This isn't a convincing argument. Regardless of the rates paid by the people in rent control apartments, unless they vacate, the supply doesn't increase, so the market isn't changed at all.
Since new buildings aren't rent controlled in SF, there is no discouragement to building due to rent control.
The real answer is just geometry. SF is geographically constrained in such a way that there isn't really a way to build more housing within commuting distance. A city like Omaha (or even Berlin) has the available land go up with the square of the commuting time. SF has the land available for development go up roughly linearly (the valley doesn't get much wider until all the way to San Jose)
The way to lower housing costs is to increase the available housing as a function of commuting time. The easiest way to do this is high speed rail.
It's not a coincidence that all the communities in the valley have fought tooth and nail against high speed rail.
Once it becomes possible to get to SF from Gilroy in 40 minutes, tons of housing will be built far from the city, where land is available and cheap. People won't have to choose between paying a huge premium to avoid a long commute, or spending 3 hours of every day sitting in a car.
This is economics 101. The marginal property is south of San Jose, and the premium for living in SF is about 2 hours * 20 days of commute time a month, which if you are making $200k per year is about $4166 of lost time per month, assuming a 40 hour work week and ability to convert that time into salary (a bad assumption, but this is the actual analysis to figure out how much more prices should be in SF, it just doesn't factor everything in appropriately). It's not a coincidence that this is roughly the difference in rental costs between these two areas.
Since new buildings aren't rent controlled in SF, there is no discouragement to building due to rent control.
The real answer is just geometry. SF is geographically constrained in such a way that there isn't really a way to build more housing within commuting distance. A city like Omaha (or even Berlin) has the available land go up with the square of the commuting time. SF has the land available for development go up roughly linearly (the valley doesn't get much wider until all the way to San Jose)
The way to lower housing costs is to increase the available housing as a function of commuting time. The easiest way to do this is high speed rail.
It's not a coincidence that all the communities in the valley have fought tooth and nail against high speed rail.
http://www.cahsrblog.com/2011/04/anti-hsr-activism-is-a-rich...
Once it becomes possible to get to SF from Gilroy in 40 minutes, tons of housing will be built far from the city, where land is available and cheap. People won't have to choose between paying a huge premium to avoid a long commute, or spending 3 hours of every day sitting in a car.
This is economics 101. The marginal property is south of San Jose, and the premium for living in SF is about 2 hours * 20 days of commute time a month, which if you are making $200k per year is about $4166 of lost time per month, assuming a 40 hour work week and ability to convert that time into salary (a bad assumption, but this is the actual analysis to figure out how much more prices should be in SF, it just doesn't factor everything in appropriately). It's not a coincidence that this is roughly the difference in rental costs between these two areas.