The redistribution of housing wealth caused by rent control (2023) [pdf]

From the abstract:

> 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%.

Why is this bad? Pretty much every Western society has fallen into the trap of raising property prices as a politcal imperative. People who own 1 (maybe 2) homes believe it's good for them but it only benefits very wealthy people who hoard land.

The real problem is that ever-increasing property prices destroys the fabric of society. It's a wealth transfer from the next generation to older and wealthier people that creates a drain on their entire lives. It's justified by people arguing the current young people will be able to do that to the generation after them. But this can't go on forever.

Want to know why eating out is so expensive? Why third spaces have disappeared? Why basically everything has gotten expensive? it's housing prices. Commercial rent is an input into everything that you buy. Higher costs mean higher wages that need to be paid, which is also an input into everything you need to buy. And the only one who is winning out of all of this is the landlord. If the commercial rent is too low well then it'll get torn down or converted into residential real estate because that's more profitable.

You know who realized this? Xi Jinping [1]:

> Houses are for living, not for speculation

So the Chinese property speculation bubble was quietly popped a decade ago and Chinese real estate has been in a severe and prolonged recession ever since as the market corrects. What's funny is media coverage points this out like it's a problem. It's not. It's intentional.

And if you think that's a purely socialist/communist idea, tell that to Adam Smith [2]:

> As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed and demand a rent even for its natural produce.

He had this in common with Mao [3].

So if Marxists, Leninists, Maoists and capitalists all agree that landlords are parasitic, what are we doing?

There's a British former wealth manager and economist named Henry Fudge who has done the math on how the housing market is a "rentier black hole" (as he describes it) on the UK economy and has hollowed out manufacturing as an inevitable consequence when returns on housing exceed all asset classes. It becomes a self-fulfilling prophecies and housing enjoys significant tax advantages and government protections. He calls it The Housing Theory of Everything [4].

Rent control is a bandaid. The solution here is for the government to become a significant provider of housing, as is the case in Vienna [5] and to stop treating housing as a speculative asset. Attacks on rent control are generally a thinly-veiled effort to increase landlord profits however.

We're rapidly re-inventing feudalism here with 1 (and soon more to come I'm sure) trillionaire who will increasingly hoard all the land and assets, leaving the rest of us as impoverished tenant workers who own nothing. Most call this neofeudalism for this reason.

[1]: https://en.wikipedia.org/wiki/Houses_are_for_living,_not_for...

[2]: https://www.prosper.org.au/geoists-in-history/adam-smith-on-...

[3]: https://thirdworldtruth.medium.com/not-just-mao-but-adam-smi...

[4]: https://henryfudgeofficial.substack.com/p/the-housing-theory...

[5]: https://www.theguardian.com/lifeandstyle/2024/jan/10/the-soc...

> In theory landlords would be looking to petition for eviction but that's usually not what happens.

For a small time landlord, a good tenant is worth their weight in gold. It's not worth chasing out a reliable tenant you have a good history with just to try to squeeze a few extra bucks out of the property.

> To build high-density housing, the city or state would have to buy out the existing landowners

Couldn't they just change the zoning to allow for greater density?

The properties become more valuable, some would want to develop, and some would sell to those developers. Moreso over time.

I think your model is off. If single family homes got rezoned to allow large complexes near trains, those plots of land would be worth more and it would likely be worth it for the people living there to eventually sell to developers. This doesn't require the city or state buying anyone out.

In the greater boston area NIMBY's are incredibly effective and will pull out every stop. I.e. instead of designating normal areas as multifamily, they will designate a portion of a golf course as multi family so you'd have to buy out the whole golf course [1].

It really is sad MA is 50/50 in housing produciton per capita [2]. Despite being severely under built and very desirable place to live, and then everyone pretends to be progressive. Michelle Wu in Boston uses "affordable housing" to bring all residential construction to a halt.

[1]. https://www.cbsnews.com/boston/news/marblehead-david-modica-...

[2]. https://x.com/JohnEDeaton1/status/1988753789076062606

Laughable the one thing that all the English speaking capitalistic countries share today is that most of its citizens most of whom don’t have rent control by the way are headed for a lifetime of being a renter all their life.

They are also headed towards paying more than 50% of whatever income they make to rent that’s the United States, Canada, Great Britain, Australia, New Zealand, and Ireland.

I can’t speak for the other countries, but in United States, the so-called luxury apartment is in fashion, and there is nothing luxury about them, except for the amount of money you will be charged to live there.

The shortage of affordable housing has nothing to do with rent control because over most of the country there is no real rent control effective rent control.

America is the land of luxury apartments currently popping up everywhere. What is also ironic is the fact that there are very few states that have anything like Prop 13 in California, which took a ballot initiative passed by the electorate and was not passed by the legislator’s who supposedly represent the people in short, there will be nothing forthcoming for the majority of people across the country. It’s sink or swim for most you are on your own in poverty.