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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

#291

Post by sudosysgen »

ProfessorLayton wrote: post #132
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…

>Secondly, studies have shown that 10% increases in supply lead to 1% decreases in price, more or less. Source? This also hand waves the fact that a 1% decrease is still great in the face of say, a 4% increase , totaling a 5% spread — even more if factoring in inflation. Sounds like increasing supply is still one of the best ways to keep prices in check.

I don't have the time to dig up the study, but it already factored in inflation.

Even with a 5% spread, to hold off real rent increases for ten years, you'd need to increase housing by 116%. Which is completely unrealistic. This rent control policy had the same effect as reversing 12 years of rent increases, which would require you to multiply supply by 2.5 over those twelve years.

Needless to say, this is not possible.

Increasing supply is assuredly important and necessary for keeping prices in check. But it will have a much smaller impact than rent control. The main purpose it will serve is to make sure mobility is still good.

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

#292

Post by Kalium »

thesuitonym wrote: post #280
908B64B197 wrote: post #248

Earlier quoted context omitted.

The beauty of it is it doesn't matter to the bureaucrats: since the 19 years old can't live in the city he also can't vote in the municipal elections! It also has bad impact on the type of buildings that get built. If you have to build some rent-controlled housing as part of your development project, and some jurisdictions will force developers to do that, it pushes you to build the rest of your building to be as ups…

I don't know how it is in Germany, but in the US, rent controlled buildings can only have the rent increased if the landlord upgrades the building, so it actually incentivizes them to do upgrades, as that's the only way they can increase rent.

In the US, rent control is regulated by states and enacted by cities. Each state and city is free to do so differently. As such, it can and does vary quite significantly place to place. This means it's impossible to offer an informed comment about rent control in the US.

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

#293

Post by neilparikh »

AlexandrB wrote: post #281
sologoub wrote: post #60

Earlier quoted context omitted.

> The caps represent a windfall to one group of tenants: those, whether rich or poor, who are already ensconced in regulated apartments. Simultaneously, they hurt all other groups — especially young people and those coming from other cities — by all but shutting them out of the market. That’s not success, that’s picking winners and losers. Same as with SF Bay Area, Santa Monica (in LA) and any other place with rent c…

> being in place early makes you a winner Isn't this just the housing market in general? Why should renters not benefit from the same dynamics that owners do?

The solution is make it so that no one benefits from this dynamic (via a land tax), rather than just expanding the group that gets the benefits (which will never expand to include everyone, since land is scarce).

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

#294

Post by csunbird »

throwaway12903 wrote: post #254
csunbird wrote: post #149

Earlier quoted context omitted.

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 mor…

All that matters should be how likely the person is able to pay the rent and not damage/burn down the apartment/disturb the neighbors.

> would you prioritize apartments for the wealthy tech people over the teachers

I am not German so I am not sure how to answer that. Logic says someone that earns extremely well, has unlimited working contract and is educated very well is a very good candidate, just as a public worker. But, for some reason, the applications that I have sent in German, even though the company representative (or very rarely the owner) is able to speak English, got 10 times more responses. Go figure.

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

#296

Post by sudosysgen »

bluGill wrote: post #236
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…

> It's not possible to create an insane level of supply for appartment rentals This is technically true, but not for the reasons you list, and it isn't the case here. You can always build up. 150 floor buildings are not possible - if rent goes high enough they are worth building. Nobody is going to build that if they don't expect a return on investment though. It isn't a problem in reality because jobs face the same…

You are assuming that the only reason anyone would build is to rent things out. This ridiculous. A great many constructions are for people that own their houses. That alone solves the conundrum.

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

#298

Post by sudosysgen »

gruez wrote: post #99
tom_mellior wrote: post #82

Earlier quoted context omitted.

> If there are more units then there are renters, prices have to fall to meet demand. Not if it's so cheap to keep empty apartments around that you would rather not make money now, in the hope that you will be able to make more money in the future. It's not exactly the same, but around here there is a huge oversupply of spaces for shops/restaurants. Owners prefer to keep them empty rather than have someone give them…

>Not if it's so cheap to keep empty apartments around that you would rather not make money now, in the hope that you will be able to make more money in the future. Ironically rent control laws that cause this. Accepting a lower rent now would mean locking in a lower monthly rate for the future, whereas if you left it empty you can hope that the rental market will recover and charge high rents in the future.

You do what Vancouver does, and impose a 1% per month vacancy tax.

That being said, I live in a rent controlled city, and occupancy rates are upwards of 90%, so that doesn't check out.

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

#299

Post by edbob »

thesuitonym wrote: post #280
908B64B197 wrote: post #248

Earlier quoted context omitted.

The beauty of it is it doesn't matter to the bureaucrats: since the 19 years old can't live in the city he also can't vote in the municipal elections! It also has bad impact on the type of buildings that get built. If you have to build some rent-controlled housing as part of your development project, and some jurisdictions will force developers to do that, it pushes you to build the rest of your building to be as ups…

I don't know how it is in Germany, but in the US, rent controlled buildings can only have the rent increased if the landlord upgrades the building, so it actually incentivizes them to do upgrades, as that's the only way they can increase rent.

That adds even more upward pressure on housing prices. That's pretty much the last thing my generation needs.

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

#300

Post by ahepp »

WalterBright wrote: post #211
droopyEyelids wrote: post #190

Earlier quoted context omitted.

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.

They already had an incentive to increase it at the max, because it's more money in their pocket.

For this to be true, they would have to either (1) under present conditions, not be raising the rent to maximize profit or (2) under the scenario, raise the rent past maximum profit

Neither of those seem likely to me.

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