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

#471

Post by diebeforei485 » Wed, Mar 03, 2021, 2:06 AM UTC

CydeWeys wrote: post #452

freyir wrote: post #423

Earlier quoted context omitted.

San Francisco also applies rent control only to older buildings. The effect is that developers only build top-of-market “luxury” housing (often cheaply constructed it rented at luxury rates). This helps them recover their development costs, which they couldn’t recoup on affordable housing.

How are you defining "luxury" here? The land in SF is inherently expensive; any newly constructed apartment building is likely to have rents meeting your definition of "luxury". The land is expensive and so too is building buildings on top of it! The granite countertops and stainless steel appliances are a tiny fraction of the overall cost.

If we're using rents to define luxury, then most of the westside is luxury.

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

#472

Post by sudosysgen » Wed, Mar 03, 2021, 2:07 AM UTC

ProfessorLayton wrote: post #453

sudosysgen wrote: post #371

Earlier quoted context omitted.

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.

Nobody was talking about nationwide averages, because the housing crunch is local, not an average of what's going on throughout the country. Wages in [U.S.] metropolitan areas have increased much more than what was referenced in your source [1], while housing in many of those areas has not kept up with that growth. Just look at the wage growth at top metros, many of which have grown a lot recently, but have failed to…

Are we reading the same study? Because the link you just posted indicated that US Metro wages grew 1% faster than the average over a 10 year span.

As far as I understand then, your entire argument is unfounded and contrary to the data.

FYI, the US urbanization rate is 86.4%.

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

#473

Post by stale2002 » Wed, Mar 03, 2021, 2:08 AM UTC

kmeisthax wrote: post #215

vkou wrote: post #186

Earlier quoted context omitted.

Kicking people out of their homes doesn't solve the supply problem, because it doesn't create new housing. It just shuffles around who lives in existing houses. If you have a housing problem, and you want to solve it, you need to do two things. 1. Not kick people out of housing that they have. (Because it is incredibly disruptive to people's lives.) 2. Build new housing, until demand is met. Rent control accomplishes…

You can't do #2 without doing #1 - most in-demand land is already occupied and unused land is typically not worth developing (or doing so would cause environmental harm). In an all-owner-occupant suburb, this isn't so much of a problem: you're literally paying people lots of money to accept the disruption of having to move. However, in almost every other kind of housing arrangement, ownership over the building is sep…

> you can't do #2 without doing #1

Of course you can. The law can be that normally rent control applies, but if you are building a new building, that doubles the amount of housing supply on the land, you can kick out the existing residents if you pay them a large payout.

This would allow new housing to built in the obvious places where it should be, and the obvious cases where a huge amount of new housing is planned to be built.

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

#474

Post by refurb » Wed, Mar 03, 2021, 2:08 AM UTC

dheera wrote: post #429

foota wrote: post #403

Earlier quoted context omitted.

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 t…

> supplying government housing to anyone at a low price Singapore does exactly this with the HDB flats.

Not quite a “low price”. A 2 bed HDB costs around $500k SGD. And the median salary is ~10-15% lower than the US.

Way cheaper than a private condo ($1M), but still a significant barrier to many people in Singapore especially since you can’t buy one if you’re single until you’re over 35.

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

#475

Post by postalrat » Wed, Mar 03, 2021, 2:11 AM UTC

u678u wrote: post #435

ryan_j_naughton wrote: post #417

There is no reason why housing cannot be much much cheaper than it is now -- so cheap that it is nearly free. Larry Page, in an interview in 2014 discussed how. "Rather than exceeding $1m, there’s no reason why the median home in Palo Alto, in the heart of Silicon Valley, shouldn’t cost $50,000" [1] and attributed this entirely to a policy problem. The answer is continuously increasing supply in a manner that outpace…

> shouldn’t cost $50,000 To me that makes no sense. Cheaper than the midwest? The whole world would want to move there.

How do you get a house built for 50k? Free labor and 600 square feet?

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

#476

Post by whatshisface » Wed, Mar 03, 2021, 2:13 AM UTC

skohan wrote: post #470

throwaway6734 wrote: post #468

Earlier quoted context omitted.

build more housing

why is this mutually exclusive?

Rent control could technically be done by handing money to tennants to then hand to landlords, but in practice it's done by taking money away from landlords. Obviously, that's going to keep landlords from being able to give that money to construction companies.

Another possible solution would be to take money away from tenants and landlords both to give directly to construction companies. That's socialized housing. However in the long run it's not likely to be much cheaper, because it's not like landlords are making that much profit in the first place. The profit in renting is about the cost of capital, the government is not going to do much better.

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

#477

Post by Schiendelman » Wed, Mar 03, 2021, 2:16 AM UTC

edbob wrote: post #313

Schiendelman wrote: post #253

Earlier quoted context omitted.

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?

It's a problem everywhere in the US; all cities have these policies, but the coastal cities have much higher demand.

The reason you don't see prices spike in inland cities is that they can expand outwards, and they don't have much economic opportunity. Cities on the coasts can only expand in one direction - and because of international trade, they have more economic opportunity, so more demand.

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

#478

Post by tehjoker » Wed, Mar 03, 2021, 2:17 AM UTC

gameman144 wrote: post #420

tehjoker wrote: post #349

Earlier quoted context omitted.

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.

One could just as easily say that you're missing the opposite point: why should policy prevent new people from moving in? In either scenario, policy will disadvantage one group and advantage another. Any policies that aim to give stability to long-term tenants is liable to disadvantage new and shorter-term tenants. There's no natural law dictating that people should be forced to move out, but there's also no natural…

I agree, but I don't think the literal lord of a property should be able to force people to migrate by demanding higher tribute. There should be a rational humane process that isn't driven by simple greed.

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

#479

Post by dionidium » Wed, Mar 03, 2021, 2:18 AM UTC

lotsofpulp wrote: post #461

dionidium wrote: post #372

Earlier quoted context omitted.

> 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;…

It is most certainly not illegal to build new housing in the US. https://www.census.gov/construction/nrc/pdf/newresconst.pdf

It's illegal to build at all on some plots of land. It's illegal to build apartments on most plots of land in most cities (this is called "single-family zoning" and it dominates most U.S. cities). It's illegal to build large apartment buildings on still more plots of land.

And then, yes, of course, there are some plots of land where it's legal to build one or more of the categories listed above.

The places where housing is scarce are in the former groups, by and large, not the latter, which is to say the problem where housing is scarce is indeed that it's illegal to build enough housing there. Those places don't need to incentivize development. They need to make it legal.

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

#480

Post by sologoub » Wed, Mar 03, 2021, 2:19 AM UTC

AlexandrB wrote: post #281

sologoub wrote: post #60

Earlier quoted context omitted.

> The caps represent a windfall to one group of tenants: those, whether rich or poor, who are already ensconced in regulated apartments. Simultaneously, they hurt all other groups — especially young people and those coming from other cities — by all but shutting them out of the market. That’s not success, that’s picking winners and losers. Same as with SF Bay Area, Santa Monica (in LA) and any other place with rent c…

> 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?

Not at all, owners take on the risk and capital responsibility. I suspect those who bought in Detroit in the peak of that market would not look like a winner today. An extreme example, but still. Other less extreme examples would be in international markets where the base currency has declined - nominally the houses are more expensive, but in real terms could have lost over 50% of value.

If the housing market is relatively flat (and the currency is stable), then owning still typically provides you with benefits, such as equity accumulation.