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

#341

Post by edbob » Tue, Mar 02, 2021, 10:41 PM UTC

renewiltord wrote: post #331

edbob wrote: post #313

Earlier quoted context omitted.

> 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?

Go on, mate. I think we both know why that's the case. Poor people and rich people make poor neighbours for each other. Maybe you can afford the house, but you can't afford the car, the motorcycle, the road bike that costs more than your annual daycare. That is a pleasant breeding ground for justification for crime. So there's the anti-poor angle that rich deep-blue neighbourhoods take and that ends up being racially…

> So there's the anti-poor angle that rich deep-blue neighbourhoods take and that ends up being racially discriminatory because of the underlying demographics.

That makes sense, but that just raises the question of why racial demographics are so regressive in those areas.

I genuinely asked because I don't know much about the inner workings of progressive coastal areas. It seems like if nearly all of the politicians and most of the population are committed to very progressive racial policies, you would expect to see... I don't know what exactly, but not this. I'd like to understand why things went so wrong.

Are there any US cities that are good examples wrt to racial demographics? Something that we could learn from?

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

#342

Post by cammikebrown » Tue, Mar 02, 2021, 10:41 PM UTC

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.

I’ve lived in the same apartment for five years in Portland. The rent has never been raised.

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

#343

Post by rsj_hn » Tue, Mar 02, 2021, 10:42 PM UTC

bdowling wrote: post #306

thesuitonym wrote: post #280

Earlier quoted context omitted.

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 California the way this works is that a landlord takes a rental property off the market for 5 years, kicking out all of the existing tenants and leaving the property vacant, then remodels the building and rents the new luxury units to new tenants at market rate. The process is called "Ellissing", after the Ellis Act that allows it. When a property is full of rent-controlled tenants paying far below market rate, it…

The Ellis act allows you to convert the unit to a live in residence, and it can no longer be used as a rental. Thus it is not attractive to investors who are developing rental stock, it is attracted to investors who are developing homes for owner-occupants.

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

#344

Post by klodolph » Tue, Mar 02, 2021, 10:43 PM UTC

slavik81 wrote: post #333

latchkey wrote: post #316

Earlier quoted context omitted.

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…

If there was no rent control, why didn't he just raise the price up to market value when your lease came up for renewal? I live in a city without rent control, and your experience is entirely foreign to me. Heck, my current landlord has offered to pay for things that I don't think are even really his responsibility. He's just happy to have good tenants paying market rate. Switching tenants will probably cost a few th…

I don’t know CA, but in NYC, rent controlled apartments can only become market rate apartments in a specific, legally prescribed way. Even if you are in a market rate apartment, the landlord is only allowed to raise your rent by a certain percentage each year; this percentage is higher for market rate and lower for rent-controlled, and there is also a third category called “rent stabilized” which is between market rate and rent controlled.

(Just as note about rent control in NYC—rent controlled apartments account for something like 1% of total apartments. The number is slowly going down, it was about 3% twenty years ago.)

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

#345

Post by sib » Tue, Mar 02, 2021, 10:45 PM UTC

neilparikh wrote: post #293

AlexandrB wrote: post #281

Earlier quoted context omitted.

> 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).

And then, of course, California decided to pass Proposition 13 [1] which made sure that owners who got in early also "win" vs more recent buyers.

There are owners of identical homes on the same block in San Francisco who pay 10x what their neighbors pay due only to when they bought (and the resultant purchase prices).

This is unlike saner places in the country which reassess property values regularly.

[1] https://en.wikipedia.org/wiki/1978_California_Proposition_13

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

#346

Post by [deleted] » Tue, Mar 02, 2021, 10:46 PM UTC

[deleted]

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

#347

Post by AdrianB1 » Tue, Mar 02, 2021, 10:47 PM UTC

sokoloff wrote: post #118

codeflo wrote: post #110

Earlier quoted context omitted.

I agree, although the toilet paper situation was a bit different IMO because the shortage wasn't in the supply chain -- it was absolutely clear that inventories would restock sooner or later. In that situation, higher prices wouldn't have incentivized more production. Still, supermarkets could have temporarily raised prices 10x and still sold their inventory. Why didn't more of them do it? Presumably, they made the r…

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

A toilet paper factory has a long planning cycle and supply contracts, so it cannot react very fast to large changes in demand. The machinery also costs a lot, so they cannot increase the capacity for every spike in demand that will usually disappear in a few weeks. The weakest chain is the Wall Street pressure on these companies to "improve cash flow or else" that lead to reducing the stocks (product and raw materials alike) to minimum, so any surge is even harder to compensate. I worked in this area for some years, this is how it's done.

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

#348

Post by DetroitThrow » Tue, Mar 02, 2021, 10:47 PM UTC

foolinaround wrote: post #53

candiodari wrote: post #43

Earlier quoted context omitted.

The purpose of this regulation is to provide cheap rent for the poor. Not to enable "the rich" to acquire new real estate which they then proceed to not rent out at all ... Increasing the number of homeless. Now of course this legislation "prevented that", by refusing owners do this while tenants are in the apartments. Except the net result seems to be when tenants do leave, the apartments are taken out of the housin…

> the apartments are taken out of the housing market altogether are the apartments just kept locked up?

Not that I know Berlin's situation, but hypothetically they could be converted into Airbnbs which end up competing with local hotels instead of rentals.

I know rental stock immediately opened up in Dublin when the pandemic started, for example, before such a large increase would have arisen from renters leaving the city for suburbs.

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

#349

Post by tehjoker » Tue, Mar 02, 2021, 10:48 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…

I think you're missing a larger point: why should people be forced to move? There's no natural law that says people should be ceaselessly pushed around by market forces.

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

#350

Post by renewiltord » Tue, Mar 02, 2021, 10:50 PM UTC

edbob wrote: post #341

renewiltord wrote: post #331

Earlier quoted context omitted.

Go on, mate. I think we both know why that's the case. Poor people and rich people make poor neighbours for each other. Maybe you can afford the house, but you can't afford the car, the motorcycle, the road bike that costs more than your annual daycare. That is a pleasant breeding ground for justification for crime. So there's the anti-poor angle that rich deep-blue neighbourhoods take and that ends up being racially…

> So there's the anti-poor angle that rich deep-blue neighbourhoods take and that ends up being racially discriminatory because of the underlying demographics. That makes sense, but that just raises the question of why racial demographics are so regressive in those areas. I genuinely asked because I don't know much about the inner workings of progressive coastal areas. It seems like if nearly all of the politicians a…

They are committed to these policies in the abstract but any time there are winners and losers for a policy, the losers will fight harder than anything.

Second and third order effects are also hard to control through publicly popular policy.

And I am not aware of any significantly sized US areas that don't have race-discrepancies in educational attainment. American society has very strong positive feedback loops and I think the strong economies of the coastal paradises amplify that. Take any uneven distribution of wealth and it will get worse in that environment.