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> Rent control discourages building more units. The more you can make from rental, the more companies will invest in new construction projects. Actually, I wou

> Rent control discourages building more units. The more you can make from rental, the more companies will invest in new construction projects. Actually, I would think the opposite. If capital-laden landlords aren't getting increased returns from their existing holdings, they would be incentivized to create more supply by funding new developments.

ralusek 5y ago
Then you don't understand opportunity cost. If the ROI isn't there, they're not gonna invest in real estate at all.
- igammarays 5y ago
  Rent control doesn't typically restrict the prices they can set on new housing, only on existing units. Therefore the ROI is there to be had, just not in forcing people out of their homes.
  - KptMarchewa 5y ago
    You need to build higher, and the way to do it is to force people out of their small homes and build large ones.
    - michaelmrose 5y ago
      Actually nimby zoning is more so what prevents this in Seattle. Without such small groups of home owners could potentially drastically increase their profit on their homes by selling together to a developer building an apartment building.
nearbuy 5y ago
Rent control can mean many different things. Different rent control schemes are implemented in different cities. But generally, any rent control scheme that reduces rental prices across the board is going to reduce new construction. I think this is pretty uncontroversial among economists. I think your logic is flawed here. 1. There's no reason why making landlords earn less money would make them want to invest in real estate more. If you have $1 million to invest, you'll try to choose the best investment available to you. It doesn't make a difference if your current property is doing well or badly. 2. If landlords make less money, they should have less capital. 3. Even assuming your premise was correct and landlords who make more money from their property want to invest in new properties less, it wouldn't matter. As long as building new units is a good investment, someone else would do it.
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ralusek 5y ago

Then you don't understand opportunity cost. If the ROI isn't there, they're not gonna invest in real estate at all.

igammarays 5y ago
Rent control doesn't typically restrict the prices they can set on new housing, only on existing units. Therefore the ROI is there to be had, just not in forcing people out of their homes.
- KptMarchewa 5y ago
  You need to build higher, and the way to do it is to force people out of their small homes and build large ones.
  - michaelmrose 5y ago
    Actually nimby zoning is more so what prevents this in Seattle. Without such small groups of home owners could potentially drastically increase their profit on their homes by selling together to a developer building an apartment building.

nearbuy 5y ago

Rent control can mean many different things. Different rent control schemes are implemented in different cities. But generally, any rent control scheme that reduces rental prices across the board is going to reduce new construction. I think this is pretty uncontroversial among economists. I think your logic is flawed here. 1. There's no reason why making landlords earn less money would make them want to invest in real estate more. If you have $1 million to invest, you'll try to choose the best investment available to you. It doesn't make a difference if your current property is doing well or badly. 2. If landlords make less money, they should have less capital. 3. Even assuming your premise was correct and landlords who make more money from their property want to invest in new properties less, it wouldn't matter. As long as building new units is a good investment, someone else would do it.

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