Control Freaks

I might live in the worst building in all of Berkeley. My friends and I affectionately refer to my temporary home as "Rape Motel" (you can imagine the ladies love coming over when they hear that).

I used to be confident in its preeminent seediness, but after touring friends' apartments, I decided that in general Berkeley is a really difficult place to find quality accommodations. I recently began my struggle to find nicer lodgings for next semester, but so far my search has been fruitless. Compared to every other place I have lived, housing in this city is both expensive and low-quality.

Why would a relatively affluent city with a great university and a great view have such a housing crisis? I personally put a lot of the blame on the bizarre layers of city bureaucracy, detrimental laws and complete ineptitude of city politicians. You know, those guys who voted to tell the Marine Corps recruiters they were "unwelcome and uninvited intruders"? Yeah, those are the people I am talking about.

The typical weapon that cities and governments use to destroy the likelihood of you finding a nice place to live is rent control. Rent controls generally set a ceiling on how much landlords can charge their tenants, subverting the processes of supply and demand that usually determine prices.

In an interview for the Daily Cal last semester, John M. Quigley, a professor of economics here at UC Berkeley, told me that "renters are far worse off with rent control than without it," and that "it's hard to see the benefits from it."

When prices are capped, landlords respond by supplying less housing or lower-quality units. Instead of investing capital in improving their buildings or putting them on the market for rent, owners will simply spend that money where they may get a more lucrative return.

In addition, rent control means that fewer new buildings are built. Constructing an apartment building costs a huge amount of money, and if the returns on that investment are not first-rate, then why invest?

Economists are almost unanimously disdainful of rent control. In a 1992 survey published in the American Economic Review, 93 percent of economists said that "a ceiling on rents reduces the quality and quantity of housing available." In many economics textbooks, rent control is used as an example of misguided government intervention lowering social well-being.

Since the state of California intervened in 1996 and forced Berkeley to tone down its draconian rent control laws, landlords have had some ability to alter their rents. Whenever a tenant moves out, the property owner is allowed to adjust the price for the next renter that comes along. If the tenant remains, the landlord can raise prices only by the amount the Rent Stabilization Board chooses.

This means that renters who have stayed in the same place for a long time are protected by controls, while those who recently moved in face higher rates. Graduate student Lauren Lambie-Hanson recently researched Berkeley rent control and found that those who have been living in a unit since before 1996 pay $585 per month less than those who moved into similar units after 2005.

Those people who have artificially reduced rents have an incentive to stay in units longer and thus reduce vacancy rates in the affected area. This of course makes it more difficult for newcomers to find a place to live, and they may face higher prices than they otherwise would have.

The people who are taking advantage of rent controls are not necessarily poorer or more deserving than anybody else; they just happened to get there first. In fact, those who can stay in an area for a long time likely live stable lives and hold stable jobs.

In addition to rent control, the city has a glut of inane codes that make it difficult for new buildings to be built. Developers have been trying to construct a 45-unit luxury condominium building next to La Burrita on Durant for a decade, but opposition has been fierce. The current building was declared a city landmark to subvert the construction effort.

The city government is right to want to help everyone in the city have a roof over their head, but they have gone about this the wrong way. The city's rent control and building policies reduce the amount of high-quality housing, raise prices and do nothing to help the poor. The city should instead free the market, encourage new, eco-friendly building, and work to subsidize those in financial need.

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