IMO nothing even comes close to beating a land value tax with a citizens dividend for fixing housing and wealth distribution challenges.
The redistribution of housing wealth caused by rent control (2023) [pdf]
51–60 of 161 posts
Re: The redistribution of housing wealth caused by rent control (2023) [pdf]
#52People like to look at rent control from a purely economic lens, but the sociopolitical aspect must also be considered. A suboptimal economic outcome might actually be optimal when all factors are considered. Social harmony and a feeling of hope for underprivileged residents are hard to value, but we must admit that they do have value.
Re: The redistribution of housing wealth caused by rent control (2023) [pdf]
#53[flagged]
The current cohort of renters wins. All future renters lose, because the rent-controlled apartments are never re-leased. People sit on them forever.
Price ceiling is the surest way in economics to create a shortage.
Re: The redistribution of housing wealth caused by rent control (2023) [pdf]
#54I feel the core issue isn’t wealth redistribution, it’s that rent controls create severe mismatches in supply and demand.
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Re: The redistribution of housing wealth caused by rent control (2023) [pdf]
#55Earlier quoted context omitted.
Except the housing market, especially the rental market, is still significantly driven by small rental property owners and is a significant source of generational wealth transfer. Starting with the assumption that all or even most investors / actors are rational is a continuing pox on both economic scholarship and societal thinking
It doesn’t require all or most investors to act rational. A small percentage of rational actors still moves prices.
Moving prices is not the same as moving the market, and famously the market might cause them to go insolvent faster then the market goes rational. Which would mean that they weren’t actually rational and this is all circular reasoning?
Re: The redistribution of housing wealth caused by rent control (2023) [pdf]
#56[flagged]
If you don't mind investors being unwilling to do new construction. It's a band-aid on a much bigger problem.
That depends on the market. I’m not familiar with St Paul Minnesota, but here in Perth, Western Australia this is raised as an argument every time someone proposes anything to do with rolling back investor tax breaks. That and “there will be no rentals!”
The truth of the situation here is that there is more than enough demand for new housing anyway, directly financed by wannabe homeowners, that ‘investment’ goes 90% into existing stock, not new builds, and that investment properties actually create rental demand as investors crowd out would-be owner-occupiers from both existing houses and new-build opportunities.
In Melbourne, where measures to reduce the attractiveness of investment have already happened, the price of housing has levelled off comparative to other capitals in Aus, and rental availability has actually gone up.
The underlying problem is of course supply, but there appears to be a limit to how fast the building industry can actually build more stock, so with huge demand and limited supply, we don’t need to encourage as much speculation or landlordism in the market to get more built. All it does is add heat and pump prices.
Re: The redistribution of housing wealth caused by rent control (2023) [pdf]
#57When Boston ended rent control in the late 90s, all of the sudden the landlords invested in their goldmine buildings and generally improved the city. It sucks for those trying to rent or buy (including me, I paid 60% more for a house in 2002 than what it was worth in 1996), but the city has certainly had a renaissance. IMHO, the problem now is bad zoning. The rich car-centric suburbs are preventing denser housing- to…
Also, when the topic of rent control, sorry, rent stabilization, comes up here in the Boston area now people won't allow for inflation adjustments. I'd be okay with a scheme that allowed for automatic inflation adjustment plus some float. But instead they're always proposed in a way that has a max cap. This means that an owner could potentially start losing money. And leads to the flip side of what you describe.
When I point this out in r/boston, cambridgema, and somerville I get downvoted to oblivion because obviously fuck the landlord class. But why on earth would anyone start renting a place if they know they could get soaked over time?
Re: The redistribution of housing wealth caused by rent control (2023) [pdf]
#58Why not just redistribute directly? If the concern is that some existing residents will no longer be able to afford things, give long time residents a subsidy voucher.
Because it goes directly into the pockets of the landlords? People can argue about whether that's what should happen, and there are nuances on both sides there, but that is undeniably what will happen.
We could like build more houses though
Re: The redistribution of housing wealth caused by rent control (2023) [pdf]
#59When Boston ended rent control in the late 90s, all of the sudden the landlords invested in their goldmine buildings and generally improved the city. It sucks for those trying to rent or buy (including me, I paid 60% more for a house in 2002 than what it was worth in 1996), but the city has certainly had a renaissance. IMHO, the problem now is bad zoning. The rich car-centric suburbs are preventing denser housing- to…
The Massachusetts law requiring cities/towns to build high-density housing around commuter rail stops neglected one thing. There's no open space. To build high-density housing, the city or state would have to buy out the existing landowners, demolish the existing property, and then build anew.
They also neglected the effect of travel time on behavior. Back in the day, I was commuting from a rich suburb to Cambridge, and to get to work on time, I had to get up early to accommodate a 30-minute commute to the train station, wait for the purple line and the red line, and then walk three-quarters of a mile. When I saw how little traffic was on the road, I said, "F it," and drove to work in the same amount of time as it took me to get to the train station.
In the Biolab space, it was a little overbuilt, and now it's tremendously overbuilt because of the killing off of NIH grants and subsequent reduction in investment in the biotech sector. I suspect the reason they don't drop the rent is that it would cause a bit of unraveling. You drop the rent; that changes the valuation of your building, which may mean you're underwater on the loan, the bank calls the loan, et cetera, et cetera. Then, similar properties would suffer devaluation and a similar unwinding. And if you agree with the contagion theory of deflationary environments, it'll all unwind all the way through your 401k and other investments. Sadly, the billionaires would be untouched.
Re: The redistribution of housing wealth caused by rent control (2023) [pdf]
#60Earlier quoted context omitted.
How do you quantify "incentive"? Is a landlord really looking at 5% lower property value and deciding it's not worth investing? Is this even true in aggregate?
Well, there's 2 ways to become a landlord: to buy a house or to build a house. I was focused only on the second way. The cost of the wood and the labor needed to build the house is unaffected by the rent control, so if cost remains the same, but the reward (or "revenue") from building the house decrease from $100K to $95K, then fewer houses will get built.
Yeah, sure, but only like, 10-100 fewer housing units per 100k people.