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

#211

Post by WalterBright » Tue, Mar 02, 2021, 8:50 PM UTC

droopyEyelids wrote: post #190

briffle wrote: post #160

In Oregon, they passed a statewide rent control. They pointed out repeatedly at how rent had gone up 30% over five years. The solution, is that now landlords can only increase rent 7% (plus inflation) per year. This year, its something like 9%. Apparently, someone forgot to figure out what >7% per year for 5 years is..... Its 40%, before the inflation numbers are added in.

I don't quite understand how you're framing this. Oregon figured out a level of increase that would be too disruptive for its appetite, and had the legislature cap the rate to below that level. On average over the past five years, that cap would not have been reached, though it may have been reached in any one of those years. Is this a self own or mistake of some kind? Are you inferring that landlords will now raise…

If rent increases are capped at 7% per year, landlords will have an incentive to increase it at the max, because that gives them more flexibility the next year.

For example, let's say the free market would raise rents 5% this year, and 8% next year. A cap of 7% means the rent will rise 7% this year, as the landlord won't want to have caps permanently reduce future rents.

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

#212

Post by pessimizer » Tue, Mar 02, 2021, 8:50 PM UTC

droopyEyelids wrote: post #190

briffle wrote: post #160

In Oregon, they passed a statewide rent control. They pointed out repeatedly at how rent had gone up 30% over five years. The solution, is that now landlords can only increase rent 7% (plus inflation) per year. This year, its something like 9%. Apparently, someone forgot to figure out what >7% per year for 5 years is..... Its 40%, before the inflation numbers are added in.

I don't quite understand how you're framing this. Oregon figured out a level of increase that would be too disruptive for its appetite, and had the legislature cap the rate to below that level. On average over the past five years, that cap would not have been reached, though it may have been reached in any one of those years. Is this a self own or mistake of some kind? Are you inferring that landlords will now raise…

They're implying that the problem of rents going up 30% in 5 years was not solved by limiting rent increases to 7% a year.

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

#213

Post by bhelkey » Tue, Mar 02, 2021, 8:51 PM UTC

fallingfrog wrote: post #146

mtoner23 wrote: post #143

Earlier quoted context omitted.

The demand is coming from renters though. People are moving to Berlin. They need to build more houses or prices will go. Markets dont solve everything but they do here. Just ask tokyo how they got out of their housing crisis. Build More.

The population of Germany is declining, (Berlin population has been stagnant since 1950), wages aren’t rising but housing prices are going up everywhere. And the same story is repeating in multiple countries all over the world. So clearly, must be supply and demand and not just a speculative bubble, right? Berlin population 1950: 3,338,000 Berlin population 2021: 3,567,000 Germany birth rate: 9.5 Germany death rate:…

> The population of Germany is declining,

Germany's population is increasing over time. In fact, 2020 was an all time high [1].

> Berlin population has been stagnant since 1950

Between 1980 and 2020, Berlin's population increased by half a million people [2]. In addition, it's population has increased every year since 2004 with an average of ~0.3% yearly increase.

[1] https://www.worldometers.info/world-population/germany-popul...

[2] https://www.macrotrends.net/cities/204296/berlin/population

edit: formatting

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

#214

Post by germanier » Tue, Mar 02, 2021, 8:51 PM UTC

throwaway85858 wrote: post #175

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 rega…

It's extremely unlikely that the court will strike down the law in a way that this situation arises. It's not like everybody starts to pretend that a law has never existed if it's ruled unconstitutional. Usually arrangements will be made for those that relied on it. Especially in a case like this, where another basic right is affected.

(It's two months btw)

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

#215

Post by kmeisthax » Tue, Mar 02, 2021, 8:51 PM UTC

vkou wrote: post #186

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…

Kicking people out of their homes doesn't solve the supply problem, because it doesn't create new housing. It just shuffles around who lives in existing houses. If you have a housing problem, and you want to solve it, you need to do two things. 1. Not kick people out of housing that they have. (Because it is incredibly disruptive to people's lives.) 2. Build new housing, until demand is met. Rent control accomplishes…

You can't do #2 without doing #1 - most in-demand land is already occupied and unused land is typically not worth developing (or doing so would cause environmental harm).

In an all-owner-occupant suburb, this isn't so much of a problem: you're literally paying people lots of money to accept the disruption of having to move. However, in almost every other kind of housing arrangement, ownership over the building is separate from occupancy, and it's not the occupant's choice to make regarding increasing the housing supply. This is the left-NIMBY trap: any action to increase housing units necessarily displaces the most marginalized parts of society. If your pro-development policy doesn't include a plan to house people who are being displaced without increasing their expenses, then you're likely to make people start protesting the new buildings that need to be built in order to accommodate demand and actually cap rent growth.

Other than that, yes. Make housing printer go brrr.

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

#216

Post by WalterBright » Tue, Mar 02, 2021, 8:53 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…

Rationing does nothing to increase the supply, and distributes the existing supply to people who don't need it. Rationing assumes everyone has exactly the same need, which is nonsense and leads to gross inefficiencies. Rationing inevitably leads to hoarding and a black market.

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

#217

Post by wfhpw » Tue, Mar 02, 2021, 8:54 PM UTC

droopyEyelids wrote: post #190

briffle wrote: post #160

In Oregon, they passed a statewide rent control. They pointed out repeatedly at how rent had gone up 30% over five years. The solution, is that now landlords can only increase rent 7% (plus inflation) per year. This year, its something like 9%. Apparently, someone forgot to figure out what >7% per year for 5 years is..... Its 40%, before the inflation numbers are added in.

I don't quite understand how you're framing this. Oregon figured out a level of increase that would be too disruptive for its appetite, and had the legislature cap the rate to below that level. On average over the past five years, that cap would not have been reached, though it may have been reached in any one of those years. Is this a self own or mistake of some kind? Are you inferring that landlords will now raise…

I think the parent's point is that since price increases are capped, landlords cannot increase beyond a certain point in a single bumper year. To compensate, they may increase rents beyond what they would otherwise to be able to maintain a similar average increase. Citation is needed, of course.

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

#218

Post by WalterBright » Tue, Mar 02, 2021, 8:54 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…

Regulating the price leads inevitably to either gluts or shortages.

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

#219

Post by medium_burrito » Tue, Mar 02, 2021, 8:55 PM UTC

droopyEyelids wrote: post #190

briffle wrote: post #160

In Oregon, they passed a statewide rent control. They pointed out repeatedly at how rent had gone up 30% over five years. The solution, is that now landlords can only increase rent 7% (plus inflation) per year. This year, its something like 9%. Apparently, someone forgot to figure out what >7% per year for 5 years is..... Its 40%, before the inflation numbers are added in.

I don't quite understand how you're framing this. Oregon figured out a level of increase that would be too disruptive for its appetite, and had the legislature cap the rate to below that level. On average over the past five years, that cap would not have been reached, though it may have been reached in any one of those years. Is this a self own or mistake of some kind? Are you inferring that landlords will now raise…

No, what grandparent is saying is state politicians and most Americans in general are unable to do simple math. Compound interest? Forget about it!

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

#220

Post by germanier » Tue, Mar 02, 2021, 8:55 PM UTC

ben_w wrote: post #182

codeflo wrote: post #127

Earlier quoted context omitted.

> Berlin can't grow forever That's not self-evident to me. Why not?

Germany is a federal system, Berlin is one of the (city-)states within it. https://en.m.wikipedia.org/wiki/States_of_Germany

It's not like this is a hard border. It's completely feasible to live outside its limits. Sure, that's not technically Berlin but for all purposes regarding the housing market it is.