
Oregon expected to enact first state-wide rent control law - mykowebhn
https://www.nytimes.com/2019/02/25/us/oregon-rent-control-bill.html
======
twoodfin
Bizarre to not mention the long-standing, broad consensus among economists
that rent controls do more harm than good.

Courtesy Wikipedia, here’s Paul Krugman in 2000:

[https://www.nytimes.com/2000/06/07/opinion/reckonings-a-
rent...](https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-
affair.html)

Surely if economists were so widely in support of such policies, the _Times_
would have highlighted that fact.

~~~
anigbrowl
And yet the market seems not to have magically provided a supply of housing
that is adequate for the market to reach an affordable equilibrium. I agree
the article should have mentioned it and am also skeptical about the efficacy
of rent control, but other approaches don't seem to be working out as hoped.

~~~
beaner
Is there local regulation or NIMBY-ism that prevents the market from providing
new housing?

~~~
wahern
In San Francisco rent control only applies to pre-1979 buildings. Ceteris
paribus, this _incentivizes_ new construction to replace rent-controlled
buildings. So why isn't there more supply? Because of zoning, approval, and
the NIMBY activism that has captured those processes.

Removing or abstaining from rent control wouldn't address the fundamental
problems. Indeed, I'd argue that _expanded_ rent control could be used as a
stick to pull the renters lobby away from NIMBY activists who have convinced
renters that any new construction is against their interests.

Rent control can be viewed as a type of wealth transfer (social welfare) that
all economists implicitly _presume_ will be used to ameliorate distribution
and dislocation inequities. Because "tax" is a four letter word in our society
and cash transfers both stigmatized and disfavored, we rely on regulatory
machinations like rent control or trade tariffs to implement the kind of
wealth transfers that economists all presume would be done with taxes and cash
payments.

------
ds
There is more consensus on Rent Control being harmful than there is on global
warming. Its absolutely insane that it would be enacted.

The solutions to expensive housing is complicated, obviously. Its about
zoning, cancelling out NIMBYism, incentivizing affordable housing and
basically matching supply with demand.

Rent control simply doesn't work. For any person it helps, it will
disadvantage 10x more in the process.

I wonder if they are putting in vacancy controls as well. That would have the
1-2 punch of not only reducing rental stock but also significantly lowering
property values (and property taxes in the process)

~~~
nosuchthing
What do you mean by vacancy controls leading to reduced rental stock and
lowering property values?

If high rent is the issue, vacant units should be pushed to the market instead
of artificially limiting supply. Cities and residents would mutually benefit
from a vacancy tax like Vancouver or similar, where international speculators
are not using the units for anything useful to anyone in the city.

~~~
ds
I can easily explain this.

Two buildings are for sale. They are identical in rental income, quality,
etc.. and cost the same.

The only difference between the two buildings is that one has enormous
restrictions on how you own and operate the building. You as a landlord will
have a cap on your potential upside in rent, but NO cap in the downside.

Which building will you buy, all other facts equal? Unless you are insane, it
will be the non rent-controlled building. As such, the price of the rent-
controlled building will have to be lowered to compete for a sale. Hence lower
prices.

~~~
nosuchthing
What value does the expensive building offer the city if it's exactly the
same?

You've actually just convinced me rent control might do a city good by pushing
capital investors into more useful pursuits, rather than simply "investing in
land" which effectively does nothing of value for people.

I do think it's silly to treat the symptom without fixing the main problem
which is zoning law and permit restrictions on building more housing stock.
But why not both?

Might as well add the Land Value Tax while we're at it

[https://en.wikipedia.org/wiki/Land_value_tax](https://en.wikipedia.org/wiki/Land_value_tax)

~~~
leereeves
That might work if you want to live in a tent in the forest, but if you want
to live in a city with buildings and infrastructure, then you want investors
in invest in land.

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dbroockman
Here's a great paper about how rent control is counterproductive:
[https://web.stanford.edu/~diamondr/DMQ.pdf](https://web.stanford.edu/~diamondr/DMQ.pdf).

> Using a 1994 law change, we exploit quasi-experimental variation in the
> assignment of rent control in San Francisco to study its impacts on tenants
> and landlords. Leveraging new data tracking individuals’ migration, we find
> rent control limits renters’ mobility by 20% and lowers displacement from
> San Francisco. Landlords treated by rent control reduce rental housing
> supplies by 15% by selling to owner-occupants and redeveloping buildings.
> Thus, while rent control prevents displacement of incumbent renters in the
> short run, the lost rental housing supply likely drove up market rents in
> the long run, ultimately undermining the goals of the law.

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refurb
Why do governments go this direction when it causes so many problems?

In a market economy, which includes both housing construction and home
rentals, price is the signal by which demand is measured. Rent control either
eliminates or severely distorts that signal.

I’m going to predict that:1) fewer new homes will be constructed and 2) rents
will sky rocket where it’s possible (tenant turnover).

~~~
anigbrowl
Market economies work great in textbooks under idealized conditions of perfect
competition, where all participants in the market are fully informed and have
the option to enter or exit the market freely. In reality demand for housing
is highly inelastic, significant informational asymmetries exist, the market
is fundamentally constrained by the supply of land and the varying demands
resulting from demographic change, and other factors.

Economic analysis that does not take these factors into account is not worth
very much. It also fails to offer any useful solution for the underlying
problem of rents rising faster than incomes.

~~~
thatswrong0
> the market is fundamentally constrained by the supply of land

And constrained by how the government allows that land to be used.

------
broccolistem
In Québec we've had province-wide rent control since at least the early 70's.
Landlords are allowed to raise rent annually up to a certain percentage
determined by inflation (last year, up to 2.5%). Rent raises can also be
appealed to the housing board if they seem unfair, or if the landlord has not
been keeping up with maintenance. Prices can go up if significant renovations
occur (which they almost never do), but even then costs must be split across
all units in the building. In 10 years, across 9 apartments, I have not once
had a landlord bother to raise my rent.

It's not a perfect system, but still today in Montréal you can get a $400USD 1
bedroom apartment in a good part of town, thanks to this system. It ensures
that the working class can live near their occupation, and they don't have to
commute from a slum neighbourhood outside the city. In many quartiers, you
have the very poor and the very wealthy living side by side.

I believe absolutely rent-control (in tandem with a few other policies) has
enabled Montréal to situate itself as a hotbed of creativity. We have one of
the most dynamic and diverse art scenes in all of North America, and with a
population on the island of Montréal still less than 2 million.

I definitely support this kind of legislation.

~~~
treis
> in Montréal you can get a $400USD 1 bedroom apartment in a good part of town

I find that extremely hard to believe

~~~
broccolistem
I pay $500 Canadian + electricity/heating ($80) / month for an apartment (half
of top floor in duplex) in a good part of town, 20 minute walk from the very
best part. That's 439.43USD including all utilities for a one bedroom, or
'3.5' as it is called here (kitchen, living room, bedroom, bathroom).

& I know many dozens of people in the same scenario, or who pay less. There is
definitely more expensive stuff out there, and you do need to hunt a little
bit for this price (usually craigslist etc. is pricey), but I regularly see
even bigger apartments go for the price I'm paying.

In fact I shit you not, my neighbour who has kept their place since the early
90s, pays 246.22 USD + electric for the same apartment as me. . .

~~~
treis
Do you have a link to an example?

>In fact I shit you not, my neighbour who has kept their place since the early
90s, pays 246.22 USD + electric for the same apartment as me. . .

Undoubtedly those that have rent controlled apartments do well. But that does
not mean one can go and get an apartment and pay a rate similar to the one
that they have.

~~~
broccolistem
>Do you have a link to an example?

Like I said, on Craigslist/Kijiji/etc it is difficult to find such a price, or
when it goes online, it disappears very quickly. A price like this can be
found by walking around and finding "à louer" signs and calling the number.

But here is one for $650CAD (492.47USD): [https://www.kijiji.ca/v-appartement-
condo/ville-de-montreal/...](https://www.kijiji.ca/v-appartement-condo/ville-
de-montreal/3-1-2-nord-villeray-beau-brillant-locataire-de-
choix/1417313879?enableSearchNavigationFlag=true)

>But that does not mean one can go and get an apartment and pay a rate similar
to the one that they have.

But when she dies (probably not far away), the place legally must be rented at
the same price (+ inflation of one year), assuming no major renovations are
undertaken. And if it get's renovated, the price can only rise to a certain
point unless the whole building get's demoed. So someone will get it at about
that price, eventually, unless the landlord illegally raises the price (which
happens).

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ummonk
Rent control is nativism just like prop 13. Provides special economic benefits
unavailable to newcomers.

~~~
teej
For arguments sake - is nativism inherently immoral?

~~~
burlesona
It depends on what kind of world you want to live in, I suppose. It certainly
isn’t egalitarian or inclusive, and I would argue it’s not very far removed
from racism. The real debate would be around what amount of “us versus them,”
favoring your chosen social group over all outsiders, is acceptable.

------
burlesona
Everyone loves to regulate and restrict housing to try and keep anything from
changing. If they would ban job creation then they’d get what they say they
want.

But if you suggest that, it reveals the NIMBY hypocracy. “We want the economy
to keep growing just no more people moving here...” ie the existing residents
want to get rich by extracting wealth from the job creators in their region
via restriction of housing supply.

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tropo
There are some great pictures in this PDF, entitled "Bomb Damage or Rent
Control?". You really can't tell!

[http://www.walterblock.com/wp-
content/uploads/publications/R...](http://www.walterblock.com/wp-
content/uploads/publications/RentControlMythsRealities.pdf)

------
mjevans
Rent control is a bandaid that tries to fix fundamental systemic flaws and
lack of planning by society.

Problems:

They do mention Oregon's land use laws. I didn't see it while skimming but
(for west coast states) the land that is actually "state" instead of federal
is also an issue (#1).

However the biggest issue is that the Supply vs Demand curves for housing are
simply insane.

Demand is mostly dictated by jobs, and only slightly moderated by the quality
of public transit and transportation infrastructure (mass transit AND
freeways/parking included).

As a nation the US has been housing constrained for at least 20 years,
probably longer.

Worse for a generation or two housing has been used as an investment rather
than the cost center that it is; so all sorts of market incentives are
massively messed up.

Finally "career" jobs, which allow someone to live in the same house for their
entire adult life more or less began a long slow death in the 1980s, which is
the true beginning of the destruction of communities.

Solutions to consider:

Tax, based on land use opportunity cost/value. This should have a built in
history consideration that gradually introduces rising land use potential over
a number of years. (E.G. sliding window over 10 or 20 years)

Tax, transparently, to fund infrastructure, and provide a place (website?)
where someone can go to see what their tax dollars are actually being spent
on. How they are getting value for services.

Zone and re-zone and do urban development more like Japan (#2) and Europe (?
speculation) do; based on nuisance level.

Encourage, via help with red-tape, ignoring local opposition when exceeding
code requirements, and co-coordinating funding and insurance bids for
projects, that there is ample supply on the market to reach the desired rental
price for an area. If builders don't want to service an area help local
benefit corporations get started to fulfill this need.

Raise the building codes and promote buildings that are designed to last, be
safe and comfortable to live in, and which encourage privacy at home while
being responsible to the community around them.

Design transportation in city cores more like the Caves of Steel, and provide
civic infrastructure (monitored parking garages/etc) at the edges to interface
with the exterior world.

#1
[https://www.youtube.com/watch?v=LruaD7XhQ50](https://www.youtube.com/watch?v=LruaD7XhQ50)
"CGP Grey - what is (US) Federal Land"

#2
[https://news.ycombinator.com/item?id=8540845](https://news.ycombinator.com/item?id=8540845)
\----- [http://urbankchoze.blogspot.com/2014/04/japanese-
zoning.html](http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html)

Edits - I can never remember what variant of markdown this site uses... please
don't convert my text to italics.

~~~
jim-jim-jim
Another far less wonky solution to consider: public housing.

~~~
everdev
I've never met anyone in the US who has enjoyed their experience in public
housing or low rent apartments.

~~~
cookingrobot
Here are some examples from outside of the US of luxury public housing.
[https://jacobinmag.com/2018/11/beautiful-public-housing-
red-...](https://jacobinmag.com/2018/11/beautiful-public-housing-red-vienna-
social-housing)

~~~
everdev
I don't think it's an engineering challenge, I think it's a cultural
challenge.

When traveling abroad, it's amazing how clean everything is. The amount of
trash on US highways, city sidewalks, public parks, etc. is pretty noticeable
when you return.

I'm sure we could build beautiful housing pretty affordably, but I'm not sure
we could keep it beautiful unless we treat affordable housing as an ongoing
investment and not just build it and forget about it.

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rhacker
Oregon actually has pretty nice rental laws, strongly favoring tenants. This
shows that continuing.

Also 8/10 pictures from Oregon are going to have that hazy white color cool.
It's always cloudy there.

~~~
sieabahlpark
Boy do I ever love the rent control of San Fran and West LA! So affordable!

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exabrial
It'll work this time

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ElijahLynn
Great news! (Oregonian here) We were kinda pushed into buying our first home
because our rent went up $100/month in 2017 and then $200/month in 2018.. I
saw where that was headed and we made home buying happen way sooner than we
wanted too.

Glad to see this is being addressed because some just can't make that happen.

~~~
ElijahLynn
I see a lot of comments referring to a study that says it does more harm than
good and I haven't read into them yet but my first question is: Does it
measure the impact it has on community? As in does it take into account the
fact that a community needs residents to stick around, not just live in boxes
and not interact with each other. Because my experience with a $100 then
$200/month rent increase showed me that it is going to destroy the community
of long time renters in the neighborhood. Hopefully it addresses that.

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liamtk43
Unconstitutional. It's a regulatory taking under the Fifth Amendment.

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menckenjr
This is not going to work. Price controls will generate shortages.

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jdlyga
Rent control causes urban blight

