WTF, Chuck: Those poor exploited landlords

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In my continuing attempt to make sense of the politics of the Chron's C.W. Nevius, I present: What The Fuck, Chuck -- the saga of the poor landlord.

I'll try to be fair: There's nothing inherently wrong with this story. I don't like rich people taking advantage of anything, particularly rent control. It's true that there are a few people who are cheating, good for Chuck to expose them (tho he didn't exactly name names). You can't make better copy than a family that moves to Hawaii (!) and keeps a rent-controlled house in the Richmond. (Of course, maybe the parents needed to be there for a couple of years for work, and were hoping to return to their family home and the landlord wouldn't allow sublets, but whatever. Sounds horrible.)

And I'm not excusing it for a minute.

But I've never seen Nevius write a story about a family that can remain in this city only because of rent control, or a longterm tenant being forced out by the Ellis Act to create "homeownership" opportunities for a wealthier person who can buy a tenance in common, or a landlord who lies, cheats and abuses tenants to get rid of them so he or she can raise the rent -- and those are far, far more common occurences. Those are problems that happen every day in this city.

It's always about the poor landlords.

Yeah, there are bad tenants. But anyone on the front lines of the renatl-housing struggles in San Francisco can tell you that the abuses by the property-owning class radically exceed the harm caused by the tenant class.

I feel about this the same way I feel about the ongoing stories on bloated city employee pay and pensions. Yes, it's true: Some city employees game the overtime and pension systems and in effect pluck money from the pockets of the taxpayers. I see no reason why a police chief who retires at 55 should get $250,000 a year for life.

But it's also true that a lot of city employees earn a basic middle-class salary and get a pension of maybe $30,000 a year, which is hardly excessive -- and the fact that the private sector quit giving pensions decades ago doesn't mean that the public sector is wrong to do it. But all of these stories create a powerful Big Lie mythology of bloated public payrolls, which undermines any effort to raise taxes for desperately needed public services.

You tell people enough tales about the poor landlord and the rich tenants and you start to make rent control look like a bad idea. Which is about the worst thing you can do in San Francisco today, where the existence of any middle class at all is primarily the result of rent control -- and if anything, rent control ought to be stronger.

In other words: A little perspective here, please.

 

 

Comments

Well, your Krugman notes it's Economics 101. And as Krugman notes, "A few months ago, when a San Francisco official proposed a study of the city's housing crisis, there was a firestorm of opposition from tenant-advocacy groups. They argued that even to study the situation was a step on the road to ending rent control -- and they may well have been right, because studying the issue might lead to a recognition of the obvious."

And as a more recent, 2012 article notes, it's still anathema to even discuss reform: "Such a move is highly unlikely, however. In a city where 64 percent of residents rent, tenants have enormous political clout and it is unpopular to even discuss reforming rent control." Source: The Bay Citizen (http://s.tt/15Jar)

So your criticism that there is no San Francisco-specific economic evidence to point to is silly. The tenant groups have squelched studies from being done, the evidence from being developed.

Posted by The Commish on Jun. 19, 2012 @ 12:22 pm

only yhose who directly benefit from it even try to justify it on political grounds

Posted by Guest on Jun. 19, 2012 @ 11:46 am

Price controls haven't been discredited. Price controls are one rational way to deal with scarcity. Somebody's still going to get whatever it is. The only question is how much they'll be forced to pay.

When something is scarce, the free marketeers just say jack up the price as much as you can until demand is reduced. But that's an ugly, amoral POV that doesn't take into account the needs of real people.

Posted by Greg on Jun. 19, 2012 @ 3:41 pm

"control" the price of it by forcing food stores to sell it for less than it is worth?

Price controls have failed wherever they've been tried which is why the price of very few things is controlled.

A better solution is to give vouchers to the really needy to help them afford things, while being careful not to help those who clearly don't need it, like all those Google and Apple employees hoarding rent controlled units.

Posted by Guest on Jun. 19, 2012 @ 3:48 pm

Okay, Krugman is wrong because you say so. Good argument.

And getting rid of rent control is good for landlords and in their self-interest; and therefore they are wrong. Is it not possible that they advocate a position which is in their self interest which is also right based on facts, theories, practice and history?

You arguments seem to boil down to rent control is a good thing because it is a good thing. Surely you can do better.

Posted by S.Marty Pantz on Sep. 19, 2012 @ 5:54 pm

Of course, means testing for rent control means that landlords will only rent to those with means to not be subject to rent control.

Posted by marcos on Jun. 19, 2012 @ 7:46 am

rent control for as long as he makes below a certain figure, but then loses it above that income.

So if you don't make six figures, you'll keep RC forever.

Most wealthier tenants looking for a new place won't want a dumpy rent-controlled place anyway. They'll want a condo of SFH, and Rc doesn't apply there anyway.

As it is, LL's prefer to rent short-term, to foreigners etc., because that way they know the tenant will leave.

Posted by Guest on Jun. 19, 2012 @ 10:09 am

You're trying to say that a landlord will not discriminate the only way that is legally allowed--in favor of the person offering the most money which means discrimination against those who cannot compete with the best off potential tenant?

You've been smoking too much University of Chicago Economics School Crack.

Posted by marcos on Jun. 19, 2012 @ 10:14 am

because the poor are more likely to not be able to pay the rent!

Posted by Guest on Jun. 19, 2012 @ 11:41 am

A means testing requirement could only kick in after a few years into the tenancy. These issues only become a problem when well heeled people begin hoarding apartments at clearly discounted rates.

Posted by Guest on Jun. 19, 2012 @ 9:46 am

Rent control is the only reason i was able to relocate here from Ohio for work. My tax returns were required to prove i was eligible.

The apartment I got was so small you could only sleep in it. For the same money, I would have afforded a luxurious apartment in Ohio. As soon as I could afford it, I moved to a better, non rent controlled apartment.

The Landlords here are out of control. I am a single, neat, older woman. Back in Ohio, I never lost my deposit, never got ripped off by a Landlord, here in California, that's all that has happened. Its a horrible place to be a renter. I've moved in to have appliances stop working 30days later, no stove, no heat, no repairs. Landlord filling up my garbage (a service that i have to pay for) with his lawn waste so heavy I can't even budge the bin. I have absolutely no sympathy for Landlords and I can well understand why some people may resort to gaming the system in self defense.

Posted by Guest on Jun. 19, 2012 @ 9:47 am

If you're a new arrival in SF then you will pay market rent, as rent control only applies to existing rents.

and the reason that market rent is so high is because so many units are permanently squatted in by long-termers clinging to their cheap rent, which leads to a low turnover rate, low supply and so high market rents.

Rent control pushes up the cost of vacant units and hurts people exactly like you.

Posted by Guest on Jun. 19, 2012 @ 10:15 am

Those who pay rent are not squatting.

Posted by marcos on Jun. 19, 2012 @ 10:38 am
Posted by Guest on Jun. 19, 2012 @ 11:38 am

That's why there are places like Ohio.

Or Oakland.

Posted by Guest on Jun. 19, 2012 @ 10:13 am

http://en.wikipedia.org/wiki/Economic_rent

Economic rent is technical terminology used by economists to define one aspect of the price of goods and services. Generally, it designates the difference between the raw costs of everything needed to produce the goods or service and the price. In the analysis, economic rent is determined for each of the factors of production that are used to produce the good or service. Usually economic rent is due to some exclusivity. For example, for labor, it could be due to celebrity or skill (e.g., higher pay for skilled workers, in a region where there is a scarcity of such skilled workers); for a good, it may be due to the power of a patent; for real estate, it may be due to a favorable location. By contrast, if there is no exclusivity and there is perfect competition, there are no economic rents, as competition drives prices down to their floor. A recipient of economic rent is a rentier.

Economic rent is different from other unearned and passive income, including contract rent. This distinction has important implications for public revenue and tax policy. As long as there is sufficient accounting profit, governments can collect a portion of economic rent for the purpose of public finance without risking the adverse effects on production or consumption. For example, economic rent can be collected by a government as royalties or extraction fees in the case of resources such as minerals and oil and gas.

---

Which market worshiping idiot is going to conflate economic rent and contract rent first?

Posted by marcos on Jun. 19, 2012 @ 10:32 am

have a mortgage and so you rent the money with which you buy it. While if you have surplus cash, you receive rent regardless of whether you receive interest, dividends, rents or capital gains.

It makes little sense to control one of those things and not the others. Yet we do, or at least we try to in just a few cities.

Posted by Guest on Jun. 19, 2012 @ 3:51 pm

Were you home schooled?

Posted by Guest on Jun. 19, 2012 @ 7:14 pm

Either you rent a home or you rent the money to buy a home.

Posted by Guest on Jun. 20, 2012 @ 5:44 am

I gave you a chance to contest your idiocy but clearly your idiocy has won.

Go back and read Adam Smith again, not the Cliff Notes, and this time, please pay attention to reading comprehension, okay?

Posted by Guest on Jun. 20, 2012 @ 6:47 am

Just obtude and oblique references that you hope nobody will check.

I've forgotten more economics than you've ever known, kid. Don't even start.

Posted by Guest on Jun. 20, 2012 @ 7:09 am

Adam Smith wrote not just about "free markets" and "the invisible hand." The task of the classical economists of the day was on eliminating economic rent, first from the prerogatives of the crown and afterward from the rising mercantile class.

The neoclassical reaction to that was paid for by the wealthy and pursuant to their demands excised the notion of eliminating economic rent from capitalist economics. As the neoclassicals rose, they eclipsed the classicals and led us to the point where the wealthy game the system via the tax code and public policy to secure unearned income and to shelter it from taxation.

Rent Control is one tiny intervention where the majority checks rent seeking against a wave of speculative rent seeking by a tiny minority.

Posted by marcos on Jun. 20, 2012 @ 9:38 am

The very fact that you use the phrase "unearned income" shows your bias.

Anyone who works hard to build a portfolio of shares, bonds or properties can tell you it is far from "unearned".

Your perspective sounds hopelessly dated and out of touch. Anyone with an IRA has income from "rent". Better close yours down if that bothers you.

In fact, even if you own your own home you have rent - the imputed rent you save by not having to pay rent.

See? We're all rentiers. Try enjoying it and spare us the guilt and marxist lectures.

Posted by Guest on Jun. 20, 2012 @ 9:51 am

Just because the rentiers have shared a few crumbs with the rabble does not mean that Adam Smith and classical economics was hijacked by the rentiers to justify rent seeking and speculation as legitimate economic activity.

The magic of the market breaks quickly at the margins and neoclassical economics has been engineered to shoehorn rent seeking as a desired goal. Hell, neoclassical economics cannot model asset bubbles or the crash of 2008 even though a child could see it coming.

We refinanced our home at a 30 year fixed mortgage as soon as possible after extinguishing our liars loan, second complete the downpayment and subsequent ARM in 2005 because I saw this meltdown coming.

But then again, I don't limit myself to what I've been taught in school, I read a diverse range of economics to synthesize my positions.

Posted by marcos on Jun. 20, 2012 @ 10:35 am

You're not rich.

But then of course, if you were, you'd be a rentier.

So, you'll be shutting down that IRA, right? It must feel terrible to be a rentier yourself.

People make money in the way that makes the most sense for them. For you, that might be a 9 to 5 cubicle grind. For others, it's speculation, trading, investment and garnering rent. Each to his own and a pox on class warfare and stereotypical generalizations. In San Francisco we support diversity, right?

Posted by Guest on Jun. 20, 2012 @ 10:49 am

Right, because everyone has gobs of cash to throw at financial speculation. I'm satisfied that we managed to play our financing conservative and now have mortgage payments that are less than half of the rent for equivalent apartments in our neighborhood and have gobs of equity even after the meltdown.

Just like capital decided to create free labor from serfs, to free the slaves in the 19th century in order to force people to work for sustenance that was once available (not arguing FOR slavery, just that food and shelter were part of the deal) neoclassicals decided to force everyone to put their money into the market in order to avoid starvation as a retiree.

The resulting bubbles, regularly occurring since the shift from defined benefit to defined contribution, have culled the savings of the middle class and enriched the rentiers. There is a big difference between scrimping and saving to avoid living in a refrigerator box under a freeway ramp eating cat food upon retirement and living like Warren Hellman, speculating with inherited money.

This is similar to the way that the plight of small business has been deployed to make life easier for the rentiers who control big business, with barriers being dropped for big biz and there never seeming to be the political will to relieve small biz of regulation.

Posted by marcos on Jun. 20, 2012 @ 11:07 am

You're effectively complaining about capitalism.

To which I can only then ask why you elect to live in the most unabashedly capitalist country on the planet.

You must be in a perpetual state of anxiety, even if it is self-imposed.

Posted by Guest on Jun. 20, 2012 @ 11:20 am

Yeah, reiterating Adam Smith and the classical CAPITALIST economists' concerns about rent seeking is now Marxist.

Shows you all how far to the right the rigged market sharia practitioners have moved.

Posted by marcos on Jun. 20, 2012 @ 11:40 am

mis-interpretation of Adam Smith is tainted by tired old marxist cliches.

Posted by Guest on Jun. 20, 2012 @ 11:57 am

You lose if all you've got is ad hominem and invective.

Next time, try an approach more sophisticated than "the waving of the hands," okay?

Posted by marcos on Jun. 20, 2012 @ 12:11 pm

stunningly little to refute.

You don't like wealthy people. We get that.

Posted by Guest on Jun. 20, 2012 @ 12:58 pm

Marc -- I don't know what you mean by this. I'm a small-property owner, and my costs go up every year, guaranteed. My property taxes, insurance, and utilities (which I pay for the whole building) are all constantly going up. The cost of maintaining and improving my property keeps increasing too, since I believe in paying my employees a living wage (they need to live in this very expensive city, too, after all), and the cost of materials keeps rising too. It is REALLY a struggle to maintain my building in the kind of condition I want it to be in without spending a zillion dollars on doing so. I may not be your typical landlord, since I live in the only building I own, and I really do care about the property, but I can say that it ain't easy owning property here in San Francisco. And as far as rent control goes, I have definitely seen its shadow side since I bought my building -- it is hardly what I would call an unmitigated good. I think that all the previous points -- about how it reduces the available housing stock, since people flat-out do NOT want to move, as well as driving rents up, since landlords know that whatever rent they set their units at they will be stuck with for an indefinite period of time, even though as I said the costs of owning a building will outpace any allowable rent increase -- are pretty accurate. So it is a very sticky situation for both landlords and tenants -- unless you're a multi-million dollar property owner, which the majority of landlords in this city are not. I HATE seeing such black-and-white analyses of such a complicated issue on these message boards. I've been a tenant with horrible landlords, but I've also been a landlord with horrible tenants -- and the line got crossed many years ago where I was wealthier than ANYBODY whom I rent to. It is a very strange situation being so regulated in such an intimate relationship as I have with my tenants -- we are housemates and neighbors, and still the city wields so much power over what we can and can't negotiate between ourselves. I think at the very least that in small owner-occupied buildings such as mine the ordinance is overreaching -- and I campaigned passionately for Prop I years ago, before I understood its downside the way I do now. I can tell you I have been horribly taken advantage of by opportunistic tenants, and nothing in Nevius's article surprises me. You can never say "All [fill in the blank] are good and honorable people", and tenants are no exception. I wish people would think about this before they started making such blanket statements like the ones I see in these comments.

Posted by grrlfriday on Jun. 19, 2012 @ 10:40 pm

economcis of running a rental building. They assume the rent is "pure profit" and "money for nothing" when in fact a significant number of rental buildings make a loss, not least because the rents can only be riased by 60% of cPI which, in recent years, has been almost nothing. Yet does anyone seriously think that contractors, plumbers, insurance etc. aren't going up?

While even with Prop 13, taxes still go up by 2% per year and more if you make improvements.

Rent control hurts tenants because it:

1) Ensures no new rental housing is built
2) Incentivizes landlords to TIC, condo or rent very short-term
3) Encourages asking the very highest rent possible
4) Leads to more evictions as landlords take any opportunity to get a vacancy

I've made good money from my two buildings but that was almost all because I was lucky in getting voluntary vacancies (I only evicted one tenant) and was able to condo convert both.

Purely as rentals, it was barely worth all the trouble.

Posted by Guest on Jun. 20, 2012 @ 5:52 am

And what about the cost of major improvements such as a new foundation? Many historic buildings in liquefaction zones will not withstand an earthquake unless this work is done. The unrealistic passthrough caps based on a percentage of artificially low rent prevents it from getting done in many buildings.

Posted by Guest on Jun. 20, 2012 @ 8:25 am

landlords are only willing to spend money on a unit or building when it's vacated. There's simply no motivation to invest in a building where rents and passthru's are limited.

So maintenance is deferred and improvements are never made. The quality of the rental housing stock declines to a level where the artificial rent actually is appropriate.

You can walk down a street in SF and literally spot the rented buildings - fading paint, rotting windows, unmaintained yards and so on.

Posted by Guest on Jun. 20, 2012 @ 8:49 am

Devious Nevius is fucking hardwired to be wrong. The only time he might ever provide useful perspective is when the "left" position is not as it appears, like when old Chuckie came out against the Willie Brown/Eddie D. props D&F in '96.

I'd look to Ken Garcia to provide useful perspective just as soon as I'd check with Nevious.

Posted by lillipublicans on Jun. 20, 2012 @ 11:44 am

most here. The idea that Redmond is more popular than Nevius would be a stretch.

Posted by Guest on Jun. 20, 2012 @ 11:59 am

I think Nevius and Matier & Ross are the most widely-read columnists in town.

Posted by Guest on Jun. 20, 2012 @ 1:34 pm

sheet and don't see any distinctions to be made nowadays. For people who go in for such insider viewpoints, I've got no doubt they are popular.

Posted by lillipublicans on Jun. 24, 2012 @ 2:07 pm

usually I disagree violently with Chuck Nevius' take on things. But this time I know he's telling the truth, and it's a truth the San Francisco left really needs to hear. I have had horrible, horrible tenants since I've been a landlord. There is a passage in the Rent Ordinance that says that if the premises are found to be unsafe, tenants don't owe any rent and are under no contractual obligation to me whatsoever. In fact, they could argue that even all the back rent they've paid to me is owed back to them. There are certain tenants who know about this section, and who knock themselves out trying to prove to the city that my building is unsafe -- even though I have literally spent hundreds of thousands of dollars in upkeep, and worked my fingers to the bone trying to restore this building to its original glory as a pre-earthquake cultural and historical treasure of San Francisco. These people have made my life a living hell -- all for the sake of their own personal enrichment, even though they're lying to the city about their true motives. The situation is made WAY more complicated by the fact that 2 of my 3 rental units were apparently built without permits many years ago, long before I was even born. Once someone blows the whistle on that, it's basically a life sentence -- all the animus of the various city agencies are aimed at me, a very small property owner who only owns, and lives in, one building. As if I'm the biggest problem the city has right now, and if they can just solve me, they've solved everything.

I think the people who say that demographic pressures will eventually change the balance of power on this issue are probably correct. I wish there was a way to have a rational dialogue about it and hammer out a compromise that actually makes sense. But the level of conflict and animosity I have seen is so intense that my hopes for that happening are pretty dim. I hope for the sake of the city we can work something out, but believe me, I'm not holding my breath.

Posted by grrlfriday on Jun. 20, 2012 @ 11:28 pm

Wow,, Redmond and C.W. are still around.. Here is a tip,, No two People are alike, no matter their similarities... Just like snow flakes,,, That is why schemes like rent ''Control'' never really work... One size never will fit all,,,, Clothes, shoes or Rules... In fact, Even though landlords considered me a good tenant, they had to raised the rent allowed yearly because the Laws, not because Finances, common or business sense dictated the increase... Boy, I Am glad you folks are in My dust.. Please don't come around here... pete

Posted by Guest Shifty pete on Jun. 23, 2012 @ 7:37 am

My family have lived in San Francisco since shortly after the earthquake in 1906. My grandmother went to the same high school that I attended. My parents met at that same school. This is my home, and I intend to raise my two children here for as long as I possibly am able.

Because I love my fair city so much, I chose to work as a teacher for San Francisco Unified School District. I have devoted my life to enriching our communities, and deepening the roots of our families in San Francisco.

Most of my friends have moved away. They cannot afford to raise their children here. The very quality of character that draws people from across the nation drains away, year after year, because of greed and limited vision.

On a teacher's salary, I would not be able to afford even a one bedroom apartment for my family of four, were it not for rent control.

When you all moved here from wherever you came from, you loved my home town. If you want a thriving city, protect its roots and imagine something beyond your own bank accounts.

Posted by Guest on Nov. 09, 2012 @ 5:58 pm