the West is being murdered by populists
Maybe so, but please don't post unsubstantive comments to Hacker News.
Berlin approves 5-year rent freeze
201–210 of 594 posts
Re: Berlin approves 5-year rent freeze
#202Earlier quoted context omitted.
No, they just declared housing to be affordable (in the $20/month ballpark region) and people had to apply 10 years in advance to move to a larger apartment. This is my parent's experience in east Germany, should be similar to Soviet Union.
The curios thing about these anecdotes is that as dysfunctional as somewhere like the Soviet Union was, getting a affordable apartment in only 10 years would be a great deal for many today. In many metro areas property values have increased more the savings from the median income, meaning that the application, or aspiration, of the majority of people is going in reverse.
The apartment was subsidized, but not free. Unless you were a part of Nomenklatura (the ruling class government officials), you could probably hope for a 40 sq.m (430 feet) apartment somewhere in Khruschyovka (a poorly built 5 floors block housing) at the outskirts of your city. After 15 years of hard work.
Perhaps it is better than nothing, however, living in Soviet Union's surrealistic "economy" was not worth that.
Re: Berlin approves 5-year rent freeze
#203Symptom: rents are too high Cause: insufficient housing supply Solution: disincentivize new construction?
The same argument is happening in Seattle now, too. It seems absurd.
Re: Berlin approves 5-year rent freeze
#204As a person born and raised in Soviet Union, I strongly believe that whoever thinks that a proper economic response to raising prices is literally to order them to stop raising , is a lunatic.
As a person living in austria, I strongly believe that goverment build housing and strong regulation of pricing and the market is the only way to keep housing affordable for all people and not make it a speculation object like in germany/berlin. Did you know that in the late 90 the housing was good and affordable? And that a big chunk was owned by the city or state? That these things were then sold for pennies, to co…
But there are different houses. Typically the most expensive are those located in the center of a big city with good transportation access. Do such apartments need price regulation? Poor people could live somewhere further from center where the prices are more affordable. Otherwise you make those nicely located apartments unavailable for other people who are ready to pay more.
Re: Berlin approves 5-year rent freeze
#205As a person born and raised in Soviet Union, I strongly believe that whoever thinks that a proper economic response to raising prices is literally to order them to stop raising , is a lunatic.
My hope is that it's not a proper economic response, but short-term political firefighting.
That is, "something has to be done" while the capacity is being built, and it cannot be built fast enough.
Surely price control will result in various shortages, lines, increased corruption, etc. OTOH this may be, at least in the politicians' reasoning, not as bad as rapidly pricing out their constituencies out of the houses where they live. And if not directly their constituencies, this applies to all low-wage workers needed by the city economy; raising their wages abruptly would raise other prices abruptly, which may be politically undesirable.
So, as a temporary throttling measure this may be not so nonsensical, with emphasis on "temporary".
Re: Berlin approves 5-year rent freeze
#206Earlier quoted context omitted.
> Government should provide it for its citizens And how do you expect government to pay for that? How do you decide who lives in these houses? It's not that easy. Government isn't a magic entity.
One of the biggest costs of new rental construction is financing costs (on a 30 year loan it's often half of the cost). Given that it's cheaper for the government to borrow money than the private sector you can have the government simply build market rate housing, but wouldn't need to charge as much in rent. In this context, the government can essentially be a magic entity.
So you'll force tax payers to pay for it? Government doesn't have free money. Why should people be forced to pay for the construction of such housing?
Re: Berlin approves 5-year rent freeze
#207Earlier quoted context omitted.
Housing is not a market that should be governed by capitalism. I honestly don't care if the ultra-rich trade 30 million dollar homes and speculate on their value, but the fact that homelessness is even a problem in the first world is a travesty. Our children will look back upon a time when there were 6 (SIX!) empty homes for every homeless person in the United States and weep. Obviously those homes aren't all where t…
As I understand it, homelessness has more complex causes than simply not having access to affordable housing.
Sure, but the majority of it comes down to "money": https://i.imgur.com/aUvpH0S.png
The fact that we can't solve homelessness "just" by giving everyone easy access to affordable housing isn't an argument against affordable housing. It's an argument for better mental health services and a wider safety net.
Re: Berlin approves 5-year rent freeze
#208Earlier quoted context omitted.
Upper middle class are usually not homeless, right now they occupy some pool of apartments in cities anyway. By building more luxury apartments you encourage them to move, thus leaving their old apartment behind, either by putting it on sale, or renting it out. Think of this like a domino effect: those earning $10M per year buy luxury residence, leaving their old house for those earning $1M, who in turn leave their o…
I don't think they're going to move that easily. Rent has been going so much it is eating a larger income share than before for many of them too. So what that leaves you with is disproportionate increase of demand and prices for smaller cheaper units.
Yes, this fits closer to reality. Most people want to spend as little as possible on rent for a situation that matches their needs. Just because fancier apartments become available at higher prices doesn't mean people will move into them from a cheaper place just because they can technically afford it. Plenty of people rent apartments below their "I can afford this" level in order to use that money elsewhere or save up for a future house.
Building luxury housing doesn't push prices lower on the bottom half of the housing spectrum, it just makes the top end higher. "Trickle down" housing takes way too long to be realized, while subsidized housing has a much stronger and immediate impact[0]
[0]https://www.urbandisplacement.org/sites/default/files/images...
Re: Berlin approves 5-year rent freeze
#209Earlier quoted context omitted.
> But many people want the status without having to pay the $$$ It's not just about the status. Every city needs people who do lower paying jobs. Someone has to clean those office buildings, someone has to take care of sick people at hospitals, someone has to drive taxis, buses, ... By not supplying those people with affordable housing within the city they're lives only become worse (more money and time spent commuti…
> Every city needs people who do lower paying jobs. Someone has to clean those office buildings, someone has to take care of sick people at hospitals, someone has to drive taxis, buses, ... By not supplying those people with affordable housing within the city they're lives only become worse (more money and time spent commuting, less time spent with family and friends). They can live in the suburbs. Nobody has a speci…
This is just literally privatizing the cost of reproducing the city onto its lowest paid workers, i.e., entirely regressive. Why should those guaranteeing the very basic functioning of a place (janitors, firefighters, nurses, etc) bear not only the burden of lower wages, but now also terrible commutes? There’s no sane logic behind this kind of sentiment besides “might makes right,” which is fueling the rise of “eat the rich” populism.
Re: Berlin approves 5-year rent freeze
#210Earlier quoted context omitted.
> What seems to always end up happening is that new residents subsidize the rent controlled ones Not really. It's landlords that subsidize rent controlled tenants. The system is redistributive. The value that would have gone to landlords in an increasing rent environment goes to the tenant instead. Theoretically it can distort the market, provide disincentives to building housing, etc etc. But those are second order…
> It's landlords that subsidize rent controlled tenants. Are there any studies showing the extent to which that is true? I would be curious to see what fraction of the rent control is paid for by landlords vs new tenants. My intuition would be that rent control reduces the supply of market-value housing, which would lead to prices increasing even more (even before you take into account a landlord wanting to compensat…
> Are there any studies showing the extent to which that is true?
There are actually plenty of studies that show that it's not true. Some of them are linked elsewhere in this thread. Your intuition is, in fact, correct and supported by a vast body of empirical research.
This is one of the least-controversial topics among economists. It's very difficult to find a topic on which there's more academic consensus than rent control and its effects. But people dig their heels in and refuse to acknowledge it, even when there's copious research behind it.
As Paul Krugman put it, "So now you know why [people say] economists are useless: when they actually do understand something, people don't want to hear about it."