Home prices aren't being driven up by developer greed or predatory landlords, they are stabilized at a rate acceptable to the market. In this case, since the availability is limited you are allowing a small percentage of the total population (those with outsized buying power) to define what is acceptable.
Rent control (alone) just pushes the problem down the road. Build more and everyone will be happy...eventually.
Government price controls have a 4000 year history of miserable failure. See "Forty Centuries of Wage and Price Controls."
Except this still will not help due to the economic forces driving urbanization. Silicon Valley is a self-fulfilling prophecy and creating more supply will only help to drive more demand.
Every new person newly moving into a heavily urbanized area will drive 0.5 more persons wanting to go there due to new network and auxiliary jobs created (groceries, haircutter, ...). As more than 70% of our jobs are by now defined by interactions with other people, urban centers of excellence are doomed to grow.
This is why building new housing is only ever a short-term solution as well. The only long-term solution to urbanization and gentrification is making these areas less attractive by offering less jobs in a major area.
This is empirically false:
https://dwtd9qkskt5ds.cloudfront.net/blog/wp-content/uploads...
http://blogs-images.forbes.com/trulia/files/2014/02/TruliaPr...
QED.
Is rent uncharacteristicly high for the value of the property in SF, or is housing of all sorts just plain expensive in SF?
Just an apartment is already over a million.
You want cheaper rent? Make purchasing cheaper. You want cheaper property? 'Fix' the supply/demand problem.
I'm not entirely convinced that there is a problem - SF, NY and Sydney (heh, little old Australia still trying to stay relevant here) are great cities which are in high demand (close to infinite!), yet is extremely limited in space/land. To me, it makes sense that the price reflects that demand.
I think that policy options that effect supply are the ones I would prefer, but we can't ignore other options.
Deadweight loss: Developers want to build places that people would benefit from renting, but they don't, because it's illegal to charge rates that would make them money.
Suppose a developer can build as tall as they wanted to, but each additional floor is more expensive: the break-even point is that each extra floor needs $100/month additional rent per unit. If you use law to force prices $100/mo lower, then the tallest floor doesn't get built anymore, because now it's not worth building.
(And if rent controls don't actually reduce the rents that people pay, then the controls aren't actually doing anything, so why have the overhead of the law? If you're reducing prices by law, things that people want to buy at or above the reduced price and sell at or below the market price don't get traded.)
This is not a 100% rule, just 5 or 6 nines.
(Yes, I know that often businesses miscalculate the value of an employee, and it may have other sources of profit that cover the losses, etc., but it doesn't change the reality that the profit motive will squeeze such things out.)
Thinks are complicated. All the dot-to-dot statements are somewhat true, but they're all going on at the same time. Higher minimum wage means more spendable cash, which means more small businesses see an uptick in sales, so more profit. See! I can do it too.
Deadweight losses are the inevitable leftovers of decreased efficiency after they have been drawn.
The problem is that the legal increase in rents is generally capped, so if the tenants who move in today remain in the rental units for many years, eventually they will be paying far below market rate.
On the other hand, the cost of insurance, maintenance, etc. for the landlord will continue to increase at the market rate, so the landlord's profit on rent will continually shrink and may become negative. That's obviously going to make developing new rental properties less attractive.
I believe the arguments that rent control is distortionary and poorly targeted (maybe they should make it means-tested rent control! I'm sure that won't have any effect on poorer people trying to rent! :P). But I don't see how market-rate rent increases, that happen fast enough for people to reach for rent control, are because the landlords are maintaining the same margins and seeing their costs increase. I do get the opportunity costs and reduced resale value costs though.
Suppose you have a project that's viable if you can rent the units at $X and then raise rents along with inflation. Then the rent control board comes in and limits increases to a sub-inflationary level. Great, just compensate for it by increasing your initial rents. Now it takes you 4 months to fill every unit in our hypothetical property rather than 2 months.
The answer is the three things that matter in real estate: location, location, and location.
How has the demise of rent control increased the amount of affordable housing in NYC?
Rent controls are just a short-sighted way of giving hand-outs to people who are politically connected or otherwise good at navigating bureaucracy. It's a price ceiling, with all the classic issues of them: shortages, quality reduction, search costs, deadweight loss, and misallocation of resources.
Shortages: More people want apartments than can get them.
Quality reduction: if you're in a rent-controlled apartment, the landlord knows you aren't going anywhere, so why would they improve the building in any way that they can avoid?
Search costs: joining a decade-long waiting list for an apartment. Fun.
Deadweight loss: Developers want to build places that people would benefit from renting, but they don't, because it's illegal to charge rates that would make them money.
Misallocation of resources: someone with a $400/mo rent-controlled apartment in a prime location in downtown SF will keep it forever, even if they only use it a couple weekends a year. Or people commuting from SF to Mountain View can't trade apartments with people commuting from Mountain View to SF, since they're locked into their rent-controlled place.