The solution, is that now landlords can only increase rent 7% (plus inflation) per year. This year, its something like 9%.
Apparently, someone forgot to figure out what >7% per year for 5 years is..... Its 40%, before the inflation numbers are added in.
Downsides that come to mind (but that don't seem too serious):
* It incentivizes landlords to keep empty apartments on the market longer before lowering rents to the true market price.
* It might encourage landlords to regularly raise prices more than they otherwise would, lest they forego the limited opportunity.
I'm normally much more free-market oriented, but I ask with the understanding of how much work and expense is involved in suddenly needing to find a new apartment. Just patching the holes in the drywall can take a full day. Then there's credit check fees, truck rental fees, pet fees, admin fees, move-in fees, new couch because the old one doesn't fit in the new living room fees...
if they raise the price too much, they will not get tenants as long as there's competition between landlords. So all this is basically just another way of saying there's not enough supply for the demand. So policies should target the supply problem directly, such as subsidies for new buildings, or tax incentives, etc.
I think we need to seriously reconsider the effect some building requirements and property taxes have on housing prices. It may not be ideal but very small apartments with shared commons and no parking for a few hundred dollars a month would be better than living in an RV or on the streets. This is a pretty common setup in Japan, not to mention college and military dorms. This isn't even that different from having roommates.
The market wants to supply more housing. We don't let it, based on laws that originally were created to keep black people out of neighborhoods. Those laws continue to be very effective at that goal.
Why does this continue to be such a problem in deep blue areas?
That is a pleasant breeding ground for justification for crime.
So there's the anti-poor angle that rich deep-blue neighbourhoods take and that ends up being racially discriminatory because of the underlying demographics.
That makes sense, but that just raises the question of why racial demographics are so regressive in those areas.
I genuinely asked because I don't know much about the inner workings of progressive coastal areas. It seems like if nearly all of the politicians and most of the population are committed to very progressive racial policies, you would expect to see... I don't know what exactly, but not this. I'd like to understand why things went so wrong.
Are there any US cities that are good examples wrt to racial demographics? Something that we could learn from?
Second and third order effects are also hard to control through publicly popular policy.
And I am not aware of any significantly sized US areas that don't have race-discrepancies in educational attainment. American society has very strong positive feedback loops and I think the strong economies of the coastal paradises amplify that. Take any uneven distribution of wealth and it will get worse in that environment.
The reason you don't see prices spike in inland cities is that they can expand outwards, and they don't have much economic opportunity. Cities on the coasts can only expand in one direction - and because of international trade, they have more economic opportunity, so more demand.
It didn’t help much. Landlords could circumvent it in many ways: by offering contracts to new renters that automatically increase each year, which then isn’t bound to the limits. For existing tenants they could do bullshit renovations that trigger a modernization clause, also killing the limit. Or put an Ikea couch in the apartment, then renting it as furnished, again circumventing some of the rent limits. Sure you could sue, but in many cases people were just happy to finally find something and ate up the higher prices.
Although I’m positively affected by the latest rent control laws in Berlin, I’m also not totally sure what to make of it. But I wanted to let you know that this is by far not the first law that was passed to try to curb price increase.
In my experience, people don't have experience outside of their local bubble, so you can easily recycle policies from another city or slightly tweak them
Thats what they really mean by land of opportunity
Oregon figured out a level of increase that would be too disruptive for its appetite, and had the legislature cap the rate to below that level.
On average over the past five years, that cap would not have been reached, though it may have been reached in any one of those years.
Is this a self own or mistake of some kind? Are you inferring that landlords will now raise rents more than they would have in the uncapped situation?
For example, let's say the free market would raise rents 5% this year, and 8% next year. A cap of 7% means the rent will rise 7% this year, as the landlord won't want to have caps permanently reduce future rents.
Yes, right now, I'd risk fewer tenants with 7%, but balance that against what might happen next year when I'd be full and still lose money because of the cap that year.
For this to be true, they would have to either (1) under present conditions, not be raising the rent to maximize profit or (2) under the scenario, raise the rent past maximum profit
Neither of those seem likely to me.
In the presence of a cap this strategy becomes riskier so it forces landlords to think about a shorter term horizon.
There's also a signalling effect of the cap which may mean tenant reactions to an increase at the cap are different.
They'll set it based on supply & demand. But caps increase the business risk to the landlord, and therefore increases the price as risk always translates to an increased price.