A Berlin Borough Buying Out Private Landlords
citylab.com
citylab.com
My proposal for new cities involves strictly limiting the foot print to enable it to be completely walkable. That would mean you don't have any cars, which is good for many reasons. A lot of what local governments do is complicated by having to service so many different residences over a wide area (think sewage and water, mail, policing/fire protection, road maintenance, etc). If you mostly just build up, then that all becomes much easier, which means government can be much smaller and cheaper. And I think the city becomes much more livable, as a large area around the city is green space, and the streets can be taken over by open air restaurants/cafes/bars on weekends.
More recently, in the north we tried placing new cities, turns out that people don't go and live somewhere if there isn't work, and there isn't much work in the north. Those cities are now failures. Heck, the big established cities in the north are being drained by people moving towards the cities in the middle.
Cities grow organically because people want to live in that city.
That doesn't mean you can't stimulate that growth. You can take the initial steps to make an area a little more desirable and then let the rest happen organically. Nobody will randomly desire to live in an empty rural area.
It's a bootstrapping problem. Sometimes a single employer can make an area desirable, but that single employer may never move there because it's not a desirable area.
Really, cities seem like a "necessary evil" to me and I hope they become less important and somewhat phased out as employers realize they can replace a lot of expensive city office space with telecommuting. I dread the thought I might have to move into one for a job soon until I have enough experience on paper to get steady remote jobs - I've been to a lot of cities for conventions or just passing through and I don't understand what possible appeal they have.
I'm half inclined to believe a lot of the people waxing romantic about cities have never been to one. You get harassed for money all the time and every time I go to a convention I hear stories of people getting assaulted for refusing, they don't look nice unless you're looking on from miles away at a few skylines like NYC's with the new WTC, you have to be a lot more on guard and pay more attention to your surroundings, everything is more expensive, and all the stores/restaurants are overcrowded a lot of the time.
It's a mystery to me why there's such an attitude against suburbs on HN. Sure, suburban town development is technically less resource-efficient than packing everything together like you're designing a circuit board to be mass-produced, but I don't think it's worth the cost.
Not everyone has to live in one of my cities. If you don't like population density, then you can live somewhere else. But the problem we have now is that there are a lot of people who want to live in densely populated places, but can't because the cost of living is too high.
Humans are generally social beings, they enjoy spending time with other humans. Life out in the suburbs is often (but not always) much more solitary. For most people, being alone in a big house with a lot of stuff doesn't make them happy. Having real experiences with those they're close with makes them happy.
You can replace the garage and the car by the fastest possible walk to the underground station, grumbling at slower people, and 30 minutes in the tube, avoiding any eye contact by looking at their smartphone/newspaper/book and avoiding any other interaction with headphone.
And on Friday afternoon or evening, they get out of the city as fast as possible, until Sunday evening.
That's "social beings enjoying spending time with other humans in cities". You don't even know 2 people in your own building, when you live in a city. You can lay on the side-walk having a cardiac arrest and people will walk by you, if not over you.
So this:
> And on Friday afternoon or evening, they get out of the city as fast as possible, until Sunday evening.
This isn't universal. Not even close.
Plus, you can't ignore the political aspect: Someone with progressive politics will be happier in a city than the country, at least in America, and that's been true a very long time.
The higher your degree of professional specialisation the more acute this problem is.
You're extrapolating too far from your own preferences. I don't like watermelon, but I don't generalize from that to a future where something replaces watermelon. I assume people are eating watermelon because they do like it.
Aren't you doing the same, but in the other direction?
I could say I don't understand why people don't live in cities. The countryside is boring - if you're not interested in the outdoors, there's nothing to do. Suburbs make some sense for people in middle adulthood to raise children in a safer environment without being too far from the city, but otherwise they're just a space / commute tradeoff, getting more space for your money than somewhere closer.
There are some more upsides to going a bit further into the country. No nearby neighbors means you can have an expectation of privacy doing whatever you want in the back yard and have no potential for noise complaints if you wanted to do something like an event with music or shoot guns, and on the flip side not hear any noise from neighbors. You'd also have more room to do home improvements if you wanted and have a much easier time getting zoned to build something like a fallout shelter if that kind of thing interests you or dig a pond.
I'm sure there's a notable group of people who want to live in a city all their lives, but I also don't think it's a coincidence that as people start to have kids, they seem to start wanting to move out of cities.
Also, suburban housing has the price of a decent school district built in, while in the city you need to pay private tuition for access to an institution which isn't completely non-functional (i.e. overwhelming majority of students are far below the extremely unambitious academic standards).
If urban schools were high quality and middle class families could afford family-sized apartments, things would be different.
Edit: No need to be so cryptic, right? Urban public schools are the top tier in my country. Affordability of housing in city centres is becoming more of an issue, but given the availability of jobs, I don't think it's a major driver of relocation.
In general, the situation here seems to be that a lot of families would prefer to live in a less urban environment, but cities make more economic sense still.
Cities are safer than rural areas or suburbs.
Pre-plan things like fiber to every home, smart measures to promote walking / biking, and promote reasonable density (3 to 5 storeys as the default height). Have cool things like a free regular bus to natural areas where people can swim or hike (cheaper than building olympic size pools, no?). Very strict building standards for things like building materials and sustainability. No suburbia or aboveground highways.
If this is in Canada, wouldn't the water be cold for most of the year? An indoor Olympic pool works year round.
The trouble with "designed" rather than "evolved" cities is that they tend to be a bit soulless, and inevitably the design reflects whatever the prejudices of the builders were at the time. Hence the famous roundabouts of Milton Keynes, one of the very few cities of the UK that really accommodates car culture.
Personally I think it would be simpler to try to distribute jobs across the existing cities a bit. The UK is over-focused on London and France over-focused on Paris. The US is larger so the effect is spread over the top 5 cities, but we still see that in order to start a tech business people think they "must" move to SF.
We've ended up with a city of 400,000 that's 40km from north to south and 15km east to west. Public transport is, as a result, highly problematic, and pushes by government to increase housing density (which I think is quite a sensible idea) meet with some resistance.
Planned cities aren't necessarily bad on the whole though - I will quite happily take "soulless" over "gridlocked" and "clean" over "gritty" any day. Canberra may be a bit "soulless", but the more organic cities around us have a very different set of problems with their own negative impacts on livability.
The US owes it's "walkability" or lack of due to Blockbusting by property developers in the 50s that used racism to drive the middle classes out of the cities into the newly built suburbs. No such thing happened anywhere else.
So it is a misrepresentation of what the other side thinks they are saying, but a correct representation of what their argument actually turns out to mean.
I think that might've been a factor, but it's an overgeneralization. In Canada, we didn't those race relations problems to anywhere close to the same degree, and yet big Canadian cities are just as sprawled as their American counterparts.
For my money, the major problem with the US and Canada is for the most part, we got to start fresh. A lot of the expansion happened in the age of the automobile, and at the time, we built what we thought we wanted — large suburbs and big arteries to take us between them. This worked pretty well in the beginning, but the further we spread, the more obvious the realization that the design doesn't scale [1].
In Europe, a lot of cities were built pre-car, and although they've seen significant change in the interim, large parts of the original geography are left over. There are some places that consciously designed their infrastructure well even if it was against the grain for the time (e.g. anti-car protests in the Netherlands that led to modern bicycle-friendly Amsterdam; also, Copenhagen), but a lot of it is a historical accident which turns out to have led to better livability than anything our city planners have done on purpose in 100 years.
---
[1] It's still not obvious to everyone, but as commute times continue to go up, I believe that broader consensus will form.
Do you suggest that sprawling suburbanised cities were too big to bomb effectively?
In Soviet Union, that kind of the most important members of society, lived in apartment blocks in city centers. And because Soviet Union did not have, and could not afford, mass automobilisation, they were stuck with that.
It made war clearly unwinnable for Commies.
I'm sorry, but this is not fair.
For whatever reasons (and ironically, after major civil rights advances) - many urban areas on the US became massively violent.
Rates of violent crime increased 600% (robbery) [1] in America overall during the 1960-1980. That's quite a radical increase. And again - note that this was a time of ostensibly major civil rights progress.
To wit - the increase in violence was not so much in rural areas, it was urban, ergo, there was even more than an 600% increase in crime. This was an era of increasing literacy and access to education for all Americans, including those who were underpriveledged. And this was way before Regans+Clinton strategy of mass incarceration.
It's deeply unfair to suggest that a family - of any race - that decides to move to the relatively affordable, calm suburbs, where they can own a full home and have a backyard, and avoid the massive increase in crime - is somehow 'racist'.
If your neighbourhood violence increased by more than 600% over the span of 10 years, and you were having kids, you might just decided to move somewhere else.
[1] http://www.disastercenter.com/crime/uscrime.htm
I don't think 'walkability' is a thing in any US city other than the one's established before cars, sadly.
On the subject of the article - if the Government is banning the sale of private property, or worse, forcing property sales - this is a problem. Banning to international investors - sure. Buying up land, sure, if they want. But banning sales from Germans to other Germans, or forcing sales to the government - no way.
But of course they never heard of avocado toasts so big companies avoid moving there
Look at the food market. The food market is extremely close to a competitive, fully capitalistic free market.
Do food sellers monopolize the market and charge extremely high prices because food is necessary for survival? No, they don't. Because the free market would force them out of business.
The current free market for food has a variety of different products, from a variety of sellers, all for a very reasonable cost.
This is especially true when you compare it to NON free market industries like housing, where much of the problems are caused by the government limiting supply.
Farming is heavily subsidized in first world countries because local farmers would be outcompeted by cheap imports in a free market. Governments subsidize their farms so that they can compete with the imports because it is extremely important for a country to be able to feed its own population if outside supply suddenly disappears.
This is actually an example of why totally free markets would be disastrous. Imagine for a moment that we let many of the local farms die to the outside competetion and a natural disaster severely reduces supply. You can't just spin up millions of acres of crops and have them ready before people begin to starve. Governments must subsidize as a form of insurance spending. You have to keep the machine running artifically for when you need it. The free market would kill this "inefficiency" for short term gain with potentially disastrous results.
But I think housing is definitely a thing capitalism struggles with because it is a good everyone needs and there is a finite amount of it, so much of it is zero-sum allocation.
Obviously I think we need to invest more in the non-zero-sum parts of it, but it's also a difficult political problem with lots of common goods and externalities.
For instance, people want to live in city x because this city have nice features (good public transport, good public spaces, buildings size that leave to see the sky..). Those features are in some cases due to location but, in other cases, are due to what the people that have been living there for generations have done with the city.
Now outsiders come and out-price the people that "created" the city and, in the process, destroy the value of the place. So, people start to move to another nice city. Rinse and repeat.
This, it seems to me, is not a "fault of the market", but the effect of an optimization process run amok. And I have not even mentioned speculation.
It's also very easy to find negative effects of displacement. The one that springs to mind easiest is that old people who get displaced die many years earlier. These negative externalities fall on people who simply don't have the money to pay enough to cover these downsides.
For a totally trivial example with real dollars: moving costs are non-zero, so when people move against their will we trivially destroy value there.
I disagree with the sibling comment which claims that the existing community/neighborhood have done is what drives gentrification - a LOT of gentrification is driven by a balancing act between price, public transportation and safety. So, I would argue that for the gentrifiers, one neighborhood is often as good as any other, but for the people who have lived there a long time, that specific neighborhood is what is important. So in this sense, it is value destroying to push these people out on a 1:1 basis.
Often gentrifiers aren't even moving to their first choice neighborhood and are merely priced out of the places they actually want to live.
I think municipalities that can support high density development are in short supply. High rises are just concrete and rebar. But if there's no transportation, not enough energy, security, etc - then no development will take place. We've left those roles to local government, and I think we should challenge that decision.
The supply of land rebar and concrete isn't that scarce (thanks capitalism). What's scarce is the organization and infrastructure that can sustain a town - and the limited land around it. If there's something that needs more capitalism it's city planning.
Regulation is supposed to prevent or limit those externalizing costs. However it's nearly impossible to put value on something like that.
Could you elaborate? I mean, the common law is littered with examples (stare decisis) throughout the industrial revolution which establishes strict liability for, say, someone else's right to enjoy their own land or property. In the UK, this extends to a tenants right to peacefully enjoy his home, even when he doesn't own it.
What I find interesting (though I don't think this is the point you're making), is that there are still people defending this obvious flaw and marketing it as a feature. But once essential needs are met (i.e. housing, food and security), what's even left? Luxuries, I guess. But even that can vary drastically between periods and societies (is gas a luxury? is higher education a luxury?).
And yet here we are.
It's why I'm in favor of legalizing price gouging - if someone goes to great personal effort, risk, and expense to buy electrical generators and drive them into a disaster area, that's a good thing and should be rewarded. And when the area has enough generators, the price will fall and the gouging will stop.
The thing we do have to watch out for is deliberately creating a need so that the entrepreneur can swoop in and fill it. I suppose this also applies to many forms of advertising, game design, and website design though, too.
How was the "price gouging" in this case not an unequivocal good on the macro level? It seems the alternative is that the airlines held prices fixed but ran out of supply immediately.
If a company is one of or the only company that can bring something important/necessary like generators to a disaster site, and the company knows this, it will charge more than is fair, e.g. more than the cost of the generator plus the expenses of transporting them. Price gouging generally hurts the people that need the product the most because they have no choice, and many people consider it unethical in cases like disasters. This situation is similar to the economics of life saving medicine, because its demand is also inelastic.
Also I don't think it's fair to use the term "someone", because it's often a company that does something like this. Don't humanize companies.
Such social engineering has a long and bloody history of turning around and disproportionately hurting the poor and the weak, in unexpected (sic!) ways. That is the socialist tragedy -- think with your heart, but only one step ahead.
"… the government should not support the people. The friendliness and charity of our countrymen can always be relied upon to relieve their fellow-citizens in misfortune. This has been repeatedly and quite lately demonstrated. Federal aid in such cases encourages the expectation of paternal care on the part of the government and weakens the sturdiness of our national character, while it prevents the indulgence among our people of that kindly sentiment and conduct which strengthens the bonds of a common brotherhood."
- Grover Cleveland, 22nd US president, 1887
What elasticity of demand does in an emergency is help ration goods. If you're considering buying ice, and ice becomes temporarily much more expensive, you'll cut out elastic demand (eg, having cold drinks), which leaves more ice available for inelastic demand (eg, keeping insulin from spoiling).
>Also I don't think it's fair to use the term "someone", because it's often a company that does something like this. Don't humanize companies.
I had a specific example in mind: John Shepperson, who, in the aftermath of Hurricane Katrina, bought 19 generators, rented a U-haul, and drove from Kentucky to Mississippi. He got arrested and the generators were confiscated. This is not the sort of incentive that we want to provide.
If it's possible for higher prices to induce supply, you want to let high prices induce supply and let the magic of price information do its work. The modern capitalist system is high magic, and prices are an important piece of how the magic works. Remember when fidget spinners got suddenly popular? March of this year they weren't a thing, and in April they were in pretty much everywhere. Messing with prices is how you break the magic. Do Not Mess With Prices.
* People need gas. Gas stations run out. It's illegal for people to pay more for gas companies to ship extra. People struggle to travel before and after the hurricane.
* People evacuate and buy hotel rooms. Hotels are required charge normal prices. People have little incentive to make efficient use of rooms, and they run out. People struggle to evacuate.
* After 2004 hurricanes, home insurance companies try to increase prices. State passes law limiting premium increases. Insurance companies drop coverage for unprofitable high-risk properties. State creates a government-run pool for people insurance companies can't insure. Thus, taxpayers get to subsidize property insurance for rich people on the coast.
STOP MESSING WITH THIS! If you really insist on throwing supply out of whack, can you at least not do it during a natural disaster??? Things are crappy enough as it is. Thanks.
That is, housing is not a free market because it's illegal to build enough of it to meet demand. Employment is not a free market for a variety of reasons, which means employees don't have enough bargaining power to get remote work. And the U.S. has the special problem that Internet access is not a free market either, political corruption has crippled the ability of rural areas to provide it for themselves, which in turn damages the ability of the economy to provide jobs in areas where there is enough housing.
And as long as all that is true, saying housing can be allocated by the market is just saying 'let them eat cake': an abdication by government of its responsibilities to safeguard the most basic rights of the people.
There is nothing any politician can do to change the laws of supply and demand. If this district in Berlin is in high demand, they're not going to fix the "problem" of high rents by keeping the supply fixed.
The only solution to this "problem" is to let people build additional housing to increase supply.
Instead of keeping the same people in their current units, overtime what will happen is people who currently rent apartments in this district will start to sub-let their apartments to the people who are willing to pay higher prices, acting as a wealth transfer from landlords to current tenants. And yes this will occur even if it's made "illegal" to sublet these apartments (this exact situation exists in NYC with people who have rent controlled apartments and people still do it all the time).
> "The only solution..."
I wonder as a thought experiment, if the city keeps buying more houses to fix the "problem", it might eventually become the dominant landlord, and then in order to raise revenue, it might find that it has to increase rents on its rent-controlled housing...
Keeping existing supply cheap is useful for the cities inhabitants, but additional demand has also to be matched to not make this a conflict forever (and Berlin has afaik a lower rate than other German cities in approving new projects).
Also, strictly speaking, building is not the only solution. Curbing demand by making the city less attractive would also be a solution.
"Why should I pay higher rents or deal with worse traffic/more crowded infrastructure just because you think my neighborhood is suddenly cool or because you're looking to stash a bunch of money in my country?"
And if your rent went up, supply didn't. Supply, not gentrification, is the problem in the SF/NY/Londons of the world.
You also seem to have missed the "or" presented by my hypothetical low-to-medium-density-city-dweller: either rents and housing prices get higher when you decide to move to my area, or my life changes in ways I don't want as a side effect of your increased supply.
So now let's imagine I own property and can vote, etc. Which of those scenarios do you think this person is going to support? The one that at least gives me a nice valuable house, I'm betting. You still want to move here? Make it worth my while $$$-wise.
I don't think most policy proposals for increasing density have enough obvious upsides for the incumbents to be very realistic.
You only get the realise the benefits of increased property values if you move away.
A more valuable house also means more property taxes (unless you live in CA).
Unless the annual appreciation in value of your house is sufficient to quit your job and live on. The risk of course is, will it continue indefinitely.
And in Berlin, I've sometimes seen graffiti along the lines of "cleaner walls == higher rents". So making the city less appealing is already part of the anti-gentrification arsenal.
* for the record, I'm not actually planning to nuke London.
Imagine taking your typical European mid-sized city and starting to allow multiple high rises taller that historical landmarks; or adding purely residential sprawl neighborhoods that distort residents' lifestyle due to long commutes and lack of attractor points outside of downtown.
You've just made a suburban hell out of a human-tailored environment, with the added sin of having destroyed the "experience continuity" which used to be core to community identity. A loss that is permanent and impossible to revert in later generations
I've lived in Rome and Amsterdam, and I know the feeling
Why should people who own buildings/land, and purchased them under laws allowing them to do as they please with the property now be disallowed from building large buildings on their plots of land and sell/rent them to willing buyers?
Why should the current renters, who don't own the property, receive superior rights to those who own the property and those who would willingly pay more than them?
No, nobody believes that this one action is going to solve a housing problem, where did you get that from in the article? The point is that Berlin took a pro-resident stance here which is both encouraging and unusual in the current "developer takes all" policies that many other desirable cities around the world have adopted. Berlin also enacted legislation restricting AirBnB rentals in the city. They understand there is a housing problem and are at least taking actions to address the concerns of the residents and possibly buy some time.
>"The only solution to this "problem" is to let people build additional housing to increase supply."
What do you suggest, Berlin gets rid of parks and public spaces and allows high high rise condos to occupy that space instead? Part of the quality of life and charm of Berlin is those spaces. Also there is nothing in this article that suggests that the potential buyers were going to increase the housing supply. Housing is a pretty complex issue and your completely reductionist policy suggestion is absurd and naive.
>"And yes this will occur even if it's made "illegal" to sublet these apartments (this exact situation exists in NYC with people who have rent controlled apartments and people still do it all the time)."
This is completely untrue. Firstly there are barely any "rent controlled" apartments left in NYC. They are an endangered species and this idea that people who don't live there are subletting them out at a profit is a complete myth. See the following:
https://citylimits.org/2015/03/09/nycs-endangered-species-a-...
As of 6 years ago rent controlled apartment in NYC were 1.8% of the total stock. And there are significantly less now: https://en.wikipedia.org/wiki/Rent_control_in_New_York
Regarding rent controlled apartments, you're correct that only about 1% are rent controlled, I should've been more specific. Given the small percentage of apartments that are rent controlled, it likely has little effect on the overall pricing. When I said rent controlled apartments I really meant rent controlled and rent STABILIZED apartments (apartments that are not currently being charged the market rate). And rent stabilized apartments are approximately 50% of NYC apartments.
[0] https://ny.curbed.com/2017/8/28/16214506/nyc-apartments-hous... -- "That brings us to rent stabilization, a much more common way for New Yorkers to secure under-market rent. While only around one percent of New York rental units are rent controlled, roughly 50 percent of the city’s units are stabilized. Rent stabilization generally applies to apartments in buildings of six or more units constructed before 1974."
Landlords are looking for any possible way to get rid of their stabilized tenants as each time the apartment turns over it is that much closer to deregulated. Landlords and property management companies watch their rent-stabilized apartments like hawks. You make it sound as if subletting rent stabilized apartments and pocketing the difference is some epidemic("people do it all the time".) Does it happen occasionally? Sure. Is it the common case? No, at at all, not even close. Not only that but rent stabilized apartments have their own issues as well.
http://www.salon.com/2017/06/27/many-rent-stabilized-nyc-apa...
And then you read that list and you realize that those are exactly the things that are being milked for all they are worth, and often more.
It's also why there's a significant ethical difference between murder on the one hand, and abortion and birth control on the other.
The place I was born made sense for my parents - barely. It didn't make any sense for me. I'd be in a world of hurt if it weren't for the ability to relocate to somewhere with job growth.
What often happens is that these cheap but beautiful areas attract students/artists/etc, who create (or support) lots of businesses and events that make the area attractive. When the lawyers/doctors/etc replace them, they destroy exactly what it was that attracted them to it in the first place.
(I live about 300m from the building discussed in the article)
Fine if the leftist gov wants to sustain their neverland but not if the other part of society (dreaded doctors, lawyers, engineers) has to pay for that.
(also living in Berlin)
This is also not about completely excluding any group from anywhere. There are plenty of doctors and lawyers living in Kreuzberg. It's about preserving a mixture of background/ages/incomes, which has shown to work rather well.
It's also hard to deny the economic impact of this scene on the city, it both includes and attracts startups, for example. Or look at Heumark development: a triple-digit million euros investment that grew out of a nightclub (bar25).
It feels a bit like a nice populist point (ragging on the rich folks displacing the downtrodden trying to pull on their bootstraps). That alone makes suspicious.
...I think it's very
arbitrary that we don't
have a problem saying
to outsiders "we won't
allow you to live here
(even though you'd be
willing to pay a lot
for it)" however saying
to someone "you can't
live here anymore
(unless you pay more)"
is a cardinal sin.
Allowing neighbourhoods to be broken up by rich foreigners sets a bad precedent both for current inhabitants and the new ones, who are very likely to find themselves in the same situation well before retirement age (as is happening in San Francisco). City governments are accountable to the people who live there, not the greater good of the One Market, and by serving their interests are merely doing their jobs.
People who move somewhere hopefully don't always stay foreigners, but they can still behave in an opportunistic way, enjoying low prices while not really putting down roots or committing to bear any of the long term costs of the community they join. American tech people in Berlin who live there for multiple years and don't learn German are an example of this phenomenon.
Of course I'm not going to put down roots in a place that's trying its hardest to get rid of me. If you want people to put down roots, stop going out of your way to prevent it.
https://imgur.com/gallery/cSpgv
This area has a fun vibe and it's easy to see why it's rising in popularity.. my Airbnb host grew up here and told me that it used to be very poor. This particular building is well painted, but doesn't really stand out.
As someone who grew up in Palo Alto, gentrification just feels so.. normal. Although it's priced out most of my friends and family, I've always seen it as something inevitable.
This is such a strange precedent to set.. how many of these dwellings is the city prepared to buy? How can they possibly stop the free market?
This is probably also infuriating to other parts of Germany, which pay substantial subsidies to Berlin and a few other poorer states.
It can be annoying but that's what being a unified country is about. Can't say those of us here in California or in NY are too happy about our massive subsidies that go to the red states that accuse us of being full of "welfare queens" but that's the cost of being a country.
In any case, this method is much better than rent-control. There is still then monetary incentive to skip on maintenance, but the institution should insulate from that. The biggest potential downside I see is a slowing of development in general. That might obstruct development of cheap rents more than it saves.
In general I wonder what prevents building higher, cause you can build high and cheap and if there is demand, why not?
1) The type of land in which you are building. Some can't support high-rises or can only do that at great expense (which defeats the purpose of building high).
2) Infrastructure. It's easy to cram a lot of people into one building but it becomes harder to alleviate traffic or ensure access to things like shops and health care.
Generally, Berlin has mixed zoning with retail on the street level, apartments above, and offices and small manufacturing in the back. You can't build higher than what you see in the photo (the old limit for fire ladders), unless it's in an area with other higher buildings already.
Rents are rising as a return to normal. Most people pay around $1.2/ft^2 (sorry, I have no idea what unit the US uses for rent)
Housing everywhere in Berlin -- especially new-build -- is very dense. Importantly that's true throughout the city, not just in the centre.
Keeping Berlin so dense is an impressive achievement, given that it's surrounded by flat, empty countryside. Partly it's because of the cold war division of the city. But mainly it's cultural -- most Berliners are happy with apartments rather than individual houses.
Politicians religiously promise to maintain the 'berliner mix', where zoning encourages housing and commercial use in the same area, and keeping a social mix by having affordable housing everywhere. A new higher-density mixed-use zone category ('urban area') has just been introduced nationally, largely at Berlin's request.
As may be obvious I am not an economist, so anticipate and welcome the flaws in my idea being pointed out!
You could go against that by having the intention of turning a profit but committing to reinvesting, but that is still extracting that profit. Moreover, it encourages the same exploitative behavior.
In general, profit isn't bad. Trades are only made when both parties are better of afterwards, so in principle, more trade means everyone is better off. The devil lies in the balance between how much better off both parties are.
That 10% increase rule is only for new tenants.
That the state or municipality is an actor on the housing market really is a perversion and outright declaration of defeat on behalf of politicians. With the negative interest rate set by the European Central Bank and thus lack of investment opportunities, and given the growth of population in the metropolitan areas of Germany, you'd think this market should be able to see after itself, like it is in other areas of Germany.
Even more so since housing has traditionally been an investment for people seeking to build up a rent for when they're old, a problem that will come big time to Germany in the years to come, the demographics being what they are.
But social-democratic politicians in Berlin are generally incompetent or corrupt in the extreme; at the expense of other German's money, they rather want to be perceived as acting in the interest of their electorate.
[1] http://www.tagesspiegel.de/berlin/gesundheitspolitik-in-berl...
Edit: cf. rsync's quote
The government's job sure is to provide economic conditions such that a market for housing and other basic needs can sustain itself. But what they are rather doing is publicly blaming investors as "evil insects" ("Heuschrecken") in the worst socialist or even Nazi tradition, and making construction expensive by laws such as EnEV (law putting absurd energy efficiency burdens on new buildings) and asymmetric, unreasonable rights in favor of tenants.
Really, if there's a housing crisis, it's entirely the fault of the government, by definition.
I am reminded of this quote, which is often misattributed to Alexander Fraser Tytler[1]:
"A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing ..."