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Rent control will make housing shortages worse? (economist.com)
164 points by baron816 27 days ago | hide | past | web | favorite | 251 comments



The housing problem is because CA et al fight new construction.

This does far more to hurt renters than anything else: https://www.latimes.com/local/lanow/la-me-ln-housing-bill-co...


Both nimbyism and rent-control are problems.


Rent control in SF is not really a problem:

https://www.cato.org/publications/research-briefs-economic-p...

Pretty much the only study I’m aware of that took the issue head-on, from the Cato institute.

They found that rent control greatly benefits recipients, that rents increase diffusely citywide (about 5%), and that the overall positive and negative impacts were roughly equally balanced (~$3Bn over 17 years). The net is slightly positive, in fact.

In other words, rent control pretty much does what’s printed on the tin: helps certain renters a lot, hurts others a tiny amount, averages out to zero net impact. Here’s the TL;DR:

”On net, incumbent San Francisco residents appear to come out ahead, but this is at the great expense of welfare losses from future inhabitants.”

You can certainly debate the desirability of that outcome, but it’s exactly as advertised.


I'm not sure the article you've linked is supporting the conclusions you are drawing from it. A $3 billion increase in costs to future tenants is not what I'd call a successful policy outcome.

I'm seeing phrases like (gross cherrypicking, also doesn't represent the full picture article, I know, I know) '15 percent decline in the number of renters living in these buildings' and 'led to a higher level of income inequality in the city overall'. This and conclusions like a 5% increase in rents city-wide suggest that the policy is not improving the housing affordability situation.

Indeed, it looks like rent control is great if you can get it but is making any housing shortage worse.


I took the summary quote directly from the Cato institute website; I am in no way misrepresenting their top-line conclusions.

As I said, you can certainly dispute the goal of favoring incumbents over new residents. There are also issues with landlords in rich neighborhoods wiggling out of the controls, which lead to the rich/poor inequities you note.

But on net, it does what people want it to do: protects existing residents, with a minimal net impact to the housing economy.


The big loss with rent control is the disincentive for developers to create new apartments which has happened in San Francisco dramatically. We should have far more apartments here given the demand with normal market incentives. The incredibly high cost of regulation in SF is also a large negative force, but if the normal market incentives (without rent control) were able to operate, developers would work through the regulation as they do in other cities without rent control.


The article I cited found a minimal impact of rent control on new construction in SF. The costs of this were accounted for in the numbers cited.

You should read the article before you assert that your opinions rebut its contents.


> The big loss with rent control is the disincentive for developers to create new apartments

Rent control does not prevent developers from building new construction, in fact it may promote new developments. Rent control reduces the cost of housing for a select few people who haven't moved in a while, which artificially raises the prices for newer tenants that just moved into a neighborhood. Higher prices for new tenants make developing new housing more attractive, not less.


>Higher prices for new tenants make developing new housing more attractive, not less.

I think you have switched cause and effect. Developers have to charge higher prices because they have to subsidize rent controlled units. Without rent control you may get away with charging $1000 per month to cover your costs and then slowly increasing prices as inflation picks up over the years.

If you expect 3% inflation but rent control only allows a 1% increase then only charging $1000 will result in a net loss over time so you will have to adjust the rent upward. Assuming a tenant in a rent controlled unit stays for 20 years then the land lord has to charge the tenant $1400 from day one.


>> Higher prices for new tenants make developing new housing more attractive, not less.

> Developers have to charge higher prices because they have to subsidize rent controlled units.

I don't think these two points are contradictory. Yes, rent control increases housing prices on newer units. However, higher prices on newer units provides incentive for developers to build new construction rather than squeezing everything they can from existing ones.


I don't think rent control has discouraged new construction, since it can't apply to new construction in SF.


All housing was new construction at some point.


Rent control only applies to buildings built before a particular date. So unless the developer is using a time machine, rent control can't affect the potential profit from building.


Having gone through an eviction in SF, it's not rich residents, but residents who don't want to risk a 5-figure judgement against them and an adversarial relationship with a landlord.

If I didn't mind the financial outcome (because I didn't have the money in the first place) I'd have hung on for dear life.. instead I took the settlement and found another living situation.


You may be taking the quote directly off the site, but I don't trust the Cato Institute to publish anything that doesn't fit with a specific narrative. You may not be misrepresenting them, but they may be misrepresenting the truth.

> "The Cato Institute is an American libertarian think tank headquartered in Washington, D.C. It was founded as the Charles Koch Foundation in 1974 by Ed Crane, Murray Rothbard, and Charles Koch, chairman of the board and chief executive officer of the conglomerate Koch Industries."


The practical result of rent control is the further enrichment of real estate developers and investors. It appears to be a populist focused measure and therefore wins support from certain political factions. Meanwhile it removes supply from the market and in a market where demand far exceeds supply - like the Bay Area - it drives up prices for new development. It's one of the more intriguing political coalitions out there. As housing prices increase, salaries have to increase in order to attract and retain talent. In the Bay Area, this represents a transfer of wealth from tech investors to real estate investors and developers. The generous valuations granted to tech companies by the private and public equity markets make this possible, for now.


If it otherwise breaks even, when you consider that a significant portion of the people it helps aren’t particularly in need of help, it seems like it easily becomes an overall net negative on the city.

I also have a hard time supporting it just in principal - it restricts mobility, disincentivises renting out property at all, and puts young people and immigrants and anyone else who didn’t happen to get here first at a disadvantage. Then the only housing those folks can get is market rate housing, which we now just call luxury housing as a shorthand even though it’s the only possible housing, and now we can write them off as rich assholes and pretend there’s not a housing problem.

Obviously the causality of these issues is complex, and it’s not all the fault of rent control, but it does seem to be a major pillar of this whole crazy mess we’ve created here.

One last point — think about how big of a deal that 5% increase really is. The median rent is around $3500 for a 1 bedroom apartment, that’s $175 a month the average person in the city could save. That’s significant.


It is absolutely pathetic that HN’s mods continue to allow politically biased censorship of factual comments using downvotes.

Mods, if you can’t control the ideologues, it’s time to get rid of graying of downvoted comments. People are just using it to censor speech.


The two are interconnected. There's less willingness to reduce communities' ability to block housing construction and approve of higher density limits because a large segment of renters have price-controlled housing.


I really enjoy reading your pro-housing arguments. I'm stuck in a debate with a NIMBYist on Nextdoor, and would appreciate your perspective. Do you have an email address I can contact you at? This is in the South bay.


You're assuming that things can get worse for renters.

The housing market in California is already non-functional because supply is not allowed to meet demand, which puts renters at a tremendous disadvantage. Efforts to relax restrictions on new housing construction have failed.

Adding restrictions until the market breaks in ways that everyone hates might be the only way to get any momentum toward fixing things.



Though you messed up the basic numbers, I think that the larger point needs addressing.

Why are these homes vacant? Should people be allowed to take a month of vacation without losing their home? Is it ok for an apartment or house to be empty for a few months in between residents?

One month in between tenants every two years is more than a 4% vacancy rate. What should the vacancy rate be?

And what if in addition to housing the homeless we also want to house workers with unreasonable commutes?

Every single person I know who has raise this X vacant homes and <X homeless has not bothered to ask these very basic questions.

We need more homes. 25% more than we currently have, in the high demand areas. We don't need hem in Detroit or Stockton, we need them next to jobs. And we need to stop the profiteering home owners who speculate on the value of their homes by blocking others from living close to them.


Obviously there will be some time between renters where units will sit vacant, but that's not the issue. Units are vacant because landlords don't want to rent them out for various reasons. Totally different situation! So, during this housing crunch units sit vacant and very little supply is being added. Sure, owning property means they're allowed to do whatever they want with it (within reason), but we're also free to complaint about the situation.

As to why landlords leave units empty; rent control. Rent control and strong renters protections, combined with dramatically increasing market rate, means landlords will get more money if they keep a unit empty for a year.


> Units are vacant because landlords don't want to rent them out for various reasons. Totally different situation!

Are they? I don't see much of the Bay Area but I haven't notice many vacancies at all, and the rates overall are low from what I've seen, something like 5%.

I'm all for vacancy taxes, and actively looking to see how to get one passed in my city. But I don't think it's going to do much other than provide a revenue stream for homeless services, like Oakland's Measure W. I can't see them helping with the housing situation based on these sorts of low vacancy rates. We need 25% more housing than we currently have, and a 0% vacancy rate is pretty much impossible and a horrible situation for renters, so I would hate to see the vacancy rate go any lower.


> We don't need hem in Detroit or Stockton, we need them next to jobs.

If more companies embraced remote workers or even just partial remote work, this problem would be greatly alleviated.


On the other hand we could also let people live where they want, instead of letting a few people exclude others from living by them.

People want to live in the Bay Area, it's wrong to exclude them.


Look, even if by some miracle, building permits are easier to get and more lenient; there’s a reason for “excluding people” and it’s not gatekeeping surplus housing. Supply is just limited. It will always be too limited due to geography and other conditions. Ie the thing stopping people from living where they want is that there’s not enough places available to everyone. Regardless of the economic system used to distribute this finite resource (money, lotteries, etc...), no matter what the end result will be the same: not everyone will get housing.

While there are a lot of nice things here, people mainly want to be here because of the jobs. If you help distribute the jobs via remoting, it will really help in reducing demand for very limited resources


There's more than enough space, there's tons of space that we need to make more dense with infill housing.

This isn't just a social issue, it's also a climate issue. Even if we assume extremely ambitious goals of 100% EVs and 75% of energy from renewables in 2050, we need to drastically reduce the amount of vehicle miles traveled in California, which means denser housing with mixed uses.

Right now that sort of necessary housing and business is illegal in most of the peninsula. We need to change that.

It really is just gate-keeping to keep others out.

Distributing jobs is not a solution, because sprawl is not a solution. We must make better use of existing land, rather than consuming more farmland or nature.


I agree with improving inventory with dense housing. However, where I disagree is that it can meet availability for everyone who wants to live here both now AND in the future. Sure, we might be able to generate enough space in the near future assuming the NIMBYS start losing legal fights, but demand will almost always outstrip inventory unless your population and economy start shrinking.

Remote work is still a good tool because it requires no extra upfront costs or slow to pass legislation; it can be done right now to offset demand of a scarce finite resource: living space. Moreover, it doesn't have to eat up new land. I would imagine it could help revitalize urban centers such as Detroit and other cities in the Rust Belt


> but demand will almost always outstrip inventory unless your population and economy start shrinking.

I don't know why this has to be the case. Can you expand upon the reasoning that makes you think this?


Populations keep growing and they are attracted by the jobs centralized in specific locations. Unfortunately, physical space both horizontal and vertical are limited. This isn’t some new revelation and it isn’t limited to just the US, nor is it some new phenomenon; it’s well known history. It’s a very old problem. The only thing new is remote work as an option


But we are not limited by space in the Bay Area.

Here's a couple different models of what building adequate housing would look like:

https://medium.com/@firstcultural/how-california-can-build-3...


I'm not really seeing this in the article unless I missed it. The plan calls for 3.5 million new homes. The problem is that the Bay Area alone will probably need approximately 2 million more homes in the coming decades. That doesn't include LA and other regions.

Also, it's not just physical space that's a resource limit: there's also time (how fast can you build it?) and money (do builders have enough financing). This is with the optimistic assumption that NIMBY legislation doesn't get in the way, which is why I still feel that remote work is still the most ideal solution, since the only roadblock it has is company culture.

I guess another solution is the route Palo Alto is taking: hinder or destroy the local economy to limit demand of physical space. I don't agree with this since only wealthy people can afford to deal with it.


Sure, people want to live here, but why is it wrong to allow people some self-determination and allow them to decide who and how can build stuff, even if they are dumb and/or claim/want contradictory things?


It's one thing to allow some of "self" determination, which would probably be a good thing if it was done. However, that's not what the current process is, it's most definitely note self determination. It's set up to allow a tiny number of people to say "no" to things. It doesn't poll the public to determine what to do. This one-sided input process has predictable results, with massive damage to the general interests of people who live in an area.


Aren't there more people who are able to vote and rent in SF/LA/BayArea, than who have property there?

To me it seems the problem is that the braindead NIMBYs successfully co-opted the locals with property, thanks to the property tax boogeyman.


LA and Boston did this and now just have vacant high-rises to show for it. And, really, greedy homeowners are the least of our worries compared to real-estate developers and landlords.

I've seen the idea of a vacancy tax thrown around. Not sure how effective it would be, but might be worth trying.


For a city of 4 million people, LA is building something like 9 thousand apartments [1]. That's not a 25% increase in the number of homes, that's nothing at all. It doesn't cover the number of births, the number of immigrants. Building that few homes is a plan to displaced people from the city.

It's time to stop treating housing as if numbers don't matter, and the only thing that matters is our feelings about seeing a crane.

There is a massive housing shortage, and people that deny it are just as fact-free as climate deniers.

[1] https://www.reddit.com/r/urbanplanning/comments/d0a9wb/top_2...


That's at best a misunderstanding of what that means, and a less charitable reading of your comment would be that it's deliberately misleading. "San Francisco" refers to the metro area which includes a much larger area. That includes 28K homes that are on the market right now. When people have studied why homes are vacant, another substantial fraction of it is homes being remodeled or otherwise uninhabitable.

That's very much NOT 100,000 livable houses sitting around being owned by speculators.

A much better way to look at it is vacancy rate. SF's vacancy rate is around 5%, which is very low and indicates that nearly all of the housing stock is being used. For a lot of the same reasons that a 0% unemployment rate is not possible, it's not possible to have a 0% vacancy rate, and in practice 5% is about as low as you can get.


  refers to the metro area which includes a much larger area
No, it doesn't, because that larger area isn't famously dense. Famously dense clearly indicates SF proper, and only part of SF is densely populated.


Did you even read your source? 100k includes Oakland and Hayward.

also, did you seriously think that the problem with homelessness is that they didn't have a house to stay in?


We should always be respectful to one another.


From 1: "Famously dense San Francisco also performed pretty well, coming in at No. 45 with 5.61 percent. That’s a little over 100,000 empty units."

That's a crock. That computes to 1.78 million units in SF. That overstates the number of units by a factor of at least 3!


If only apartments were 5k instead of 6k, then all the homeless would have houses.


Supply and demand. It's just that simple.


I thought the California rent control:

- didn't control much more than egregious rent increases

- didn't apply to new housing

- expired after a time


>didn't control much more than egregious rent increases

This is accurate, this year the increase limit is 7%, which is pretty much unheard of except in the most egregious cases.

> didn't apply to new housing

> expired after a time

The expiration is on the waiver for new buildings.

Rent control won't apply to buildings that opened within the past 15 years, and it won't apply to single-family homes, unless they’re owned by a corporation, or duplexes where the owner lives in one of the units.


I might not understand the "expired" part.

I understood that it meant the controls would only be in effect until 2030.


There is no 'California rent control'

Each city has its own law.

Edit: whoops... I had meant the currently active laws, not the new statewide law. Now I realize the comment was about the new law.



Oh, I thought they meant the currently active laws. My bad.


I see this conventional wisdom posted a lot here on hacker news and other forums, but is it really true? There are plenty of high density cities with high housing costs.


High housing costs are always, without fail, a regulatory problem.

If the rents are high because of a lack of available units, you build more units or make more units available.

If you are at peak carrying capacity in a given city you need to expand infrastructure (vertically or horizontally) to support more & denser development.

The trick is both can require public spending to make work. You can't just rezone and let a city go and expect magic in the first case scenario. You often need government subsidized building of cheap apartments to spur the economy to build up and attract investment / higher paying residents to build generalized housing. Most developers are looking for the highest margin building they can do, and while in theory any potential profit from building should eventually be met there are only so many construction companies, especially urban highrise class builders, and they prioritize the best deal.


The need for massive investments in public transportation is a little more than just a regularly problem. The real solution is allowing but taxing new development and using that money to wisely pay for new infrastructure.

This rarely happens because developers want to pocket that difference, nimby wants zero development, and everyone wants to spend that money on their own ‘critical’ projects.


>High housing costs are always, without fail, a regulatory problem.

It's not possible that desirable places may have more demand than physical space?


> If you are at peak carrying capacity in a given city you need to expand infrastructure...

Why not say, "sorry, we are full"?


Because full depends on infrastructure. Tokyo sits at ~37.5 million people demonstrating few cities are near any real limits. https://en.m.wikipedia.org/wiki/Greater_Tokyo_Area


Tokyo metro is 37 million, Tokyo city is 13 or so million. As always, City classifications are a bit weird in Asia (see Chongqing).


It’s not that different from New York City which is technically 8.6 million, but people over a much larger area commute to the city center which has real impact on housing costs. Thus the Metropolitan Statistical Area (20.3 million) and other such approximations. https://en.m.wikipedia.org/wiki/New_York_metropolitan_area

It really comes down to transit not where lines are drawn on a map.


As long as we are comparing apples to apples. Actually Chongqing is worse since you can’t really commute daily from the hinterland into the city (same with Beijing and even Shanghai). Japan is quite unique with commuter oriented HSR (eg tokaido line for Tokyo, though it would be a horrible expensive life to commute daily from Yokohama).


Cities in the United States have no mechanism to prevent nonresidents from moving in. If nonresidents want to move in and capacity is not expanding it will drive up prices and result in economic pressures on the poorest residents until they vacate enough space to reach an equilibrium. A city can control how many people get to live there, or it can work to ensure that all current residents can continue to live there, but the Takings Clause of the Constitution essentially prevents doing both. Saying "sorry, we are full" (like San Francisco) amounts to telling a large portion of your poorest residents to get out (like San Francisco). People are generally pretty bad at putting two and two together and realizing that their misfortune is the result of poor capacity planning by their city government, but they still tend to get angry and angry people tend to vote out whoever is currently running their city, so pissing off a large swath of residents is rarely a good strategy.


Cities may not be able to control nonresidents moving in directly, but their taxing authority is more than sufficient to strongly discourage it. A municipality could massively raise property taxes and grandfather in current city residents for example. It could then use the new revenues to ensure the current residents can continue to live there.


Yep, prop 13 and insane property prices serve that function in the SF Bay Area. If you buy now, you pay $2M upfront and ~$20k/yr property tax for a small ranch house, while your neighbor who has lived in a similar house for 40 years pays <$2k/yr, less on an inflation adjusted basis than when they moved in, thanks to prop 13. The cherry on top is that after paying a small fortune for your house, your municipal (and school) budgets are stretched thin, despite some of the highest land values in the country, because so few of the long time residents are paying anywhere near the nominal 1.x% rate. And then the long time residents loudly complain that infrastructure is buckling, and we can't afford to improve it, so we can't expand housing. It's maddening.


The flip side of that. I live outside California and my neighbor has lived in his place for over 30 years, and it was his dad's place for 30 years before that. Because property taxes go up with assessed value and because the area became more affluent around him, he is now faced with having to sell his business that his dad started to cover property taxes or lose his home.


If property taxes are unplayable then selling the house should net a lot of money. If he really just wants to stay there he could get a reverse mortgage at this point to pay property taxes. Unless he has already dipped into that equity.


What area?

But yeah, property taxes can be rough, they’re meant to ensure that you’re not sitting on land that could be used more productively. On the other hand, your neighbor’s investment in land has apparently paid off in terms of appreciation.

With prop 13, I’d support age-based property tax abatement, but the current way it’s set up is insane (commercial property gets the same treatment, the tax basis can be passed on to heirs, if you sell less than some fractional share of the land, it doesn’t trigger a reset, and some other insane provisions).


Well, that does happen implicitly, except the full statement is "Sorry, we are full to our limit of low income residents." They eventually get replaced by richer residents.


Because here in the United States that isn’t something that you can say.


Not taking a side but it seems like that's what a lot of people were trying to say with the idea of the wall and everything.


Legal residents of a country choosing to relocate to a new city is a different issue than the enforcement of national borders.


> High housing costs are always, without fail, a regulatory problem.

True, I would have built a 10,000 square foot single famly home with a massive yard in manhattan facing central park but those damn regulations are making it too expensive /s


This is totally unrelated to the article, but are you by any chance the DanTheMan of Wilt Chamberlain Archive fame?


All these comments and threads fail to understand the purpose of rent control. It is not to provide the most efficient housing to new residents but to protect existing residents from being priced out.

Until there's a better solution than "tough shit" these policies will continue to be popular.


>but to protect existing residents from being priced out.

Why is this something we should encourage/subsidize?


Because pricing people out of their homes is an extreme inconvenience, and also expensive - finding a new place takes time, moving in costs time and money.

And that's assuming that if they can't find housing sufficiently nearby, they may also need to find a new job, lose friends, have a harder time staying in touch with family, etc.


If you want something long term, you must own.

I'm not suggesting it's easy to own, but emphasizing that the rental market is a market, and rents change whenever a new contract comes due. If you want to smooth the rates over a long time horizon, buy something or sign a long-term lease.


Well I'm golly sure glad you were around to alert people of this! Renters being priced out just need to buy the multi-million dollar properties they could barely afford to rent in the first place! Who would have thought of this one weird trick if not for you?


It should be easier to (a) buy a home and (b) rent somewhere else but still commute to a job. We probably agree on that.

But that doesn’t change the fact that renting is fundamentally unstable, and a short-term contract comes with risks. You seem focused on shooting the messenger.


I'm reminded of this thread from yesterday: https://news.ycombinator.com/item?id=21021709

The relevant issue: Switzerland has rent control (and has had it for a long time). So if it's tenable position for the 2nd richest nation (and has been for a long time), it does suggest that renting being "fundamentally unstable" is not a requirement.


Not everybody has the luxury to own. Limiting long-term stability to the those with stable, well-paying jobs will only further marginalise and destabilise those who are already struggling. Rent control is one possible solution to this problem.


I know that. Owning a home isn’t supposed to be a luxury. But in that part of the country, it is, and it doesn’t change the fact that rents are subject to change every time the term renews.

Unfortunately, rent control fails consistently. It doesn’t change the fact that too many people need too few homes, not to mention the margin squeeze for property owners. The Bay Area needs way more home, especially multi-family units near transportation.


That's what a lease is for. Many rental leases are a "fixed price" for 1 year. If, during that time period, there is a large acceleration in rental prices, it is an individual's responsibility to be aware of those consequences and plan accordingly. Unfair? Well, yes, it is. But if rental prices are rising quickly, why is that? Usually one reason is because there are others coming into the market who are paying substantially more. Should they be disallowed from renting that place? Is that fair?

The same individual responsibility for the rental price is on the landlord. If prices rise substantially during their renter's lease period, the landlord is going to pay attention to that. If the rental market increases only a little bit, it is not uncommon for landlords to leave the rental price more or less the same when there is an upcoming lease renewal because it is often more of a hassle (and a risk) to jack the price up, potentially piss off the renter, then they move out, and the landlord now has the new hassle and risk of finding a new renter and possibly going one or more months without revenue.

But in cases where rents rise, say 25% or more in a 1-year lease period, what should a landlord do? Not raise the price for his renter? Leave that money on the table? Or raise the price, run the risk that the current renter cannot afford it, and they either move out or pay.

I'm basically describing normal market behavior. And I think this discussion often devolves into what we often deem to be our "rights" as people. We see the same discussions occurring with healthcare, too, and there are pieces of that applying to housing as well. Renters cannot easily "control" what happens to their supply/demand of rental housing units in their area but when there are large swings, how much "protection" from those swings are people really entitled to?

Perpetual rent controls seem awfully unfair, in my view. There has to be at least some form of rent price adaptation that allows a rental unit to always converge towards its market price if a renter is already living in it.


Because our policies are currently aligned to make houses a good investment, which means they can never be affordable


Houses are very affordable these days. If you have decent credit and closing costs, the FHA will guarantee your loan. I bought my first house in 2012 paying only $6,000. It can be done.


Extending people's commutes by pushing the working class farther and farther from job centers is awful for the environment.

And besides, no rent should be jumping past 5%+inflation in good faith, especially while wages are stagnant. The name rent control is confusing as it implies some sort of stasis.

In this case, it just helps prevent gouging.


In SF anyway, there are more renters than owners, and we live in a democracy, so the incentives are obvious.


>Why is this something we should encourage/subsidize?

Because you don't want the social fabric of a city rooted up because no one can live there. Where are your teachers going to live? Or the person flipping your burger?


It doesn't matter what you think. The local residents set local policy. You'll need reform that also benefits the existing voting block.


You’re still saying “tough shit”, but only to younger people and families. Mostly seniors and older people are protected.


An equivalent phrase for being "priced out" is being rewarded for wise real estate investment.


> Until there's a better solution than "tough shit" these policies will continue to be popular.

Why do we need a better solution than "tough shit"?

Not everyone is entitled to live where they want. If you want that, try Europe.


You say that but the vast majority of housing being built in CA is "luxury" accommodations. Luxury homes, luxury apartments, luxury condos. Nothing else justifies the cost of land, the developers say, and hence nothing else gets built. Meanwhile short-term rentals are cannibalizing existing housing stock. I was born here, and like hell would I tolerate some random fuck telling me I'm not entitled to live here.

You're saying the only people entitled to live on desirable land are wealthy assholes coming from afar? "I'm sorry, the only place you're entitled to live at your income level is that shithole next to the meatpacking/chemical/whatever plant. Why are you complaining? You can live with all your other equally-abled friends!"

This is how you create ghettos.


> You're saying the only people entitled to live on desirable land are wealthy assholes coming from afar?

Rich or poor, asshole or not asshole: No one is entitled to live anywhere.

There is only a market price. That's all.


Means is a form of entitlement. Free market economics creates massive inequality. That's the whole issue at stake here.


But the other side of the argument is that if somebody worked hard, and obtained monies, they should be able choose where to live using said monies. If i found out that wealth gained means nothing, and that the 'mob' penalizes wealth, then people would tend to create less wealth. Would society be worse off then?


I don't know but Europe seems to be doing OK


But this is self-contradictory. When you say "there is only a market price" you are saying that those with money are entitled.


But the money obtained through work has a meaning. "Entitled" means to demand without having first "worked" to obtain the necessary resources for said demand.


Welcome to exactly what's wrong with the system! We view somewhere to live as something you have to save for, work for, invest in when it should be a fundamental right.

What's wrong with the housing market is that a housing market actually exists. We should be working to provide food, housing and comfort for all people as a matter of course, not to make rich capitalists who already own most of the wealth on the planet even richer.


Unless you consider vast swathes of America “ghetto”, there are other places in the country where salaries vs cost of living is much better.


"If you don't like it leave." People who say that might as well be telling somebody in Venezuela if they don't like it there try the USA. Most people can't just move to another developed country. They don't have the means and/or don't the meet the visa criteria.


There are 49 other states besides California.


Because we make lots of policies that make housing hard to build in the first place.


If you don't think you need a better solution then you have to admit you need a better argument; it seems like a lot of voters disagree with you.


> it seems like a lot of voters disagree with you.

I don't know man, appealing to the authority of the collective wisdom of the voters seems like a pretty shaky foundation on which to base an argument these days.


The parent comment was “if you want this policy, tough shit move to Europe”. If the policy is popular here, why doesn’t parent comment move?


> The parent comment was “if you want this policy, tough shit move to Europe”. If the policy is popular here, why doesn’t parent comment move?

If you want rent control, I'm saying you should go elsewhere.

If you are against rent control, my comment did not imply what you should or shouldn't do.


> why doesn’t parent comment move?

you'd probably get a better answer if you were to ask the person who made that comment.


A lot of existing policies favor the existing owners of the real estate (not even the renters)

"Not everyone is entitled to live where they want" is like... OK sure. But only land owners used to be able to vote. It makes a lot of sense to help out renters through policies that might harm owners.


This cuts both ways. Why should you or anyone else be able to access this housing, for example?

But beyond that, local residents set local policy so it's obvious why these policies are in place.


Because people invest big chunks of their lives in communities. I realize that many tech workers in SF are normally ignorant of the lives of the people around them though.


> Not everyone is entitled to live where they want

whilst that is true, society should band together in such a way as to make it possible to create cheap shelter for everybody (as an option, those who wants to live more luxuriousy should be able to if they have the means).

Rent control isn't really achieving it though, and only distorts the market.


But you and I are, right?


[flagged]


What entitles anyone to own land in the first place?

What entitles the market to exist?


> entitles anyone to own land in the first place?

by fiat, land can be owned.

The first land was obtained through war and conquest (from native american indians). Those who worked and produced wealth used it to purchase the land from the crown (or whatever gov't that did the conquering).

If you want to change this, you either must convince everybody (including existing land owners) that your system is better. Or, raise an army, and take it by force (as what was originally done to the native american indians).


Those were rhetorical questions.

Like you said, through our system of democracy, we _allow_ the markets to exist in a particular form. We _allow_ the government to administer force to protect the peoples' ownership of private property. None of this is a given, and pretending everyone has a moral imperative to participate in the market does not follow.

If people in a region decide, by democratic means, they want to change the way the market functions, there is nothing implying they should 'get out'. It is fully within their rights.


Yeah! I should have rent control! I should be able to live where I want and pay below the market value. Screw the free market, I want to live in someone else's house and pay them less than it's worth. I don't care if their costs go up due to increased maintenance costs, or inflation, or wage increases. I don't care if the value of their property increases due to basic, fundamental, elementary economics like supply and demand, and their property taxes increase. Screw them. It's my right to live where I really really want to live. I especially don't care that nobody else can move to where I live because there are no new houses being built, and therefore no new money into the local economy. I'm not moving to a more affordable area, why should I? And I'm definitely not going to save money for a deposit so I can borrow money at some of history's lowest ever interest rates. Then I'd be working for the man. Screw that, I've got avocado toast to pay for.


Supply and demand isn't a magic incantation that makes a particular process valid. Slave markets have supply and demand, too.

If the fundamental property rights under consideration themselves are unjust, then efficiency arguments are missing the point

Of course, I also oppose rent control, because of the inefficiency. But I very much sympathize with and understand the brutal truth behind how land ownership is acquired. It is a simple matter of force... ownership is decided by whoever wields control over the application of violence.

That fact, combined with the fact that land is not a fruit of labor, means that individual ownership claims are unjust. And even from a pure efficiency standpoint, the ability to own and speculate on land creates a huge amount of idleness and underproductivity. People are able to afford to sit on idle land indefinitely, if there's little cost to do so.

The obvious solution is to tax land by value and use the revenue for infrastructure and public goods, and any remainder should go to a Citizen's Dividend. Wise use of such funds would always flow back into the value of land itself, and thus pay for itself. Without needing to tax production or labor. This would be much fairer than our current process of creating perverse incentives by taxing labor, and then allowing landlords to reap unearned benefits from nearby public works.


On the plus side, anybody who gets in to owning apartment buildings at this point knows the score. The risk is not that you won't be able to find tenants. The risk is that you won't be able to charge them enough to make a profit (because of regulation). If you don't want to roll the dice, don't invest in rental housing. You can't claim that you didn't have notice. If you want good performing investments, you'd better prepare to be a slumlord, or you'd better invest somewhere else.

I say this as an opponent of rent control. The people you should feel sorry for are not the owners. It is all the people who want to come to SF, would have a better life in SF, would have a lower impact on the environment, would be more productive and make this a better country, who can't because housing prices are so high and there are no vacant units.


I feel like this comment is way below par for HN.


It is successful at showing the root cause: people don't want to change.


When you first start renting in a rent controlled apartment, it's at market value. Rent control in California just caps rent increases to 5%+inflation to prevent price gouging by landlords.

In CA, the landlords property tax will be the same as the day they bought the property.


Absolutely. A market adjusts far more rapidly to match supply and demand than any committee ever could, especially as groups of people that set prices have agendas other than seeking movement to a balanced price.


An absolutely free market does.

Housing is NOT anything like that kind of market.

Building permits, zoning, NIMBY, various minimums (aside from taxes, thanks Rs for focusing so strongly on less taxes rather than greater value for money...).

Make building the desired type of housing easy; incentivize it until market conditions have been corrected... We're several decades behind at this point, so a huge boom is required to correct prices.


> building permits

Conversely, you don’t want unsound buildings in earthquake country, but yeah they’re also being abused


Hmmm, I wish that were true. It seems like it would be, but my (Canadian) province’s two major cities are showing how glacially slow the market is reacting to an oversupply. Cheap interest rates mean that for a lot of builders who overbuilt, it’s cheaper to pay the 2-3% interest for the year than to lower prices 10-20%. Our prices went up like a rocket around 2006-2008, and are very very gradually dropping back down. There was, of course, no significant salary increase in the same time period, or since then, so entering the housing market for first time buyers has been much more very difficult than it was in the past.


Most markets take awhile to sort out the proper price. The proper price is not based on any one commodity, it can be seen as an optimization problem. As the price goes down certain other industries can move in, and then the price will stabalize or even begin to increase again. This is how neighborhoods go from expensive -> cheaper -> gentrification -> expensive.


Which cities are these? It's (I think) pretty well known that housing prices are a little sticky. Even if the market reacts to changes in supply and demand, nobody wise says it reacts instantly. But, I think there's also a chance you've been misled as to exactly how much oversupply there is.


Saskatoon (worse) and Regina (not as bad). For a long read about Saskatoon, see https://jbuc61.wordpress.com/

We recently moved from Saskatoon to Regina, and our family sold the Saskatoon house. We priced it slightly below market and it sold in 3 days, but there were many similar houses that had been on the market for months. The buyer tried to flip it (it needed love for sure); I'd guess $15-20k worth of supplies plus his own labour. It sat on the market for a long time, and ultimately sold for only $40k more than he paid us for it.


Sure, if your only goal is the most efficient allocation of scarce resources.

However, 'supply and demand' doesn't care at all about fairness. Richer people will get more of the desired resource than poor people. Poor people might be priced out of the market entirely.

The 'free market' might end up with entire communities being forced to move to a cheaper area because their current location is highly desirable to wealthier people.

In a free market, this might be determined to be a fine outcome: people willing (and able) to pay more for that area get to live there.

Citizens might not think this is an ideal outcome. They might, with valid reasons, feel that poorer, existing, residents should be allowed to stay where they are, even if wealthier people from other areas want to move there.

I am not saying one side is right and the other is wrong, I am saying a free market only solves the efficient use of resources part of the equation, not the other parts.


more than 11% of all rental apartments in New York City — sit either empty or scarcely occupied, even as many New Yorkers struggle to find an apartment they can afford.” One reason for the growing vacancy rates, as the article states, is the city’s high rent, which has risen twice as fast as inflation.


When local rule kills the creation of new supply, it doesn't seem far fetched to cap rents to inflation + N%.


How about, if housing isn't allowed in an area, then rent and sales price isn't allowed to increase?


How about rent increase matches property tax increase + inflation. If a property owner isn't paying fair taxes on its property value then rent isn't getting increased as well.


So assuming 2% inflation and maximum property tax rate increase of 2%, that would by 4%. Would a 4% increase be acceptable in your opinion?


In my opinion it's fair the have a rent increase if the property owner has a tax increase.


I see what you're thinking; a tax rate increase to the current market rate, as if it weren't locked in by that one California law (IIRC Prop 30?).


So many people in this message board hold strong normative opinions of free markets (namely, that they are inherently good) and don't understand the basics of them.

It surprises me, because economics seem so aligned with this board's interests, and usually the conversations about these kinds of topics here are informed or at least interesting. The "free market" seems to always be an exception.

Here are a few _basic economic_ reasons why you might not want a "free" market to determine the price of some good:

1. It's "free" but not actually free. For a free market to exhibit the beautiful self-organization and maximization of surplus, you need:

a. Zero-cost (or at least low-barrier), voluntary entry/exit from the marketplace

b. Many participants

c. Information transparency

(a) doesn't apply to housing, healthcare, food, or anything else that's required for survival, so there are no theoretical guarantees about "free" markets in those cases.

2. Self-organization and maximal surplus are not sufficient. This is a question of values, and usually is a question of valuing equality over efficiency. You might want, for example, for everyone to have a access to something (like a home) even if it comes at an economic cost.

3. There are costly externalities. Sometimes markets can self-organize and provide efficient distribution of resources, but also cause a lot of problems that aren't captured in the supply/demand curve. For example, not having a home might cause you to do things that is socially harmful that you wouldn't otherwise do. Like using the sidewalks as a toilet.


I also want to challenge an implicit assumption made in the article, namely that rent control inherently limits housing supply.

Suppose rentals were simply banned. That is, you can only buy, and the rental market was eliminated. Would housing supply disappear?

I'd argue no, that you'd simply end up with more longer-term, higher-rate (to compensate for default-risk) mortgages.

Which might be a good thing. You wouldn't have to worry about 40-year residents being suddenly forced out of their homes any more, and still have a "free" market.


What's up with the modified title? The article title is "Rent control will make housing shortages worse" - statement, not "Rent control will make housing shortages worse?" - question


In Sweden we have a history of a very strict rent control (which will probably be scrapped for newly built homes, because of current politics) while also handing a lot of power to the local governments to regulate housing.

There are a lot of reasons Sweden has absurd real estate prices (the Gothenburg area in Sweden, which is the seat of moderately famous Volvo, has real estate prices close to the Seattle area which is the seat of Boeing, Amazon and Microsoft while the median incomes are not even remotely similar), and why the bulk of the price hike happened during the last decade, but a big one that's often overlooked is that local governments don't want rentals. Because of rent control they are mostly inhabited by low income earners, who pay less tax. Rent control is set by the national government agencies, who of course don't care where you live, they want everyone to have a decent home without being gouged.

Not saying that rent control is necessarily a bad thing, but if implemented on a national level they give local governments less tools to get rid of poor people. In the end, they'll find a way, and that might create even more problems.


The California bill is hardly a win for renters. How many renters who do not currently have rent control have their rents go up on average of 8% a year? I have lived in SF since 2012 in non rent controlled units and have never experienced that.

The only units I’ve seen that have rent increases that are greater than 10% are the new luxury high rises, which will continue to be exempt. The only landlords I really see this impacting are the corporate landlords like Avalon that manage older rentals and squeeze rentals as much as they can.


I just did the calculation on an apartment I rented back in 2000 in Fremont. It was $1300 back in 2000 and $3200 now. So that is about 4.6% increase per year. And this was a new apartment back then with pool, gym, covered parking, laundry in unit, close to BART. Are people really seeing rates increase more than 8% per year all around the bay area?


Friends of mine were hit with a 20% increase last year.


Maybe not consistently year over year, but bursts of rent increase can happen to people and blindside them financially. Preventing price gouging is what this law is intended for.


I have a feeling though that landlords who used to do 5% now think it is acceptable to do 8%. Obviously the market demands will restrict the increases further but the law kind of codifies what is not price gouging. I guess we will see in a few years.


Only in luxury high rises


Good landlords provide vital public service, and should be able to charge a slight premium as compensation.

This is different than speculators who boot out tenants to take advantage of market swings.


There will be no incentive to be a good landlord when it legally can't net you more money than being a bad one. NYC made a law that banned landlords from doing more than some percentage worth of capital improvements. The result is nobody improves anything, and the buildings and living quality just gets worse for everybody.


That hasn’t been the result in nyc to date, and there were plenty of abusive, negligent landlords before. The only difference with the new laws is that tenants have enhanced legal rights to prevent that abuse.


I'd love to find a good landlord! Out of the 5 I've had the pleasure of doing business with across 3 cities, they've all cut corners and done the bare minimum. There is zero incentive to raise the bar.


Ask a rent control proponent what market rate actually is and you’ll see why they gravitate towards these bandaids

People view “market rate” as “expensive so lets do something so people can afford housing” , distinct from “influenced by supply and demand and a rent control solution further constricts the supply of non controlled units further exacerbating inequality”


Can't read the article so I don't know if they cover it, but this whole topic is unproductive due to binary thinking. The mild rent control being enacted statewide in Oregon and California doesn't seem much like the strict rent control resulting in people having far below-market rents?


It really just prevents price gouging. I believe on average market rents rise at a lower rate than these rent control measures allow, and rent control doesn't apply to new builds.


The housing problem has always been the biggest problem for mankind and the most basic problem for mankind.


I'm sure this is being posted because California's state wide rent control is going into effect soon enough.

Of course - my rent was just jacked up again. Got the letter in the mail today. (Now paying about 22% more than two years ago) Landlord needed to get another 10%+ rent increase in before they're under rent control.

Figured this would happen. Just sad to see it actually go through. So much for protecting existing renters...


Check the wording on the bill... I think that isn't actually allowed.

I seem to remember that your rent in Jan 2020 must be lowered to what it was in March 2019.

Edit: text from https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml...

"...The bill would provide that these provisions apply to all rent increases occurring on or after March 15, 2019. The bill would provide that in the event that an owner increased the rent by more than the amount specified above between March 15, 2019, and January 1, 2020, the applicable rent on January 1, 2020, shall be the rent as of March 15, 2019, plus the maximum permissible increase, and the owner shall not be liable to the tenant for any corresponding rent overpayment..."



Well, of course, because that's what the bill is forcing your landlord to do.

If they, looking at housing starts and the economy and projecting out, think that there's a chance that there'll should be a 40% increase over five years, they now have to raise your rent to have a chance to get there and also know that the other landlords in the quasi-market that they're competing with will be doing the same.


I've been living in the same place for 3 years in CA, right on the beach. Have not had any rent increase in that time. It's probably a rarity, but pretty sure this will ensure mgmt raises prices to the max every year as they know they can't do large increases when they need it.

So this will likely hurt many, many other renters. Not to mention makes it harder to move across town (they'll do massive rent increases every time a unit is vacant in anticipation of not being able to do it while you're there) and will hurt any newcomers to the state (ya know the same shit we like to bitch about Boomers doing).


Basic Economics, by Thomas Sowell[1]

There seems to be a requirement that policy makers not have read this book.

[1] https://www.amazon.com/Basic-Economics-Fifth-Common-Economy/...


I like to test my world view as policies are enacted. Decide a concrete measure for a particular outcome, write it down and check the results once a year (I do it on new years day). These rent control measures are a great target for this regime.


Why don’t you just check out the numerous other historical examples of rent control and see how they turned out.


You could publish predictions on http://longbets.org/ and make some money!


This article ignores the political dynamics. Pro-supply policies like zoning reform are much more popular when bundled with anti-displacement measures, which address people's anxiety about them.

A mild level of rent control such as the new California law is not nearly as damaging to supply as policies like strict height limits. Knowing that rent control isn't fully optimal, I'd still gladly trade one for the other.


I'm not an expert on this, and as such, I would like to "favorite" this submission on HN without actually bestowing upon it a "point." I'm not informed enough to feel confident in endorsing this with the point that comes with "favoriting," rather, I just want to save this submission in the discussion in the comments for later.


Here's the episode about rent control on Freakonomics: http://freakonomics.com/podcast/rent-control/

If you don't know the podcast (or the books) I highly recommend those.


I wish there was a requirement of building 'x' homes before you can build 'y' and rinse & repeat. Need incentives or people just build the best contract deal.


If this were true, and I'm inclined to believe it is, then shouldn't current landlords be campaigning for rent control?

It basically gives them a monopoly. Rent control serves as price fixing to keep out competitors. The entrance fee (to build a new building) is too high for the returns compared to alternative investments. For current landlords, it's a trade-off of lower short-term profit for long-term stability. Isn't stability the reason you invest in real estate (as opposed to say the S&P500)?


The value of an asset is determined by the expected return to investors (i.e. rent). If you reduce expected returns by limiting rent, your asset (the apartment building) is suddenly worth less.

But the typical rent control regulation only covers older building. If you are a developer of new apartments, you can benefit here. Your competition is under rent control, so their current tenants have a strong incentive to remain in older buildings. This reduces supply, and your new apartment building can raise prices.


Get out of California while you still can. Gavin Newsom is hell bent on completely destroying it.


I don't buy it. Even with strong rent control or tenant rights laws, there's still a glut of profit to be extracted as a landlord. I understand the arguments, and somewhat agree with the purported models of behavior that say rent control will make things worse or at best maintain the status quo.

The whinging about rent control strikes me as misunderstanding the differences between modern rent control legislation and the policies of the 20th century, and also pure libertarian whinging. The arguments against rent control are econ 101 mealy mouth crap that is not even representative of all econ theory.

I own four houses outright and rent three of them out to families, and I'm currently invested in a quadplex whose rents I use to pay the loan off; and I'm about to leverage all of these properties to invest in a 20 unit apartment complex. Even considering taxes, maintenance, legal expenses, etc. I am pulling in so much raw cash that I foresee that I will be able to expand my business indefinitely -- even with Oregon's new rent control and tenant rights law.


You claim that supply and demand is nonsense Econ 101 then humble brag about your burgeoning rental income empire? So you want the government to take your money?


I'm more than happy to pay my fair share in taxes. Honestly, I think they should scale much more quickly with income.

The real estate stuff isn't even my main job, it's a side business. I'm a full time software engineer.


I hope you get your wish of paying more taxes, but failing that, you are allowed to voluntarily pay more taxes if you feel guilty about your "glut of profit".


You sound like a greedy landlord extracting rents while adding no value!

Part of the problem!


Pretty much. It's absolutely predatory. That's why I'm investing in building the 20 unit complex. At least it's not just me printing free money that way.


I'm a landlord too and would love rent control in my area. No where else is a 8-10% increase year over year tolerable, but in rent controlled areas, it's the norm.


When the maximum rent controlled rate increase is set above the market rate increases, it's not going to affect prices.


> When the maximum rent controlled rate increase is set above the market rate increases, it's not going to affect prices.

In theory, if real estate was a perfectly competitive market you'd be right. But by setting a standard well-known rent control rate, it sets a standard that landlords can follow. It allows landlords to act in concert and collude on rent increases without any direct communication between them.


Are you thinking rent control causes rents to go up?

It’s usually the other way around.


Under rent control, it is in your best interest as a landlord to utilize the maximum rate increase every year 'just in case' your value goes up faster than your income. Its pretty obvious from the numbers what to do if profit is your goal.


It really isn't. You pretend like rent control laws force everyone to raise rent every year double the rate of inflation. That isn't the case, and if they did they'd price themselves out of the market. Rents are competitive in Oregon, and I imagine they'll get even more competitive.

The biggest hassle with rental property, as you are well aware I am sure, isn't the government -- it's shitty tenants.


The biggest hassle is maintenance and turnover. I've never had a shitty tenant in over 10 years of operation b/c I do a good job screening.

It'd be much better if I could lock in a tenant and simply raise the rent each each, but where I live housing is plentiful and if I did that, they'd move.


Are you implying that rent control will eliminate competing landlords and therefore increase the profit of your existing investments?


No I'm implying that it allows landlords to collude on pricing without needing to actually meet and discuss it. I can't predict the future of the market so my safe bet is to raise rent each year, because in the event that I desperately need to at some point in the future, I won't be able to.


Rent is going to be a thing of the past as landlords decide to just sell their real estate.


Now they have the option instead of selling it, to make it a full time AirBnb rental.


Many cities are actually regulating/pushing regulations against short-term rentals.


With zero enforcement


Absolutely not true


Certainly some landlords will do that as rent control shifts their business into unprofitability. Result: less rental housing stock.


How will that even work? San Francisco has multi tenant apartment building and restrictions on condo conversions.


Every time rent control comes up, you get a lot of Econ 101 critique of it, but really, rent control is fine and can even encourage new development. This is a good discussion of it: https://www.fresheconomicthinking.com/2019/09/rent-control-i...

Like a lot of economic critique, rent control criticism is driven from cultural allegiance to landlords and the rentier class, rather than good faith.


> Like a lot of economic critique, rent control criticism is driven from cultural allegiance to landlords and the rentier class, rather than good faith.

What a bizarre claim. There's plenty of "good faith" criticism of rent control.

People think different things. You're allowed to advocate rent control. But assuming bad faith because "I am right" or "my opponents are in the thrall of the rentier class" is just astonishing.


Don't be naive. Think of key debates on economic issues: Deregulation, monetary policy, minimum wage, rent control, taxation, etc.

People's opinions on these is overwhelmingly driven by their political values.

Trump doesn't love the Laffer Curve for its abstract mathematical beauty or essential truth - it's merely a rhetorical device for justifying the policies that he and other wealthy interests prefer.


"Assume good faith" and "avoid ad hominem" are not "naive." They are necessary. You simply cannot have a fruitful discussion without both parties agreeing on those rules. Even if you are convinced that your opposing party is not arguing in good faith, it is still in your best interest and the interest of those observing that you argue your own side using proper technique.

If you have given up on this, there's no point in participating at all.


I am not saying these things as a means to insult. I am not up on a debate stage here debating Trump on a stage.

I'm simply describing what motivates people on the political right. There is no end of literature to support this view.

You may find it troubling to accept that many people in politics aren't acting in good faith or motivated by pure virtue. But it's true!


Find me a landlord who doesn't support rent control and I'll show you one who doesn't currently own property in the area where it's being discussed. Rent control is a boon to landlords who can easily justify an 8% rent increase each year, because it's codified in law!


Landlords in SF hate rent control. The allowable increases don’t even cover inflation as far as I can tell. Any place where landlords will pay tenants $$$$$ to move out (at best) or burn their place down and keep it empty until they can rebuild as condos (at worst) is not a place where they like rent control. I benefit from rent control but it also locks me into an apartment. I’d love to move but it would cost 2-3x to get something equivalent which is market rate, let alone actually get a better place. We really need to build more housing and decent infrastructure like other world class cities.


That's because SF has lost their minds and capped it at 2.9%. Generally speaking, most places allow anywhere from 6-10% for increases.


In the rest of CA it's inflation+5%.


There are two basic positions on the economy:

1. Those who focus on the beauty and simplicity of markets and the advantages of decentralized decision making.

2. Those who focus on all the ways markets create or abet undesirable conditions for human beings.

Everyone reasonable sits somewhere in the middle of those positions. The loons are gathered at both extremes. There are perfectly good arguments against minimum wage, rent control, and steep progressive taxes. There are also perfectly good arguments for those things.

And none of that has anything to do with Donald Trump.


It would seem your article supporting rent control does not suggest it encourages new development, it states a "super-profits" tax system would do so.


Recent work points to it not having any affect on development. And whatever affect it might have is largely irrelevant, as rent control does not apply to new builds in CA.

https://dornsife.usc.edu/pere/rent-matters


It's not like landlords provide housing to fulfill human need, they only serve people with money. Rent control might make them sad and build less, that's why we need to go further and provide universal public housing.

https://www.jacobinmag.com/2016/10/housing-crisis-rent-landl...


Tell that to people living in NY public housing...

"Imagine paying rent for a home with rats, cockroaches, lead paint and mold. That’s what far too many of the estimated 600,000 residents of New York City public housing are doing, even after a lead paint scandal led to an investigation by federal prosecutors." [1]

[1] https://www.nytimes.com/2019/07/30/opinion/new-yorks-public-...


Yes, when you make programs target only the poor it breeds resentment and makes them vulnerable to conservative attack. Thus they get defunded, look like crap, and people can point to them and say they suck. Making them universal creates a mass constituency like social security and Medicare that is protective.


I don't think by any measurements the NY State/City gov'ts and/or New York Times can be called conservative.


I would call them a mixture of conservative and liberal. They share in common an interest in preserving the power of capital and private property. I am not a liberal, but am a leftist.

I used the word conservative not because it's 100% accurate (liberals are conservative compared to leftists though so it still is accurate), but because it's the word that people more immediately understand.

https://www.jacobinmag.com/2015/11/public-housing-social-wel...


So the way it’s run is not the problem, it’s that we’re not spending money?

Kind of like public schools?


No, we don't need anything fancy or government funded. We just need to let builders build.


We have more empty houses than homeless people by >> 3x. This is a problem of distribution. Also, why should I pay someone who does nothing for me 1/3 or more of my income? They just own a piece of paper, thus extract rents and victimize people that can't pay. People must be housed, the landlords should be cast out into the cold.


I agree with you on the first point but not sure I understand the second. People had to pay to build or buy the property. For example, my uncle built a 12 unit apartment building. He paid the mortgage on it, maintained it, and took care of it for 30 years until the mortgaged was paid off. Was he victimizing the people that paid him to live there?


Depends on how much he was charging. I have no problem with paying to cover the cost of running the building, including labor, but I do take issue with my rent payment being used to pay off a bimmer while the building falls apart.


If he evicted any of them, refused reasonable accommodations, or made a profit off it in excess of the labor and services he provided.

This is an old joke, but why should we show any deference to a person we literally call Lord?


Full blown commie blocs make more sense than rent control. If you're going to give stuff out for free, just go all the way. The government trying to make a compromise that depends on straining the market in some artificial way never ends well. It's the same with healthcare. Look at that mess. It was better when it was free market and would probably be better socialized, but in between it's trash.


Housing should not be a commodity. Rent control is a solution to a specific problem of housing being a commodity -- landlords spiking tenants' rents, forcing them to relocate. It isn't a solution to the housing shortage. The solution to the housing shortage, which, for example Bernie Sanders proposes in his plan and this article fails to mention, is dramatically expanding affordable public housing. There is simply no other solution to the housing crisis than to decommodify housing, considering it a public good and a right. The unregulated market has never and will never provide affordable housing to all on its own.

Economists love to criticize rent control because in some abstract economic sense it is "bad", but most people don't care about the market efficiency (Which mostly means maximizing profit to landlords and developers) of the housing market. They care that their communities are not destroyed by gentrification and that they are able to stay in their homes without being dislocated, both goals that rent control is successful at achieving.


The solution is to build more housing. Look at all the restrictions in NYC, Boston, LA, SF -- the costs are high because people want to live there and the government refuses to allow people to build.

In the cases where someone can make it through the years long process to get a building approved, the only thing that makes financial sense to build is luxury apartments.

If you want more inexpensive apartments the key is to build more of them.


> the only thing that makes financial sense to build is luxury apartment

Exactly! That's the problem with housing as a market commodity -- developers will only build luxury housing or slums. A deregulated housing market looks like this: https://en.wiktionary.org/wiki/slum#/media/File:Mumbai_03-20...

Affordable housing requires public investment, public housing. There is no other solution.


Sure. I mean, you can sell pretty much any kind of car, as long as it fulfills all the safety regulations. That's why the free market only builds Lamborghinis and utter rust buckets.

Trust me, if developers could freely serve every sector of the market there was demand, without being choked by zoning, land supply, etc, we would see the whole housing range from the Toyotas to the Testarossas.


Cars can be a psuedo-free market, because you can buy a car built in Detroit, but drive it in Boston, and everything is fine. You can buy a car from Tokyo, and drive that in Boston and everything is fine. You can also choose not to buy a car, but instead buy a motorcycle, and everything is (mostly) fine.

You can't do that with housing. No amount of new zoning or new construction can solve that problem, because the land in every city is already fully monopolized.

Housing will never ever be a "competitive" "free" market. It can't be, because buyers don't have meaningful agency in their choices (for all but a few exceptions, everyone basically has to live pretty near their work/school/family), and buyers can't opt-out of the housing market (there are no reasonable alternatives except things like homelessness, which aren't reasonable).


Looking forward to purchasing real estate imported from Japan.


It seems like you're invested in missing the point, but will you accept the analogy of restaurants? A wide variety of restaurants exist in most cities across a wide spectrum of prices. It's not a given that some 5-star French restaurant is necessarily the most economical use of a storefront everywhere. It might make more sense to build a Buffalo Wild Wings. But if you can only build a limited amount of housing, much less than what is demanded, you'll only be selling to the highest bidder anyway, and since you know you can fill your whole building with your target customer type you might as well build exactly what they want because then you can charge a bit more for it.


Mumbai is extremely regulated, and much of the city has strict height limits. The slums there are mostly built illegally.


Housing is a resource. If you have a magic wand to make resources exempt from economic forces, please wave it over food prices for the rest of us.

The reason economists get so excited about abstract issues of market efficiency is because if supply and demand don't balance naturally there will either be too much or not enough of something (effectively). Introducing rent controls will push the market towards the not-enough end of the spectrum and shortages will get worse.

> The unregulated market has never and will never provide affordable housing to all on its own.

That is a huge claim. If people could use their land as they like there probably wouldn't be a housing shortage. Developers make large fortunes out of install dense blocks of apartments; and doing that isn't going to make housing more expensive.


>Housing is a resource. If you have a magic wand to make resources exempt from economic forces, please wave it over food prices for the rest of us.

That magic wand is called public policy. There are similar things you could say about food -- i.e. how unregulated markets lead to developing countries being forced to export cash crops instead of growing food that people in that country need to actually eat.

>That is a huge claim. If people could use their land as they like there probably wouldn't be a housing shortage. Developers make large fortunes out of install dense blocks of apartments; and doing that isn't going to make housing more expensive.

4.8 million households in the U.S. depend on Section 8 to afford rent. These are direct subsidies to landlords to house these people. In an unregulated market, landlords would not rent to these people, and they would be homeless, or they would live in actual slums, which don't really exist in the U.S., but would have to in a fully unregulated market.


> That magic wand is called public policy.

Public policy doesn't exempt resources from economic forces, it's just a mechanism to divert resources from one area to another. It just allows you to fudge a little bit, push resources here and there. The Soviet Union eventually collapsed because towards the end for all their fudging they couldn't keep up net economic production. All effective policymaking comes from understanding constraints and operating within them to achieve the best outcome. For that reason - pretending that constraints don't exist is a recipe for bad policy.


I'm going to make the point that this is comparing an actual warts-and-all reality to a hypothetical "someone very reasonable will just get it right" system - the reality will never measure up to an ideal. That out of the way...

Public policy is not a magic wand that creates something from nothing. Governments that believe that tend to be called socalist and the worst case scenario for socalist governments tends to be much worse than for capitalist governments. Public policy can allocate resources from people who make money to people who make less money, but it is a lousy tool for trying to create more housing when there is not enough housing. A much better policy would be to remove government restrictions that actively prevent or disincentivise people from building housing/renting it out. That is to say: less controls on rent and construction.

> 4.8 million households in the U.S. depend on Section 8 to afford rent. These are direct subsidies to landlords to house these people.

I don't like welfare either, but it is certainly a step up from rent controls. Rent controls are an actively destructive policy that work directly against getting everyone in a house. Welfare is only questionable incentive structure and some welfare is appropriate.


Public services can be exempt from economic forces if a society deems them worth the cost. Generally in most first world nations you aren't denied life saving treatment on a cost benefit analysis.

In the same vein, it seems like its almost necessary that governments be leading the density charge in building. There should always be a public housing option everywhere, and it shouldn't be a default ghetto. Japan does an extremely good job providing a baseline amount of public investment in dense urban housing that helps regulate the unit supply the private market is otherwise managing.


We need more housing if there's a housing shortage. Build more.


I agree -- but we need public housing. The market does not build affordable housing.

Libertarians have this idea that the housing market is restricted by government regulation and just needs to be freed in order to flourish. In actuality, the only reason there is any affordable or low-income housing in the U.S. is because of government money (Section 8, LIHTC, public housing, etc). Homelessness is a totally solvable problem, and any place that has solved it knows the solution: build enough homes for people to live in, through state-funded programs!


I'm genuinely curious where the seemingly new faith in federal government has come from, while criticism of local government (police action, city and town policies, county actions) seem to be on the rise. I'm neither Democrat nor Republican. Both parties have become too corrupted to support in any legitimate way, and I tend to only look at what policies any candidate supports, which is getting more and more difficult, as everything is in 20 second sound bites. But broad federal government as opposed to local government always seemed far more disconnected and I'm curious as to why the boost in popularity of this centralization in federal power on "both" sides, seemingly.


If you don't have faith in your government, you need to fix your government. Nothing else in society can be healthy or long term stable if you are operating under a fundamental distrust of the exclusive wielder of violent force. Its fundamental.

Going into an election season its valuable to remember. Housing, healthcare, the military industrial complex, infrastructure, bribery, corruption, undemocratic elections, polarization, etc are all fundamentally a product of flawed government. Its not just a "get money out of politics" flawed, its a fix elections to be representative and equitable, make representatives accountable, make everyone matter and have equal influence. Because contemporary American government is hugely against all these points.

Its a super hard problem of course, but it is the problem to solve first - nothing else is going to get much better while things are very likely to get worse so long as the disconnect between having an educated rational electorate whom are fairly and justly represented by elected officials accountable to them isn't the general state of affairs.


I have no problem fixing government, but it has been shown time and time again that the biggest bag for your vote is to vote is local elections. Making your voice heard on the local government level can and will have more of an effect, with less influence (on average) by corporate monies than at any other point in the political process. The focus has continuously been swayed to a larger, more centralized power stricter with a greater disconnect that seems to be less interested in "getting to know" for lack of a better phrase, it's constituency. It's a matter of scale. Local governments, by their nature, are going to be more interested in their local constituency. They, then will come together to answer to a larger, managing power. At least, that's the theory. Ceding these self interested small government bodies to large monoliths seems like a step backwards. Even when thinking about it from a program architecture standpoint, it seems like going back to the 70's style of monolithic services instead of the modern approach.


I blame hot topic and the che guevara shirt trend. For some reason people have convinced themselves socialism is the solution to everything while at the same time complaining about surveillance states and corrupt/racist police.

It's bizarre to me.


There are plenty of markets in which the median household can easily buy or rent the median house, because competition drives the price down towards the cost (labor and materials, which just aren’t that expensive). The crisis exists near big cities because zoning boards have created massive shortages of buildable land, and builders and landlords can’t possibly satisfy more than a small fraction of total demand. Naturally they prefer to accommodate the highest bidders. If more inventory existed they would have to take lower prices for it.

If SF only allowed one Burger King and no other restaurants or grocery stores, the price of food would be shockingly high, yet government subsidy wouldn’t be the most effective fix.


Cheap, market-rate housing does exist in every city. It may not be where you want to live, but it exists. The issue is transportation, not subsidized housing that locks low-income people in an apartment they can't really afford.

Every city in the USA builds less housing than 20 ago, adjusted for population, etc. The primary reason is wealthy HIMBYs, lawsuits, laws, mandated affordable housing requirements, etc. In DC most new buildings require huge payments to the affordable housing fund, which in turn jack up middle class rents. Nonsense.


Which housing crisis are you referring to? Is it the one created by the unregulated free market which will never provide housing to people? Or, is it the one where regulations have not created enough affordable public housing?


That's correct -- there is no contradiction here. A totally unregulated housing market would be an unmitigated disaster. And some regulations are certainly counter-productive (e.g. exclusionary zoning). The problem isn't "more regulation" or "less regulation" -- it's making affordable housing a priority and crafting policy that is consistent with that goal. The problem isn't that the people in charge are stupid and bad at economics, it's that landlords and developers (and to some extent, homeowners) have a tremendous amount of power and resist the political changes that need to occur in order for housing to become affordable.


Agreed, no regulations or over-the-top ridiculous regulations are both likely awful.

I also agree that "owners" are likely to try to influence politicians. However, "owners" intentions are probably relevant to the discussion. For instance, there may be existing owners who want to have zoning that prohibits new construction for multifamily units near their golf course. They would see a "developer" who wants to build multifamily units as "bad". Presumably, in this scenario many would support the "developer", ceteris paribus.

On the other hand, if the "owners" were in an area that was being gentrified and there were "developers" who wanted to construct luxury condos in the area (with similar density to the multifamily units discussed above), the "developers" would be "bad" and the "owners" would be the good guys to many.

Politics is inherently involved in both cases as you allude to in your response. The question is which politics is going to better resolve the "crisis" - it appears many will bet on politicians/government to resolve the "crisis". While most politicians can talk a great game, I haven't seen a lot of results from any of them from either party in any geography which tempers my confidence politicians have anything to do with a solution...


You're absolutely right that what most politically engaged people want is to preserve the status quo. So they will use increased social control over housing production the same way they're using existing social control over housing production: to minimize it. Existing NIMBY communities won't allow significant new housing. They're certainly not going to initiate and pay for it. The housing shortage is exactly the same thing as these people getting what they want, neighborhoods and communities that look and feel the same over time, excluding however many former/would-be residents they need to exclude for that to happen.

De-commodified housing gives a community more control over who gets to be a resident, but there's no reason it would lead to a change in how many. Expensive cities already have the levers for that.


Why does the housing need to be public?


Because housing is a vital human necessity, so much like healthcare, the price ceiling for it is effectively infinite, because almost no-one can reasonably opt-out of purchasing it. (And due to how it's financed, it's not even really capped by people's income, since all of society is built with the requirement that everyone spend more than they could afford, just to get basic essential housing)

Saying "new (for-profit rental) housing construction will fill the shortage" is like saying, "Yes, Nestle charges an obscene amount for our water, but if we just let Nestle pump more water from the ground, they'll voluntarily sell that water to us for less".


The bottled water market has exactly 0 things in common with the housing market.

Every city is growing and adding more people than new housing construction. Thus rents go up. Hm, wonder what the solution would be? If a landlord has a unit open for 2 months maybe they would drop the rent? Crazy idea.


Who's competing with Nestlé? If the answer is “no one,” why is that?


It doesn’t have to be totally public, just publicly provided supply with eventual private ownership, as is the case in Singapore. The problem is that the USA is a country (many cities/towns to live in, some more desirable than others), while Singapore is a city state.


The housing shortage is not a shortage overall. It is a shortage in areas where people want to live.


As shortage is defined as a situation where an external mechanism prevents price from rising, technically it's a shortage where rent control is present, as rent control is the external mechanism that prevents price form rising. Economically, where price may freely increase, the price will rise until demand wanes to the point that there is no more need for additional housing. Socially, that is a problem as in the case of housing we want everyone to have the opportunity to have housing, which is why we bring in rent control, which then create shortages.


Rent control does not do anything to limit new development. The law in california doesn't even apply to new builds.




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