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Comment by dragonwriter | Hacker News Reader

> But those programs should be implemented as subsidies, not price controls!

Subsidies for historic populations without price controls would be a windfall for landlords, and an accelerant to runaway general unaffordability. You could probably split the difference with weaker rent controls and subsidies that make it look like stronger rent control from the renters side, which might mitigate the worst problems of either policies (albeit, at thr cost of combining thr problems of both.)

What would probably be better is to find a way to lean into displacement, or at least accept it, while giving displaced residents a stake in the unleashed value.

Strong rent control but with a buyout option where the the bought-out renter gets some share of the excess (compared to what they could have been charged with rent control) rent over a specified period with some floor might be an option.

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Subsidies for historic populations without price controls would be a windfall for landlords

This is specifically addressed in the introduction to The Affordable City, and is why "Supply, Stability, and Subsidy" are a three-point policy.

Without supply, yes, subsidies are swallowed up by landlords, and stability (tenants' rights measures) benefit a small minority. Without subsidy, those temporarily or permanently disadvantaged still lack housing or assurance of it. And without stability, tenants remain at risk of being abused by landlords.

(If this sounds like "please read the book", it's because it is. I'm not yet sold, but the proposals seem far-better fledged than most I've seen.)

> Subsidies for historic populations without price controls would be a windfall for landlords

How is it a windfall for landlords? If the rent prices are going up, they will be making the money regardless of whether the renter is paying for it or the government is paying for some of it.

If your point is that a subsidy will shift demand and increase the price, that is exactly what we want! A price signal to the market to build more housing to accommodate everyone who wants to live there including displaced communities!

> lean into displacement

What does this mean? I think there is some level of societal interest in preventing displacement, there are negative externalities from displacement that the market can't properly price in.

> If your point is that a subsidy will shift demand and increase the price, that is exactly what we want! A price signal to the market to build more housing to accommodate everyone who wants to live there including displaced communities!

As long as that same government is using law (ie. violence) to prevent building more housing, no amount of subsidies can be effective.

What do you intend landlords do? Hire an army to defend cheap housing from the government?

Yes, subsidies should be paired with dezoning.

Yes, law includes the threat of coercion, I don't see what adding that little tidbit does to improve your point.

> How is it a windfall for landlords? If the rent prices are going up, they will be making the money regardless of whether the renter is paying for it or the government is paying for some of it.

Subsidies for a population that otherwise couldn’t afford it will accelerate the rate at which market price increases, especially since those subsidies will also increase as the market price does. It’s like student loans and college prices, but worse.

> tudent loans and college prices, but worse.

It's not worse if there is cost-sharing.

And as I said above,

> that is exactly what we want! A price signal to the market to build more housing to accommodate everyone who wants to live there including displaced communities!

Inevitably, trying to keep displacement from happening is going to increase prices for newcomers. The question is whether we want to do that in a way that incentivizes increasing supply or one that keeps people out.

> A price signal to the market to build more housing

And, as basic economics will tell you, sending such a signal to a market is a windfall for people that already own the underlying asset in that market--i.e., landlords. They get a windfall because they bought the asset when the market undervalued it (because the price signal was not being sent).

Sure, but if paired with dezoning, the loss due to the elimination of rent-seeking through constricted suply would likely be larger decrease for landlords than the increase from demand surge from the subsidy.

> Sure, but if paired with dezoning, the loss due to the elimination of rent-seeking through constricted suply would likely be larger decrease for landlords than the increase from demand surge from the subsidy.

Landlords benefit from dezoning; increased density increases the rent value realized per unit of land area, even if it might decrease it per unit of living area, even without subsidies (and the slumlords that go whole hog on density will make those islands of private communities that don’t even more valuable, so long as the crime and other unattractive effects of the former can be kept out of sight, out of mind, from the latter.

The people opposed to dezoning aren’t landlords, they are residents who prefer low density conditions.

IIRC, by modern economists that inflation doesn't work like that in the real world. Real estate is based primarily on desirability, the order-of-magnitudes of wealth influx, and comparables. Overall, housing prices are uninvolved in changing inflation, but mostly externally-caused inflation changes housing prices slightly.

> I think there is some level of societal interest in preventing displacement,

Why?

‘Historic populations’ is a euphemism for Black in most cases.

In most large cities I’ve lived in, there is typically a section of town plagued by bad schools, high crime, bad infrastructure, and crumbling residences, and it is usually monoethnic.

Why is this a good thing?

It seems that whites in the more affluent areas and suburbs are willing to throw a lot of money at these ‘historic’ populations so that the residents won’t move to their side of town.

Kinda perverse.

‘Ethnic’ neighborhoods in large cities are quaint. Sometimes they become tourist attractions. But, in large part, many are simply ghettos and the faster the ethnicity is integrated into the larger housing market, the better for everyone.

Those neighborhoods are often targeted for redevelopment the moment the ghetto starts improving, and as the ethnic residents are often renters, they have little recourse when it begins.

See: gentrification.

Isn't it typically a windfall for richer people posing as poorer and clever poorer people for improved survival who can utilize or resell earmarked subsidies meant for extremely struggling people?

Welfare fraud is one of those instance of things where it is really salacious so people love reading about it in the media but is not actually that common.

Rent control laws are a different beast altogether because they are not means tested typically.

Its simple - tax landlordism out of viability.

How do people who can't afford to buy then survive? I'm in NZ and we've just seen laws introduced that makes being a landlord more expensive and unsurprisingly it's seen rental increases as a result.

Yeah, I guess that's the logical conclusion. I'd naively expect that the decreased profitability of an asset would decrease its market value, but the owner, banks and government are all interested in keeping the prices high, so instead of offloading less lucrative properties at cheaper prices, the rents get increased :/ I've rented most of my adult life, never did the landlords not be assholes. There must be a better way.

> I'd naively expect that the decreased profitability of an asset would decrease its market value

It actually does (kind of), the problem is that the gap between "not profitable" and "affordable" is a chasm. Someone who is currently paying $350/week rent with minimal savings behind them (which statistically is an optimistic assumption) is not going to be able to find a 10% (or maybe higher) deposit on a $500,000+ property.

The other issue is that right now we're experiencing massive inflation of house prices. Median house value in NZ increased 24% in March - that means you'd need to save around $2000/week just to not lose ground. It's madness, I'm glad I bought at what I thought was the top of the market in March 2000.

Spend the money on new houses without asking anyone for permission. (Specially not home owners who financially benefit from homelessness.)

You could even do a construction project and bill the land lords for that directly. In an even crazier universe they would get something in return for the [forced] investment.

You don't make landlordism more expensive. You make it more difficult and less profitable.

House prices will go down, and more people will be able to buy. For others, there is public-ownership rental and even public housing (that would be of much higher quality than today)

> You don't make landlordism more expensive. You make it more difficult and less profitable.

How is that any different? If it's more difficult then it inherently consumes more time and/or money - given that money is (arguably) how we measure the value of labour I don't see any way of escaping this.

Not if you bound the profit. Then it consumes more time without yielding more money, and is thus less interesting of a proposition -> property values go down. You're assuming an equilibrium return on investment (and unchanging prices), and a perfectly stable market, here.

I have no idea. It seems like, in the US with spotty social assistance, people aren't able to conduct typical investments and savings for retirement and spend much more at convenience businesses for life's essentials such that they become trapped in poverty / economic immobility.

That doesn't make sense. You only need to tax the appreciation of the land value via land value taxes. Building housing and renting them out is economically productive, we want more of that but property taxes are paid on the productive part. This makes land value appreciation a far more reliable way of earning money even though you are doing absolutely nothing that is economically productive.

...and what? What do you expect that to do?

I don't want to own a home. I don't want to have to sell a house/apartment when I move and I don't want to be responsible for it in the meantime.

Cool, then let the government do it. Your "rent" can even build equity in such a scheme.

The supply of landlords is not fixed. If subsidies make it attractive for suppliers to offer housing, more housing will be built and the prices they can demand will fall. Subsidies naturally give rise to a glut and underconsumption which is exactly what you want.

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