How Rent Control Drives Out Affordable Housing • Hacker News Board

Re: How Rent Control Drives Out Affordable Housing

#41

Post by calambrac » Tue, Dec 30, 2008, 10:02 PM UTC

pelle wrote: post #31

pg wrote: post #10

Markets interpret social engineering as damage and route around it.

I agree completely. Unfortunately the outcome is normally very different when the market has to route around it. Rent control here in SF only affects people in older buildings. One of many unintended consequences of this is the ridiculous state of Tenderloin. Back in Denmark where I own an apartment, rent control forces me to only be able to rent it out as a corporate apartment to foreigners. The official rent would…

I seriously doubt that the situation in the Tenderloin can be blamed squarely on rent control. There's only a small part that's genuinely scary, and that seems almost institutionally embedded at this point. Rent control or not, you're going to have a hard time convincing the affluent to move in next to the SRO's, liquor stores, porn shops, homeless centers, and methodone clinics. I think geography is to blame more than anything - it was completely destroyed in the 1906 earthquake, it's not downtown, not on a hill, and not near the bay (where the wealthy wanted to be), but it was close enough to all these things that the lower class that worked for and entertained the wealthy could set up. Throw in the flight to suburbia that hit most cities after WW2, and it's pretty understandable why that part of town is like it is.

Re: How Rent Control Drives Out Affordable Housing

#42

Post by calambrac » Tue, Dec 30, 2008, 10:05 PM UTC

mhartl wrote: post #37

loumf wrote: post #17

Earlier quoted context omitted.

Aside from anecdotes, do you have access to any data that substantiates the claim that "The rent controlled units went to people with high incomes and political power" -- can you put a figure on it (50%, 60%, higher?). My grandparents lived in rent controlled apartments in NYC that they could not have afforded to stay in -- moved there in the 30's in neighborhoods that filled with gang violence -- but gentrified arou…

My grandparents lived in rent controlled apartments in NYC that they could not have afforded to stay in This is selection bias. Suppose the government raised the federal minimum wage to $50/hr. This would cause massive unemployment (and, no doubt, a thriving black market for labor), but some lucky low-income workers would keep their jobs. You could then point to one of those workers and say, "Hey, I know someone who…

Okay, fine, but the op that he's replying to suffered the same flaw by pointing to cases of politically connected wealthy people in rent-controlled apartments. Where's the proof that rent-control inflicts large systemic damage across all groups? It's certainly not in the topic's article (see my other post).

Re: How Rent Control Drives Out Affordable Housing

#43

Post by natrius » Tue, Dec 30, 2008, 10:08 PM UTC

calambrac wrote: post #34

yummyfajitas wrote: post #28

Earlier quoted context omitted.

"It has nothing to do with NYC being an island and SF being a peninsula." It's not just that. NYC is not built up the way it should be, and most of the buildup of recent years is condos. For many years, there was a ridiculous incongruity in NYC: sky high rents and abandoned buildings. Why renovate when you can't charge rents commensurately? These days it's mostly a Harlem/Inwood phenomenon. By the way, why is "allowi…

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…

"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."

You say this as if it's not a side effect of rent control itself.

Helping people avoid being priced out of their neighborhoods is desirable, but rent control has so many side effects that it's not worth it in my opinion. It's basically taxing people when they move to or within a city to pay the rent for people who have stayed in the same place. There are probably better ways to achieve that goal.

Re: How Rent Control Drives Out Affordable Housing

#44

Post by calambrac » Tue, Dec 30, 2008, 10:22 PM UTC

natrius wrote: post #43

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…

"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." You say this as if it's not a side effect of rent control itself. Helping people avoid being priced out of their neighborhoods is desirable, but rent control has so many side effects that it's not worth it in my opinion.…

Of course it's a side effect of rent control, but it's not a necessary side-effect of rent control. Rent control laws do allow for increases to cover maintenance, so the money is there. It's not like doing away with rent-control would have a better outcome from the POV of the tenant - instead of living in a gradually deteriorating building, they'd just have been kicked out.

BTW, I'm not a necessarily a fan of rent control, I just like its goal. I really don't know enough about the issue to make an informed policy decision either way. My main point originally was just that this article was terrible - stupidly reasoned and completely lacking in meaningful evidence that would let me make an informed policy decision.

Re: How Rent Control Drives Out Affordable Housing

#45

Post by davidw » Tue, Dec 30, 2008, 10:32 PM UTC

Prrometheus wrote: post #38

davidw wrote: post #27

Earlier quoted context omitted.

When the squares actually visit LineLand though, who do they hold their noses and vote for? My guess is that they generally vote Republican (like, for instance, Milton Friedman), or did at one time. Perhaps that's changing?

Cato actually has done some studies on the libertarian vote. It went overwhelmingly for George Bush in 2000, but swung about 20 points democratic in 2004. I'm not sure that they've updated the study for 2008, but my gut (and surveys of self-identified well-known libertarians) tell me Obama won the vote. If you like market economics, don't care if your neighbor is gay, and don't feel like occupying countries on the ot…

Interesting. It would be fun to have numbers for the past, too, to see how much 'bouncing around' there was, and what it could be correlated with.

Re: How Rent Control Drives Out Affordable Housing

#46

Post by calambrac » Tue, Dec 30, 2008, 10:34 PM UTC

jason wrote: post #32

I have a vagrant living in my NYC apt building that pays $75 a month in rent and eats out of the garbage. He has no electricity or running water. When he opens the door to his apt in the summer the rest of the building gags. There are two other units that pay $75 dollars; a nice old couple and a loony chain smoker with bad BO.

At a 7.5% annual increase from 1971, they would have originally been paying just over $5/month (that's about $25.34 in today's dollars). I'm not an expert in NYC rent prices in the early 70's, but that seems absurdly low. Maybe it's that cheap for some other reason?

Re: How Rent Control Drives Out Affordable Housing

#47

Post by yummyfajitas » Tue, Dec 30, 2008, 10:35 PM UTC

calambrac wrote: post #34

yummyfajitas wrote: post #28

Earlier quoted context omitted.

"It has nothing to do with NYC being an island and SF being a peninsula." It's not just that. NYC is not built up the way it should be, and most of the buildup of recent years is condos. For many years, there was a ridiculous incongruity in NYC: sky high rents and abandoned buildings. Why renovate when you can't charge rents commensurately? These days it's mostly a Harlem/Inwood phenomenon. By the way, why is "allowi…

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…

"Rent stabilization in NYC isn't mandatory for new construction,"

In NYC, future crazy regulations are always a worry. Most new construction IS rent controlled. My previous apartment (built to be condos, but the owner was unable to sell) was. To evade various ridiculous NYC taxes (which make a lot of new construction unviable), you need to submit to rent control.

"if landlords can't charge rents commensurately, where are the sky high rents coming from?"

Sky high rents come from current demand. Rent control provides a disincentive to long term investments like new construction or major renovations to rental buildings.

Incidentally, neither of the "things that bother you about the free market religion" are actually part of the free market ideology. 1) only applies to efficient markets (like the rental market, with many buyers and sellers, and good information) and 2) is closer to the Clinton/Bush/Dodd/Obama ideology that ownership is something to encourage.

"Neighborhoods don't just magically become expensive to live in. I won't claim that the only reason is because good, noble people moved in when things were cheap and turned things around, but it's ridiculous to suggest that the people living in a place have nothing to do with that place becoming a desirable place for wealthier people to live."

In some cases the people are completely unrelated. The main attraction to living in Harlem is the 1-6 trains. Having tried to get a sublet for my old place, I discovered that the people living there make it less desirable to live in.

"You're making an emotional appeal for a guy with a family to have a right to be close to his job - that cuts both ways, you know."

As far as who "deserves" to live on some place, it's a wash. So lets not favor any particular group over the other. As far as emotional appeals go, I'm not casting any group of people as assholes.

Re: How Rent Control Drives Out Affordable Housing

#48

Post by [deleted] » Tue, Dec 30, 2008, 10:57 PM UTC

davidw wrote: post #45

Prrometheus wrote: post #38

Earlier quoted context omitted.

Cato actually has done some studies on the libertarian vote. It went overwhelmingly for George Bush in 2000, but swung about 20 points democratic in 2004. I'm not sure that they've updated the study for 2008, but my gut (and surveys of self-identified well-known libertarians) tell me Obama won the vote. If you like market economics, don't care if your neighbor is gay, and don't feel like occupying countries on the ot…

Interesting. It would be fun to have numbers for the past, too, to see how much 'bouncing around' there was, and what it could be correlated with.

[deleted]

Re: How Rent Control Drives Out Affordable Housing

#49

Post by Prrometheus » Tue, Dec 30, 2008, 11:00 PM UTC

davidw wrote: post #45

Prrometheus wrote: post #38

Earlier quoted context omitted.

Cato actually has done some studies on the libertarian vote. It went overwhelmingly for George Bush in 2000, but swung about 20 points democratic in 2004. I'm not sure that they've updated the study for 2008, but my gut (and surveys of self-identified well-known libertarians) tell me Obama won the vote. If you like market economics, don't care if your neighbor is gay, and don't feel like occupying countries on the ot…

Interesting. It would be fun to have numbers for the past, too, to see how much 'bouncing around' there was, and what it could be correlated with.

http://www.cato.org/pubs/pas/html/pa580/pa580index.html

page 13

Keep in mind that these are "soft libertarians", people that consider themselves economically conservative and socially liberal, but don't necessarily go around trolling message boards with anarchist philosophy.

2004 seemed to be unusually bad for the republican percentage of the libertarian vote. The only worse year was 1992, when Ross Perot, Clinton, and Bush I all got a third (well, I think 2008 will be bad, too).

Re: How Rent Control Drives Out Affordable Housing

#50

Post by toby » Tue, Dec 30, 2008, 11:07 PM UTC

timr wrote: post #26

loumf wrote: post #17

Earlier quoted context omitted.

Aside from anecdotes, do you have access to any data that substantiates the claim that "The rent controlled units went to people with high incomes and political power" -- can you put a figure on it (50%, 60%, higher?). My grandparents lived in rent controlled apartments in NYC that they could not have afforded to stay in -- moved there in the 30's in neighborhoods that filled with gang violence -- but gentrified arou…

Indeed. I live in a rent-controlled apartment in San Francisco, and it is not squalid, the landlord is not crooked, and neither I, nor the other tenants, are politically powerful. I heard a lot of horror stories about rent control before I moved here, but so far the stories haven't approximated the reality. Perhaps the problem lies the details of the rent control policies in question, and not with the concept of rent…

I also live in a rent-controlled apartment in SF. I'm not sure what the particular policy in Boston is, but here they can increase the rent by 3%/year (I think) while I live there. After I leave, they can reset it to whatever they like.

So, in principle, if market rents increase a lot, the landlord has an incentive for me to leave. I think there's another side to this though: I've been a great tenant for a while and always pay on time -- if I leave, he runs the risk of getting a scammer who just won't pay and will take a year to evict.

Also, since I've locked in a nice rate, I have an incentive to stay and even make minor improvements (like clearing all the dead growth from the patio, etc.)

I think rent control probably is not a great idea in many places, but in SF it seems to work. My pet theory is that the boom-bust cycle here is much more severe and without rent control the city would have no stable population.