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Rent controls have split housing in Berlin into two distinct markets

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

#521
post #322

Earlier quoted context omitted.

There is plenty of scientific denialism on the right. Along with anti nuclear, the belief that rent control is a remotely good idea is an example of scientific denialism on the left. There are some decent arguments to be made against nuclear but rent control has always always caused more harm than good everywhere it's been tried.

100% Rent control in crises makes sense. Rent control was applied in WW2 in NYC for example. Just like rationing is a good response in a crisis, but not in "peacetime".

It's a crisis in a lot of cities where rents have outpaced wages for decades now.

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

#522
post #486

Earlier quoted context omitted.

I doubt this calculation changes whether a developer chooses $500 or $1000 countertops. New units in San Francisco are not luxury units. Few have luxury amenities like doormen.

Aren't doormen pretty much only an NYC thing, anyway?

NYC is one of the few places in the United States building truly luxurious condos. The per unit construction cost of new construction in San Francisco is probably within 20% of 100% affordable non-profit developer built subsidized housing (which runs at around $850k/unit).

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

#523
post #513
post #454

Earlier quoted context omitted.

If you only have 15 years of free pricing, then build the housing with the highest short term margins possible. If you have free pricing in perpetuity, then you can build housing that might have a lower margin near term but an overall high NPV over its lifetime.

> If you only have 15 years of free pricing What do you mean by that? Rent control in SF only applies to buildings built before mid-1979. New buildings built today, whether low-end or high-end, will not be subject to rent control now, or in 15 years. There was a 2020 ballot initiative to change that so buildings older than 15 years old could be subject to rent control on a rolling basis, but IIRC that failed. (And ev…

Not quite true. California passed statewide rent control at inflation + 5% in 2019. Now some have moved the goalposts and called that rent stabilization instead of control because it allow rents to increase.

New construction is exempt, though.

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

#524
post #470

Earlier quoted context omitted.

why is this mutually exclusive?

Rent control could technically be done by handing money to tennants to then hand to landlords, but in practice it's done by taking money away from landlords. Obviously, that's going to keep landlords from being able to give that money to construction companies. Another possible solution would be to take money away from tenants and landlords both to give directly to construction companies. That's socialized housing. H…

Is that how rent control is done in Europe? In the U.S. at least, rent control isn't taking money away from anyone. All rent control stipulates is that for the duration of your lease you cannot raise rent a certain percentage, such as 4% a year. Not having rent control allows rents to exceed earned wages for working people and pushes them to the street sooner than it pushes them out of the city.

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

#525
post #454

Earlier quoted context omitted.

If you only have 15 years of free pricing, then build the housing with the highest short term margins possible. If you have free pricing in perpetuity, then you can build housing that might have a lower margin near term but an overall high NPV over its lifetime.

I doubt this calculation changes whether a developer chooses $500 or $1000 countertops. New units in San Francisco are not luxury units. Few have luxury amenities like doormen.

Is there a functional difference between places that have a front-desk person and actual doormen, besides opening doors? Not that the former is super-common in San Francisco either, but it's at least existent.

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

#526
post #516

Earlier quoted context omitted.

Well, it's not like there's a counterfactual Venice with a market to compete with the real Venetian government. But even accepting your claim at face value, all I said was that the government paying construction companies was not likely to outperform landlords paying construction companies by that much, because the best they could do would be to get rid of the (actually quite small) cut that landlords take for themse…

First of all, it's Vienna, not Venice. And you don't need a counterfactual Vienna to compare it to cities of similar size and economic characteristics. > the best they could do would be to get rid of the (actually quite small) cut that landlords take for themselves Again, I think this claim is easily contradicted by the success of Vienna's housing market. The thing is, if you took the market as it is today, and the g…

>If you treat housing as a public good, you make decisions to keep rent prices stable, and you build more housing to serve the need rather than the profit motive.

This argument strikes me as the tail wagging the dog. Vienna has no motive to limit housing since they build such an enormous percentage of it. If rents go up because the government of Vienna doesn't build enough housing, they will be removed from office. Profit is profit. Developers will build anything and everything that they can. The issue lies in the extreme costs involved in building anything new at all, mostly in graft by local municipalities and residents. If a municipality with a broken real estate market allowed housing to be built with less effort, more housing would be built.

Forty percent of Manhattan's buildings could not be built today.

https://www.nytimes.com/interactive/2016/05/19/upshot/forty-...

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

#527
post #495

Earlier quoted context omitted.

Think more along the lines of amenities like pools, exercise rooms rather than more spartan buildings that are literally just basic apartments.

Few San Francisco new constructions have pools, and I don’t see how putting some exercise equipment in what would otherwise be a storage closet makes a building luxury. That can’t be more than a few basis points of total project cost.

Pools are a bad example for SF, but here is an example of a luxury condo built in the last few years.

I don't disagree that they don't add much to the cost, but they are high-margin offerings - people pay more rent for places that offer these.

http://38doloressf.com/amenities/

Amenities: LEED Gold certified, butterfly garden, outdoor living room with fire pit

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

#528

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…

Where would that person in that rent controlled apartment be otherwise? Chances are, on the street. Moving requires upfront capital. It requires promise of a job at the other end. If you are in a high cost of living area like NYC or CA, you might have to quit your job if you want to find a more affordable apartment; there might be absolutely nothing affordable within a three hour drive of your job of cleaning up a downtown office or working a bar, and there may be absolutely no jobs in areas that are affordable. Throw in multiple earners, as is the case of many working poor in overcrowded rent controlled apartments, and you've complicated the problem further and make it even more difficult to wind down your life in one location and wind up in another.

And let's be reasonable here, rent control is not some handout. It's not a subsidy or a tax. The price you pay on your first year in a rent controlled apartment is market rate. Rent control simply says rents cannot go up say, beyond 4% a year. Perfectly reasonable in a world where wages for the working poor rarely go up beyond 4% a year. If landlords want to make more rental income per year, they should instead lobby their city council members to allow them to build more units per parcel, rather than lobby to artificially constrain housing supply with zoning and/or red tape in effort to raise real estate values.

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

#529
post #528

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…

Where would that person in that rent controlled apartment be otherwise? Chances are, on the street. Moving requires upfront capital. It requires promise of a job at the other end. If you are in a high cost of living area like NYC or CA, you might have to quit your job if you want to find a more affordable apartment; there might be absolutely nothing affordable within a three hour drive of your job of cleaning up a do…

> Where would that person in that rent controlled apartment be otherwise?

Or, you know, New Jersey. Or some suburb. The same place younger people have to go because rent control destroyed the housing market in the city.

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

#530

Earlier quoted context omitted.

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…

Policy should instead favor constructing supply to fit new people moving in while not displacing current tenants. Extending commutes from ten minute bus rides to three hour car journeys in the name of hyperlocal market forces is neither good for the economy or the planet.
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