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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

#171

Post by roenxi »

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…

But at what point does someone try to solve the shortage by baking more bread? If the price rises, more people will open bakeries.

Economics answers 2 questions:

1) Who gets what today?

2) What should people prepare for tomorrow?

Regulating an excessive focus on (1) will get bad results on (2) because it makes it less sensible to be come a baker.

I'm not writing software because I believe there is a philosophical shortage of software. I do it because there are decent odds that I'll be overpaid relative to the work I put need to put in. Those odds are resulting in a lot of software being written.

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

#172

Post by codeflo »

sokoloff wrote: post #161
codeflo wrote: post #144

Earlier quoted context omitted.

I don't like "gotcha" style discussions, but I admit I could have worded that more precisely. What I meant is: There was no reduction in overall toilet paper production, and people didn't suddenly start to shit more. The shortage was mostly a distribution/packaging issue in the form of "not available in packaging X at location Y". Markets tend to solve that kind of problem incredibly quickly.

I wasn't trying to "getcha", but I do think this genuinely is a supply chain issue. Consumer form factor toilet paper is still being rationed for me right now (in Cambridge, MA-max 1). That's a year after the start of this.

Very interesting, I guess my experience here in Germany was very different. No toilet paper anywhere for 2-3 weeks last March/April, and then suddenly supermarkets drowned in it.

Do you know if these are really meaningful shortages, or if businesses have just kept the signs up to make people feel taken care of?

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

#173

Post by alacombe »

sudosysgen wrote: post #61
candiodari wrote: post #43

Earlier quoted context omitted.

The purpose of this regulation is to provide cheap rent for the poor. Not to enable "the rich" to acquire new real estate which they then proceed to not rent out at all ... Increasing the number of homeless. Now of course this legislation "prevented that", by refusing owners do this while tenants are in the apartments. Except the net result seems to be when tenants do leave, the apartments are taken out of the housin…

Apartments aren't kept out of the housing market, actually. If they are, then the Vancouver solution is very effective - a 1% tax on the value of the property if not occupied. The key thing here is supply and demand. If there is no profit to be made in renting out the property, then there is little reason to buy them up, in actuality. The exception is large companies that buy up a large amount of properties to manipu…

> If they are, then the Vancouver solution is very effective

Because rent could be considered affordable in Vancouver ? In which Canada do you live ?

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

#174

Post by criticaljudge »

sudosysgen wrote: post #66
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…

This is not how it works. Without the possibility to rent out or consolidate homeownership, the inflationary pressure on home prices collapses. You create an insane level amount of supply for homeownership on this market. An absolutely insane level. Indeed, the vast majority of increase in housing prices is because rents are so high that 7% YoY returns are possible. Without these returns, then there is no way to just…

You assume prices were merely driven by greedy landlords. That is of course untrue. Prices were driven up by the popularity of the city, with people seeking a place to rent outbidding each other and bidding prices up.

That demand will not simply go away, but newcomers will have to buy instead to rent. Or, there will be a huge black market. I've read an article about Stockholm were that seems to be what has happened.

A big irony is that the left who created the law has hurt some of their staunchest supporters, who did subsist by subletting their flats, which they had rented at old, low prices. That income is now also going away - it is not just "greedy rich speculators", but also transgender artists getting by on minimum income from subletting their flats whom they have hurt.

It is of course possible to lower prices by making the city less attractive. Socialism has succeeded in doing that already once, that is why Berlin was so cheap in the 90ies.

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

#175

Post by throwaway85858 »

el_nahual wrote: post #152

An issue that many commenters here are missing is that the problem with rent control will manifest more sharply in the future. Sure, the impact today seems relatively equitable: a windfall for people that rent today coupled with a small drop in supply. But fast forward 10 or 20 years and the situation looks far worse: everyone who got a windfall today is still living in the same apartment, whereas anyone trying to en…

not just in 10 or 20 years, more like in 9 months!

The supreme court will probably rule that the Mietendeckel is unconstitutional in November, which will lead to a nasty situation for many renters with old contracts. If the tenants are lucky the landlord will just ask for the money "saved" to be paid back, but the unlucky ones will be evicted, as being in arrears of more than one month is grounds for termination regardless if you pay it back the the debt or not.

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

#176

Post by joshuaissac »

gruez wrote: post #92
sudosysgen wrote: post #84

Earlier quoted context omitted.

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…

> I'm not speculating at all. The article has the data to back the facts : house prices went down in Berlin. but supply has dropped as well. Freezing food prices would also drop food prices, but won't stop bread lines. >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 incom…

> when you can be doubling your money roughly every 20 years with stocks.

With housing, a poorly-capitalised speculator can get a mortgage to buy property, and pay it off using rental income, with a deposit of maybe 15-20% of the value of the property. This lets them capture the price increase on a multiple of their deposit.

It is much harder to do something similar with the stock market and loans. Amount loaned would be lower and interest rates higher.

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

#177

Post by jkingsbery »

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 practice, this almost never happens. There isn't a fixed supply of bread. When the price of bread goes up, the following all happen:

- Bakers will bake more bread - People from an area with cheaper bread will travel farther to sell bread where it's more expensive - Individuals will decide to bake bread for themselves - Companies that don't bake bread but that have the capability of baking bread (either directly, or with minor changes) will start baking bread.

All these activities happen in proportion to the price increase, increasing volume and putting pressure on prices to go back down. And this article describes the data showing that this happens.

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

#178

Post by ben_w »

xvedejas wrote: post #142
kuschku wrote: post #101

Earlier quoted context omitted.

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…

Berlin is a small city on the global scale. It doesn't need to grow forever, it needs to grow to meet its local demand, which is apparently larger than the existing housing stock.

It’s the biggest city in the EU, now that London isn’t.

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

#179

Post by huitzitziltzin »

dahart wrote: post #56
robertlagrant wrote: post #13

> In a food shortage, for example, regulating the price of bread only trades one expression of scarcity (high prices) for another (empty shelves). This is the key statement to refute if you want to argue for rent control.

Why? That argument doesn’t address the fact that many cities have an absolute limit on supply in the form of space, and no amount of construction that starts today will bring prices down today. Here are some arguments to refute if you want to oppose rent control, particularly the first one (copied and pasted directly from investopedia): “Rental prices in many U.S. cities are rising far faster than wages for moderate-…

> [edit: note here that most of the US has banned rent control, and this is happening regardless]

Where do you get that idea? It is false. New York? San Francisco? California has statewide rent control as of January 1 of last year. Many of the places where people want to move still do have rent control. Rent control is not a live issue in, e.g., Tulsa, OK or Amarillo, TX, whether it is legal or not.

> “Neighborhoods are safer and more stable with a base of long-term residents in rent-controlled apartments.”

If you have good evidence for this claim, I would like to see it. Moreover: "safer" and "more stable" relative to what? I guess your claim would be "safer and more stable than the counterfactual w/out rent control and with more housing." If you have good empirical evidence for that claim, I would love to see it.

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

#180

Post by bogomipz »

csunbird wrote: post #149
febeling wrote: post #72

The situation in Berlin before the policy change was that the city government had made it very hard to build apartments at all. Each time a project it developed, the developer is blackmailed into supporting various unrelated policies, being it parking space related, maximum stories, etc., and sometimes capriciously denied permission to build. This is how my green-leaning, government-trusting architect friends describ…

I moved to Berlin two years ago and the finding a house was incredibly exhausting. As the article mentions, there are two categories, rent capped apartments and non rent capped apartments. For the first category, there are 2000+ applicants per day per apartment, making it impossible to actually have a chance to get the apartment. The odds getting that apartment as a foreigner that do not speak German is non existent,…

>"The second category is the overpriced apartments, the "landlords" (mostly the same three evil companies) are asking stupid amounts of rent for small apartments (1100 - 1200 cold rent for 50sqm ??)."

Which companies are these?

>"The first category are mostly expats, who are being screwed by landlords who do not want to rent to foreigners (especially if you are not from Europa),"

Unless I'm reading this incorrectly doesn't this contradict your earlier statment that they want to rent to expats "since they can extract money from them, plus they do not know the local laws, so they can push newbies around."?

I'm curious How did you ultimately end up finding a place?

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