61–70 of 161 posts
If the construction strike by commercial investors is replaced by public housing then the better outcome can emerge.
Earlier quoted context omitted.
How do you quantify "incentive"? Is a landlord really looking at 5% lower property value and deciding it's not worth investing? Is this even true in aggregate?
Well, there's 2 ways to become a landlord: to buy a house or to build a house. I was focused only on the second way. The cost of the wood and the labor needed to build the house is unaffected by the rent control, so if cost remains the same, but the reward (or "revenue") from building the house decrease from $100K to $95K, then fewer houses will get built.
When supply is constrained by the availability of builders and materials, then some landlords dropping out won’t make a lot of difference there.
> This paper studies the effects of rent control on the housing wealth of renters, landlords, and homeowners. Over the nine months following the passage of rent control in St. Paul, Minnesota in 2021, average property values fell by 4.4% to 5.8%. This seems like too short-term a study. The argument against artificially holding prices down is that people won't produce as much as they would otherwise and people won't b…
Artificially holding down rents will result in housing shortages. The lower the rent controlled price, the worse the shortage.
If the rent goes too low, the building owner will stop doing maintenance. Eventually, the building gets abandoned.
One effect of rent-control that I have observed in San Francisco is that well-off people get into baller apartments with the intention of keeping them forever. Over time the rental rate gets inflated away to almost nothing, the person buys a mansion in suburbia, keeping their rent controlled penthouse as a pied-a-terre. In theory landlords would be looking to petition for eviction but that's usually not what happens.
> In theory landlords would be looking to petition for eviction but that's usually not what happens. Are landlords allowed to increase rents when the tenant changes? If so then yes, I would expect them to do so, so if they don't, there needs to be some other explanation. If they don't, then obviously they'll prefer to keep their long-term, pays-on-time, probably-not-wrecking-the-place existing tenant.
People like to look at rent control from a purely economic lens, but the sociopolitical aspect must also be considered. A suboptimal economic outcome might actually be optimal when all factors are considered. Social harmony and a feeling of hope for underprivileged residents are hard to value, but we must admit that they do have value.
They create a strong incentive to keep a flat indefinitely. It's not unheard of for a person to continue renting a rent frozen apartment after they buy a house because the rent is so cheap - effectively it's a second home.
There's also plenty of corruption. "Knowing a guy" is one of the best ways to get a rent controlled unit since the wait time can be years.
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The current cohort of renters wins. All future renters lose, because the rent-controlled apartments are never re-leased. People sit on them forever. Price ceiling is the surest way in economics to create a shortage.
Surely they are more likely to sell if they can never be leased profitably? This would put that capital to better use.
Your assumption there is also that the class of ‘renters’ is homogenous and wants to rent. In some cities there is a significant class of people who are forced into continuing with renting because of supply constraints on homes for sale, which are exacerbated by landlords with superior access to leverage buying up stock and pushing up prices. In this situation the landlords actually create their own market.
A comparative shortage of rental properties and of landlords could be very desirable, as it implies more owner-occupiers.
It also implies more capital flowing out of real-estate and into productive industry, which one would assume is also desirable for a thriving economy.
https://news.ycombinator.com/item?id=48524204
Don't use Twin Cities property values in the early 2020s to draw conclusions about anything related to policy or economics. What you're actually measuring is the after shock of race riots.
Also, RHAWA is a landlord lobbying group.
> This paper studies the effects of rent control on the housing wealth of renters, landlords, and homeowners. Over the nine months following the passage of rent control in St. Paul, Minnesota in 2021, average property values fell by 4.4% to 5.8%. This seems like too short-term a study. The argument against artificially holding prices down is that people won't produce as much as they would otherwise and people won't b…
The key to understanding the effects of rent control is understanding the Law of Supply and Demand. Artificially holding down rents will result in housing shortages. The lower the rent controlled price, the worse the shortage. If the rent goes too low, the building owner will stop doing maintenance. Eventually, the building gets abandoned.
Dear reader, never believe anyone who says a serious societal problem is "just" anything. Especially on the internet when they use merely a pesudonym to assert their authority.
Especially when the person behind the pseudonym is a one-time washed-out author desperately clinging to their housing stock in Atherton.
Earlier quoted context omitted.
> But I doubt the impacts of rent control would appear in the market this quickly, it'd take years for the market signals to be measurable. Hard disagree. Rational investors have no problem whatsoever projecting the impact to future cash flows and adjusting the amount they're willing to pay now. That's like saying the stock market wouldn't respond quickly to changes in next year's tax law.
I think you're wildly overestimating the rationality of investors.
> This paper studies the effects of rent control on the housing wealth of renters, landlords, and homeowners. Over the nine months following the passage of rent control in St. Paul, Minnesota in 2021, average property values fell by 4.4% to 5.8%. This seems like too short-term a study. The argument against artificially holding prices down is that people won't produce as much as they would otherwise and people won't b…
The key to understanding the effects of rent control is understanding the Law of Supply and Demand. Artificially holding down rents will result in housing shortages. The lower the rent controlled price, the worse the shortage. If the rent goes too low, the building owner will stop doing maintenance. Eventually, the building gets abandoned.
It will increase the price for new comers, lower the quality of buildings due lack of maintenance funding, and decrease new construction.
Rental control is NIMBY for renters who are already there.