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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

#191

Post by inglor_cz »

La1n wrote: post #79
orloffm wrote: post #58

Earlier quoted context omitted.

Which means a comeback of Soviet-style blocks. Given that red-green-red coalition is basically a comeback of DDR socialist party, this feels like DDR strikes back in Berlin.

Better soviet-style blocks than no housing.

I grew up in a city with a lot of Soviet-style blocks (Ostrava).

Construction quality of said block living was notoriously shoddy. State of the buildings only improved when most of the units were sold into private hands (usually that of the tenants, no megacorps). After that, the tenants-turned-owners started investing into repairs and reconstructions.

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

#192

Post by bogomipz »

kamyarg wrote: post #40

I have mixed feelings about this policy as a berliner. But the article is definitely skewed towards the landowners and huge renting companies. Some facts for you: Rate of home ownership among Berliners, Londoners, Parisans: - Berlin: 17.5% - London: 52% - Paris: ~60% The main problems is huge home-renting corporations. The article refers to a separate discussion about breaking up huge companies that own more than 3,0…

Regarding the rate of home ownership among Berliners. I remember reading that Germans in general are more likely to to rent than own their housing. Is that not true?

>"It is very ironic that companies such as Deutsche Wohnen were able to grab so many apartments when Berlin wall fell with dirt cheap prices. You can argue rushed privatisation caused this problem and something needs to be done if Berlin wants to avoid becoming SF."

Interesting. Is Deutsche Wohnen origins the old East Berlin then?

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

#193

Post by [deleted] »

codeflo wrote: post #155
cambalache wrote: post #135

Earlier quoted context omitted.

No, they use it to buy lands, resources, mercenaries to get more land and to keep the status quo. I suppose if you are a mercenary you will be fine (as long as your head is not split in 2)

I guess that's an accurate analysis of the economic situation in Europe AD 1100, a time period famous for its laissez-faire capitalism.

[deleted]

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

#194

Post by 762236 »

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…

Based on what I've seen elsewhere in Germany, Berlin will start seeing lots of empty apartments now that it is too much of a gamble whether you'll earn profit renting (since Germany's laws protect the renter more than the landlord, which you can combat with a portfolio of properties that earn a certain level of rent to cover the non-paying tenant that you can't evict), and because there isn't much of a good reason to sell (maybe in a few years things improve, or maybe the apartment is useful for family, or one's own future retirement home).

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

#195

Post by jdxcode »

anoncake wrote: post #188
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…

Giving people "incentive to move" – aka forcing them out of their homes – doesn't increase supply. Unless they're "moving" onto the streets in which case you did free up a flat.

"I'd like to move out of my rent-controlled apartment in SF because my job is in Mountain View, but I don't want to walk away from this rate."

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

#196

Post by bhelkey »

fallingfrog wrote: post #131

If you’re going to argue that supply will only go up if you allow price to rise infinitely, you’re getting it backwards- the increase in supply is supposed to make the price go back down , that’s the whole idea. There is supposed to be a balance that develops that holds the price down to an affordable level. Why does this never happen? Well, there are many areas of the United States where real estate prices are skyro…

I think you have the articles argument twisted.

> If you’re going to argue that supply will only go up if you allow price to rise infinitely, you’re getting it backwards- the increase in supply is supposed to make the price go back down, that’s the whole idea. There is supposed to be a balance that develops that holds the price down to an affordable level.

The article argues that the people who construct apartment buildings operate on incentives. Their incentives are the revenue generated by the apartment over, say, 30 years and the cost of constructing the apartment (in materials, regulations, time, ...).

Decreasing the expected rents and/or increasing cost of construction should result in less new apartments (supply increase is slow or nonresistant).

Conversely, increasing the expected rents and/or decreasing cost of construction should result in more new apartments (supply increases quickly).

The article does not suggest: >supply will only go up if you allow price to rise infinitely

but instead: >> The right answer to that shortage would be to increase supply — for instance, by cutting red tape in zoning and construction.

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

#197

Post by A12-B »

gruez wrote: post #81
logimame wrote: post #63

Earlier quoted context omitted.

Okay, I'll try. Given the unmeasurable social costs of people starving and dying when there isn't enough food (you can say similarily for people not having houses and freezing to death when there's a blizzard, but also read the sidenote at the end), the capitalists involved in selling and distributing food should not be compensated equally in monetary terms (by selling at higher prices) when there is a shortage of fo…

I read your entire comment and despite being three paragraphs long I can't see how it addresses gp's point, which is that the scarcity is still there whether you institute price controls, and instituting price controls only changes the symptoms.

Housing is not scarce though, some people (companies) own 14 houses whilst others have non. It's not a problem rent control can solve, but it's also not a scarcity problem.

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

#198

Post by [deleted] »

walshemj wrote: post #134
gruez wrote: post #80

Earlier quoted context omitted.

>So you are replacing landlords with people who actually live there. ...who are now saddled with decades of mortgage payments, and have a high percentage of their net worth being tied up in a not very well diversified asset class.

But you are buying an asset instead of just paying rent.

[deleted]

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

#199

Post by bluGill »

nonsince wrote: post #113
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…

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

Maybe for you, in your current life situation, but that isn't for everyone. You might want a large apartment to live in, and a small room near the "party/bar zone" where you can sleep off your night. Similar to the above you might want a large place for the family, and a small place near work so you can get to the next shift. The above are somewhat common reasons people already take two apartments in the same city.

And there are also people who would be interested in an apartment in a different city. A favorite vacation destination. Near the in-laws so you can visit and yet get away. A short term job. The foreigner in an unstable country who wants every possible reason for customs to let him in if things get bad enough to flee. Hotels fill some of that, but if the price was right an apartment where you can leave spare things instead of packing starts to look nice.

Mostly it isn't economical, and I don't see that changing. However in the imagined world where it was very cheap you might be interested in a second flat just across town. It would change your lifestyle to use it.

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

#200

Post by anoncake »

jdxcode wrote: post #195
anoncake wrote: post #188

Earlier quoted context omitted.

Giving people "incentive to move" – aka forcing them out of their homes – doesn't increase supply. Unless they're "moving" onto the streets in which case you did free up a flat.

"I'd like to move out of my rent-controlled apartment in SF because my job is in Mountain View, but I don't want to walk away from this rate."

We're talking about Berlin.
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