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Why Rent Control Doesn't Work

116 points by MagicPropmaker 7y ago

irq11 7y ago
This is a good discussion of rent control, even though the title is unfortunately click-baitey. The great thing about this episode is that it actually does something that most popular discussions of rent control don’t do: it acknowledges that it does work, for the rent controlled people. It also acknowledges that the harms of rent control are smaller, and spread across a large number of people (which is why rent control policies are popular).
- LanceH 7y ago
  It does work for those renting. Whether those are who it needs to work for gets greatly distorted as time goes by. The cost is also not widely distributed, but can fall heavily on the property owner.
  - kungfoodog 7y ago
    One anecdotal example of this - my sister, lives in SF, near market in a rent controlled apartment paying ~$2200 for a single bedroom. She is a director at a tech company making high 300k - 400k a year depending on bonus etc - so obviously doesn't need rent control to have a roof over her head. Recently her job moved to South Bay (Palo Alto) but she refuses to move cause she can't let go of the "great deal" in the city. Way I see it - everyone is hurting - she, cause of he horrible commute, but can't let go of the "great deal", someone who probably really deserves that apartment/rent, the landlord, the environment. I know just one anecdotal example and I am sure there are many other examples on the other side where rent control helps. But to me, it looks like rent control really distorts the market way too much to be an effective solution to the housing crisis.
    - around_here 7y ago
      She leaves, and some also wealthy person gets to pay way more for it. The also wealthy landlord gets to get way too much for it. I'm happier to watch the owners of capital hurt for it. Decommodify housing. Full stop, no rents. Housing by need.
      - fenk85 7y ago
        I recommend you take a trip to any Russia (ex Soviet city)
      - bzbarsky 7y ago
        Who gets to determine the need? I've lived, though as a child, in a place where housing was distributed "by need" -- the USSR, though even then in the 80s things were liberalizing some. It was, in retrospect, a horrible combination of corruption, underinvestment in housing, and what would in the modern West be considered terrible living conditions.
- flukus 7y ago
  > it does work, for the rent controlled people And anyone relying on their labor. If the cost of living goes up for those people then the cost of other things go up. It's in everyone's interest that cheap housing is available (by some means or other), but lately we've all been sacrificing for the literal rent seekers.
  - scarface74 7y ago
    Or both businesses and employees could move to other parts of the country where it is cheaper.
    - flukus 7y ago
      An leave everyone else without local goods and services? It would make sense for software shops to move, but the grocery store and the people stacking it's shelves need to be where the population is.
      - scarface74 7y ago
        As people left, the cost of housing would come down as demand decreased. If people owning the stores saw they couldn’t make a profit there, they would not open businesses. People wanting the goods and services wouldn’t be happy with what is available and they would leave.
deepsun 7y ago
Well, economists said similar things before the Great Depression. But market couldn't fix it, so government had to basically redistribute tax money "from rich to poor". Yes, there were mega-projects like Hoover dam, but the main idea was to give poor some money to buy the goods. I don't have opinion on rent control in question, but I can see it as yet another form of redistributing money "from rich to poor". Every single revolution happened because of income disparity, so I can see it as a form of loosening that tension a bit. Whether it works -- I don't know.
- autokad 7y ago
  capitalism probably was not the cause of the depression, its also worth noting that arguably none of those "from rich to poor" things worked, and arguably it was the end of WW2 that ended it. i myself am in a rare camp that believe the great depression was caused by a decline in population blip created from ww1/spanish flu. the pattern seems rather consistent, you first have a boom (roaring 20s) followed by a difficult / if not impossible to end depression - like Japan as well. but I'm in a rare camp, so don't take my opinion for a grain of salt.
- bhl 7y ago
  You're onto something. The thing that got the United States out of the Great Depression and into 20 years of prosperity between mid 1940s and late 1960s was the Federal government's massive involvement in the economy, mainly during World War 2 and afterwards. Surprisingly, Roosevelt's attempt to boost the economy with public works in the 1930s didn't help much. If you look at charts around this time, economic inequality was decreasing and the median wage was growing linearly with productivity. It was also during this time that rent control was implemented as a public policy (mentioned in the podcast).
- rahimnathwani 7y ago
  "I can see it as yet another form of redistributing money "from rich to poor" Except that rent control is not usually means tested. If you've lived in a rent-controlled apartment in SF for 10 years, and worked as a software engineer all that time, you might choose to stay put even if you buy an apartment. You can pay rent at slightly above prices from 10 years ago, and receive market rent on your new place.
avs733 7y ago
I lost respect for freakonomics and their analysis a while ago. What I used to find pointed and creative I now see as willfully ignoring elemebts of reality to come to some conclusion that is notable mostly for it's faux-contrarian 'creativity.' they, along with Malcolm Gladwell, some take a complex issue...use complexity to dismiss existing reductivist solutions...and then substitute their own equally reductivist conclusion. Add in that suddenly after Koch industries became a sponsor of their radio show/podcast they did a total softball interview of one of the Koch brothers with no disclaimer that they were a sponsor
- jahewson 7y ago
  I enjoyed the Charles Koch interview, sure it wasn't hard-hitting journalism - it was about him and personal philosophy. I hadn't heard about the sponsorship but it turns out that's because it's not true: https://twitter.com/freakonomics/status/938505933508038658?lang=en https://twitter.com/freakonomics/status/938505933508038658?l...
- CrowFly 7y ago
  Hey @dang -- given that what "avs733" says is completely untrue and it is a lie meant to damage the people behind Freakonomics, can you 1.) Remove this parent post and 2.) Ban this user for intentionally spreading malicious lies. Thank you. https://twitter.com/freakonomics/status/938505933508038658?lang=en https://twitter.com/freakonomics/status/938505933508038658?l...
- MagicPropmaker 7y ago
  This > Add in that suddenly after Koch industries became a sponsor of their radio show/podcast they did a total softball interview of one of the Koch brothers with no disclaimer that they were a sponsor is simply untrue. https://twitter.com/freakonomics/status/938505933508038658?lang=en https://twitter.com/freakonomics/status/938505933508038658?l... What's your agenda? Who pays you?
- hindsightbias 7y ago
  They always put the glib in glibertarian. Particularly liked their take on climate change: “sure it exists, but there’s no way governments can solve the problem - but if we give corporations trillions and trillions of dollars we can engineer a solution”
neilwilson 7y ago
Supply side markets work when they defeat the power of hoarding. Pick any market, and if sitting on the item makes you money in the long term, rather than putting it to use then you have a monopoly problem of some sort. For a market to work, it must always be the case that using the item to cause some socially useful economic flow to happen is more profitable than sitting on it, or trading your hoard with other hoarders. Ideally you go bust quickly if you sit on it, much as you would with perishable goods. When you apply that view to housing services you find that the power to exclude is the hoard that needs defeating. Keeping an apartment empty and outside the housing services supply market should be cripplingly expensive. Ask yourself this. What's the market force that drives rent prices down and is it equivalent in force to that which drives rent prices up? People need housing to live, but housing only needs people if there is a chance of a profit.
- skybrian 7y ago
  Calling it "hoarding" doesn't seem right unless there are both high vacancy rates and strong demand. How often is that the case?
  - ToFundorNot 7y ago
    Currently? at least Vancouver, and possibly Toronto. I don't know about other markets. It's roughly 4.3% of Vancouver's housing stock[1] Toronto has roughly 23% [2] of its for sale stock vacant, unfortunately there have been no openly published numbers on total vacancies. [1]https://www.cbc.ca/news/canada/british-columbia/empty-homes-tax-not-helping-rental-crisis-generating-millions-more-for-vancouver-report-1.4925994 https://www.cbc.ca/news/canada/british-columbia/empty-homes-... [2]https://www.narcity.com/ca/on/toronto/news/a-shocking-number-of-houses-in-toronto-are-completely-empty-heres-why https://www.narcity.com/ca/on/toronto/news/a-shocking-number...
- stickfigure 7y ago
  Keeping an apartment empty ... should be cripplingly expensive. It is? I mean, if you owned an apartment that could rent for $3000/mo, then keeping it empty is a direct reduction of your income by $3000/mo. The problem seems to be that offering an apartment under a rent control regime creates an opportunity cost, so maybe the owner thinks it's worthwhile to "spend" $3k/mo to achieve a future return some other way.
xrd 7y ago
This is an interesting conversation. As others have said, this article does indicate rent control works for the renters. What are the arguments about who it doesn't work for? I've heard landlords angry about this kind of thing in Oregon but never heard them complain about the values of their properties skyrocketing. It's human nature to only see the downside. But, is the solution to make these rent controls temporary? Is the big problem, as the article suggests, that the laws don't adapt to the dynamic nature inherent to cities? Could blockchain solve this? Joking!
- orangecat 7y ago
  this article does indicate rent control works for the renters Current renters. Future renters get locked out. What are the arguments about who it doesn't work for? By discouraging development, it creates an environment where the only people who can afford housing are the rent control lottery winners, and the very wealthy who can outbid everyone else for the few remaining units. In other words, San Francisco.
  - repsilat 7y ago
    It also discourages downsizing. If you're old and retired, and want to move into a house that's a bit smaller now that your kids have moved out, maybe you can't afford to because it would mean paying more in rent than you do currently. This can exacerbate (or cause) shortages.
    - xrd 7y ago
      I would argue this is actually a separate thing. Rent control does one thing. Zoning laws like they have in SF that prevent building more dense structures prevent people from selling in one area and then finding a new property that is much smaller in the same area. The combination of rent control and NIMBY zoning laws makes downsizing challenging.
  - geezerjay 7y ago
    > (...) creates an environment where the only people who can afford housing are the rent control lottery winners, and the very wealthy who can outbid everyone else for the few remaining units. In other words, San Francisco. I would also add that it also creates the ideal environment for corruption and organized crime, as bribing decision-makers becomes the only way for some to have access to desirable housing. Supply and demand always works, and if those with a higher purchasing power are in the race then their highet offers are extended through side-channels.
skybrian 7y ago
Note that Oregon's new rent control law is at 7% + inflation per year which seems like a very mild restriction and unlikely to cause bad long-term effects? I would guess this only guards against sudden, extreme increases; eventually, someone on fixed income will have to move somewhere cheaper, but at least they know what's coming and have some time to figure it out. It seems unlikely these studies say very much about mild rent control.
- imtringued 7y ago
  It would definitively have better outcomes but I don't think it would be politically acceptable. 7% means doubling rent every 10 years. Building more housing within those 10 years to prevent excessive increases in rent is certainly possible but will it actually happen? The type of government that uses rent control doesn't actually want to take it's medicine (more housing). They just want a quick win even if it causes problems over the long term.
aliswe 7y ago
TL;DR version: Rent control keeps overall rents artificially high by disincentivizing new construction. Correct?
- ptaipale 7y ago
  In addition, it encourages inefficient use of existing housing.
  - aliswe 7y ago
    Like me not finding incentive for renting out my existing apartment when I'm out of town?
    - ptaipale 7y ago
      Not really a problem. A more significant thing is not finding incentive to move to a 2-room apartment after kids have grown up, because regulated price of your 6-room apartment is same as the 2-room would be.
memoir2comment 7y ago
* SF: has rent control, prices go up. * Cambridge: removes rent control, prices go up. How do you show the causal relationship? Seems like there's constrained housing supply everywhere.
- imtringued 7y ago
  Why look at the price rather than the population/housing capacity growth? If you have housing for 500000 residents and 600000 looking for housing or living in the city then prices will go up simply because demand outstrips supply as you said. The demand probably grows every single year. Rent goes up because people can afford it, so this is actually not a problem that needs to be solved. What needs to be solved is the fact that 100000 people cannot find a place in the city at all. No matter how low or high the price of rent is, you will always have a shortage of 100000 units if you're not increasing the supply.
esotericn 7y ago
The idea of renting a property as a long-term solution to remaining on a specific plot of land fundamentally makes no sense. A five or ten year fixed lease, if you can negotiate one, might. It's completely unsurprising that on a year-by-year lease the rent might rise and you may want to move out. That's what a 1 year lease _is_. All of the emotional pandering surrounding that is simply unnecessary. If you want to live somewhere for an extended period you either need a long lease or to buy a place. That's not a politically popular viewpoint for reasons I can't quite understand.
- MsMowz 7y ago
  That's not a popular opinion because it's functionally the same as saying only the people who can afford to buy a home or enter a long-term lease should have access to affordable, stable housing. Since politics is about who gets what, and since most people don't have much in terms of savings or leverage, it's in the interest of most people to oppose your viewpoint because it's against their interests. It's only emotional pandering if you don't think politics should be a useful instrument to people without money.
  - esotericn 7y ago
    Yes, only people who can afford to enter into a long term lease have access to stable housing. There is no "should" here. It's definitional. That's literally what a long lease is, as opposed to a short lease. > It's only emotional pandering if you don't think politics should be a useful instrument to people without money. It's emotional pandering because it's devoid of actual logic. You've injected the 'people without money' bit here as if it's relevant when actually this is a matter that affects everyone.
    - pixl97 7y ago
      >The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread. One should realize that politics can be used to cement long terms societal stability, and not just make one rich as fast as possible.
bradleyjg 7y ago
As a resident of NYC I’m all for getting rid of rent control (stabilization) but I have to say that it leaves a sour taste in my mouth to just hand over a windfall to landlords that bought buildings while rent control was in place and accordingly paid a lower price. Maybe some kind of rent control buyout program would make more sense.
- brianwawok 7y ago
  What happened to all the landlords who owned a building when rent controlled was first introduced? Most got stuck with a huge future loss. Seems weird to subsidize one side but not the other.
  - bradleyjg 7y ago
    They are long dead. How does it make any sense to give a windfall to a group of owners far removed in time and ownership to “balance” that?
    - brianwawok 7y ago
      That's not my argument ;) My argument is that is why you don't give landlords a one time cash payment when you end rent control. You are making someones property worth MORE, paying them is giving them a double win.
      - bradleyjg 7y ago
        Ah I see. I meant that landlords would have to buyout of rent control with a one time payment not get paid.
hackeraccount 7y ago
Rent control is government setting the price on a good. I've always thought that price is metadata about a good or a service. Changing the price doesn't change that reality - it just hides it. If the rent is too high why not just give people money and let them spend it on rent? That's probably idiotic but it makes more sense to me then telling the people renting out units that they have to charge a certain amount. At least in this case you still have a price signal - though if you toss money like it's nothing at a problem you tend to get inflation especially if you give people money and tell them they have to spend it on a single good. A better fix is to increase the supply of housing and to the extent it's possible lower the fixed costs for building. If there's more of it the price will go down. I understand the argument that says "If we let them build more they'll only build for rich people" Sure. My answer to that is let them build more. It will take time but eventually the supply of units for non rich people will increase and when it does the price will go down. That's all easy to say but I doubt any of that will happen.
- aeternus 7y ago
  >If the rent is too high why not just give people money and let them spend it on rent? This doesn't work because the money will go straight to landlords. Rent prices simply increase across the board. There's even an argument that indirect improvements, like building parks and improving infrastructure, generally does not benefit renters since it drives rental prices up. Landlords reap the majority of the benefit. Building more would definitely help, but that is directly against the interest of existing landlords. They will fight it hard since it will generally erode their views and decrease their property value. We really need a solution that incentivizes higher density where there is high demand.
gumby 7y ago
If you consider an economy as a dynamic, rather than static system, then there can be a place for a form of rent control that functions like a dashpot. People have trouble dealing with high-speed changes in their situation, especially many such changes, so wild swings of rent etc turn into stressful high-speed chop. When you think of a city's economy as a static system you can tell yourself that you can predict the result of fixing a single variable (e.g. rent in this case). Of course over time it has results you might not have anticipated, and results that are hard to fix due to hysteresis (e.g. rents go up slowly, so buildings are not maintained, and suddenly you get to the point of a lot of derelict buildings and no tax base proportional to your maintenance needs).
cafard 7y ago
"And the most recent paper has shown that crime has gone down — particularly, street crime has gone down right after the elimination of rent control in Cambridge." Is that because the removal of rent control caused a net loss of the poor in Cambridge? Certainly not all of those who'd have a hard time affording Cambridge were committing crimes.
olliej 7y ago
I used to be against rent control, but when I found that in CA there is a constitutional amendment that prohibits the government from increasing the taxable valuation of property by more than 2% per year I became strongly pro it. If you want to increase rent costs by more than 2% you’re acknowledging that your property value has increased by more than 2% and you should pay taxes on that. But the tax valuation can’t increase by more than 2% so you shouldn’t be able to increase your rent by more either. So I’d favour something strong than rent control (that only applies to continuous residents), I’d say that no rent, lease, or similar arrangement can increase at a rate of more than 2% (or whatever the limit on increases property taxes is) year on year, irrespective of occupancy, or changes in tenants.

This is a good discussion of rent control, even though the title is unfortunately click-baitey. The great thing about this episode is that it actually does something that most popular discussions of rent control don’t do: it acknowledges that it does work, for the rent controlled people. It also acknowledges that the harms of rent control are smaller, and spread across a large number of people (which is why rent control policies are popular).

LanceH 7y ago
It does work for those renting. Whether those are who it needs to work for gets greatly distorted as time goes by. The cost is also not widely distributed, but can fall heavily on the property owner.
- kungfoodog 7y ago
  One anecdotal example of this - my sister, lives in SF, near market in a rent controlled apartment paying ~$2200 for a single bedroom. She is a director at a tech company making high 300k - 400k a year depending on bonus etc - so obviously doesn't need rent control to have a roof over her head. Recently her job moved to South Bay (Palo Alto) but she refuses to move cause she can't let go of the "great deal" in the city. Way I see it - everyone is hurting - she, cause of he horrible commute, but can't let go of the "great deal", someone who probably really deserves that apartment/rent, the landlord, the environment. I know just one anecdotal example and I am sure there are many other examples on the other side where rent control helps. But to me, it looks like rent control really distorts the market way too much to be an effective solution to the housing crisis.
  - around_here 7y ago
    She leaves, and some also wealthy person gets to pay way more for it. The also wealthy landlord gets to get way too much for it. I'm happier to watch the owners of capital hurt for it. Decommodify housing. Full stop, no rents. Housing by need.
    - fenk85 7y ago
      I recommend you take a trip to any Russia (ex Soviet city)
    - bzbarsky 7y ago
      Who gets to determine the need? I've lived, though as a child, in a place where housing was distributed "by need" -- the USSR, though even then in the 80s things were liberalizing some. It was, in retrospect, a horrible combination of corruption, underinvestment in housing, and what would in the modern West be considered terrible living conditions.
flukus 7y ago
> it does work, for the rent controlled people And anyone relying on their labor. If the cost of living goes up for those people then the cost of other things go up. It's in everyone's interest that cheap housing is available (by some means or other), but lately we've all been sacrificing for the literal rent seekers.
- scarface74 7y ago
  Or both businesses and employees could move to other parts of the country where it is cheaper.
  - flukus 7y ago
    An leave everyone else without local goods and services? It would make sense for software shops to move, but the grocery store and the people stacking it's shelves need to be where the population is.
    - scarface74 7y ago
      As people left, the cost of housing would come down as demand decreased. If people owning the stores saw they couldn’t make a profit there, they would not open businesses. People wanting the goods and services wouldn’t be happy with what is available and they would leave.

deepsun 7y ago

Well, economists said similar things before the Great Depression. But market couldn't fix it, so government had to basically redistribute tax money "from rich to poor". Yes, there were mega-projects like Hoover dam, but the main idea was to give poor some money to buy the goods. I don't have opinion on rent control in question, but I can see it as yet another form of redistributing money "from rich to poor". Every single revolution happened because of income disparity, so I can see it as a form of loosening that tension a bit. Whether it works -- I don't know.

autokad 7y ago
capitalism probably was not the cause of the depression, its also worth noting that arguably none of those "from rich to poor" things worked, and arguably it was the end of WW2 that ended it. i myself am in a rare camp that believe the great depression was caused by a decline in population blip created from ww1/spanish flu. the pattern seems rather consistent, you first have a boom (roaring 20s) followed by a difficult / if not impossible to end depression - like Japan as well. but I'm in a rare camp, so don't take my opinion for a grain of salt.
bhl 7y ago
You're onto something. The thing that got the United States out of the Great Depression and into 20 years of prosperity between mid 1940s and late 1960s was the Federal government's massive involvement in the economy, mainly during World War 2 and afterwards. Surprisingly, Roosevelt's attempt to boost the economy with public works in the 1930s didn't help much. If you look at charts around this time, economic inequality was decreasing and the median wage was growing linearly with productivity. It was also during this time that rent control was implemented as a public policy (mentioned in the podcast).
rahimnathwani 7y ago
"I can see it as yet another form of redistributing money "from rich to poor" Except that rent control is not usually means tested. If you've lived in a rent-controlled apartment in SF for 10 years, and worked as a software engineer all that time, you might choose to stay put even if you buy an apartment. You can pay rent at slightly above prices from 10 years ago, and receive market rent on your new place.

avs733 7y ago

I lost respect for freakonomics and their analysis a while ago. What I used to find pointed and creative I now see as willfully ignoring elemebts of reality to come to some conclusion that is notable mostly for it's faux-contrarian 'creativity.' they, along with Malcolm Gladwell, some take a complex issue...use complexity to dismiss existing reductivist solutions...and then substitute their own equally reductivist conclusion. Add in that suddenly after Koch industries became a sponsor of their radio show/podcast they did a total softball interview of one of the Koch brothers with no disclaimer that they were a sponsor

jahewson 7y ago
I enjoyed the Charles Koch interview, sure it wasn't hard-hitting journalism - it was about him and personal philosophy. I hadn't heard about the sponsorship but it turns out that's because it's not true: https://twitter.com/freakonomics/status/938505933508038658?lang=en https://twitter.com/freakonomics/status/938505933508038658?l...
CrowFly 7y ago
Hey @dang -- given that what "avs733" says is completely untrue and it is a lie meant to damage the people behind Freakonomics, can you 1.) Remove this parent post and 2.) Ban this user for intentionally spreading malicious lies. Thank you. https://twitter.com/freakonomics/status/938505933508038658?lang=en https://twitter.com/freakonomics/status/938505933508038658?l...
MagicPropmaker 7y ago
This > Add in that suddenly after Koch industries became a sponsor of their radio show/podcast they did a total softball interview of one of the Koch brothers with no disclaimer that they were a sponsor is simply untrue. https://twitter.com/freakonomics/status/938505933508038658?lang=en https://twitter.com/freakonomics/status/938505933508038658?l... What's your agenda? Who pays you?
hindsightbias 7y ago
They always put the glib in glibertarian. Particularly liked their take on climate change: “sure it exists, but there’s no way governments can solve the problem - but if we give corporations trillions and trillions of dollars we can engineer a solution”

neilwilson 7y ago

Supply side markets work when they defeat the power of hoarding. Pick any market, and if sitting on the item makes you money in the long term, rather than putting it to use then you have a monopoly problem of some sort. For a market to work, it must always be the case that using the item to cause some socially useful economic flow to happen is more profitable than sitting on it, or trading your hoard with other hoarders. Ideally you go bust quickly if you sit on it, much as you would with perishable goods. When you apply that view to housing services you find that the power to exclude is the hoard that needs defeating. Keeping an apartment empty and outside the housing services supply market should be cripplingly expensive. Ask yourself this. What's the market force that drives rent prices down and is it equivalent in force to that which drives rent prices up? People need housing to live, but housing only needs people if there is a chance of a profit.

skybrian 7y ago
Calling it "hoarding" doesn't seem right unless there are both high vacancy rates and strong demand. How often is that the case?
- ToFundorNot 7y ago
  Currently? at least Vancouver, and possibly Toronto. I don't know about other markets. It's roughly 4.3% of Vancouver's housing stock[1] Toronto has roughly 23% [2] of its for sale stock vacant, unfortunately there have been no openly published numbers on total vacancies. [1]https://www.cbc.ca/news/canada/british-columbia/empty-homes-tax-not-helping-rental-crisis-generating-millions-more-for-vancouver-report-1.4925994 https://www.cbc.ca/news/canada/british-columbia/empty-homes-... [2]https://www.narcity.com/ca/on/toronto/news/a-shocking-number-of-houses-in-toronto-are-completely-empty-heres-why https://www.narcity.com/ca/on/toronto/news/a-shocking-number...
stickfigure 7y ago
Keeping an apartment empty ... should be cripplingly expensive. It is? I mean, if you owned an apartment that could rent for $3000/mo, then keeping it empty is a direct reduction of your income by $3000/mo. The problem seems to be that offering an apartment under a rent control regime creates an opportunity cost, so maybe the owner thinks it's worthwhile to "spend" $3k/mo to achieve a future return some other way.

xrd 7y ago

This is an interesting conversation. As others have said, this article does indicate rent control works for the renters. What are the arguments about who it doesn't work for? I've heard landlords angry about this kind of thing in Oregon but never heard them complain about the values of their properties skyrocketing. It's human nature to only see the downside. But, is the solution to make these rent controls temporary? Is the big problem, as the article suggests, that the laws don't adapt to the dynamic nature inherent to cities? Could blockchain solve this? Joking!

orangecat 7y ago
this article does indicate rent control works for the renters Current renters. Future renters get locked out. What are the arguments about who it doesn't work for? By discouraging development, it creates an environment where the only people who can afford housing are the rent control lottery winners, and the very wealthy who can outbid everyone else for the few remaining units. In other words, San Francisco.
- repsilat 7y ago
  It also discourages downsizing. If you're old and retired, and want to move into a house that's a bit smaller now that your kids have moved out, maybe you can't afford to because it would mean paying more in rent than you do currently. This can exacerbate (or cause) shortages.
  - xrd 7y ago
    I would argue this is actually a separate thing. Rent control does one thing. Zoning laws like they have in SF that prevent building more dense structures prevent people from selling in one area and then finding a new property that is much smaller in the same area. The combination of rent control and NIMBY zoning laws makes downsizing challenging.
- geezerjay 7y ago
  > (...) creates an environment where the only people who can afford housing are the rent control lottery winners, and the very wealthy who can outbid everyone else for the few remaining units. In other words, San Francisco. I would also add that it also creates the ideal environment for corruption and organized crime, as bribing decision-makers becomes the only way for some to have access to desirable housing. Supply and demand always works, and if those with a higher purchasing power are in the race then their highet offers are extended through side-channels.

skybrian 7y ago

Note that Oregon's new rent control law is at 7% + inflation per year which seems like a very mild restriction and unlikely to cause bad long-term effects? I would guess this only guards against sudden, extreme increases; eventually, someone on fixed income will have to move somewhere cheaper, but at least they know what's coming and have some time to figure it out. It seems unlikely these studies say very much about mild rent control.

imtringued 7y ago
It would definitively have better outcomes but I don't think it would be politically acceptable. 7% means doubling rent every 10 years. Building more housing within those 10 years to prevent excessive increases in rent is certainly possible but will it actually happen? The type of government that uses rent control doesn't actually want to take it's medicine (more housing). They just want a quick win even if it causes problems over the long term.

aliswe 7y ago

TL;DR version: Rent control keeps overall rents artificially high by disincentivizing new construction. Correct?

ptaipale 7y ago
In addition, it encourages inefficient use of existing housing.
- aliswe 7y ago
  Like me not finding incentive for renting out my existing apartment when I'm out of town?
  - ptaipale 7y ago
    Not really a problem. A more significant thing is not finding incentive to move to a 2-room apartment after kids have grown up, because regulated price of your 6-room apartment is same as the 2-room would be.

memoir2comment 7y ago

* SF: has rent control, prices go up. * Cambridge: removes rent control, prices go up. How do you show the causal relationship? Seems like there's constrained housing supply everywhere.

imtringued 7y ago
Why look at the price rather than the population/housing capacity growth? If you have housing for 500000 residents and 600000 looking for housing or living in the city then prices will go up simply because demand outstrips supply as you said. The demand probably grows every single year. Rent goes up because people can afford it, so this is actually not a problem that needs to be solved. What needs to be solved is the fact that 100000 people cannot find a place in the city at all. No matter how low or high the price of rent is, you will always have a shortage of 100000 units if you're not increasing the supply.

esotericn 7y ago

The idea of renting a property as a long-term solution to remaining on a specific plot of land fundamentally makes no sense. A five or ten year fixed lease, if you can negotiate one, might. It's completely unsurprising that on a year-by-year lease the rent might rise and you may want to move out. That's what a 1 year lease _is_. All of the emotional pandering surrounding that is simply unnecessary. If you want to live somewhere for an extended period you either need a long lease or to buy a place. That's not a politically popular viewpoint for reasons I can't quite understand.

MsMowz 7y ago
That's not a popular opinion because it's functionally the same as saying only the people who can afford to buy a home or enter a long-term lease should have access to affordable, stable housing. Since politics is about who gets what, and since most people don't have much in terms of savings or leverage, it's in the interest of most people to oppose your viewpoint because it's against their interests. It's only emotional pandering if you don't think politics should be a useful instrument to people without money.
- esotericn 7y ago
  Yes, only people who can afford to enter into a long term lease have access to stable housing. There is no "should" here. It's definitional. That's literally what a long lease is, as opposed to a short lease. > It's only emotional pandering if you don't think politics should be a useful instrument to people without money. It's emotional pandering because it's devoid of actual logic. You've injected the 'people without money' bit here as if it's relevant when actually this is a matter that affects everyone.
  - pixl97 7y ago
    >The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread. One should realize that politics can be used to cement long terms societal stability, and not just make one rich as fast as possible.

bradleyjg 7y ago

As a resident of NYC I’m all for getting rid of rent control (stabilization) but I have to say that it leaves a sour taste in my mouth to just hand over a windfall to landlords that bought buildings while rent control was in place and accordingly paid a lower price. Maybe some kind of rent control buyout program would make more sense.

brianwawok 7y ago
What happened to all the landlords who owned a building when rent controlled was first introduced? Most got stuck with a huge future loss. Seems weird to subsidize one side but not the other.
- bradleyjg 7y ago
  They are long dead. How does it make any sense to give a windfall to a group of owners far removed in time and ownership to “balance” that?
  - brianwawok 7y ago
    That's not my argument ;) My argument is that is why you don't give landlords a one time cash payment when you end rent control. You are making someones property worth MORE, paying them is giving them a double win.
    - bradleyjg 7y ago
      Ah I see. I meant that landlords would have to buyout of rent control with a one time payment not get paid.

hackeraccount 7y ago

Rent control is government setting the price on a good. I've always thought that price is metadata about a good or a service. Changing the price doesn't change that reality - it just hides it. If the rent is too high why not just give people money and let them spend it on rent? That's probably idiotic but it makes more sense to me then telling the people renting out units that they have to charge a certain amount. At least in this case you still have a price signal - though if you toss money like it's nothing at a problem you tend to get inflation especially if you give people money and tell them they have to spend it on a single good. A better fix is to increase the supply of housing and to the extent it's possible lower the fixed costs for building. If there's more of it the price will go down. I understand the argument that says "If we let them build more they'll only build for rich people" Sure. My answer to that is let them build more. It will take time but eventually the supply of units for non rich people will increase and when it does the price will go down. That's all easy to say but I doubt any of that will happen.

aeternus 7y ago
>If the rent is too high why not just give people money and let them spend it on rent? This doesn't work because the money will go straight to landlords. Rent prices simply increase across the board. There's even an argument that indirect improvements, like building parks and improving infrastructure, generally does not benefit renters since it drives rental prices up. Landlords reap the majority of the benefit. Building more would definitely help, but that is directly against the interest of existing landlords. They will fight it hard since it will generally erode their views and decrease their property value. We really need a solution that incentivizes higher density where there is high demand.

gumby 7y ago

If you consider an economy as a dynamic, rather than static system, then there can be a place for a form of rent control that functions like a dashpot. People have trouble dealing with high-speed changes in their situation, especially many such changes, so wild swings of rent etc turn into stressful high-speed chop. When you think of a city's economy as a static system you can tell yourself that you can predict the result of fixing a single variable (e.g. rent in this case). Of course over time it has results you might not have anticipated, and results that are hard to fix due to hysteresis (e.g. rents go up slowly, so buildings are not maintained, and suddenly you get to the point of a lot of derelict buildings and no tax base proportional to your maintenance needs).

cafard 7y ago

"And the most recent paper has shown that crime has gone down — particularly, street crime has gone down right after the elimination of rent control in Cambridge." Is that because the removal of rent control caused a net loss of the poor in Cambridge? Certainly not all of those who'd have a hard time affording Cambridge were committing crimes.

olliej 7y ago

I used to be against rent control, but when I found that in CA there is a constitutional amendment that prohibits the government from increasing the taxable valuation of property by more than 2% per year I became strongly pro it. If you want to increase rent costs by more than 2% you’re acknowledging that your property value has increased by more than 2% and you should pay taxes on that. But the tax valuation can’t increase by more than 2% so you shouldn’t be able to increase your rent by more either. So I’d favour something strong than rent control (that only applies to continuous residents), I’d say that no rent, lease, or similar arrangement can increase at a rate of more than 2% (or whatever the limit on increases property taxes is) year on year, irrespective of occupancy, or changes in tenants.