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

#401

Post by edbob » Wed, Mar 03, 2021, 12:16 AM UTC

vkou wrote: post #386

edbob wrote: post #364

Earlier quoted context omitted.

> 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. Re…

Good points.

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

#402

Post by dllthomas » Wed, Mar 03, 2021, 12:17 AM UTC

handoflixue wrote: post #388

dragonwriter wrote: post #324

Earlier quoted context omitted.

> 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…

The values that people hold don't necessarily match those that people profess. I don't think that's what's at play here, but it can be good to keep in mind.

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

#403

Post by foota » Wed, Mar 03, 2021, 12:18 AM UTC

imtringued wrote: post #383

Xylakant wrote: post #312

Earlier quoted context omitted.

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.

Rent control, when coupled with other means of ensuring housing is built for those that can afford it, is a reasonable way of ensuring housing for those that can't afford it at the market price.

That is, globally applying a cap on rents would be a bad idea, since there would be no incentive to build new housing. However, when coupled with restrictions such as requiring only some fraction of new housing construction to be below market rate it can produce better results.

Imo we should just solve this issue once and for all by supplying government housing to anyone at a low price, but there seems to be little political will for that. It seems to me if you can reach the right people to pay for it they would gladly pay to solve homelessness (which, is admittedly more than just having available housing), but it's difficult to get that to happen.

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

#404

Post by imtringued » Wed, Mar 03, 2021, 12:19 AM UTC

dragonwriter wrote: post #270

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…

> 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. Rent control tends to be adopted with the fairly explicit goal of prioritizing affordability for existing tenants in their current residences over either encouraging maintenance/updates or improving housing supply f…

That's the problem. People absolutely love dysfunctional systems. They love it when the machine is broken. They get to complain and then they get their preferential treatment.

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

#405

Post by statstutor » Wed, Mar 03, 2021, 12:22 AM 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…

> everyone... is still living in the same apartment

I don't think this is a function of rent control. The people who were renting 10-20 years ago will still need somewhere to live.

If there isn't sufficient new housing available, then this increases competition for existing housing, but kicking people out of their homes doesn't seem like a good solution either.

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

#406

Post by heterodoxxed » Wed, Mar 03, 2021, 12:23 AM UTC

zamfi wrote: post #398

heterodoxxed wrote: post #377

Earlier quoted context omitted.

| 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.

> For that purpose, it has done very well as a policy. Well...for those who are not actually displaced, yes. But the ones that are displaced are often essentially banished by a dysfunctional housing market. Rent control is not targeted towards the poor and elderly, and there are many others who benefit in the short-term (but then, again, are unable to move because the market rate has skyrocketed, though of course not…

| for those who are not actually displaced, yes.

Yes, exactly.

| But the ones that are displaced are often essentially banished

Without it they would have been displaced even earlier. Speculative bubbles exist outside of rent control, especially in the US where rent control is never all that strong or comprehensive.

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

#407

Post by WalterBright » Wed, Mar 03, 2021, 12:24 AM UTC

AlexandrB wrote: post #284

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.

This is a weird argument. Would this still happen if rent increases were capped at 10%/year, what about 50%/year? At some point no one is going to rent at the rates you're asking and you're going to have to stop.

It all comes down to business risk. For example, with all the trillions being printed and stuffed into the economy, I'd be afraid of a return to 20% inflation like in the 70's. If my rates were capped at 7%/year, you can bet I'd raise it now by 7% just so I don't get caught next year with 20% inflation and only a 7% rate increase.

Yes, right now, I'd risk fewer tenants with 7%, but balance that against what might happen next year when I'd be full and still lose money because of the cap that year.

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

#408

Post by imtringued » Wed, Mar 03, 2021, 12:25 AM UTC

vkou wrote: post #356

edbob wrote: post #326

Earlier quoted context omitted.

Your technical analysis is correct as usual, but I agree with sologoub's comment[0], "That’s not success, that’s picking winners and losers." [0] https://news.ycombinator.com/item?id=26316547

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…

>Markets pick winners and losers all the time. Markets pick winners and losers all the time.

This isn't true. If people are paying enough for the developer to build additional housing then everyone will win in the end.

>It's just that winners in market housing situations are always the people with the most money.

That is the price you have to pay for allocating resources in the most productive way possible and ensuring that everyone wins in the end. It's a small price compared to the benefits.

>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'.

As I said, it's the path to everyone winning. If you fail to allocate resources efficiently then you will just get a lot of losers and some special interests who are not losing.

>Both are fundamentally unfair. Life, in general, isn't fair.

The difference is that one of them will stay unfair forever, while the other would have the potential to get fairer, year by year.

>Rent control doesn't exist to maximize overall virtue. It exists to minimize disruption and upheaval in people's lives. You're explicitly excluding that from your criteria for success.

They will have to move one day, since there isn't enough room for everyone and when they do, they leave for good with no second chance.

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

#409

Post by yibg » Wed, Mar 03, 2021, 12:25 AM UTC

justapassenger wrote: post #311

asdff wrote: post #279

Earlier quoted context omitted.

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.

I'm not following your point here. Renting is not the same as owning correct. But the topic is rent control, how does ownership play into this?

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

#410

Post by Kalium » Wed, Mar 03, 2021, 12:26 AM UTC

mancerayder wrote: post #395

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…

>This is why if you're 19 you can't afford to live in Manhattan: you're either old (and lucky) or rich. Or a real estate broker who knows building owners willing to rent out the stabilized units (50 pct are stabilized, 50 free market more or less). Or you paid a broker fee to this broker. Or you sublet from a rent stabilized tenant who charges market rent.. No one talks about how easy corruption happens in these situ…

SF famously has a black market in rent controlled sublets. In theory the amount a master tenant can charge for a room is a question of proportionate space and overall rent. In practice, they charge a lot more, and it's exceptionally rarely challenged.