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

#251

Post by colinmhayes » Tue, Mar 02, 2021, 9:20 PM UTC

throwaway12903 wrote: post #204

I moved to Berlin with partner in late 2019. We were looking for 3 rooms for After long, tiring search of 20+ places with 100+ people at each, through a friend of friend we got a place for 1400 because we were the only ones that looked at it. Then rent control happens and now we pay 1000. And we would have paid 2000+... --- If you find something you like, it doesn't matter because there would be 20 other people apply…

Do you not think this was the entire point of the policy? Rent control doesn't exist to lower rent for everyone, it exists to reward the long term residents who voted for it at the expense of newcomers. Berliners essentially voted themselves a handout.

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

#252

Post by djoldman » Tue, Mar 02, 2021, 9:21 PM UTC

codeflo wrote: post #144

sokoloff wrote: post #118

Earlier quoted context omitted.

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

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.

There were some interesting theories floating around about how everyone was home so the residential TP market demand jumped but the commercial demand fell.

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

#253

Post by Schiendelman » Tue, Mar 02, 2021, 9:21 PM UTC

Wohlf wrote: post #235

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 mind this as 7% per year seems like a reasonable safety measure to me. The issue is they need to make it much easier, cheaper, and faster to build more housing along with it. Portland is probably particularly bad about this, as I see plenty of new apartments and rowhouses going up in Hillsboro and Beaverton. Still, these units aren't what I'd consider affordable. I think we need to seriously reconsider the ef…

For the most part, our high housing prices are purely a matter of supply and demand. If you own a piece of land, and you want to build housing, you're not allowed to build as much as you want. NEARLY EVERY building proposed builds to the maximum currently allowed on that land.

The market wants to supply more housing. We don't let it, based on laws that originally were created to keep black people out of neighborhoods. Those laws continue to be very effective at that goal.

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

#254

Post by throwaway12903 » Tue, Mar 02, 2021, 9:22 PM UTC

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,…

> it is not going to happen if they allow systematic exclusion* and abuse of expats that are trying to settle in the city.

I don't think its deliberate exclusion/racism as you say.

When we looked we always found that there were other people more deserving than us. Like a pregnant couple with baby always needs more room more than us. If you are German, speak German, and are going to live here a long time, it makes more sense for landlord. If you don't earn a tech salary you will struggle to find anything within the city, so you are probably more deserving.

The tech foreigners usually can pay more, they just see cheaper rents that they can't get because of rent control and feel hard done-by.

If Berlin was your city, Germany your country, would you prioritize apartments for the wealthy tech people over the teachers for example?

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

#255

Post by anothernewdude » Tue, Mar 02, 2021, 9:23 PM UTC

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…

They'd be SOL anyway. Honestly there is no downside here, because this happens anyway.

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

#256

Post by kmeisthax » Tue, Mar 02, 2021, 9:24 PM UTC

ChuckMcM wrote: post #124

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 think this is something that is often overlooked in progressive circles. Markets treat high prices as signal to increase supply. When supplies cannot be increased you get market inequities. Rationing for goods like bread, paper, milk, gasoline, etc. Can be a stand-in while the problem that is preventing the market from responding by increasing supply is fixed.

The problem is that usually supply isn't the problem, it's demand. For example, America's main problem with agricultural products is finding enough people to buy and eat them. That's why the government spends lots of money on agricultural supports. Hell, even welfare programs, as inadequate as they are, help stabilize prices by basically injecting a minimum amount of demand into the system. So, usually, supply shocks are temporary and resolvable without needing to resort to price gouging. The producers know that prices of a particular commodity aren't going to collapse if they invest money in switching over to produce it. Instead of getting a 10x jump in the price of, say, bread; it gets a little hard to find at first and then goes up 5%.

Housing is almost completely the opposite; supply of the underlying land is fixed and most cities cap density. We can, of course, uncap density; but that still requires we basically displace everyone living in the city eventually to make way for larger buildings that can house more people. The thing that really grinds my gears is that the solutions to housing scarcity effectively amount to building a wall around a city and making foreigners pay for it - and they're often championed by exactly the same kinds of people who otherwise are rightly opposed to immigration formalities.

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

#257

Post by ChuckNorris89 » Tue, Mar 02, 2021, 9:25 PM UTC

bogomipz wrote: post #192

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 b…

>I remember reading that Germans in general are more likely to to rent than own their housing. Is that not true?

The majority rent not because of a lifestyle choice but because they can't afford to buy anything so renting is their only choice. What else are they gonna do, be homeless? All mid-upper class German families I met owned their properties.

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

#258

Post by throwaway12903 » Tue, Mar 02, 2021, 9:25 PM UTC

csunbird wrote: post #227

bogomipz wrote: post #180

Earlier quoted context omitted.

>"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 d…

My first apartment was a limited lease for 6 months (like AirBnB but a private company), which I could terminate within a month if I could find another place. I could not, had to extend it to 2 years (the landlord said it will not be possible to extend beyond 2 years). After the 1.5 years of search, I was able to get not so affordable but acceptable place. 1.5 years to find an apartment, that is not cheap but borderi…

> 1.5 years to find an apartment, that is not cheap but bordering the acceptable

Curious - how far outside of the center of Berlin did your search extend, and what was your parameters for an acceptable place/rent?

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

#259

Post by jdxcode » Tue, Mar 02, 2021, 9:25 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…

The major flaw in your argument is that you can't do #2 with rent control in the picture. From the economist[0]:

> Rent controls are a textbook example of a well-intentioned policy that does not work. They deter the supply of good-quality rental housing. With rents capped, building new homes becomes less profitable. Even maintaining existing properties is discouraged because landlords see no return for their investment. Renters stay put in crumbling properties because controls often reset when tenants change. Who occupies housing ends up bearing little relation to who can make best use of it (ie, workers well-suited to local job opportunities). The mismatch reduces economy-wide productivity. The longer a tenant stays put, the bigger the disparity between the market rent and his payments, sharpening the incentive not to move.

[0] https://www.economist.com/leaders/2019/09/19/rent-control-wi...

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

#260

Post by swiley » Tue, Mar 02, 2021, 9:28 PM UTC

jdxcode wrote: post #259

vkou wrote: post #186

Earlier quoted context omitted.

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…

The major flaw in your argument is that you can't do #2 with rent control in the picture. From the economist[0]: > Rent controls are a textbook example of a well-intentioned policy that does not work. They deter the supply of good-quality rental housing. With rents capped, building new homes becomes less profitable. Even maintaining existing properties is discouraged because landlords see no return for their investme…

Germany is one of the counties that tries to avoid getting themselves into situations where a violent revolution is the best path forward for most young people. I'm sure they'll figure this one out.