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Rent controls have split housing in Berlin into two distinct markets

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

#111

Post by arrrg »

tom_mellior wrote: post #82
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…

> If there are more units then there are renters, prices have to fall to meet demand. Not if it's so cheap to keep empty apartments around that you would rather not make money now, in the hope that you will be able to make more money in the future. It's not exactly the same, but around here there is a huge oversupply of spaces for shops/restaurants. Owners prefer to keep them empty rather than have someone give them…

There is still legal uncertainty. The German Constitutional Court hasn’t settled this matter yet. I would assume that that’s causing most uncertainty and people waiting. A temporary effect until legal certainty exists.

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

#113

Post by nonsince »

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…

Rental properties are inherently rationed by the fact that there is no reason to rent more than one flat in the same city.

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

#114

Post by compiler-guy »

sudosysgen wrote: post #70
foolinaround wrote: post #51

Earlier quoted context omitted.

a kind, that enjoys the upsides, but can run away when there are downsides without any consequences?

Which downsides can they run away from? They pay for maintenance, property taxes, and so on. And still pay a premium over that.

They don't pay for these things if their rent is fixed.

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

#115

Post by sokoloff »

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…

I agree that subsidies perturb the free market, but in this case to the side of increasing supply. (You can model it as the supply curve being shifted downward by the amount of the government subsidy.)

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

#116

Post by nickff »

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…

Subsidies are different from price ceilings; subsidies often spur over-production along with over-consumption (think HFCS), whereas price ceilings discourage production and encourage hoarding (arguably a form of over-consumption). Price ceilings also foster a domestic black market, whereas subsidies foster an export black market.

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

#117

Post by [deleted] »

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…

[deleted]

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

#118

Post by sokoloff »

codeflo wrote: post #110
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…

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 r…

If the shortage of consumer form-factor toilet paper wasn't in the supply chain, where was it?

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

#119

Post by davidw »

codeflo wrote: post #110
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…

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 r…

I think this is part of the nuance: we've gotten ourselves into such a bind with housing in so many places that it feels like we need the short term, crisis relief that rent control provides. For some people, it absolutely means not being kicked out into the streets. Go tell that mom and her kids about 'the market'. Yet at the same time, markets, supply and demand are real, and we need to bring them back into balance by at the very least not artificially constraining housing supply in so many places.

It's a tricky problem.

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

#120

Post by smnrchrds »

sologoub wrote: post #60
crote wrote: post #26

"Price changes in the regulated market dropped relative to those in the 13 other cities. That’s because real estate loses value if its future cash flows to landlords are capped. There was also an acceleration of apartments going up for sale, as landlords tried to cash out of their now less profitable investments." & "And whenever somebody does move out — when moving to another city, for example — the landlord tends t…

> The caps represent a windfall to one group of tenants: those, whether rich or poor, who are already ensconced in regulated apartments. Simultaneously, they hurt all other groups — especially young people and those coming from other cities — by all but shutting them out of the market. That’s not success, that’s picking winners and losers. Same as with SF Bay Area, Santa Monica (in LA) and any other place with rent c…

I think that quote refers to American style of rent control that is tied to the tenant, as opposed to the German style that is tied to the building.
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