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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

#371

Post by sudosysgen »

ProfessorLayton wrote: post #337
sudosysgen wrote: post #291

Earlier quoted context omitted.

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 possib…

The affordability crisis many cities are facing are not caused by the fact that rent increases exist, it's that they're increasing faster than wage increases . One does not need to hold off rent increases for an arbitrary amount of time, they just have to stay inline with wages to remain affordable. With that in mind, it is certainly not impossible to build enough to keep up with job/wage growth. I agree that no sing…

https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...

The average hourly US wage has not increased or barely so.

Therefore, the inflation adjustment done above corrects for it.

If you want rent increases to stay in line with wages, they will need to be held off entirely.

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

#372

Post by dionidium »

Xylakant wrote: post #312
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. Th…

> 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.

Typical YIMBY broken record here, but in the U.S. it's more or less illegal to build new housing on almost every inch of land (especially in the most expensive cities). We don't need to develop baroque incentives for developers to create housing; we need to stop making it illegal.

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

#373

Post by sudosysgen »

csunbird wrote: post #163
sudosysgen wrote: post #35

Earlier quoted context omitted.

If they are finding homeowners which are not renting them, is that not a good thing?

But, people are not buying it, companies are. Most known offenders are Akelius and Deutsche Wohnen, who just buy those apartments for cheap, wait until the renters leave (or make them leave), then renovate the apartment and rent for 4 times the price. The rich is getting richer, while people are being screwed.

Which is why the ruling alliance is trying to expropriante all entities with more than 3000 units. That's a nuclear options but it certainly fixes the issue.

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

#374

Post by e40 »

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…

Because of something called vacancy control. You can't raise rents on people in a unit. You could raise the rent of an empty unit to market rate (in Berkeley, in the 90's after rent control was changed).

EDIT: changed word "defeated" to "changed"

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

#375

Post by sudosysgen »

ska wrote: post #240
sudosysgen wrote: post #61

Earlier quoted context omitted.

Apartments aren't kept out of the housing market, actually. If they are, then the Vancouver solution is very effective - a 1% tax on the value of the property if not occupied. The key thing here is supply and demand. If there is no profit to be made in renting out the property, then there is little reason to buy them up, in actuality. The exception is large companies that buy up a large amount of properties to manipu…

> If they are, then the Vancouver solution is very effective Whatever is going on in Vancouver, it isn't effective (at controlling rent prices)

Whatever was done in Vancouver wasn't done to control rent prices. It was done to control vacant buildings. It was successful at that.

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

#376

Post by refurb »

rsj_hn wrote: post #343
bdowling wrote: post #306

Earlier quoted context omitted.

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.

Ellis Act allows you to remove the unit(s) from the rental market and remove the tenants. In an apartment building you may do this before condo conversation but cities like SF have almost stopped condo conversions.

If you Ellis Act you can re-rent the units are market rate but only after 5 years (or else you have to rent it back to the original tenants at their old rate or new tenants at the old rate).

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

#377

Post by heterodoxxed »

koolba wrote: post #334
vitno wrote: post #327

Earlier quoted context omitted.

calling this "scientific denialism" seems like a huge stretch to me. It's not a science, it's housing policy.

It's a policy that is intended, or at least marketed, to lower the price of housing in the interests of the general public. The science denial aspect is refusing to look at every single instance of these policies leading to negative outcomes, some sooner than others.

| to lower the price of housing in the interests of the general public.

Its purpose is to prevent displacement, especially of the poor and elderly for whom displacement is a major negative. For that purpose, it has done very well as a policy.

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

#378

Post by sudosysgen »

alacombe wrote: post #173
sudosysgen wrote: post #61

Earlier quoted context omitted.

Apartments aren't kept out of the housing market, actually. If they are, then the Vancouver solution is very effective - a 1% tax on the value of the property if not occupied. The key thing here is supply and demand. If there is no profit to be made in renting out the property, then there is little reason to buy them up, in actuality. The exception is large companies that buy up a large amount of properties to manipu…

> If they are, then the Vancouver solution is very effective Because rent could be considered affordable in Vancouver ? In which Canada do you live ?

The point of occupation was vacancy. Rent control is used to lower rent, and vacancy taxes are used to enforce vacancy. These are two separate effects and goals.

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

#379

Post by sowjetthrowaway »

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,…

>as a foreigner that do not speak German Nothing is preventing you from learning Hochdeutsch. It is a simple language. Easier than python, certainly.

The problem is not caused by these land lords or real estate owners, but broken USSR era govenrnment planning combined with extremely lazy and corrupt modern government. Berlin had higher population than today in 1938, and the city administration did not have any issues.

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

#380

Post by 908B64B197 »

jariel wrote: post #310
jdxcode wrote: post #259

Earlier quoted context omitted.

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…

No, this is not the reasoning that helps your argument at all. It's false to claim you need to kick people out of homes in order to have new developments. Though the notion of 'lack of investment in capped rentals' may be true, that has nothing to do with new housing. The entirety of Ontario and Quebec (and I'm going to bet most of the rest of Canada) has a form of rent control, in that at least there are caps on the…

Would that explain why a lot of new constructions are condos and not rental units?
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