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

#381

Post by cambalache » Tue, Mar 02, 2021, 11:42 PM UTC

codeflo wrote: post #155

cambalache wrote: post #135

Earlier quoted context omitted.

No, they use it to buy lands, resources, mercenaries to get more land and to keep the status quo. I suppose if you are a mercenary you will be fine (as long as your head is not split in 2)

I guess that's an accurate analysis of the economic situation in Europe AD 1100, a time period famous for its laissez-faire capitalism.

It is exactly the same right now, with the difference that the crumbles of the pie are enough to feed the people. (Housing, health and education is another story)

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

#382

Post by jandrewrogers » Tue, Mar 02, 2021, 11:48 PM UTC

bluGill wrote: post #249

gruez wrote: post #151

Earlier quoted context omitted.

That's the point. People are forced concentrating their wealth into a single asset.

Which can be good or bad. If land prices are increasing faster than inflation it is bad unless they can get out before the bubble pops. Obviously if they bought too high that is a bad investment. Lets ignore this and assume a sane market where values mostly are similar to inflation. While property increases with inflation are not nearly as good an investment as investments that do better than inflation, it isn't as b…

Technically, for many owners their carrying costs do increase year over year. Property taxes, HOA, maintenance, etc all tend to increase over time. Depending on where you live, these non-mortgage costs can be thousands of dollars per month and they don't go away when the mortgage is paid off.

If you look at it in terms of portfolio construction, you would never want more than 10-20% of your net worth in your home, much less the 50+% many people have in practice. Owning your home is a pretty mixed bag, financially, and made worse in practice because people have far too much of their net worth in it. They'd benefit from renting much longer and buying much less home if it was a financial argument.

I've owned my current home for several years, and go back and forth between renting and owning. Even though I live in a "hot" property market and benefited from appreciation, I actually lost money versus renting the equivalent and investing the difference, and I do keep track.

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

#383

Post by imtringued » Tue, Mar 02, 2021, 11:48 PM UTC

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…

Rent control only exists for one reason: to keep tenants in their apartments. It's not a tool that is solving a shortage of housing but lots of politicians will insist that new housing isn't needed. You just need to manipulate the useful fiction that is the market and fake everything. At least that's what the politicians think. Even if it means that the market is no longer useful.

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

#384

Post by Jochim » Tue, Mar 02, 2021, 11:48 PM UTC

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.

It only leads to negative outcomes if that's the only step you take though. Most societal problems need to be tackled from multiple angles to actually see any positive effect.

Rent control is a good tool for keeping existing tenants in their homes. That has a lot of value in itself but it must to be coupled with the construction of good quality, affordable public housing at or below the average rent controlled property in order to maintain the desired goals of keeping rents/property prices down for new entrants and increasing mobility.

The only issue with rent control is that it's applied as a band aid without also addressing the root causes.

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

#385

Post by jariel » Tue, Mar 02, 2021, 11:52 PM UTC

908B64B197 wrote: post #380

jariel wrote: post #310

Earlier quoted context omitted.

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?

New builds are outside the scope of rent control, so I'm not sure it's a relevant factor in Berlin.

I think a lot of this discussion may be around gentrification as much as anything.

Some nice neighbourhoods in Berlin were on the E. Side and they were kind of run down, but over the last couple of decades the hipsters moved in, now the professionals.

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

#386

Post by vkou » Tue, Mar 02, 2021, 11:53 PM UTC

edbob wrote: post #364

vkou wrote: post #356

Earlier quoted context omitted.

Markets pick winners and losers all the time. It's just that winners in market housing situations are always the people with the most money. It's difficult to make an argument that it's a more virtuous way to select winners, compared to 'the winners are the people who were here first'. Both are fundamentally unfair. Life, in general, isn't fair. Rent control doesn't exist to maximize overall virtue. It exists to mini…

> It's difficult to make an argument that it's a more virtuous way to select winners That's because it's a strawman that you've constructed. Real debates involve consideration of the needs of people who can't find housing in heavily-regulated areas. Existing tenants aren't the only people worth considering. They just happen to be the people with the votes and the political power, so it's no surprise that local govern…

You're conflating rent control (which impacts long-term tenant-landlord relations - which are largely a zero-sum game that does not create any new housing units on the market) with zoning and building and lending regulation, and tax rates, and returns on investments in real estate and stock markets and debt (which impacts construction of new housing.)

The entire purpose of this subthread is to tease the two apart. Rent control is a solution for the here and now. Building new housing stock is a solution for the future.

The two are largely orthogonal, and the causal relationship between rent control and construction of new housing stock is incredibly weak. There are a million factors that have a far bigger influence on the latter, compared to rent control. If you want to encourage development, relax zoning, cut the red tape for construction, stop letting NIMBY groups veto projects, raise property taxes, and actually start non-rent controlled property at market values.

If rent control were eliminated tomorrow in San Francisco, it would continue to have a crippling housing shortage, because of those million factors.

You have a wrong impression of who most local governments focus on. They don't focus on the needs of the tenants - they focus on the needs of landlords (mostly concerned with keeping rents high by preventing any new construction) and property developers (mostly concerned with getting concessions and hand-outs from their municipalities.) Most city councils are squarely in the pocketbook of the latter. Both of those groups have a lot more money to spend on influencing campaigns and elections, compared to unorganized groups of tenants.

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

#387

Post by islandlordingok » Tue, Mar 02, 2021, 11:53 PM UTC

One thing I've always wondered is why we as a society even let real estate be a thing that people can buy a lot of. Why does an individual get to buy, say, 10 buildings and rent them? The title "land lord" even seems like a holdover from some feudal time.

Not that I think you completely outlaw the practice, but why not start taxing after, I don't know, you own 20 units or something. Just figure out some sort of scheme that disincentivizes people from hoarding a resource required for life. I'd much rather rent from someone that lived in the building and actually cared for the place than some random LLC in Florida I mail checks to that can't be bothered with anything.

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

#388

Post by handoflixue » Tue, Mar 02, 2021, 11:54 PM UTC

dragonwriter wrote: post #324

JPKab wrote: post #322

Earlier quoted context omitted.

There is plenty of scientific denialism on the right. Along with anti nuclear, the belief that rent control is a remotely good idea is an example of scientific denialism on the left. There are some decent arguments to be made against nuclear but rent control has always always caused more harm than good everywhere it's been tried.

> Along with anti nuclear, the belief that rent control is a remotely good idea is an example of scientific denialism on the left. No, because “good idea” isn't an objective claim within the domain of science , it's a subjective value claim outside of the domain of science. Now, it's possible that in some cases this belief could be supported by belief in an objective claim that is itself an example of science deniali…

One can generally look at the stated values of the people advocating for a policy, and then run objective studies on whether that policy produces outcomes in line with those stated values. A lot of people, confronted with proof that their favorite policy does not do what they want, will simply deny the science and continue to believe that this policy is concordant with their values.

Some policies are also bad enough that one can safely say that no reasonable mainstream set of values could endorse it without denying the actual facts of the matter - for instance, re-introducing lead and asbestos is just plain Not A Good Idea for any set of values worth discussing, despite the fact that there are most assuredly a few sociopaths out there who'd be happy to make a buck gutting those regulations.

I've no personal experience with "rent control" but I get the impression that the people saying it's a bad idea genuinely mean one of these two cases, not simply a difference of values. Whether the science actually agrees with them, however, is quite beyond my expertise :)

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

#389

Post by donarb » Tue, Mar 02, 2021, 11:55 PM UTC

latchkey wrote: post #316

e40 wrote: post #289

Earlier quoted context omitted.

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…

Interesting that it took an essay contest to break the tie. Seattle now has an ordinance that they must rent to the first applicant who qualifies. This is to prevent discrimination against minorities.

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

#390

Post by ForHackernews » Tue, Mar 02, 2021, 11:56 PM UTC

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…

According to the article, this is the same system enacted in Berlin. The supply of new-build developments in Berlin has increased at a greater rate than in other German cities, just not fast enough for this Bloomberg writer's tastes.