California Approves Statewide Rent Control • Hacker News Board

Re: California Approves Statewide Rent Control

#991

Post by notSupplied » Sat, Sep 14, 2019, 10:04 PM UTC

ng12 wrote: post #915

verbify wrote: post #780

Earlier quoted context omitted.

I used to think so too. Now I'm on the fence. High interest rates means people can borrow less, and has a dampening effect on house prices, low interest rates means people can borrow more, so house prices go up. Our current environment of low interest rates means that borrowing is cheap - which has pushed up prices, as now people can now afford larger mortgages. This has come at the same time as a withdrawal of mortg…

> low interest rates means people can borrow more, so house prices go up. Sure, but they go up by the amount of money you saved on the mortgage, the net price is the same. The amount homebuyers can afford to pay doesn't change with interest rates.

But it results in a higher overall level of societal leverage despite consuming the same quantity of housing.

Re: California Approves Statewide Rent Control

#992

Post by eru » Sun, Sep 15, 2019, 4:46 AM UTC

cybersnowflake wrote: post #985

eru wrote: post #972

Earlier quoted context omitted.

You are right that it is a bit weird and hard to understand why productivity differs so much. But that labour productivity (eg measured in salaries the market can bear) differs so much is a fact. Whether we like it or not. That puzzle is mostly about productivity differences for tech workers. For the baristas in the Bay Area relatively standard explanations like the Baumol effect do most of the explanatory work.

The productivity is higher because you have one of the highest concentrations in the world of big companies at the top of the field employing the best people and most resources. Not rocket science. This has nothing to do with people that think they deserve to work there (which I frankly don't get what the big deal is, you're not a teenager scoping out the best colleges anymore) but obviously the marketplace disagrees…

I'm not sure it has much to do with anyone deserving anything. It's just good for the economy if more people work in more productive places.

So if the best companies could employ more people in those places and pay them high salaries, those people would also pay high income taxes that could finance public infrastructure for the rest of the country.

Re: California Approves Statewide Rent Control

#993

Post by macspoofing » Sun, Sep 15, 2019, 11:55 AM UTC

azernik wrote: post #984

macspoofing wrote: post #971

Earlier quoted context omitted.

>Rent control that simply smooths out price increases, and loses landlords perhaps a year of the new price during sudden spikes, is pretty innocuous. Says who? You're just making things up now. >they always have the option of not keeping up with market-rate increases. Not that I think anyone will take that option. No you're just distorting words. Rent-control is a mandate. Saying it isn't a mandate because you can ju…

The essential feature of this bill is that the rate of increase allowed is well above long-term market trends. This is qualitatively different from a rent control policy that aims to keep rents perpetually below market rate. The "housing crunch" is a very general term; the specific symptom addressed by this bill is drastic increases of rent on, for example, a change of ownership of a building. See https://www.latimes…

>The "housing crunch" is a very general term; the specific symptom addressed by this bill is drastic increases of rent on

Right ... except the bill aggravates the "housing crunch". Again, you're trying to solve a small problem by magnifying the major cause of the problem you're trying to solve.

Your linked articled quotes an economists who says this will hurt people who "are upwardly mobile, striving families who are middle-income or lower-income in Irvine, who can’t afford to buy a house but where renting might be in their reach,", because:

1) "landlords who might have held rents for existing tenants at below-market rates with the knowledge they could increase them at any time might decide to hike rents every year."

2) "restrictions on rent hikes encourage owners to convert their apartments into condominiums, which removes properties from rental stock"

So, this policy makes rent broadly more expensive, and it lowers housing supply - which makes rent more expensive. Come on man.

What if you California introduced legislation that targeted the underlying cause of the rent spike ... i.e. the 'housing crunch'. This way, you can solve both problems, the housing crunch and rental spikes.

Re: California Approves Statewide Rent Control

#994

Post by jlebar » Sun, Sep 15, 2019, 6:20 PM UTC

abalone wrote: post #593

jlebar wrote: post #576

Earlier quoted context omitted.

Ruthless capitalism and fundamental human needs do not mix well. I dunno. I don't have much trouble finding reasonably priced, nutritious, and tasty food (cooked or as ingredients) anywhere I've visited in the world. Yet food is governed by ruthless capitalism, no? Surely we wouldn't argue that farm subsidies are all that's standing in the way between people getting a decent meal and chaos? What about...petroleum? Li…

Petroleum is literally exhibit number one of the failures of ruthless capitalism in that its negative externalities have led to the possibly irreversible destruction of our climate. This is not a good start to your argument. > Or a "guaranteed public option"? Or is the idea to have more of a "centrally planned" housing market, where the means of production^W^W^Whousing stock is owned by The People but decisions about…

You're saying that the system we have for oil would work but for the fact that governments don't attach a price to oil's negative externalities?

This does not seem like much of an argument against a capitalist system! I would call this a win for capitalism then, and a loss for governments sidestepping their obligations to, you know, govern.

I am the first person to agree that oil companies have used their money and influence to buy favorable regulations, putting the whole world in danger. On the other hand, this again seems like a failure of government rather than a failure of capitalism. Indeed, the powerful using their influence to protect their interests is something that has happened under every economic system ever tried, no?

>> Or a "guaranteed public option"? Or is the idea to have more of a "centrally planned" housing market [...] > Basically yes.

Are you familiar with the notion of "the projects"? I wouldn't say this turned out well for anyone...

The good news is that the major driver of cost in places like SF isn't actually the cost of building per se but instead is the cost of absurd regulations, causing it to take many years of fighting with NIMBYs just to get a permit to build anything. Solving this morass would be a huge effective subsidy to developers and would cost the public literally nothing. If you're in favor of subsidizing housing development, I hope you're in favor of starting with this?

Re: California Approves Statewide Rent Control

#995

Post by verbify » Sun, Sep 15, 2019, 10:26 PM UTC

ng12 wrote: post #990

verbify wrote: post #979

Earlier quoted context omitted.

> The amount homebuyers can afford to pay doesn't change with interest rates. The amount people can afford to pay doesn't change, but the cost of the house does change. Assume a 30 year mortgage. If the interest rate is 2%, and I spend 1.5k a month on my mortgage, I can afford a mortgage of 406,000 and own the home at the end. However, if interest rates are 10%, even if I'm still earning 1.5k a month, I can only affo…

The error in your logic is assuming the bank is going to want the same % down payment for a 2% and a 10% mortgage.

A down payment is usually a percentage of the value of the house (typically 10-20%). If the house is worth more, the down payment is higher. As I said before "effectively people who have bought before can buy another house, while those who haven't can't". A higher downpayment is yet another barrier. However those who have houses already can use their existing previous equity as a downpayment and therefore can sell their home and buy another.

This underscores the view I was promoting - that interest rates play a large part in the difficulties besetting new buyers.

Re: California Approves Statewide Rent Control

#996

Post by zepto » Mon, Sep 16, 2019, 7:48 PM UTC

fountainofage wrote: post #966

zepto wrote: post #947

Earlier quoted context omitted.

What happens when the tax liens outweigh the value of the property?

I'm trying to understand: are you saying landlords should be able to not pay property taxes on the current value, not get their property seized by the state if they don't pay property taxes, collect market rate rents from tenants, and also keep all of the profit from property value gains once they sell? But ignoring that absurdity - property taxes are usually 2% of the property value. So you'd need to what... Not pay…

Nobody is guaranteed a profit from housing.

Just like any other asset you can pay too much, buy something unsuitable, or mis-predict market forces.

Are you against private ownership of property outright?

Do you favor being taxed on the value of other things you own, how about your laptop, stove, etc?

Re: California Approves Statewide Rent Control

#997

Post by matchbok » Fri, Sep 20, 2019, 3:32 AM UTC

Jweb_Guru wrote: post #845

_gi12 wrote: post #836

Earlier quoted context omitted.

> "More housing" does not automatically translate to "affordable housing" Imagine two hypothetical cites, each with one million residents. The first one has half a million apartments, while the second one has ten million apartments. Which city would have cheaper apartments?

What city are you imagining where ten million apartments would be built with no demand for them? I'm assuming the city with ten million apartments and half a million residents is economically depressed, since that many apartments were clearly built for a much larger number of people. Here's a better question: under a realistic model of building, where building slows down when landlords and property owners feel they h…

Nobody is entitled to live in posh neighborhoods. That is a false argument.

Re: California Approves Statewide Rent Control

#998

Post by fountainofage » Fri, Sep 20, 2019, 4:50 AM UTC

zepto wrote: post #996

fountainofage wrote: post #966

Earlier quoted context omitted.

I'm trying to understand: are you saying landlords should be able to not pay property taxes on the current value, not get their property seized by the state if they don't pay property taxes, collect market rate rents from tenants, and also keep all of the profit from property value gains once they sell? But ignoring that absurdity - property taxes are usually 2% of the property value. So you'd need to what... Not pay…

Nobody is guaranteed a profit from housing. Just like any other asset you can pay too much, buy something unsuitable, or mis-predict market forces. Are you against private ownership of property outright? Do you favor being taxed on the value of other things you own, how about your laptop, stove, etc?

I'm very much for private ownership of property, not sure why you would think otherwise. All I've said is to do what just about every other state does: if your property is worth $200k, you pay $2k that year in property taxes. If it's worth $2 million, you pay $20k. This isn't hard, and it isn't controversial.

Edit: just to appeal to authority: every single legitimate economist agrees with me on this as well.

Re: California Approves Statewide Rent Control

#999

Post by Jweb_Guru » Fri, Sep 20, 2019, 6:20 PM UTC

matchbok wrote: post #997

Jweb_Guru wrote: post #845

Earlier quoted context omitted.

What city are you imagining where ten million apartments would be built with no demand for them? I'm assuming the city with ten million apartments and half a million residents is economically depressed, since that many apartments were clearly built for a much larger number of people. Here's a better question: under a realistic model of building, where building slows down when landlords and property owners feel they h…

Nobody is entitled to live in posh neighborhoods. That is a false argument.

You don't see any reason why it might be worse for someone who lives in an area, and already has a life there, to be kicked out, than it would be for someone else not to be able to move in?

Re: California Approves Statewide Rent Control

#1000

Post by thisisnotatest » Fri, Sep 20, 2019, 10:43 PM UTC

foobar1962 wrote: post #959

cycrutchfield wrote: post #759

Earlier quoted context omitted.

In a country with freedom of movement? Never. Your wishful thinking won’t change that. But by all means go ahead advocating to build housing where nobody wants to live, and continue your NIMBY policies to price people out of desirable locations.

I hear what you're saying, but can do without the NIMBY rhetoric. The discussion about "build more houses to reduce housing cost" is exactly the same as "build more highways to reduce traffic congestion" in that it doesn't work for long. What needs to happen is effort put in to make other cities and towns attractive. This could mean encouraging commerce and industry to re-locate or set up new factories or offices. It…

There are key differences between building more highways and building more dense housing.

I suspect induced demand is more of an effect with highways than housing. People can change their driving habits from day to day more easily than they can change their living habits.

Expand a highway, and more people in the area start taking more car trips on it.

Add housing, and more people don't instantly come into existence to occupy it. (Maybe, over a few years, people stop cramming themselves into crowded roommate arrangements as much, and over decades they have more kids.)

But if I granted that induced demand applied to both...

Driving is a means to an end. People stuck in traffic are suffering.

Having a home is an end in itself. People need shelter, and living near your community/job/family is a huge quality of life improvement.

Plus, when you expand a highway, strictly more mileage is created. It's not like the additional car trips in this city are taking the place of car trips in another state. It's a net loss for society and the environment.

Whereas, when you add housing, even if it induces more people to move into that city, they're moving out of some other city, easing the demand in the housing market there.