Jewish World Review Feb. 7, 2002 / 25 Shevat, 5762

Thomas Sowell

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Consumer Reports

The housing farce

http://www.NewsAndOpinion.com -- A RECENTLY published housing study says: "San Francisco is one of the densest large cities in the U.S." That is true in both senses of the word "dense."

Nowhere are San Franciscans more dense than when talking about housing -- especially that perennial will o' the wisp, "affordable housing." Tight rent control laws in San Francisco are supposed to help the poor. But the recent housing study shows that 26 percent of the households living in rent-controlled apartments have incomes of $100,000 or more.

At the other end of the economic scale, people who might be expected to have budget problems are leaving the city. Although San Francisco's total population is growing, the number of children in the city has declined absolutely. More than three-quarters of the households in rent-controlled apartments have no children at all. The black population of San Francisco has also declined -- by 23 percent -- in just one decade.

Nearly half the working population still remaining in the city are in professional or managerial occupations. It is tough to live in San Francisco if you have jobs paying ordinary salaries.

Rent control laws are supposed to keep down rents. But rents today are more than five times what they were in 1979, when such laws were passed in San Francisco. The average apartment rent in the city today is $2,100 a month. Even for a studio apartment, the average rent is $1,500 a month.

In short, the goals of rent control and its actual consequences are at opposite poles. Nor is this peculiar to San Francisco. Studies show that rents are usually higher and homelessness is greater in cities with rent control. How can this be? Partly it is because the only housing that repays the cost of building under rent control is usually luxury housing, which is often exempt.

When renting apartments becomes a losing proposition, that drastically reduces the prospects of anyone's building new rental housing, either to replace the housing that is wearing out or to accommodate a growing population. Three quarters of the rent-controlled housing in San Francisco was built before 1950. Again, this is not peculiar to San Francisco. Nothing brings private building to a halt like rent control. Housing shortages have followed rent control in cities across the United States, as well as in Europe, Asia and Australia.

What makes all this a complete farce is that the very people who push such notions as rent control and drastic restrictions on building are forever wringing their hands about a need for "affordable housing" and deploring homelessness. Yet the very word "builder" is anathema to such people. But where is any housing to come from if it cannot be built? And who is to build it, if not builders?

San Francisco compounds the problem by having restrictions on how tall they will allow buildings to be built. They don't want their skyline to look like Manhattan's skyline. But the fundamental problem is not what they want or don't want. The real problem is that those who make these decisions do not have to pay the costs.

All sorts of notions and fashions can be indulged when you don't pay the costs. Arbitrary zoning, "open space" and other restrictive laws escalate the cost of building housing, often to the point where numerous people cannot afford it. All the while, the plaintive cry of "affordable housing" goes up from the very people who are making housing unaffordable.

To make the farce truly monumental, there is now a proposal for a bond issue to get money to allow the city government to build the low-income housing that it has made impossible for private developers to build.

Meanwhile, vast tracts of unused land in prime locations with magnificent views remain idle in a city with a severe housing shortage. This land is in military and naval bases that the federal government has turned over to local authorities. If this land were sold in the open market, it would probably bring in more money than a bond issue -- and this would be income to the city, not debt to be repaid by the taxpayers. But that would not cater to the fashionable notions among the politically correct in San Francisco, so such land will remain largely unused while the hand-wringing about "affordable housing" goes on and on.

JWR contributor Thomas Sowell, a fellow at the Hoover Institution, is author of several books, including his latest, The Einstein Syndrome: Bright Children Who Talk Late.

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© 2002, Creators Syndicate