Rent controls have split housing in Berlin into two distinct markets • Hacker News Board

Re: Rent controls have split housing in Berlin into two distinct markets

#101

Post by kuschku » Tue, Mar 02, 2021, 7:29 PM UTC

xvedejas wrote: post #93

aphextron wrote: post #88

>In a food shortage, for example, regulating the price of bread only trades one expression of scarcity (high prices) for another (empty shelves). Well sure. But the total amount of people who have some bread is now greater, versus a select few wealthy people getting all the bread they want, as the wretched masses stare longingly. You can either increase total happiness, or concentrate it to the powerful. It's pretty…

In the short term, I'm in agreement without caveat, but in the long term letting the prices rise supports industrial growth. The wealthy buying all the bread they want funds the expansion of the farming industry, allows them to invest in more intensive farming practices, and even better encourages price discrimination, whereby the wealthy actually get the same amount of bread as everyone else but pay extra for the "a…

The issue is, there's only a limited supply (Berlin can't grow forever), and as result there's already many apartments left empty today to artificially increase the prices of apartments, as they're treated as investments in a bubble, with the intention to profit from increasing value, not from rent.

Not regulating the price was tried for 30 years, and led to many families unable to afford housing, or spending 80%+ of post-tax income on housing.

Re: Rent controls have split housing in Berlin into two distinct markets

#102

Post by Mediterraneo10 » Tue, Mar 02, 2021, 7:30 PM UTC

sokoloff wrote: post #94

aphextron wrote: post #88

>In a food shortage, for example, regulating the price of bread only trades one expression of scarcity (high prices) for another (empty shelves). Well sure. But the total amount of people who have some bread is now greater, versus a select few wealthy people getting all the bread they want, as the wretched masses stare longingly. You can either increase total happiness, or concentrate it to the powerful. It's pretty…

Rationing bread would increase the number of people who have some bread. Regulating the price to a point well below the free market supply/demand driven price causes a decrease in the amount of bread supplied to the market (and probably increase hoarding/decrease the breadth of distribution). Think back to toilet paper shortages last spring. Rationing was arguably the best move (and was what local markets around me d…

> Regulating the price to a point well below the free market supply/demand driven price causes a decrease in the amount of bread supplied to the market.

In some countries like Egypt, bread (or another basic staple) is heavily subsidized below the free market price, but that doesn’t seem to meaningfully impact the market’s supply: any consumer able to pay that artificially low price can still eat all the bread he or she wants.

Re: Rent controls have split housing in Berlin into two distinct markets

#103

Post by delecti » Tue, Mar 02, 2021, 7:30 PM UTC

ycombinatorrio wrote: post #64

awillen wrote: post #52

Earlier quoted context omitted.

So you're driving out renters, who are typically less affluent, in favor of the wealthy. Whether or not you call that success or failure depends on what you're trying to achieve, but usually these sorts of actions are trying to create housing affordability. Taking most of the supply off the market for new renters (by selling to people who can afford to buy and by incentivizing those who were already renting to stay f…

I learned a new word SOL (S*t outta luck)

Or its more appropriate alternative, "sore outta luck".

Edit: Not to criticize the profanity version, I prefer it, just offering an alternative that doesn't need to be censored.

Re: Rent controls have split housing in Berlin into two distinct markets

#104

Post by [deleted] » Tue, Mar 02, 2021, 7:31 PM UTC

robertlagrant wrote: post #12

ahoy wrote: post #9

This is an opinion piece in bloomberg, a pro-business, pro-wealthy publication. Is there any surprise that they dislike rent controls?

This is true. Same logic goes for anti-vaxxers and doctors. Of COURSE doctors recommend going to doctors. They WOULD say that.

[deleted]

Re: Rent controls have split housing in Berlin into two distinct markets

#105

Post by kuschku » Tue, Mar 02, 2021, 7:31 PM UTC

_2d30 wrote: post #91

aphextron wrote: post #88

>In a food shortage, for example, regulating the price of bread only trades one expression of scarcity (high prices) for another (empty shelves). Well sure. But the total amount of people who have some bread is now greater, versus a select few wealthy people getting all the bread they want, as the wretched masses stare longingly. You can either increase total happiness, or concentrate it to the powerful. It's pretty…

Unclear on how claimed price controls would ensure equitable distribution of bread. Why is the price of bread being capped making it so that more people get bread? If I’m rich and the price of bread is artificially low, maybe I’ll just buy up even more bread and now fewer people get bread.

Because you can define the cap so e.g. it only applies for one apartment per person, so you can't use it to get multiple ones cheap.

Re: Rent controls have split housing in Berlin into two distinct markets

#106

Post by Shivetya » Tue, Mar 02, 2021, 7:32 PM UTC

aphextron wrote: post #88

>In a food shortage, for example, regulating the price of bread only trades one expression of scarcity (high prices) for another (empty shelves). Well sure. But the total amount of people who have some bread is now greater, versus a select few wealthy people getting all the bread they want, as the wretched masses stare longingly. You can either increase total happiness, or concentrate it to the powerful. It's pretty…

The bread example is apt if considered in the context of the apartment issue. What was driving up the price of housing was that they were not creating new housing at a pace to keep up with demand.

So using the focus you had on bread, so you lower the price of bread so more people can afford it. However you don't increase the bakers ability to create bread and they still only have the same amount of bread as before. Well for the most part you have only swapped who has the bread and the number without is basically the same as before. You have done nothing but reduce the profit of the bread maker, at most.

The right answer is to increase availability to where those who have the desire to have bread are satisfied and bread remains around that needs someone to buy it.

Almost all housing shortages are government created if not 100%. Either through direct changes to laws and regulation or through providing the means for other groups to contest the construction of new properties in the courts because enough loop holes exist to stop any new housing.

Re: Rent controls have split housing in Berlin into two distinct markets

#107

Post by selimthegrim » Tue, Mar 02, 2021, 7:33 PM UTC

sudosysgen wrote: post #84

gruez wrote: post #78

Earlier quoted context omitted.

>This is not how it works. Without the possibility to rent out or consolidate homeownership, the inflationary pressure on home prices collapses. No, as we seen in north america that's not really true. Homes can go up on speculation alone. >You create an insane level amount of supply for homeownership on this market. An absolutely insane level. Is homeownership a necessary component of this? Creating a insane level of…

I'm not speculating at all. The article has the data to back the facts : house prices went down in Berlin. Yes, homes can go up on speculation alone, but this is a bubble that will pop. In North America, rising rents act as a backstop that prevent the bubble from popping, because of guaranteed rental incomes that protect you. It's not possible to create an insane level of supply for appartment rentals. There's two re…

You could try the Japanese solution of treating houses like cars, with strict inspections and tearing down/rebuilding essentially buying a new one every 10-20 years. (Obviously they can't export the used houses so it's not a complete analogy)

Re: Rent controls have split housing in Berlin into two distinct markets

#108

Post by HDMI_Cable » Tue, Mar 02, 2021, 7:34 PM UTC

Mediterraneo10 wrote: post #102

sokoloff wrote: post #94

Earlier quoted context omitted.

Rationing bread would increase the number of people who have some bread. Regulating the price to a point well below the free market supply/demand driven price causes a decrease in the amount of bread supplied to the market (and probably increase hoarding/decrease the breadth of distribution). Think back to toilet paper shortages last spring. Rationing was arguably the best move (and was what local markets around me d…

> Regulating the price to a point well below the free market supply/demand driven price causes a decrease in the amount of bread supplied to the market. In some countries like Egypt, bread (or another basic staple) is heavily subsidized below the free market price, but that doesn’t seem to meaningfully impact the market’s supply: any consumer able to pay that artificially low price can still eat all the bread he or s…

Well it seems more that the supply is sufficiently high to prevent a shortage from the demand (I guess we can thank modern farming techniques).

Re: Rent controls have split housing in Berlin into two distinct markets

#109

Post by [deleted] » Tue, Mar 02, 2021, 7:35 PM UTC

[deleted]

Re: Rent controls have split housing in Berlin into two distinct markets

#110

Post by codeflo » Tue, Mar 02, 2021, 7:35 PM UTC

sokoloff wrote: post #94

aphextron wrote: post #88

>In a food shortage, for example, regulating the price of bread only trades one expression of scarcity (high prices) for another (empty shelves). Well sure. But the total amount of people who have some bread is now greater, versus a select few wealthy people getting all the bread they want, as the wretched masses stare longingly. You can either increase total happiness, or concentrate it to the powerful. It's pretty…

Rationing bread would increase the number of people who have some bread. Regulating the price to a point well below the free market supply/demand driven price causes a decrease in the amount of bread supplied to the market (and probably increase hoarding/decrease the breadth of distribution). Think back to toilet paper shortages last spring. Rationing was arguably the best move (and was what local markets around me d…

I agree, although the toilet paper situation was a bit different IMO because the shortage wasn't in the supply chain -- it was absolutely clear that inventories would restock sooner or later. In that situation, higher prices wouldn't have incentivized more production.

Still, supermarkets could have temporarily raised prices 10x and still sold their inventory. Why didn't more of them do it? Presumably, they made the rational calculation that the bad reputation they'd get from such a move would outweigh any short-term profits.