-control -- a better bargain the longer you stay. So my landlord sells the building to a huge company which is notorious for harranging the people who are benefitting from rent control, so they can empty the apartments and rent them at the new market rate (around $850 for my current $775, or if they fixed it up, $900). Of course this is illegal, but there are many subtle ways to get someone out of an apartment.

So if I move, I pay more. If my girlfriend moves into something similar to what she has, she would nearly double her rent. If we lived together, in something similar to her place, we would both end up paying much more.

Buying ? Ha. Buying something that has some resemblance to middle class would cost us both most of our cash flow -- as my engineer friend and an investment friend have calculated, in this market, it actually makes more sense to rent.