Can someone explain how rent control works? It seems like it only benefits long-lived tenants. In the Bay Area, every apartment I’ve signed with advertises a “1 month off” deal or some equivalent. That guarantees them the option of at least a 9% increase in rent the second year.
California Approves Statewide Rent Control
491–500 of 1001 posts
Re: California Approves Statewide Rent Control
#492Earlier quoted context omitted.
> yet supply is not rising to meet demand, largely because existing owners oppose new construction. So when over-regulation drives up prices, the appropriate response is to introduce new regulations to fight the other regulations? Because that’s exactly what this is. It won’t even improve the problem. The problem is that there are more people who want to live in California than there is housing. The reason for that i…
Talking about "regulation" doesn't really say anything. All laws, good and bad are regulation. There is regulation passed by businesses, and very few passed by citizens. When you cry about regulation, it is similar to crying about the water being wet or over having to breath. In modern society, very few things are done without regulation. Even basic rights that we take for granted, such as freedom of speech, are guar…
I’m not sure what this is supposed to contribute to the conversation. Regulations make it simply impossible for housing supply to keep up with demand in California (and lots of other places too). This point in particular is not even contentious as far as I can tell. If you want to fix the problem, the only way to do it is to relax zoning and permit regulations. Trying to fix over-regulation with more regulation will only ever make things less efficient, requiring even more regulations, ad infinitum. This has been California’s long standing policy, and not only has this never solved the problem, it’s never even been able to stop it from endlessly getting worse.
Re: California Approves Statewide Rent Control
#493Earlier quoted context omitted.
Losing an entire year of 1.2K rent breaks even with 1.7K rent after roughly 3.3 years , breaks even (1.7(x-12)=1.2x, x = 40 months). And that’s if the new tenants stay with no churn and you don’t play the same game forcing them out for another year. Had they just raised your rent $200, the break even point becomes almost 6 years. I don’t understand your landlords at all. With regard to the story before it, it sounds…
I believe part of the explanation for this is that big landlords have more ways to make money off property than just collecting rent over long periods of time due to the way buildings are valued in the commercial real estate market. Building net operating income has a direct relationship to market value; the ratio of these things gives you the capitalization rate, which tends to be known for a given type of building…
Alright, that makes sense. But can we all agree that it's a problem?
When I said there needs to be some level of control (and apparently nobody agrees), I was referring to something like the taxes put in place by local governments against foreigners buying up property, keeping it unoccupied thus creating scarcity and driving prices up.
In this particular case, the local government practically gave away building permits, changed codes, the whole town was at the developer's feet (roads closed, free traffic enforcement, less green space, redesigned roads to deal with the forecasted traffic, etc..) under the promise of building plenty of 'affordable housing'.
But when after you build it (tons of this crap https://www.bloomberg.com/news/features/2019-02-13/why-ameri...) you raise the rent for no reason and practically drive people away (I'm not saying it's gentrification, I'm saying it's well-off young professionals who are now choosing to move to a different city), the local market stops being competitive, you sit around with empty apartments, somebody went wrong somewhere. All new developments are under the ownership of two or three giant entities which have a vested interest of keeping prices very high as opposed to competing among themselves. The management companies who own these also made sure to buy a lot of the existing (crappy) apartment buildings.
The argument I was trying to make is that more housing does not necessarily solve the rent price problem, especially if the new housing is governed by a handful of large corporations. And that is usually the case.
Re: California Approves Statewide Rent Control
#494One thing I have noticed as I have become more aware is that many of our laws are aimed at trying to freeze a moment of time, often by piling on contradictory policies on top of each other. Subsidize home loans Ban new construction Ban rent increases It is no wonder why housing prices/rents continue to rise in these markets. In software engineering sometimes conclude that a rewrite is necessary. How can we completely…
Stop making housing an investment?
Is it? As I remember, real prices only started climbing sometime after 2000.
Re: California Approves Statewide Rent Control
#495I'm a renter in Oregon and I've been outspoken about this long before the laws were passed. From my experience, people who support heavy laws, regulations and taxes don't spend enough time considering potential side effects. They feel like with enough support, they can just force anything they want to happen, while completely disregarding the market. I feel like an amount of the general public just wants Big Daddy go…
The market is simply a tool. It's not infallible. It is a very powerful framework, and enables amazing things. However, left unchecked, it will also create undesirable outcomes or side effects. Negative externalities are a real thing.
In this specific case, perhaps you are right, I can't say.
But your wide-sweeping declarations and general tone reveal your own harmful ignorance.
Re: California Approves Statewide Rent Control
#496Earlier quoted context omitted.
>decommodify housing genuinely curious what would that entail, in practical steps
My guess is to implement a higher tax on properties where the owner does not live on the property, or put a limit on how many rental units a landlord can own. Something like that could dis-incentivize large tracts of rental properties.
How does that create an abundance of housing?
Re: California Approves Statewide Rent Control
#497Earlier quoted context omitted.
Except in practice people can't find affordable places with rent control because nobody is willing to leave their below market rate place. The real problem with it though is that it does not in any way fix the root cause of the problem, which is lack of supply.
The root of the problem is greed. I'm a truly free market, rent would be outlawed.
How so?
Re: California Approves Statewide Rent Control
#498Earlier quoted context omitted.
This is wrong. Because the landlords are still making money. If they were renting at a cost they would have sold their places a long time ago.
No, if they stopped making money they would convert to owner occupied as imputed rents are not controlled. Which is what happened.
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Re: California Approves Statewide Rent Control
#499There is no functioning market to begin with. Housing prices and rent are through the roof in California, yet supply is not rising to meet demand, largely because existing owners oppose new construction. Turnabout is fair play. If owners organize politically to control supply, tenants can organize politically to control prices.
Time to let half of Rome burn.
Re: California Approves Statewide Rent Control
#500Earlier quoted context omitted.
I think your illustration has failed, though, because I would very much choose b). I consider a) as an evil in the world and would avoid participating in that if at all possible. b) sounds like a really good choice for long-term investment in in sustainable society. > All else being equal Okay but all else is not equal, and in the real world, it is never equal. These thought experiments do nothing to improve conditio…
> Okay but all else is not equal, and in the real world, it is never equal. These thought experiments do nothing to improve conditions in the real world, since they are based on flawed models of how people behave. By that logic, nothing affects anything else and we should all give up trying to think or plan.
I don't agree. We know that people are not 'rational actors' that maximize personal profit at every turn, and we should not base our economics around that known false idea.
I think it is wise to produce better models with new information - not to ignore everything or to knowingly use false models. People do not - and should not - act according to those 'rational' ideas of maximum profit.