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Comment by pydry | Hacker News Reader

>Only around 8% of Swedes live in households spending more than 40% of disposable income on housing, compared to 15% in the UK and almost 40% in Greece, according Eurostat data.

I wonder what metric they use for "not working".

It's not like a lack of rent control is creating vast new supplies of housing here in London and as far as Im aware the fastest period of homebuilding in NYC was in the 50-60s when rent control was at its strictest (https://cbcny.org/sites/default/files/media/image-caption/Ho... ).

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Rent control actually works great for the limited number of people who can get into rent-controlled housing. They love it! Unless you want to move to a different apartment, or have your friends move near you, or have any pressure on your landlord to improve the property, or…

It’s everyone else who suffers the most. Usually they have no choice but to move somewhere else or stay at home with parents, so you can’t get an accurate picture by looking at aggregate household statistics. Unless you’re deliberately trying to ignore everyone excluded by these policies.

Rent control is one of those policies that sounds great as long as you ignore second-order effects and pretend the population and economy never change. In practice it just creates a different system of haves and have-nots while removing any chance for the market to compensate.

>It’s everyone else who suffers. Usually they have no choice but to move somewhere else or stay at home with parents

A lot like London without rent control then, but if rent control were implemented it would be the primary culprit for what's happening anyway?

Color me skeptical.

Seems to me it's the landlords that really "suffer". E.g. the SF landlords that paid a tenant hundreds of thousands to get them out ( https://apnews.com/article/lifestyle-business-san-francisco-... ). Rent control just decides whether the "spoils" of restricted supply go to landlords with the most capital or the renters who lived in the city the longest.

Hacker news cries bitterly about nimbyism (especially in SF) that restricts development to keep up property values and rents. Whom do they think is most incentivized to do that? Redirect those spoils to leveraged landlords and find out.

> A lot like London without rent control then, but if rent control were implemented it would be the primary culprit for what's happening anyway?

I’m not sure what you’re trying to suggest about hypothetical rent control in London, but it should be clear that London was geographically exhausted long ago and they’ve been debating architectural preservation and building height control ever since.

You can’t simply buy a property in London, knock it down, and build a 50-story skyscraper. Using it for your case study on rent control doesn’t make any sense.

> Seems to me it's the landlords that really "suffer".

This is the fantasy: Stick it to those evil developers and landlords, amirite?

The fallacy is assuming that you get the exact same apartment under rent control, but cheaper. You don’t.

The truth is that being a rent-controlled landlord is easy mode. You have very little competition, by law, and the waiting list to get into your apartment can be years or decades long. As a result, you don’t have to compete on anything. Who’s going to turn your apartment down when it’s their only shot at housing and no one’s building new construction to compete at artificially depressed prices?

Now you don’t have to worry about installing good appliances or even nice carpet. The air condition doesn’t work well? Too bad, as long as it meets regulations (if any) then that’s good enough. Why would you if your tenants aren’t choosing based on competition? The tenants suffer, too.

And you’re still ignoring all of the people locked out of the system by the ensuing decade-long wait lines, as is the case in this article.

>I’m not sure what you’re trying to suggest about hypothetical rent control in London

I'm stating that the extreme lack of supply ascribed to rent control also exists in similar cities without rent control.

So maybe rent control's effect on supply is vastly overblown as you can see by looking at the large amount of house-building in NYC before 1974 in the graph above, which is when rent control laws started getting really watered down.

>It should be clear that London was geographically exhausted long ago

Thats kind of absurd. It only recently caught up to prewar population levels. Property prices skyrocketed way before that.

>The truth is that being a rent-controlled landlord is easy mode.

If they like it so much why do they try to trick/bully tenants into leaving or offer large sums of money to tenants to leave if that fails?

>And you’re still ignoring all of the people locked out of the system by the ensuing decade-long wait

Give leveraged landlords market rent in restricted supply environments like SF and the FIRST thing they will try to do is to inhibit further development with NIMBYism that might bring down their rents and damage their investment.

Detractors of rent control tend to feign support for new residents but theyre perfectly happy for them to be priced out alongside the long term residents of the city.

More social housing fixes the underlying supply issue. Higher property taxes fixes the underlying supply issue. Wanting to kill rent control before or instead of fixing these things means being concerned with profit, not people.

Rent control is a band aid while that happens to keep long term (especially elderly/vulnerable) renters housed.

And landlords loathe it.

> So maybe rent control's effect on supply is vastly overblown.

Just because rent control negatively affects supply doesn't mean bad supply is only caused by rent control.

I live in London too and I'm baffled by the lack of tall buildings in pretty central parts of the city. The real solution is more supply.

> Rent control is a band aid while that happens to keep long term (especially elderly/vulnerable) renters housed.

At the expense of people who don't currently live in London but could, such as immigrants or people from poorer parts of the country finding a good paying job here.

>At the expense of people who don't currently live in London but could, such as immigrants or people from poorer parts of the country finding a good paying job here.

Kicking grandma out of her rented apartment and on to the street isn't going to suddenly mean that Romanian cleaners won't be living 7 to a house in zone 5.

This housing crisis was deliberately engineered in London as a result of the 1980s war between Thatcher and local government. Council housing was privatized as a result (& some of those gains were capitalized by existing residents through right-to-buy).

Councils were starved of tax funding through the UK's comically low council tax rates. This meant that not only was owning property a much better deal but also that councils lacked the funds to increase the supply of housing. Hence prices taking off like a rocket.

There's your supply issue. Rent control would be a drop in the bucket compared to that.

Not london, but i moved away from cambridge in the 2000s to switzerland of all places, which i thought was hugely expensive.

Well, in cambridge, i got kicked out of 2 flats in6 years because they wanted to raise rents, each time, i had to move further out, get a smaller place and still had to pay more money each time, i wasn’t getting pay rise in line with this and i think that’s still the reality across much of the uk, house prices and rents are rising higher than wages.

I also noted across this time that younger people apparently like staying in more and the selfish gits are spending less money on other things and somehow that’s their failing.

I didn’t have my rent raised in ten years here, in fact, as interest rates went down, i would have been well within my rights to demand a decrease. Also, bars, restaurant and clubs seem much more vibrant here than when i was in the uk, as if younger people had a bit more disposable income that flows in the local economy

I had the fun idea to tie minimum wage to real estate in the area. Take the national average rent for an apartment for a family of x people. If the regional average rent is 10% lower the minimum wage can be 10% lowered as well. If the average rent is 100% higher the minimum wage can be cranked up by 100%.

It would create problems for poor companies that will have to make room for more effective entrepreneurs. At the same time it would create new opportunities in areas normally not considered.

> Kicking grandma out of her rented apartment

If she's retired, she can move somewhere cheaper so someone who actually needs to live there for their job can move in.

The rest of what you've written is completely unsubstantiated.

Ah yes, the classic “you’re useless now grandma, the fuck on outta here” line. I bet you’re a real gem in the family.

A landlord is to housing what a scalper is to tickets (or for the nerds, graphics cards). Only one of them leaves you fucking homeless.

Ah yes, the classic "I got here first so it's mine forever".

Are you advocating for an end to all property rights or full housing nationalization or something? Do you advocate for 100% capital gains taxes, including on housing? I don't understand why you target rent control as the only thing that rewards the people who already have things.

I don't support policies that actively entrench the status quo. I'm for taxation that's as high as possible without causing too much negative impact on investments. We're having a conversation about rent control here though, that's why I only talk about rent control, in a conversation about taxation, I'll talk about taxation.

I'd rather a grandmother be housed than be homeless, even if it means her grandchild has to live in a further flat.

two ways of looking at things. on the one hand, there's the view that society exists to take care of people, including letting grandma stay in her appartment if she wants to. on the other hand is the view that society is a competiton, grandchild against grandparent, and so on. one of these views is insanity.

So should grandma occupy a five bedroom house by herself a 15 min walk from the city for twenty years while her children wait until their mid thirties for a deposit on a studio?

If you can afford to rent a flat in London, you can afford a flat anywhere, it's not about homelessness.

but what of you can only afford it because of rent control? isn't that the actual discussion at hand, elderly people staying where they've lived forever because they can afford to due to rent control?

There's a limited supply of housing in those high demand locations, not everyone who wants to live in London can live in London because there just isn't enough units, with that limited supply, housing should go to the people who need it the most, like the people who have jobs in those locations.

Then rent control will allow the _most_ people who have the _shittier jobs_ to live closer to work. I don't think there is a real care here about anything other than "I want the power to do what I want", which translates pretty closely to "mah freedoms".

Absolutely not, they protect current renters, not people with the lowest wages, people with the shittiest jobs have been priced out already. Rent control protects the millionaires renting in Mayfair as well.

> If she's retired, she can move somewhere cheaper so someone who actually needs to live there for their job can move in.

OTOH that is extremely cruel. Older people, assuming they have lived there most of their life, are the hardest hit by having to change. All their lifelong friends are near, their trusted doctors are nearby, it's all they know.

Why not have the job move to the person instead?

That's the dream isn't it? Take all the high paying silicon valley jobs, and move it to some cheap city like detroit.

That'd be great of course, for a ton of jobs, that's not possible though.

> I live in London too and I'm baffled by the lack of tall buildings in pretty central parts of the city. The real solution is more supply.

I just spent 5 days in London and was shocked at how many tall buildings there were that weren't there 20 years ago, and indeed how many are being constructed - not just in the centre and docklands, but in battersea and vauxhall too

In 20 years, you would hope plenty of buildings were built, if you go to places like Whitechapel though, it's all 3-5 floor buildings.

Supply isn't an issue, there are plenty of empty flats already - that's market failure.

Source on the "plenty" of empty flats in London? The number I found is 29,242 which is hardly something that'll get the prices down.

Indeed, and vacancy numbers are to be expected. Go to any source for rental investments and you'll typically see vacancy rate assumptions of 4% to 8%, because tenants leave and placing a new tenant can take some time. If you plot that on a city home to 10 million people, it's entirely natural to find that a few hundred thousand homes are vacant at any point in time, typically only a few weeks or months. The 'long-term vacant' problem is relatively minor by comparison, and while that must certainly be addressed, it's not at all going to change the order of magnitude of the current housing issue.

London's vacancy rate is actually very low, even during covid when vacancy rates tended to rise.

> More social housing fixes the underlying supply issue.

How could social housing fix the issue? The underlying issue is too many obstructions to building new houses, which restrict supply. If commercially motivated developers cannot build enough houses due to bureaucracy and obstructions by NIMBY groups, then municipality would likely fail too.

My house was build some 30 years ago by students who paid for their education. They added a new badge of construction workers every year (and the oldest badge got their diploma). I have no idea what happened with the concept. They are now back to [the usual] building things next to and inside the school then demolishing it.

I imagine the collective mind could greatly benefit if everyone had to spend a few (education focused) months in construction (and/or say farming etc) Its not boring if its just a short period. In construction you can learn the basics of a discipline (and make yourself useful) in just a few days.

But I agree it is the obstruction that prevents cheap housing. Its probably intentional (to some extend) simply to drive up prices.

> Now you don’t have to worry about installing good appliances or even nice carpet. The air condition doesn’t work well? Too bad, as long as it meets regulations (if any) then that’s good enough. Why would you if your tenants aren’t choosing based on competition? The tenants suffer, too.

I'm totally against rent control, but London's rogue landlords and its very low quality housing are world famous and people coming from all over the world spend the first 6 month adapting to crazy stuff like carpet, old carpet, 10 year old carpet, fucking carpet, windowless toilets, wooden walls, decaying electrical systems, holes in the walls, carpet (I can't get my head around the idea of having carpet in a flat), etc... and carpet (unless they are in the top 5% of the income distribution and can afford to pay 2-3K£ per month in rent). Air conditioning and half-decent insulation are for the top 1%.

Said that, I don't think London's problem is lack of rent control, but rather it is lack of development of the rest of the country and the government artificially inflating the housing market.

You have forgotten carpeted stairs, and worst, carpeted bathrooms.

My skin crawled at the thought.

Carpeted kitchens.

> it should be clear that London was geographically exhausted long ago

It's clear that there are over 30,000 empty homes in London, while most flats built are way out of the range of ordinary families.

Many people are locked out of the system now, we have "affordable housing" that you need to earning about £80k to buy, the current system is utterly failing.

>It's clear that there are over 30,000 empty homes in London

So? According to wikipedia london has anywhere between 10.0 million and 14.3 million people (depending on whether you're counting "urban" or "metro"). 30,000 empty homes translates to 80k people[1]. As egregious as that might sound, is a drop in the bucket relative to the overall population. The 30k number also fails to differentiate between long term emptiness (eg. billionaires hoarding houses) and short term emptiness (eg. units undergoing renovation, units looking for a new tenant). The latter is necessary for a functioning rental market, otherwise it's impossible for people to move into/around the city because all the housing units are locked up.

[1] https://www.statista.com/statistics/295548/average-household...

Why are there over 30k empty homes, if they command so much money from tenants?

Who can afford to keep homes empty at such great expense, and for what purpose?

Sounds like a step is missing...

> Stick it to those evil developers and landlords, amirite?

Seattle so far has not imposed rent control, but they've done everything else they can to create benefits for renters at the expense of landlords.

And so the smaller landlords exit the business, and the larger ones raise rent to cover these new "free" goodies.

One of the freebies is the city will provide a free lawyer to any tenant with a dispute with the landlord, but the landlord gets to pay for his own lawyer.

The landlord would have been paying for their own lawyer regardless.

Yes, but by reducing the lawyer cost for the tenant to $0, the tenant is far more likely to initiate legal action, even for frivolous cases. The tenant can regularly use that as a threat.

I would think that the blame for rising rents in Seattle might be more realistic to put on 600,000 people, many of them earning hundreds of thousands of dollars moving into the metro area over the past decade.

With a firehose of money sloshing around, of course rents are going to rise. You can be damn sure that I'm going to outbid any of the locals for my apartment. Rent is barely a blip on my budget.

I've read in the letters section of the Seattle Times many, many letters from landlords who are exiting the business in Seattle due to the extra uncompensated costs heaped on them by the city.

When a landlord 'exits the business', do they also load the apartment they are letting into a helicopter, and take it out of the city?

The housing inventory doesn't change, regardless of whether landlords are 'exiting'. Like any conscious class, they are just complaining because they, like the rest of us, want more money.

Many own the home, they can sell it to anyone, including people who want to own it as a residence. Underperforming buildings also get razed by developers.

> Many own the home, they can sell it to anyone, including people who want to own it as a residence.

Which, in terms of the rental market, is the exact same thing as that person long-term renting the unit.

> Underperforming buildings also get razed by developers.

... And in this town, when that happens, they get replaced by buildings containing more units. You may have seen a few cranes here and there on the city skyline.

There are few mechanisms through which rent control can hurt.

Rent control discourages building more units. The more you can make from rental, the more companies will invest in new construction projects.

Rent control can decrease efficiency of living situations. You can imagine an old woman living alone in a 3 bedroom unit with rent control because it would be more expensive for her to move to a smaller unit. Or someone who gets a new job far from their current rent-controlled apartment but won't move out because the rent is so much cheaper.

>Rent control discourages building more units.

Yet the strictest rent controls went hand in hand with the fastest homebuilding spree in 1950s NYC.

It clearly didnt discourage that much. Maybe it didnt discourage it at all?

Or maybe it does a bit but is eclipsed by the effect of, say, NIMBY landlords inhibiting development, hellbent on staying above water on their eyewatering SF mortgage.

>Rent control can decrease efficiency of living situations. You can imagine an old woman living alone in a 3 bedroom unit with rent control because it would be more expensive for her to move to a smaller unit.

I can imagine. She could get priced out of the city entirely I suppose.

It seems to me that if the market rate is intent on 10x'ing her rent maybe it's the market that should be forced to adjust first, not her.

More home building. Higher property taxes. Rent control while the effects kick in.

Seattle (which is for forbidden by the state from implementing rent control) added 2-3x the housing units as San Francisco from 2010-2020 despite similar population growth in both cities. The impact of price controls on supply is a well studied phenomenon. Lower price for something -> less incentive to produce it.

If you look at the data above it shows home building peaking in the early 1960s in NYC. Rent control laws were strong until the 1970s. That's the point when homebuilding plunged and didn't perk up for decades.

Weakening them in 1974 if anything seemed to restrict supply.

SF has comically low density housing that is driven by homeowners lobbying to restrict development.

The difference between SF and Seattle is probably property taxes (higher in Seattle). It discourages land from being hoarded and used unproductively.

You're blaming rent control for SF not building housing even though SF rent control doesn't apply to new buildings built (and hasn't for 40 years)?

Because of the laws around new buildings, rent control advocates have an incentive to prevent old buildings from being redeveloped: if they are redeveloped then there will be fewer rent controlled units! This does regularly play out in the politics of development in the area[0].

Then when rent controlled unit can be redeveloped, there's a desire to allocate various percentages to different income levels. This means that some units have less income for the same cost so it's hard to balance meaning fewer projects get off the ground.

Now there's even further issues about development as a right vs requiring a use permit...

So, there's a lot of contributors, but the political impact of the politics of rent control is significant.

[0] https://www.berkeleyside.org/2021/07/28/uc-berkeley-settleme...

It’s doesn’t take a genius to see see that being a landlord in SF is an ugly prospect.

70% of housing units in SF are still rent controlled. The negative influence of price controls are still felt. Not to mention, repeated attempts to repeal Costa-Hawkins means the threat of rent control is still hanging over developers heads.

Units built after 1980 in SF units aren't subject to rent control. On a purely econ 101 level "old units are unprofitable/new units are profitable" should spur more new construction to minimize the effects of old units on your portfolio.

I agree with this, but the misunderstanding because no one is explicitly talking about how there is a desire to preserve rent controlled units. This means it's very hard for the econ 101 to play out.

> Seattle (which is for forbidden by the state from implementing rent control) added 2-3x the housing units as San Francisco from 2010-2020

and yet to keep up with demand we would've needed to more than 3x what we did, though from what I understand, the infrastructure to build more high density housing even faster just doesn't exist. Seattle was literally building housing as fast as it is possible for a US city to build housing.

If true that, in my opinion, points to a more significant problem in America.

> It seems to me that if the market rate is intent on 10x'ing her rent maybe it's the market that should be forced to adjust first, not her.

Assuming a family of 4 would live there instead, she's effectively removing 3 people from the city. That can force other old women to move out of nearby homes that aren't rent controlled (since prices become higher than they'd be if more people could fit in existing housing), or it could prevent people from moving in. But either way, less people can live there. The policy isn't without harm.

> I can imagine. She could get priced out of the city entirely I suppose.

kind of an unlikely worst case. There's a gradient of prices as you move further from the city center, and this particular hypothetical woman is moving to a much smaller unit. I haven't heard of a city where the average market price unit was 10x the rent controlled price. It's probably 2x-3x at worst for an equivalent unit.

> Assuming a family of 4 would live there instead, she's effectively removing 3 people from the city.

I think is overrated concern in general. Most popular cities aren't underdeveloped. Rather the problem is concentration of resource. Having less optimized areas are actually a good things as that means more areas are equivalent. Which is really what supply is in housing markets. It's when every one too young, old or poor have to move you get problems because now all the attractive things are in the same area. Which means the demand will be very high.

Also this is happening in the housing market in general but apparently it isn't a problem when it's wealthy people retiring in their forties because of the housing market itself.

> There's a gradient of prices as you move further from the city center, and this particular hypothetical woman is moving to a much smaller unit.

That is mostly true if you are moving voluntarily. Because if you couldn't find something beneficial you wouldn't move in the first place. It isn't as true when you are being forced to move. Often it isn't even about what you are moving to but what you are moving from. Once you can't live close to your family, acquaintances or familiar establishment it doesn't matter as much.

It's sort of curious how so many seem to agree that we are "losing our values" in society (or whatever) but then base everything on assets. If we want people to be able to live close to their grandchildren, know their friends from growing up, involve themselves in organization or otherwise make social connections it isn't going to be free.

There's a shortage of bread. What's the solution?

> More bread baking. Higher bread taxes. Limit bread prices while the effects of all these magical new baking companies flocking to lower prices and higher taxes kick in.

Also, some will get cheap subsidised bread allotments, others won't get anything. And if you get an allotment of bread to feed 3 people but it's only you, there's no mechanism that redistributes the excess to those who need it most, despite massive scarcity.

And if you get a certain type of bread you like at a certain age, but your preferences change and it becomes bland, there's no mechanism for others who love your type of bread, to be incentivised to exchange your types.

e.g. my dad, who is in a rent-controlled apartment with 3 bedrooms in the capital city and has no mechanism or incentive to move out, despite not using the space, not wanting the space, and not wanting to live in such an in-demand area necessarily. Oh wait, I meant bread.

Rent control has 2nd order effects that can do a lot of harm. If rent-control was mixed with market based incentives and a limited time to the right to an apartment, it wouldn't be as bad. I'm not against rent-control per se, but as with all things, it must be balanced. Just adding more of it isn't a solution. And balancing existing rent-control rules with reasonable additional (market) incentives, would help.

For example, if cities allow an individual to live in a rent-controlled unit for 8 years, after which they must leave, that's better. The unit can then go to someone else, also rent-controlled. Instead, some people get a lifetime right, and others a lifetime waiting list. That's a fundamentally unfair use of public funds. It's not perfect (leaving a home has a chance of making it harder to stay connected to a local labour/social circle), but two people having each 8 years is clearly preferable to one having 16 and the other nothing.

Another example is if (such as in Germany I believe, if anyone can link an English source that'd be great) you have a system where your rent is controlled based on usage. e.g. suppose market rent is 1500 for a 3 bedroom, rent controlled it's 750 for a family of 3. The moment you live there alone it's no longer 750, but instead say 1000. That creates natural incentives to only renting a place that is necessary to fit your lifestyle. My dad for example would exchange his place with someone who lives with a family of 3 in a 1 or 2 bedroom home, because of this.

I don't know if this mattered, but there was still a lot of public housing being built in New York in the 1950s.

https://www.guernicamag.com/the-rise-and-fall-of-public-hous...

How exactly do higher property taxes encourage more homes being built?

Edit: I guess you mean taxes on land, not the houses. But even then, would this not encourage to build high-yield luxury condos instead of high-density cheap space?

> Rent control discourages building more units. The more you can make from rental, the more companies will invest in new construction projects.

Actually, I would think the opposite. If capital-laden landlords aren't getting increased returns from their existing holdings, they would be incentivized to create more supply by funding new developments.

Then you don't understand opportunity cost. If the ROI isn't there, they're not gonna invest in real estate at all.

Rent control doesn't typically restrict the prices they can set on new housing, only on existing units. Therefore the ROI is there to be had, just not in forcing people out of their homes.

You need to build higher, and the way to do it is to force people out of their small homes and build large ones.

Actually nimby zoning is more so what prevents this in Seattle. Without such small groups of home owners could potentially drastically increase their profit on their homes by selling together to a developer building an apartment building.

Rent control can mean many different things. Different rent control schemes are implemented in different cities. But generally, any rent control scheme that reduces rental prices across the board is going to reduce new construction. I think this is pretty uncontroversial among economists.

I think your logic is flawed here.

1. There's no reason why making landlords earn less money would make them want to invest in real estate more. If you have $1 million to invest, you'll try to choose the best investment available to you. It doesn't make a difference if your current property is doing well or badly.

2. If landlords make less money, they should have less capital.

3. Even assuming your premise was correct and landlords who make more money from their property want to invest in new properties less, it wouldn't matter. As long as building new units is a good investment, someone else would do it.

Berlin is rent-controlled (though probably not to the same extent as Stockholm), and covered in new apartment building sites.

Though Berlin is going through interesting times with rent control at the moment.

And it's next to impossible to move to the rent controlled side of Berlin. The reality of rent control is it's a handout for the people who already live there at the expense of those that wish to move there.

I don't see how that is particularly legitimate argument against rent control as that is how the housing market works in general. The difference is that if you buy an apartment you also get appreciation.

New development is occurring in Berlin because the rent control does not apply to new units and it's on purpose. (Although didn't the rent control policy get voided by some court?).

As I understand it, and I'm not sure I do, the "you can't increase rent by that much" law got knocked down, and the govt response was to buy a bunch of properties and offer them for rent at rent-controlled prices.

Interesting times. It'll be fascinating to see this play out. Like a social experiment on rent control.

If rent control discourages building more units, then the market has failed and the government or local authorities should build "more units"

There is lots of research on this. Here's one heavily cited paper that finds what the previous poster was suggesting. Fine to disagree, but it would be nice to see some counter evidence.

https://web.stanford.edu/~diamondr/DMQ.pdf

In terms of London, there is also the problem of building restrictions. I don't think we're going to see tall residential towers popping up in say, Mayfair, anytime soon. I understand that this kind of change would completely transform the character of London. But the price of not wanting change is sky high rents.

I'm generally favorable to rent control (it's a socio-political tradeoff, like all public policies), but rent control on single-family homes or single units (as with renting an in-law), which is what that paper examines, is a horrible policy. The consequences for landlords are far more extreme than rent control on large, multi-unit buildings. This makes it's difficult to infer similar supply effects between rent control on single-family homes and on multi-unit buildings.

Turnover in SF is actually quite robust. The vast majority of tenants don't stay in the same apartment for decades. This is especially true during boom periods. IOW, ebbs & flows in turnover actually tend to benefit landlords. But a small number do. The average turnover rate is ~20%, which means the average occupancy is ~5 years. For large buildings what matters is the average. The fewer the number of units (either in a building, or in your portfolio), the riskier things become.

The riskiest of all is a single-family home, whether you rent out an in-law or the whole house. In the face of rent control you're not only risking being stuck with the same person indefinitely, paying an increasingly below market rent, but you're locking up for an indefinite period what is probably your largest and most important asset. It's a potential financial nightmare, and one with realistic odds (e.g. maybe 1 in 10 instead 1 in 10000) of befalling you.

As the building grows larger, the more the risk is spread and you can rely on the average occupancy term. Moreover, the larger the building, the less likely one would want to tear it down to build something larger. IOW, the larger the building, the more closely your expected future investment returns approach non-rent control levels.

Rent control policies should be accompanied by policies that promote densification. All forms of rent control will tend to reduce supply to some extent (at least, that should be the a priori expectation), but rent control also provides important social benefits. IMO, those lines cross, but I would never expect the benefits to be greater than the costs in the context of single-family homes.

Rent control in San Francisco doesn't apply to single family homes or condos. As the owner you can raise the rent to market rate.

You're right. I was confused. It doesn't cover the main residence of single-family homes. But AFAIU the 1994 rent control extension did encompass pre-1980 in-laws in single-family homes, which are quite common in the vast areas of San Francisco containing single-family homes. (Most homes built after 1930 put the primary living space on the 2nd floor. The first floor was a garage, and it was extremely common to build an in-law at the back of the garage.) They would be more common but for the fear people have renting them out.

The 1994 law encompassed multi-unit buildings of 4 or less, which were previously excluded from rent control. An elderly neighbor of mine owns a classic 1960s-era 3-story, 2-unit apartment building. He lives in one unit and keeps the other vacant so that his children won't have any trouble refurbishing or selling the asset when he dies. This is a nearly identical scenario to someone living in a single-family home with an ADU. There are several such homes on my block, though I don't know the owners so don't know how many are kept unnecessarily vacant.

There is lots of research going the other way too. https://www.sciencedirect.com/science/article/abs/pii/S02642... Forty years of rent control: Reexamining New Jersey’s moderate local policies after the great recession. The short of it is moderate rent control doesn't positively or negatively impact aggregate prices, but it prevents displacement in the short term.

Not in Mayfair, but all around the fringes of the city they are.

If you want a £500,000 studio flat 30 minutes away from central london by tube there is a massive amount of supply. If however, you can afford said property, you probably dont want to jam your wife and 2 kids into it.

And with high speed trains on the west coast mainline you can get a 5 bed detached with garden for around that - with Euston reachable in 45-50 minutes in places like Rugby.

Interesting way of looking at it, but if you want to make a positive impact for the most people then supplying more housing would make a lot more sense than messing with prices.

London's problem isn't "rent control." It's "construction control."

London permitting just will not allow builders to construct enough housing.

Perhaps for worthy reasons, or perhaps not, but regardless there's no question as to the source of London's housing shortage.

So the difference between with and without rent control is just a matter of who gets excluded?

With rent control, basically those who were there first get the housing, those who come later are out of luck.

Without rent control, those who are more wealthy can afford the housing, those who are poorer are out of luck.

If that was the only oversimplified way to see the effects of rent control, I'm sincerely not sure of what would sound better (or less worse) to me. I like when a city keeps its soul and doesn't slowly become a theme park for rich people (which is what I see in mine over the decades).

> With rent control, basically those who were there first get the housing, those who come later are out of luck.

And then they vote against any new construction "to keep the neighborhood's character intact" (remember in the 50's when certain groups of undesirables were excluded from certain neighborhoods?)

> Without rent control, those who are more wealthy can afford the housing, those who are poorer are out of luck.

That creates an incentive to build more.

> Without rent control, those who are more wealthy can afford the housing, those who are poorer are out of luck.

I prefer that. It's not just about wealth, but also about how much you want to live there. I know people who earn about as much as me and spend > 30% of their net income on rent because they want to live in a trendy area. I don't need to live there, so I was able to choose differently and pay ~12% of my net income.

Also: with wealth, there's at least some correlation with merit. With a lottery, there's none.

I feel a bit confused about what you mean with that it is not about wealth. If two people wants to live in a place as much and they both are ready to give 30% of their net income, the richer one would get the apartment in a system with no rent control, right? Your point only makes sense if everyone had the same net income.

Secondly, why is the merit of high income more valuable than waiting in the line for longest time? None of them is a lottery in my opinion.

>Secondly, why is the merit of high income more valuable than waiting in the line for longest time? None of them is a lottery in my opinion.

People invest internationally. This gives a strong bias for money to chase large metropolis because of agglomeration effects. So now "everyone" has to move to the city to work for the investor money. There are people who just want to get their fair share of the money. If you let someone live there that can't find a job that gets him investor money then he basically displaced a productive worker bee and made the entire economy worse off. Social mobility takes a massive hit as a result.

That worker bee could have earned enough to live in a newly constructed apartment. If he actually managed to get a rent controlled apartment then congratulation, you just subsidized one of the richer individuals.

Think about it this way, you want vulnerable people to afford their apartments. Why are you subsidizing every single apartment instead of subsidizing people in need? In fact, the subsidy is greater the more expensive the apartment is. You're subsidizing the rich.

I said it's not just about wealth. Yes, if both a millionaire and an average salaried employee spend 30% of their income, the millionaire will always get the house. But they don't compete for the same real estate. Instead, the average person competes with others grouped around the average, and 30% vs 15% of income is a significant difference. If you really, really want to live in the prime location, you can, you just have to spend more.

> Secondly, why is the merit of high income more valuable than waiting in the line for longest time?

Because it correlates with useful stuff being done for society. Not perfectly, of course, but somewhat. Waiting doesn't at all. And it's usually not about "waiting", it's often about being part of some group, having the luck of the draw, knowing someone in the office that assigns priorities, or "inheriting" the right to live in some (publicly owned) flat from your parents.

What happens then? Person A lives in a very desirable place, person B does not, and person B has to subsidize A's flat.

The point is, rental markets without rent control are also failing to provide affordable housing. It's a quandary with no obvious solutions.

All of these places suffering from severe housing shortages have some government policy which can clearly be linked to it. Sweden has rent control, London has a labyrinth of building restrictions based on historical preservation among other things, etc.

There's an obvious solution here, it's just not one most people living in these areas wants to hear.

> All of these places suffering from severe housing shortages have some government policy which can clearly be linked to it.

All these ill people have doctors around them, which also can clearly be linked. That in itself doesn't seem to be an argument.

(Note I'm not taking positions here, I don't know enough about the topic)

Sweden had a functioning rent control system for many decades until relatively recent changes. Please feel free to elaborate how you can clearly link the current situation to rent control and not those changes.

Land value taxation and reduction of regulations which artificially limit supply are the obvious solutions.

Taxing improvements to land makes it less likely that people will build or renovate, so all such taxes should be removed. Taxing land, however, disincentivizes landlords from holding land idle.

Regulations are also important.

If there is a mandatory minimum amount of parking that must be provided, then it becomes that much harder to build more units, even if you are near transit and most of your tenants don't need cars.

If there are height restrictions, restrictions on mixed-use development, restrictions on the number of units allowed, and so on then these will likewise cap the amount of supply.

The problem is that the people who like rent control also dislike land value taxes. Land value taxes mean that if your neighborhood gets a successful shopping mall then the land value goes up and some people are priced out of the area.

The reason people support things like rent control is "I've lived here my whole life but I can't afford rent anymore because it keeps going up."

The half-assed solution is progressive taxation. Your first plot will be taxed very little. Every plot after that more and more.

It's not perfect because it is basically a subsidy to owner occupants so it won't help suburbs become denser. However, it disconnects the impact of taxation on home owners and commercial developers/investors which means home owners will be more willing to tax developers. The one benefit is that large scale development will naturally consider denser housing because they want to optimize their tax burden.

I agree. Rent control vests certain residents who for whatever reason have chosen to remain tenants in the same place for a long time, at the expense of newcomers and overall economic productivity. But for people who hate change, it works as intended. Makes it hard for new people to move in, and makes building new things an unattractive proposition.

However, with respect to affordability, a key complaint across the board, LVT does indeed help by reducing the amount of speculative holding and removing tax penalties for improvements. Under LVT residents will be able to afford better accommodations for less money. Particularly if other onerous policies are removed such as rent control, building restrictions, parking mandates, taxes on demolition, and the like.

Building social housing is an obvious solution.

A media that is very "concerned" with housing shortages where rent control is concerned suddenly loses its concern and gets overly concerned with crime, delinquency, public debt, etc. when a solution that brings down property values is mooted.

Raising property taxes will also help as it will act as a disincentive to use land unproductively or as a store of value.

Social housing (or other approaches to subsidized housing) are a necessary piece of the puzzle. However, they are also extremely expensive: around my area the commonly cited number is $500,000/unit. It would take a very major political shift to finance enough housing to even cover the 1-2 million people/year US population growth rate (~$750B/year), let alone resolve the backlog.

A more feasible option is to let private developers (who collectively have access to trillions in capital) to finance housing creation for rich/middle class people, and rely on government subsidies for low-income housing.

A lot of people complain when a new luxury apartment tower goes up because it gets filled with rich people, but surely that would mean that all the existing average housing just got cleared out by all of these rich people leaving and is now freed for less wealthy people.

The problem is if two towers worth of rich people move to the area but you only build one tower. Then half of them will move into the luxury tower and half will bid up the prices on the nearby average housing.

Obviously the solution is that you should've built two luxury towers. However, people watching the situation sometimes get the counterfactual wrong and conclude that if the luxury tower hadn't been built, none of the rich people would have moved to the area. They then conclude the best idea would be to build no new housing at all and do everything they can to make sure that is the case

It might be worth considering both whether under supply factors into that cost and size of unit. Developers may not reasonable choose to build small units that may be quite sufficient for people's needs while coming in cheaper than the stated figure.

The $500k figure is the cost the local housing agency spends building units sized based on actual need and with optimizing cost part of the focus. Private developers around here regularly create housing costing anywhere from $700k to $2 million per unit

The obvious solution is to build more housing.

Or to raise interest rates:

https://www.bankofengland.co.uk/working-paper/2019/uk-house-...

Raising interest rates makes everything else more expensive.

When people talk about how raising interest rates lowers the cost of housing what they really mean is that interest rates lower the value of income streams derived from monopolies and land is the biggest monopoly of them all. Monopolies basically can do perfect price discrimination, the more money you have, the more the monopolist can charge. Thus the obvious solution of giving people more money doesn't seem to work.

Raising interest rates is basically the opposite. What if we take everyone's money away? If people have less money the monopolists will charge lower prices. This didn't really solve the monopoly problem. After all, the monopoly allows perfect price discrimination. If the monopoly power is strong enough to get 30% of your salary it will always get 30% of your salary no matter how high it is. What really happened is that you now have less money to buy non monopoly goods.

Here are the practical implications: You can spend $1000 per month on your mortgage at 5% interest or -5% interest. The -5% interest house is significantly more expensive but the monthly payment is still the same. You still lose $1000 no matter what you do.

And how will raising interest rates make housing more affordable? If you have enough cash to buy a place outright, maybe, but normal people get mortgages. Raising interest rate will make monthly payments higher, which will exactly compensate the drop in house prices — this is in fact how raising interest rates reduces asset price.

I think this is about interest rate on savings side. Ten years ago in Poland you could get saving account paying 7% interests. 5 years ago you could get one that pays 3%. Right now interest rates are almost at 0, and saving accounts pay ridiculous 0.01% interests. Which has the effect of people taking money from the bank and buying apartments, as an investment.

With high interest rates, you might get good return on savings account, but it will make the mortgage payments much higher. Most people prefer to get a mortgage and move in earlier in their lives, instead of saving for decade or two in order to buy house/apartment with cash in their mid 30s or even 40s.

Not only that but if you’re paying a mortgage you’re not paying rent. Buying means your housing cost is now an investment (minus interest, tax, and upkeep) rather than just an expense. Now it could well be a terrible investment, but in theory you’ll own something of value in the end in addition to the housing you had as you paid.

I am assuming those rates aren't adjusted for inflation? Real rates have certainly decreased in the USA, but when we had high rates we tended to have high inflation as well.

Yes, rates were not inflation-adjusted. But in our country it is the opposite: in times when savings account paid 7% we had maybe 1.5% inflation. Now, when the rates are near zero we have 5% inflation. So keeping money in the bank means losing 5% yearly - you can see how that motivates people to buy some real estate.

Increase in mortgage availability is directly linked to price increase.

Yes, but the point is that price increase doesn’t affect affordability if the lower interest rates compensate for it. Why does it matter for affordability that house prices went up 20%, when mortgage rates fell so that the monthly payments did not budge much?

But this is not what happened. Median carrying costs for real estate have fallen, so that US housing affordability has increased (for buyers).

The places where this is not true are all places that have seen significant population growth and have not permitted sufficient new construction. For example, in Jacksonville, FL, the median home costs $250k, which would leave a payment of ~29% of the median household income in Jacksonville using a 5% down payment. Similar math works in other cities where builders have been allowed to keep pace with population growth.

Zoning, not interest rates, is inhibiting residential building the most.

My city (Portland) has incentives for developers to build affordable housing - adding affordable units to a project increases the allowed density of the development, allowing more total housing on the same lot, and presumably, more return for developers.

Portland does still have high rents, so it’s hard to point to this as a “success”, but I think it’s a good template for how you can encourage affordable units without putting the whole city under tight rent control.

There is no solution. There’s only so much land, not everyone wants to be surrounded by skyscrapers. Some people will get to live where they want, some people won’t. Supply and demand.

All half measures to «fix» the housing market are just variations around this theme. If there’s political consensus against the only solution that fixes the root cause — building much more — then any other measure to alleviate the problem will be varying degrees of dysfunctional and ineffective.

I’d be delighted to be proven wrong, but it seems unlikely.

What you call dysfunction I would call the market reaching equilibrium. The market is working efficiently if pricing signals cause housing seekers to look elsewhere due to limited supply or market clearing prices beyond their means.

For example, not everyone can afford San Francisco, but there is a lot of buildable land besides SF in California (the Central Valley, for instance). Everyone should be housed, but it’s likely it might not be their first choice.

This makes sense in an economics-textbook kind of way; but systematically excluding low- and middle-income people from a given city would not turn out well in reality, I think.

All cities need janitors, teachers, baristas, grocery clerks, garbage collectors, etc. in order to function, and those people have to live somewhere at least within a reasonable commuting distance to the city. You can't have all the garbage collectors move out to Bakersfield and have San Francisco _just_ be a citadel of software engineers, unless the software engineers haul their own garbage, or the garbage collectors in SF also get paid $100k+ per year.

Doesn't that dilemma also have an econ 101 answer though?

The teachers, janitors, baristas, etc will move to the location that gives them a better quality of life. If they decide that's not San Francisco, they can move to a better city. If SF wants them back, SF can sweeten the deal for them.

I guess it's kinda sad that not everyone who wants to live in SF gets to, but I'm not sure how "closing the door" is any more fair.

I think that "SF can sweeten the deal for them", while true in theory, does a lot of work in glossing over exactly how it could sweeten the deal for them. By offering higher pay? Or perhaps by somehow providing more affordable housing?

Which (as I understand it) is kind of the topic of this whole sub-discussion: it is not easy to find a solution which will sweeten the deal for them (aka: make it economically feasible and attractive for low/middle income people to live and work in a city with a housing shortage and high housing costs). Rent control is one such proposed solution. It has its benefits and drawbacks, of course, as evidenced by all the debate about it here.

I don't think they actually have a choice though. In person jobs are available in specific locations

I think that's an important issue. If there isn't a real choice about where to live, it's a much bigger problem. I guess I'm under the impression that the labor market is pretty tight across the country right now. I was under the impression that people had pretty good opportunities if they moved out of SF/Seattle/whatever, but I guess I haven't seen real data to back that up.

It's a self solving problem though. If businesses _need_ janitors and there are very few janitors around, those remaining ones can charge very high rates for their work.

Then you either pay very high rates for basic labor or you push the government to build cheaper housing. It all fixes it self.

My point is, the political leadership in most of these locations wring their hands and say "oh no, it's terrible, our janitors and nurses and families with little kids can't afford to live here, it's horrible" and then implement some sort of half-assed kludge that's only effective at giving naïve folks the impression that they care.

Rent control would be one such measure. Other examples are loans with better-than-market terms for certain privileged buyers, publicly-built houses sold at lower than market rates and so on. The market reaching equilibrium for everyone and the local government saying "sorry, but screw you" to buyers is at least honest, if a little heartless from the voters who live there.

I suppose it's fair enough as long as other markets with decent job options are available elsewhere. If not, I would classify it as a failure of democracy if a significant portion of society has no better option than to pay most of their productive output towards rent. This probably varies a lot by location; San Francisco wouldn't be the first example I'd use. Maybe Oslo.

I'd agree if San Francisco was full, but it's possible to build up and increase density so people can live close to their jobs.

People per square mile: San Francisco: 17,246.4 Brooklyn: 35,369.1 Manhattan: 69,467.5

People in SF simply aren’t willing to pay that much for the shoe box condos/apartments necessary to reach manhattan density. That’s what the market is signalling. Because of course even the most die hard nimby would likely take a 8 figure buyout offer for their 7 figure home. If the developer could afford that and still profit, i.e. if they could then sell the units at thousands of dollars per square foot.

If demand ever reaches that high then the market will move to a new equilibrium.

You can have large apartments in tall buildings. There just aren't enough high rise buildings in SF.

Those jobs can be remote, and it is cheaper to encourage employers economically to support remote work than to reshape entire geographies with housing.

Speaking of Manhattan:

https://www.nytimes.com/2021/07/01/nyregion/manhattan-vacant... (Office Vacancies Soar in New York, a Dire Sign for the City’s Recovery; Nearly 19 percent of all office space in Manhattan has no tenants — the highest on record — as companies shed leases and embrace remote work.)

https://www.bloomberg.com/news/articles/2020-12-05/even-befo... (Even Before Covid 2,600 People a Week Were Leaving New York City)

There is a solution, if you want to live near a city, you get high density housing / towers. If you want to live in a remote town, you get low density single houses.

It makes no sense to reserve city space for single level buildings.

The same can be said for minimum hourly employment requirements, too. It is interpreted as a guarantee to make $X, but in reality, it is literally a prohibition to make <$X. Most people I talk to take employment (at the aggregate and individual level) as constants when discussing this, but that's not how this works.

For employment, for instance, much more useful analysis comes out of lifetime income analysis. We really ought not care how many people earn minimum wage... we ought to really care how their wage changes over time. Not even suggesting that there isn't merit to a minimum wage, but just that our discourse of it almost always omits the point you bring up about "everyone else who suffers." That's important to talk about.

That’s comparing apples to oranges.

Minimum wages reduce some of the exploitation that low quality employers will always engage in. If you travel to a state that has the lowest minimum wage for waitresses, you won’t find more waitstaff, lower prices or better quality. Just more misery. Any further erosion of worker rights in this gilded age is gross and unacceptable.

When I travel to places with lower minimum wages, I do tend to find lower prices.*

Get yourself a breakfast omelette plate in San Francisco and the same order in Jackson, MS. I can pretty much guarantee that the plate in Jackson will be less, possibly 50% less.

* I don’t claim it’s caused by the minimum wage difference, but it seems pretty strongly correlated.

As a New Yorker, I have been surprised when I travel that food isn't cheaper many places...

For instance, I searched "Brunch" in Google Maps for Jackson and omelette plates are $10-16 at Google's top result[1].

Labor costs certainly impact prices, but restaurant pricing isn't totally formulaic outside of maybe "market price" fish dishes. Kenji Lopez Alt has written about this[2]:

  Here's where one of the first intricacies in menu pricing arises: Menu prices have to make sense to the customer. Placing a $15 carrot entree and a $20 chicken dish next to a $40 mushroom dish and a $45 steak doesn't compute; the range is simply too big. Either the latter two dishes are far too expensive, or the first two are far too cheap. Which sceniaro seems true largely depends on the atmosphere of the restaurant and pricing at similar restaurants, but both cases can be disconcerting.

  Because of this, most successful restaurant owners fudge the numbers a bit. "You're willing to lose money on some things because they're important to keep on the menu," says Maws.

[1]https://www.elviesrestaurant.com/day [2]https://www.seriouseats.com/menu-pricing-vegan-vegetarian-me...

> As a New Yorker, I have been surprised when I travel that food isn't cheaper many places...

Some of that may be on you, choosing to eat the expensive food.

My experience in Shanghai was that I could eat basically the same things I'd eat in America, and it would cost basically the same amount of money. Or I could eat local food for 5-10 times less than that.

But you know, if I go to 老外街 ("foreigner street") in Shanghai to eat at the Mexican restaurant there, it's not exactly a secret that I may be willing to pay more for food than a normal Chinese person. And they price accordingly.

Sorry my original comment was unclear. I was strictly talking about traveling within America. Internationally there are huge price differences.

I've noticed that Manhattan restaurant prices(other than pizza) are much higher than Chicago restaurant prices. Hard to find non-counter serve for less than $15 in manhattan. Chicago $10 is easy to find.

Chicago tipped minimum wage is $8.4 to $9 per hour, NYC tipped minimum wage is $15 per hour.

Rents are probably considerably higher in NYC too, especially restricting to Manhattan.

San Francisco is like Disneyland for the nouveau riche. Rents, wages, everything is insane because workers have to get shipped in. Your breakfast plate in Manhattan, where poor people are still allowed is pretty cheap.

You are expected to tip generously as without your tip money your waitress wont be able to eat as she is only paid 3.93 an hour plus tips.

In addition she is even more likely to make use of state services like food stamps and medicaid which in effect you and I help pay for even if we don't even live in that state let alone eat at that diner.

I don't think its cheaper its just subsidized by everyone.

Very true. Visit high minimum wage areas like San Francisco and Seattle, with no visible misery at all.

So... a lower minimum wage will solve the homeless problem? That does not compute.

Not all developed countries have legally mandated minimum wages, even those that are often considered "socialist" in American parlance. Indeed, Sweden is one such example!

(In practice, those places still have minimum wages - it's just that they're negotiated between employers and unions, and can vary across different industries and geographically where that makes sense.)

The real problem with min wage is that it's effectively a regressive tax, because it raises the cost of the cheapest produced goods/services - which, of course, tend to be disproportionally used by those who simply can't afford anything else. So you're taxing the poor to help the very poor! It is better compared to a free-for-all jungle, but it's much worse than e.g. UBI (funded by actual progressive taxes, on income, or better yet, on capital gains) without min wage.

This is called work piling. The unit of work isn't whatever people want it to be, it's jobs, meaning entire human beings. During a recession it rarely makes sense to keep people employed at full capacity, maybe you only need each person at 50%. So the obvious solution is to just fire 50% of the workers.

You now have a segment of the population with enough work and another with too little. Those with work are scared of losing the job. Those without are desperately trying to compete in the labor market to get a new job.

https://youtu.be/EKd6WURBqOY

Rent control is a nuanced thing, it’s a great and valuable tool if it’s combined with housing growth.

As people in general are becoming poorer, we’re shifting towards either more rentals or less safe/sound construction practices. Tenants need rights beyond market forces to avoid a revolving door of 1 year leases, etc. Stability in communities is important for both families and the community at large.

That said, the unchecked development model where construction of actual homes is impossible, or where exclusionary construction is allowed (entire buildings of studio apartments, no family apartments, etc), you are correct, rent control just benefits incumbents.

Rent control is easy to criticize if you use straw men. Not ever implementation of rent control is or needs to be so extreme as to cause these types of problems. There exists a level of rent control that can prevent families form being rapidly evicted from their communities via rent increases and does not dramatically distort the housing market. Just because many implementations are terrible doesn't negate the concept.

“Rent control” is like “Defund the police”: you can have the most reasoned, well-thought-out, evidence-based policy proposal, but as soon as it gets a label that’s accurate enough that advocates can’t muster the mental energy to enter into a detailed technical discussion with every Internet comment poster that misunderstands what is proposed - but so-loaded with connotations and political innuendo that the ideological other-half of the country parrots the misrepresentations because thinking less of the opposition makes them feel good.

So let’s agree to avoid the buzzword.

What’s a more accurate - yet succinct - phrase to describe housing market controls that protect the least fortunate of us from being priced out of their homes and communities without disrupting the significant market forces which should - ideally - be promoting new housing construction?

(Also, ban unsustainable zoning regs, enact an unimproved land value tax, and only allow greenbelts in areas with full mixed-use developments without building height restrictions)

It's also like "defund the police" in that you have both carefully thought out policy changes and completely asinine extremist ideas co-mingling under the same label and the people peddling the latter use the former as cover when their BS is called out for what it is.

> Rent control is one of those policies that sounds great as long as you ignore second-order effects and pretend the population and economy never change. In practice it just creates a different system of haves and have-nots while removing any chance for the market to compensate.

Meh, rent control has almost no effect on a market where there is enough housing. Ownership of housing has the exact same consequences as rent control, and is even more likely to have crazy NIMBYs preventing anyone from building new housing (looking at you the bay area).

That everyone else bit is not having enough rent control, isn't it?

The situations where rent control don't apply still suck. More rent control would cover those, no?

> or have any pressure on your landlord to improve the property

Not sure what you think that has to do with rent control?

> > or have any pressure on your landlord to improve the property

> Not sure what you think that has to do with rent control?

With rent control, the owner may not be able to afford to do any maintenance (let alone improvements) if the tenant has been there long enough that the landlord is losing money every month. But also, the tenant knows they have a deal they can't replicate anywhere else so they have an incentive to never move out, even if the place falls in disrepair.

Without rent control, the tenant is free to move out if conditions are not acceptable and the landlord can afford to maintain the place.

But, not every rent control city is the same of course, details matter. In some cities maintenance or improvements are allowed to reflect in rent, in some places they don't. So it depends.

Without rent control, if your landlord doesn't improve the property, there's a credible threat that the tenant will move out.

With rent control, that threat will not be taken seriously.

>It's not like a lack of rent control is creating vast new supplies of housing here in London and as far as Im aware the fastest period of homebuilding in NYC was in the 50s when rent control was at its strictest.

They started to remove rent control in the early 50s due to a housing shortage. So by your argument removing rent control helps increase supply.

http://www.tenant.net/Oversight/50yrRentReg/history.html

In Sweden it _only_ applies to first-hand contracts. So I don't think NY is a good comparison here.

The main issue is that the government doesn't build enough. There are just nowhere near enough first-hand contracts, like not even the same order of magnitude.

They've effectively abolished the system by just never building any, much like council housing in the UK.

Thinking this might have been the case... Good strategy amongst the more extreme neoliberals out there. Can see them doing it with the NHS too, play the long game, dismantle it piece by piece and then when everyone has forgotten what it once was like, the private solution becomes insatiable when compared to a disfunctional system that supposedly "never worked".

>They started to remove rent control in the early 50s

Your article says that it shifted from federal to state control in the 1950s, not that it was removed.

Realistically they werent properly weakened until the 1970s.

Yeah, that sounds like rent control doing it's one job: preventing existing tenants from being priced out of the places they already live. I don't think there's a single advocate for rent control that believe it will solve all housing problems.

>I don't think there's a single advocate for rent control that believe it will solve all housing problems.

I mean, OP literally did that, erroneously implying that rent control increases supply by using a historically incorrect example from 50s NYC.

This is why people get so annoyed with many proponents of rent control, they don't stop mid way as you do but keep going and implying it solves all housing problems.

>I mean, OP literally did that, erroneously implying that rent control increases supply

False. OP (me) was implying that it didnt meaningfully restrict supply.

I suspect a longitudnal study would find the two variables to be tenuously related at best.

>This is why people get so annoyed with many proponents of rent control

Because they make wrong inferences?

>False. OP (me) was implying that it didnt meaningfully restrict supply.

The OP said "fastest period of homebuilding" with fastest being in italics. I don't see how that can be read as anything except saying rent control increases supply.

No. Absolutely not. It simply throws a huge amount of doubt on the prevailing narrative that it severely restricts supply.

One could make the argument that it helped increase supply but that wasnt my intention.

it does that for current tenants, but in a growing city the incentive to build is severely reduced. Also the incentive to buy is severely reduced, meaning all incoming tenants have a hard time getting places to live.

To the extent that the incentive to build is reduced, the problem is with the idea that incentives should determine the rate of building, and not with rent control.

Providing housing security to existing residents through rent stabilization is a moral imperative. Homeowners such as myself have access to it through mortgages. Renters should have the same.

Beyond that, of course we need to build a ton of new housing. That can either be done by the state directly, or by loosening zoning regulations, or by some other means.

> of course we need to build a ton of new housing

To build a ton of new housing, you need investors willing to do so. If you have a million dollars, would you invest to build in a rent control city, or in a city where you can raise the rent as you wish? Most people would choose option 2, thus creating shortages in rent control cities, which in turn make the housing more expensive than it would be if the rents would be free-market.

As I said, then the solution is to lessen the importance of the incentive system and for the state to do so, for example.

There are things in life we treat as core moral values even if they cause issues with incentives. For example, people should not go to prison for not paying their debts, even though it runs against incentives. Rent stabilization should be one of them as well. The rest of society should adjust.

> people should not go to prison for not paying their debts

Try to not pay your taxes and you end up in prison in all the countries I know about.

Anyway, I feel like your argument works against you, actually. I think a core moral value is to allow anyone to move into the city if they wish so. With rent control, you limit the privilege to live in a city mostly to those born there. This is worse than the unfair advantage you have when raised in a wealthy family. At least anyone can study and make a good life later on, but rent control doesn't allow for much movement altogether. If you're born outside the city - bad luck.

You could always pay those people to move out, the same as you would for an owned house.

The same rent control alternative applies too. You can move to the outskirts of the city that are less desirable locations.

It is really the lack of investors that is causing the lack of supply? I was under the impression that it's mostly that building more is not allowed/very difficult (for various reasons), not that there is a lack of capital.

Correct, in Stockholm for example, it is absolutely not as simple as “investors turn away”, far from it.

In fact, they did build housing. Luxury housing that doesn’t solve the problem at all. Student apartments that are so expensive to live in, you have to work a job while studying.

If you build luxury housing, then people moving there should free up some space. Of course that does not happen, and they hoard properties because of lack of real property taxes in most places. Some are using them to fuck over new buyers, like California.

The investor can be the government imposing the rent control. It doesn't have to be a private investor

> the fastest period of homebuilding in NYC was in the 50s when rent control was at its strictest.

A lot of things happened in the 1950s. How am I supposed to untangle cause and effect? I'd more likely credit the return of American troops from the war, the baby boom, home loans as part of the GI Bill, and the economic power of a country still ramped up for wartime industrial output, but existing in a world in which every other industrial power had been reduced to rubble.

Don't forget that during WW2, the availability of construction materials was heavily curtailed due to diversion to war production. A fair amount of that homebuilding would have been making up for the lack of homebuilding in WW2 and consequent housing shortages.

New construction was exempt from rent controls. So people built aggressively. But later, all of that new construction got regulated again, and construction has never picked up to that extent, due to the 'recapture'

Is there a source for this?

My first guess is period of time in the early 70's known as The Great Inflation. Primarily driven by the abolishing of the gold standard. Not sure what the gold mining to construction rate was prior to this point but thereafter they could print it faster than they could build and this type of inflation where there is little growth in actual output creates asset bubbles. Just like this latest episode of quantitative easing has led to housing price inflation around the world right now.

> It's not like a lack of rent control is creating vast new supplies of housing here in London

They seem to be building as much housing in London as it's possible to do so - new blocks of flat flying up all the time.

It's really hard to estimate the sufficiency of construction visually. What we notice is a change from the past trend.

However what's needed is sometimes entirely disconnected from the past trend. Ask a lot of people in San Francisco, and they will say that there's been a huge amount of building of new apartments, even though they are nowhere close to matching the 2% growth rate of US population, much less the much higher growth rate that a thriving urban area needs to match the trend of people moving from rural areas to urban areas, or to match an increased preference for urban life over suburban life.

It's because we see construction in a concentrated area where it is allowed, but then there are VAST areas off limits to anything but building a bigger house.

There's also pretty big restrictions on how high you can build in most places, I looked up the zoning document for Tower Hamlets and the parts of the borough allowing tall buildings is extremely tiny.

A realistic way to manage this demand issue has two options: build more units (can’t go on forever), or stabilize the population. Else, you double bunk or triple bunk like in Soviet times. You can’t magically solve a shortage via price controls.

Population doesn’t grow that fast, you can build enough to keep ahead of the curve for a long time especially if you keep zoning in check. What nobody mentions is the real reason rents go up is an oversupply of jobs in the area vs housing. Keep the housing to office space ratio reasonable and rents never explode, except that shifts costs to business rather than individuals.

> Population doesn’t grow that fast

You can't really look at country-wide population though. The population of e.g. Germany is pretty stable, but within Germany there's a lot of movement with people moving to the large cities. Rent is rising in those cities, while it's getting lower and lower the further you move from those cities.

I think GP was suggesting that if you limited office space in the large cities, businesses would be priced out, which would reduce demand on housing.

I live in Sweden and I can attest that rent control is a disaster. Lofty political aspirations aside the simple truth is that the middle class does not want to live in the crime-ridden suburbs and will do anything to stay out of there. As that is the only place where you can rent they're forced into taking huge loans and buying something in the city, or they can try their luck on the unsurprisingly flourishing black market. The effect of this is that Sweden now has one of the highest private debt burdens in the world. As long as the prices keep going up the system keeps limping along, but if that would ever change there could be some interesting consequences.

Rent control is not the cause. These suburbs you correctly identify as undesirable would not become more palatable just because landlords were allowed to extract extortionate rents from an inherently limited supply resource.

What you suggest would in fact probably lead to MORE segregation and MORE of the same issues.

Wages don’t magically rise because you abolish rent control, either. You would simply price out the less wealthy to live… in the shitty suburbs.

Do you have any links or additional information about the "crime-ridden suburbs"? As an American, I was really surprised to hear that another country has the opposite issue we seem to have: crime-ridden cities (particularly since Covid-19 started wiping out businesses and foot traffic in many city centers). I'm really curious why Sweden has more crime in the suburbs, and would love to learn more!

It's not really 'Suburbs' in the way the word seems to be used in the US. In Swedish the word suburb (förort) tends to more refer to the areas just outside city limits with large cheap housing projects. Saying you are from 'förorten' implies you grew up in an impoverished area. Much like saying you are from "the projects" in the US.

All these crime-ridden suburbs are within 20-30ish minutes easy public transport to the city center.

Basically think these sorts of buildings: https://upload.wikimedia.org/wikipedia/commons/0/01/Hammarku...

rather than these sorts of buildings: https://upload.wikimedia.org/wikipedia/commons/thumb/3/37/Su...

Sweden has a huge problem with violence in their suburbs: https://www.theguardian.com/world/2021/may/26/fatal-shooting...

https://www.nytimes.com/2018/03/03/world/europe/sweden-crime...

Sweden quite simply took way more poor migrants (many of them for humanitarian reasons) from developing world than it could effectively integrate, and that failed integration resulted in hopelessness, high crime and unemployment in these communities. Most of them ended up living in cheap apartment blocks located in suburbs while more well-off people started avoiding these areas, and that's why those suburbs are the bad areas.

Obviously you also have also suburbs with villas where richer people live and little crime. Sweden at this point is a highly segregated society.

Not the main point, but there is also a question of how accurate that 40% number for Greece is.

From a western European perspective, tax fraud is rampant in Greece. e.g. In Athens, around 400 swimming pools were reported for tax purposes. But satellite analysis shows almost 17,000 houses have swimming pools: https://boingboing.net/2010/05/04/satellite-photos-cat.html

Here's a more complete picture. Sweden is consistently among the least affordable across metrics: https://www.oecd.org/els/family/HC1-2-Housing-costs-over-inc...

> The median burden of rent payments for tenant households is highest in Finland, the Netherlands and Sweden (30%), Norway (29%), and Denmark and the United Kingdom (28%)

That said, it's not very different from its peers, so I doubt rent control is having a huge effect.

It helps that Sweden has a significantly higher median gross income than either the UK or Greece.

The ONLY reason the BBC have published this article is because Scotland are proposing rent controls.

The BBC have gone full union and need to knock any Scottish Government proposal.

That is the only reason this article is published. Don't read too much into it.

The 50s-60s were a boom time compared to the following decades, but were nothing compared to the preceding decades. NYC's biggest building boom was the ~1900s-1930s, after which things fell off considerably.

https://www.renthop.com/studies/nyc/building-age-and-rents-i...

It also sounds like the rent-control in Sweden isn't like that in other places. TFA at least implies:

1. It is universal

2. Rates are collectively negotiated between landlords and tenants

This is more like a renters union that there is a 9 year waitlist to join than typical rent control.

The impression I get is that Sweden has fewer people sharing flats and more affordable flat rents (adjusted for income) than most places in western Europe.

UK has lots of politically-allocated housing too, but its main problem is that it's not adding enough new stock because of the restrictive planning system.

"politically-allocated housing"?

as opposed to market-allocated

Shouldnt that be public-allocated vs private-alocated?

Both could be politically minded, or something else

Actually, a market-allocated one is always a political allocation since it's got the idea that rich people deserve better housing than poor people asked into the market.

Sweden is a much richer country than the UK

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