How Rent Control Drives Out Affordable Housing • Hacker News Board

Re: How Rent Control Drives Out Affordable Housing

#151

Post by calambrac » Wed, Dec 31, 2008, 3:23 PM UTC

sokoloff wrote: post #143

calambrac wrote: post #34

Earlier quoted context omitted.

Rent stabilization in NYC isn't mandatory for new construction, so new buildup being condos is not a response to rent control (unless it's a response to the threat of future rent control). Also, you'll need to explain how "sky high rents + abandoned buildings" corresponds to "Why renovate when you can't charge rents commensurately?" - if landlords can't charge rents commensurately, where are the sky high rents coming…

"The argument that rent control prevents owners from maintaining their buildings is pure bullshit. There's not a rent-control law in existence that doesn't allow annual increases sufficient for maintenance. Buildings aren't maintained because the owner sees the opportunity for dramatically increased profits if the current tenant leaves and lets the building fall to shit in an effort to drive them out." Read that para…

Your comment has exactly the same information, that owners are not prevented but are disincentivized from maintaining their properties in a rent control environment, as the snippet of text you quoted from me. How did you manage to be a sarcastic prick about restating exactly what I said?

Anyways, from the POV of the tenant who is faced with eviction or a gradually deteriorating building, which do you think is the preferable option?

Re: How Rent Control Drives Out Affordable Housing

#152

Post by Retric » Wed, Dec 31, 2008, 4:02 PM UTC

demallien wrote: post #141

r7000 wrote: post #90

Earlier quoted context omitted.

Ticketing has been a weird market. There is a strong expectation among consumers that there is a 'fixed price' (face value) and that anything else is 'unfair'. Demand is constrained completely by a venue's capacity leading to all the obvious problems for over-subscribed events.

This is an important point that the author of the article seems to have not noticed. His whole argument is based on the idea that rent control leads to a decrease in supply, with a resulting hike in price due to unmet demand. But I wonder just how many apartments can really be built in Manhattan? Or in intra-muros Paris, or in the City in London...

Manhattan could have 3x the number of apartments by increasing average building size, granted transportation would become an even larger problem. However, when you increase the cost to live somewhere you decrease the number of people who want to live there so it's probably not a problem.

IMO rent control is best when it limits how much above inflation you can increase rent per year. At 3.5% over inflation you can basically double the real cost over 20 years, but people can plain ahead and know they will not be forced out next year. The major problems seem to occur when rent suddenly goes up 20 percent with little notice or fall significantly below market.

PS: London and Paris are less developed than Manhattan, but they seem to want to maintain their historic look which limits growth. DC has started building down because they can't increase building height which is extremely expensive.

Re: How Rent Control Drives Out Affordable Housing

#153

Post by rsheridan6 » Wed, Dec 31, 2008, 4:06 PM UTC

demallien wrote: post #141

r7000 wrote: post #90

Earlier quoted context omitted.

Ticketing has been a weird market. There is a strong expectation among consumers that there is a 'fixed price' (face value) and that anything else is 'unfair'. Demand is constrained completely by a venue's capacity leading to all the obvious problems for over-subscribed events.

This is an important point that the author of the article seems to have not noticed. His whole argument is based on the idea that rent control leads to a decrease in supply, with a resulting hike in price due to unmet demand. But I wonder just how many apartments can really be built in Manhattan? Or in intra-muros Paris, or in the City in London...

Given that there are 113 cities in the world with greater population density than NYC, I'd say it would be possible to build more housing. http://www.citymayors.com/statistics/largest-cities-density-...

But rent control is probably not the whole story. I'm not familiar with NYC laws but I'm sure there's a lot of regulatory red tape besides rent control that keeps housing scarce and expensive.

Re: How Rent Control Drives Out Affordable Housing

#154

Post by sokoloff » Wed, Dec 31, 2008, 4:10 PM UTC

calambrac wrote: post #151

sokoloff wrote: post #143

Earlier quoted context omitted.

"The argument that rent control prevents owners from maintaining their buildings is pure bullshit. There's not a rent-control law in existence that doesn't allow annual increases sufficient for maintenance. Buildings aren't maintained because the owner sees the opportunity for dramatically increased profits if the current tenant leaves and lets the building fall to shit in an effort to drive them out." Read that para…

Your comment has exactly the same information, that owners are not prevented but are disincentivized from maintaining their properties in a rent control environment, as the snippet of text you quoted from me. How did you manage to be a sarcastic prick about restating exactly what I said? Anyways, from the POV of the tenant who is faced with eviction or a gradually deteriorating building, which do you think is the pre…

Clearly living in a deteroriating building is better than being evicted.

However, eviction is not the alternative to rent control. Being evicted is different from having your rent raised to market rates, and is different from having your lease not renewed. It may be a legal consequence of tenants deciding not to leave and/or not to pay a higher rent, but it's not like the choice we're debating is eviction vs rent control.

As to my restatement, you claimed that argument X is "pure bullshit" in a short paragraph that shows you clearly understand that argument X is much more accurate than inaccurate. If quoting that paragraph and asking you to observe that contradiction makes me a prick, so be it. (I'll admit to being sarcastic; if you want to call me a prick on the internet over it, I'll still sleep OK.)

Re: How Rent Control Drives Out Affordable Housing

#155

Post by calambrac » Wed, Dec 31, 2008, 4:34 PM UTC

sokoloff wrote: post #154

calambrac wrote: post #151

Earlier quoted context omitted.

Your comment has exactly the same information, that owners are not prevented but are disincentivized from maintaining their properties in a rent control environment, as the snippet of text you quoted from me. How did you manage to be a sarcastic prick about restating exactly what I said? Anyways, from the POV of the tenant who is faced with eviction or a gradually deteriorating building, which do you think is the pre…

Clearly living in a deteroriating building is better than being evicted. However, eviction is not the alternative to rent control. Being evicted is different from having your rent raised to market rates, and is different from having your lease not renewed. It may be a legal consequence of tenants deciding not to leave and/or not to pay a higher rent, but it's not like the choice we're debating is eviction vs rent con…

I intended 'prevent' to mean, you know, prevent, which is pure bullshit, given that all rent control laws explicitly allow maintenance increases. I'm obviously aware that it still creates the disincentive, seeing as how I pointed it out the very next sentence.

Eviction is the alternative to rent control in the cases where rent control matters - if the tenant can't afford market rates, then they get evicted.

Re: How Rent Control Drives Out Affordable Housing

#156

Post by sokoloff » Wed, Dec 31, 2008, 4:48 PM UTC

calambrac wrote: post #155

sokoloff wrote: post #154

Earlier quoted context omitted.

Clearly living in a deteroriating building is better than being evicted. However, eviction is not the alternative to rent control. Being evicted is different from having your rent raised to market rates, and is different from having your lease not renewed. It may be a legal consequence of tenants deciding not to leave and/or not to pay a higher rent, but it's not like the choice we're debating is eviction vs rent con…

I intended 'prevent' to mean, you know, prevent, which is pure bullshit, given that all rent control laws explicitly allow maintenance increases. I'm obviously aware that it still creates the disincentive, seeing as how I pointed it out the very next sentence. Eviction is the alternative to rent control in the cases where rent control matters - if the tenant can't afford market rates, then they get evicted.

Or, in hopefully more common cases, they do the responsible thing and move out themselves at the end of the lease term, without going through the legal process of eviction.

Re: How Rent Control Drives Out Affordable Housing

#157

Post by mmmurf » Wed, Dec 31, 2008, 4:52 PM UTC

calambrac wrote: post #97

mmmurf wrote: post #80

Earlier quoted context omitted.

The point is that rent control (over time) drives up the price of rental dwellings, a phenomenon which greatly harms the poor. Here's why: In many cities, new buildings are exempt from rent control if they are "luxury" buildings. So the supply of luxury housing increases. Meanwhile, the incentive to build non-luxury buildings is greatly diminished b/c those buildings fall under mandatory rent control. Also, there is…

New properties are exempt at least in NYC and SF, the main cities the article harps on. I don't know about elsewhere. A place deteriorating over time happens, but from the POV of the tenant whose alternative is getting booted to the curb, this seems like a reasonable tradeoff, doesn't it? The over-consumption of housing space is a pretty lame argument, and it's contradicted by the point that other people are making a…

I have no problem with a program designed to subsidize housing for people with tax dollars. If the democracy decides that people with attributes x, y, and z deserve a $2000/month housing subsidy, that's fine. It's no different than the subsidy given to mortgage debtors (tax breaks), parents (the child tax credit), electric car owners (tax credit), student loan debtors (student loan interest deduction), farmers (direct subsidy), etc., etc.

But consider how paternalistic any of these programs are compared to simply giving the person cash to spend on whatever he/she wants.

Also, the above programs are taxpayer subsidized so the burden is distributed across all taxpayers. Rent control, on the other hand, screws over the building owners only, effectively making a single building owner personally provide a $1000+ subsidy to a hundreds of people. Compared to a broad, taxpayer-subsidized program, this is equivalent to a 70% additional tax just on landlords, this is on top of that person's fair share of income and payroll tax already being paid!

The biggest problem, though, is the distortion caused by rent control... which causes all of the problems in my above post.

To make obvious the issue of price controls leading to shortages, consider this: During the 1970s when Nixon instituted price controls on gas at the pump, there were massive lines outside gas stations. This was not due to the "evil Arabs" withholding gas. It was due to the price controls: People who would have decided to carpool or walk if the price had been at market price decided to buy gas at Nixon's price. This led to huge lines.

Re: How Rent Control Drives Out Affordable Housing

#158

Post by mmmurf » Wed, Dec 31, 2008, 4:58 PM UTC

loumf wrote: post #103

mmmurf wrote: post #75

Earlier quoted context omitted.

True. I don't think anyone would object to helping the 1% of people who are actually in that category. The problem is that interest groups hijack the programs in order to win handouts for those who don't really need the programs.

Where does this 1% come from? As a back of the envelope calculation, I would guess that almost all senior citizens are unprofitable to insure -- that's way more than 1%. Even if I'm off by a lot, it's still way more than 1% -- and I haven't addressed the rest of the population.

Only unprofitable if you decide that everyone deserves the latest, greatest, cutting-edge medical care.

Healthcare prices have come way down in the past two decades, the issue is that nobody wants 1990 level care, which could be administered at a fraction of the price of delivering all of the latest advancements.

The "healthcare costs are rising" meme is false. It's like saying "the price of supercomputers is rising". In non-inflation-adjusted dollars, the top-end supercomputer from IBM costs more than the top-end supercomputer from IBM cost 10 years ago, but the price per unit of computation has gone way down.

Healthcare prices have done the same thing, but everyone wants the best possible at all times.

(I want this too, but at least I try to appreciate that what I'm getting today is significantly better than 10 years ago)

Re: How Rent Control Drives Out Affordable Housing

#159

Post by pchristensen » Wed, Dec 31, 2008, 4:58 PM UTC

rsheridan6 wrote: post #153

demallien wrote: post #141

Earlier quoted context omitted.

This is an important point that the author of the article seems to have not noticed. His whole argument is based on the idea that rent control leads to a decrease in supply, with a resulting hike in price due to unmet demand. But I wonder just how many apartments can really be built in Manhattan? Or in intra-muros Paris, or in the City in London...

Given that there are 113 cities in the world with greater population density than NYC, I'd say it would be possible to build more housing. http://www.citymayors.com/statistics/largest-cities-density-... But rent control is probably not the whole story. I'm not familiar with NYC laws but I'm sure there's a lot of regulatory red tape besides rent control that keeps housing scarce and expensive.

Don't make the mistake Manhattan or NYC with the New York Metro area (used in your link).

Manhattan: 1.6M people, 23 sq mi, ~70K/sq mi (more than double #1 on the list)

NYC: 8.3M, 305 sq mi, ~27K/sq mi (would be #2 on that list)

NY Metro: 17.8M, 8700 sq mi, 2K/sq mi

So while NY Metro could definitely use more housing, you're talking about CT farmland, the Poconos, Hudson county, etc.

Re: How Rent Control Drives Out Affordable Housing

#160

Post by mmmurf » Wed, Dec 31, 2008, 4:59 PM UTC

arockwell wrote: post #133

mmmurf wrote: post #75

Earlier quoted context omitted.

True. I don't think anyone would object to helping the 1% of people who are actually in that category. The problem is that interest groups hijack the programs in order to win handouts for those who don't really need the programs.

Take a look at a list of what is considered an uninsurable condition for personal health insurance. That alone would hit more than 1% of the population.

Do you happen to have a list of these?