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

#261

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

kingkawn wrote: post #162

Bloomberg op-eds on economic redistribution issues are like asking oil companies to comment on environmental protections

Thanks, I was searching comments whether anyone had klaxons going off in their head reading this drivel:

> If populism on the political right corrupts democracies, populism on the left ruins economies.

Might as well stamp "this article is written by a conservative fanatic, proceed with caution". Looking at the author his short bio says worked for Handelsblatt -- I peeked at wikipedia, why am I not at all surprised to find they printed a fake vaccine story recently?

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

#262

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

WalterBright wrote: post #216

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…

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.

> Rationing does nothing to increase the supply,

Maybe, maybe not. Depends on how you handle prices (or subsidies) along with the rationing.

>distributes the existing supply to people who don't need it.

A bit, but in the case of housing and food you can safely assume people all need it in about the same amounts. You will be wrong, but close enough. The black market might even by your friend in correcting some of your mistakes.

> Rationing assumes everyone has exactly the same need, which is nonsense and leads to gross inefficiencies.

yes and no. You don't have to assume the same needs. You can figure out rules. Families need more space - which can be used to encourage/discourage having kids depending on your goals. Overall it leads to inefficiencies I agree.

> Rationing inevitably leads to hoarding and a black market.

True or not based on how much trust there is in the ration plan. If people agree with the reasons and means there will be a lot less than if people disagree, or find they can't get even the minimum. WWII rationing in the US mostly worked from what I understand - people were proud to not use their entire ration of sugar, but there was overall enough food (including gardens) so it wasn't hard. That is probably the exception (and even then there was a black market!), but it does make the point.

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

#263

Post by fragmede » Tue, Mar 02, 2021, 9:30 PM UTC

Kalium wrote: post #125

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…

> You can either increase total happiness, or concentrate it to the powerful. The nasty, invisible catch with price caps is that this outcome you've described is an idealized one. It's possible to get neither as you make whatever you're trying to regulate functionally unavailable to anyone. How much bread do you think bakers will produce if a loaf costs $1.20 to make, but politics dictates they cannot sell for above…

This is related to Goodhart's Law, which is "When a measure becomes a target, it ceases to be a good measure." It's a large area of study to figure out how to get the outcome you actually want, while measuring something close, because good metrics can be hard to come by.

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

#264

Post by plumeria » Tue, Mar 02, 2021, 9:31 PM UTC

Would be interesting to see a longer term analysis for Copenhagen where rent-controlled buildings exist since longer ago.

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

#265

Post by jamesliudotcc » Tue, Mar 02, 2021, 9:31 PM UTC

callmeal wrote: post #242

jdxcode wrote: post #195

Earlier quoted context omitted.

"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."

You would be able to if apartments in Mountain View were also rent-controlled.

Huh? Give one example of a working transfer of the rent controlled apartment from one jurisdiction to another.

Even if there was rent control both places, you'd have to find a rent controlled apartment in the new place. And in reality, you can't, because nobody is willing to leave their rent controlled apartments in the next place either.

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

#266

Post by throwaway12903 » Tue, Mar 02, 2021, 9:33 PM UTC

colinmhayes wrote: post #251

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.

Gentrification is real though. And a lot of Berlin's culture is built by people who don't earn that much.

I'd be interested to know for how many people it actually helps at the margins and how many its just a handout for.

But yeh - I can imagine a lot of middle-class folks saw its as virtue signalling and free money at the same time.

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

#267

Post by bluGill » Tue, Mar 02, 2021, 9:34 PM UTC

ben_w wrote: post #246

germanier wrote: post #220

Earlier quoted context omitted.

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.

Not quite . If I understand right (as a recent-ish migrant to Germany, I expect to have half an understanding at best), different states have laws and slightly different taxes. Not as much so as American states, but perhaps more like Newark vs. NYC than Cupertino vs. Sunnyvale.

Okay, but suppose I got a job in Berlin - why would I have to live in Berlin proper as opposed to some place out side of Berlin? What is stopping me from getting a place just outside of the Berlin limits?

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

#268

Post by sudosysgen » Tue, Mar 02, 2021, 9:34 PM UTC

compiler-guy wrote: post #114

sudosysgen wrote: post #70

Earlier quoted context omitted.

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.

The vast majority of rent controlled cities have rent control boards where landlords can request and increase in rent in case of exceptional circumstances. In those cases, the landlord must show that the rent is not enough to cover maintenance, and the increase is granted.

In general though, maintenance on average only costs ~150-300$ a month, so it's not necessary.

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

#269

Post by jetrink » Tue, Mar 02, 2021, 9:35 PM UTC

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.

Potential math illiteracy aside, is this such a terrible policy? This seems to me like a nice compromise that provides some stability to the renter while still allowing the landlord to raise the rent substantially over several years.

Downsides that come to mind (but that don't seem too serious):

* It incentivizes landlords to keep empty apartments on the market longer before lowering rents to the true market price.

* It might encourage landlords to regularly raise prices more than they otherwise would, lest they forego the limited opportunity.

I'm normally much more free-market oriented, but I ask with the understanding of how much work and expense is involved in suddenly needing to find a new apartment. Just patching the holes in the drywall can take a full day. Then there's credit check fees, truck rental fees, pet fees, admin fees, move-in fees, new couch because the old one doesn't fit in the new living room fees...

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

#270

Post by dragonwriter » Tue, Mar 02, 2021, 9:35 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…

> 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.

Rent control tends to be adopted with the fairly explicit goal of prioritizing affordability for existing tenants in their current residences over either encouraging maintenance/updates or improving housing supply for people who aren't current tenants, so I don't think it's at all a policy that doesn't work.

A policy whose purposes are at odds with other, arguably more important, policy goals, sure, and possibly even with other more important, if less inmediate, interests of current tenants.

But saying it “doesn’t work” bases on it not encouraging things it is not meant to encourage is...not really useful.