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

#311

Post by justapassenger » Tue, Mar 02, 2021, 10:06 PM UTC

asdff wrote: post #279

justapassenger wrote: post #247

Earlier quoted context omitted.

“Your” here is like with a chain - as strong as a weakest link in the chain. Creating your home in someone else’s property doesn’t really make it yours overall.

You don't really own your house either. Stop paying your mortgage, stop paying taxes, watch you eventually end up the same as someone who stops paying their rent, just through a slightly different bureaucratic process. Sometimes you might not have the liberty to freely modify your home, much like a lease.

Yeah, totally. But you have very different risk profile in terms of likelihood of you being kicked out - your expenses are much more predictable than with renting. Capitalism approach heavily prefers owning vs renting.

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

#312

Post by Xylakant » Tue, Mar 02, 2021, 10:07 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…

A counterexample is Vienna, which utilizes a well balanced system of rent-control and social housing to have incredibly low rents and still a stable supply of flats. One tweak they apply is that rent-control does not apply to new developments, so creating new flats is more lucrative than turning old buildings into luxury developments. The city also acts as a competitor, driving prices down by offering cheap flats. There are definitively problems with rent-control if applied bluntly, but the it's a tool that can be useful.

[1] https://www.immobilienwirtschaft.tu-berlin.de/fileadmin/fg28...

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

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Post by edbob » Tue, Mar 02, 2021, 10:07 PM UTC

Schiendelman wrote: post #253

Wohlf wrote: post #235

Earlier quoted context omitted.

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…

> 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.

Why does this continue to be such a problem in deep blue areas?

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

#314

Post by WalterBright » Tue, Mar 02, 2021, 10:07 PM UTC

bluGill wrote: post #262

WalterBright wrote: post #216

Earlier quoted context omitted.

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…

> WWII rationing in the US mostly worked from what I understand

It suffered from all the faults I mentioned. The black market in gas was extensive, and even included drive by shootings. In public, people proudly supported rationing, in private, they sold their extra gas to people who needed it at black market prices. Yes, the government did try in their blundering manner to give different rations based on need, but it inevitably grossly mismatched supply with demand.

I've talked to people who lived through it, and there was certainly two economies going on - the ration one, and the black market one. For example, one lived on a farm that wasn't doing much, but got a big gas allocation because "farm". They made a mint selling it under the table.

> You can figure out rules.

Yeah, like the byzantine vaccine rules, along with the confusion and fights over it. Politicians moved themselves to the front of the line, naturally. Just like in WW2, politicians got all the gas they wanted.

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

#315

Post by ben_w » Tue, Mar 02, 2021, 10:08 PM UTC

bluGill wrote: post #267

ben_w wrote: post #246

Earlier quoted context omitted.

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?

Stopping? Nothing, though public transport prices go up and travel times take longer. How much depends how far out, of course.

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

#316

Post by latchkey » Tue, Mar 02, 2021, 10:09 PM UTC

e40 wrote: post #289

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…

I experienced exactly this in the early 1980's. In Berkeley, CA. Apartments were scarce because of rent control. I had a coworker that lived in his apartment from late 70's until late 90's. He paid less than $300/mo. It was great for him. He saved a ton of money and bought a house in Berkeley in the late 90's. But, as a student I had to live in Oakland and was never able to find an apartment. Every time I went to loo…

Around 1994/5 I wanted to move to Berkeley. I had a very hard time finding a place. I looked at so many attics turned into bedrooms and other crappy places. Eventually, I found an ideal (relatively) place and there was a good 50+ people looking at the same apartment during a showing...

I walked up to the landlord (who was a lawyer in his day job) and said... "I know you can't pick favorites, but I have a good salary and I'm not a student." ... he ended up making his top picks write an essay on why we wanted the apartment. I got the place and stayed there for 10 years.

Interestingly, during the last few years I was there, rent control ended and the landlord really wanted me out because he knew that he could make 2-3x more. He turned into a slumlord and refused to make any improvements and the ones he made were all half assed. The storage locker in the carport under the building got broken into as well.

Eventually, I left for SF and sublet the place to some friends illegally because they needed an inexpensive place. He eventually found out about that and I had to let the place go.

I guess my point is that I've seen first hand rent control and no rent control go through both phases. I really don't think there is a good solution. Someone always gets the short end of the stick.

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

#317

Post by rsj_hn » Tue, Mar 02, 2021, 10:09 PM UTC

yokaze wrote: post #307

rsj_hn wrote: post #154

Earlier quoted context omitted.

Do you really think that suppressing professional home builders to make room for homesteaders building their own homes by hand is a good idea for Berlin? Why not get rid of greedy farmers so people can grow potatoes in their backyard? Why this longing to re-implement the failed policies of East Germany? Is it nostalgia for police states and shortages?

> Do you really think that suppressing professional home builders to make room for homesteaders building their own homes by hand is a good idea for Berlin? No, and it isn't what I am suggesting. The point is that just that it becomes uninteresting for investors, it isn't for people actually living there. That doesn't exclude the professional execution of housing projects. I seriously doubt that people can build their…

Well if homes are not built by homesteaders then they will be built by for profit companies that are funded by investors.

If your goal is to have more of something then you tax it less and impose fewer costs on it. If your goal is to create less of something, then you tax it more and impose more costs on it. People understand this with cigarette taxes and carbon taxes but suddenly when it comes to apartments the signs are reversed? No, getting the sign right is important. If you want more homes, then reduce the costs of building homes -- or in your parlance, make it "more interesting" for investors.

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

#318

Post by ipnon » Tue, Mar 02, 2021, 10:09 PM UTC

American and European urbanites need to become comfortable with Chinese and Japanese style mega cities or their urban areas will always be unaffordable. Chinese and Japanese cities are affordable for everyone because they build! They build as much as they need to in order to fit everyone into the city. We don't do that here so cities are for rich people.

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

#319

Post by WalterBright » Tue, Mar 02, 2021, 10:10 PM UTC

ahepp wrote: post #300

WalterBright wrote: post #211

Earlier quoted context omitted.

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.

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

They'll set it based on supply & demand. But caps increase the business risk to the landlord, and therefore increases the price as risk always translates to an increased price.

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

#320

Post by gscott » Tue, Mar 02, 2021, 10:12 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.

When something is baked into the law like that landlords will raise the rent. Renting in San Diego my last two places never had a rent increase (I lived in each for about 4 years per).