Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Rent controls have split housing in Berlin into two distinct markets

bloomberg.com

Post reply on HN
Print view View original

411–420 of 724 posts

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

#411

Post by imtringued »

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…

Rent control is a mechanism to ensure that zoning can stay the same and construction is discouraged as much as possible.

>If rent control were eliminated tomorrow in San Francisco, it would continue to have a crippling housing shortage, because of those million factors.

Yes and as long as politicians don't get the dumb idea of reinstating rent control they would be forced to listen to all those angry voices instead of just giving them rent control to make them shut up. Rent control is a tool to reduce accountability. It's mostly abused to sweep problems under the rug.

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

#412

Post by imtringued »

pertymcpert wrote: post #201
anoncake wrote: post #200

Earlier quoted context omitted.

We're talking about Berlin.

It's just a temporary short term fix. Like opioid pain killers, over time the downsides massively outweigh any benefits.

Exactly, it's a pain killer. It's about making people shut up and stop talking about the problem.

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

#413

Post by tormeh »

awillen wrote: post #231
sudosysgen wrote: post #66

Earlier quoted context omitted.

This is not how it works. Without the possibility to rent out or consolidate homeownership, the inflationary pressure on home prices collapses. You create an insane level amount of supply for homeownership on this market. An absolutely insane level. Indeed, the vast majority of increase in housing prices is because rents are so high that 7% YoY returns are possible. Without these returns, then there is no way to just…

"You create an insane level amount of supply for homeownership on this market. An absolutely insane level." You're completely ignoring the fact that homeownership, even if prices aren't incredibly high, requires a large down payment that many people don't have, which is why they rent. Those people still can't afford to buy and are pushed out, and they're the ones you're supposed to be helping. "If somehow millions of…

> This is where your argument totally loses steam. You can't just handwave and say you'll build public housing... that is an incredibly expensive and politically difficult thing to do. When your theoretical solution to the problem is something that is very much not guaranteed (or even likely), and you pretend it'll just be no problem at all, you're ignoring reality and not presenting a useful solution.

Just issue municipal bonds, and use that money to build. Investors pay the German government to hold their money. Building is not expensive at all.

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

#414

Post by sokoloff »

ben_w wrote: post #328
bluGill wrote: post #276

Earlier quoted context omitted.

Paris is one of the densest city in the world (overall, there are denser areas) despite having a cap at 6 floors on building height. (I might be off by a floor or so) At that height the cheapest building technologies* still apply and up is not that expensive. Now going up to 200 floors is very expensive. However on a per unit area it is only a few times what the cheapest building style* is. So it does require more ex…

On that basis, I’d be interested to see more grand buildings like those on Frankfurter Tor. While the insides of Soviet era buildings are the targets of German jokes [0], the outsides are grand, and they are more than 6 levels high. [0] IIRC “if you come home to find your wife has changed her hair and redecorated, you went into the wrong apartment”, according to the DDR museum. I’m sure it lost something in the trans…

That's interesting that Soviet era buildings there have a reputation for being grand outside. In Prague, buildings built in the Czechoslovak Socialist Republic era have a (well-deserved, IMO) reputation for being brutish, simply, and inelegantly built on the outside, especially as compared to the beautiful buildings from the earlier eras.

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

#415

Post by refurb »

rsj_hn wrote: post #396
refurb wrote: post #376

Earlier quoted context omitted.

Ellis Act allows you to remove the unit(s) from the rental market and remove the tenants. In an apartment building you may do this before condo conversation but cities like SF have almost stopped condo conversions. If you Ellis Act you can re-rent the units are market rate but only after 5 years (or else you have to rent it back to the original tenants at their old rate or new tenants at the old rate).

Ellis act Owner movein is for moving yourself or a relative into the unit so you can live in it. Condo conversion is separate from Ellis act and Owner* Move in, it has to do with splitting off units to sell them independently, for example turning a TIC into a condo. Units that have been Ellised* or Owner Occupied* find it much more difficult to do a condo conversion, as there are laws about how long you need to wait…

Ellis Act is different than Owner Move-In (which covers family members too).

Ellis Act, named after the law, was created as the govt can’t compel you to rent - you have the right to remove your home from the rental market.

” The Ellis Act (California Government Code Chapter 12.75)[1] is a 1985 California state law that allows landlords to evict residential tenants to "go out of the rental business" in spite of desires by local governments to compel them to continue providing rental housing.”

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

#416

Post by cm2187 »

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…

Also 10-20y down the line, the incentives to invest into and maintain a rent controlled unit being very small, they will be in a really poor state.

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

#417

Post by ryan_j_naughton »

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 outpaces population growth dramatically.

If we reorganized the market such that there were incentives to massively build new housing, this would be a solved problem. The price of housing could effectively be the marginal cost of construction as opposed to the market power driven pricing derived from scarcity.

Couple that with remote work and efficient high speed transit both within cities, to the suburbs, and to other cities, and we should be able to enable the demand to spread out (enabling more diverse supply to compete) and to add significantly more supply everywhere.

It is infuriating that a simple problem of supply and demand has not been able to be solved by developed governments. I recognize that it isn't as simple of a market problem as say a true commodity because location matters -- causing heterogeneity in the goods. But that location difference is alleviated by the increasing supply in high demand areas and by empowering more competition across areas through transit and remote work.

This honestly doesn't have to be that hard.

[1] https://www.ft.com/content/3173f19e-5fbc-11e4-8c27-00144feab...

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

#418

Post by imtringued »

sudosysgen wrote: post #66
awillen wrote: post #52

Earlier quoted context omitted.

So you're driving out renters, who are typically less affluent, in favor of the wealthy. Whether or not you call that success or failure depends on what you're trying to achieve, but usually these sorts of actions are trying to create housing affordability. Taking most of the supply off the market for new renters (by selling to people who can afford to buy and by incentivizing those who were already renting to stay f…

This is not how it works. Without the possibility to rent out or consolidate homeownership, the inflationary pressure on home prices collapses. You create an insane level amount of supply for homeownership on this market. An absolutely insane level. Indeed, the vast majority of increase in housing prices is because rents are so high that 7% YoY returns are possible. Without these returns, then there is no way to just…

If there are 1000 units and they are being rented out then people are more willing to move to a residence that suits their needs better. When it makes sense people move away.

Once you add rent control people might stay simply because of the low rent, even if they are fully capable of paying market rate rent. They might have to commute to the edge of town and it still is a better deal for them. You get a stagnant housing market where people rarely move. The vacancy rate goes down and instead of renters always being able to at least visit an apartment with the fair chance of competing with say 5 people at most you now have dozens of renters all looking at the same apartment. This gives the land lord more power to charge higher prices and since he has to cancel out the losses from existing rent controlled apartments he might not even have a choice and simply increases the rates when possible.

The problem is that the land lord is being put under more pressure to perform and thus he becomes more selective and only gets the "best" tenants which favors the wealthy.

Of course, all those people getting paying dirt cheap rent are happy since they benefit personally from an externality.

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

#419

Post by imtringued »

sudosysgen wrote: post #84
gruez wrote: post #78

Earlier quoted context omitted.

>This is not how it works. Without the possibility to rent out or consolidate homeownership, the inflationary pressure on home prices collapses. No, as we seen in north america that's not really true. Homes can go up on speculation alone. >You create an insane level amount of supply for homeownership on this market. An absolutely insane level. Is homeownership a necessary component of this? Creating a insane level of…

I'm not speculating at all. The article has the data to back the facts : house prices went down in Berlin. Yes, homes can go up on speculation alone, but this is a bubble that will pop. In North America, rising rents act as a backstop that prevent the bubble from popping, because of guaranteed rental incomes that protect you. It's not possible to create an insane level of supply for appartment rentals. There's two re…

>Secondly, studies have shown that 10% increases in supply lead to 1% decreases in price, more or less.

That's more than enough to justify building an infinite amount of housing.

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

#420

Post by gameman144 »

tehjoker wrote: post #349
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…

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 law dictating that newcomers should be forced away.
Post reply on HN