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Comment by anovikov | Hacker News Reader

It can and does work in many places. Whole cities like Stockholm mostly consist of rent-controlled apartments which have same rents paid since WWII era, which now amount to almost nothing. It creates awful social distortions and indirect costs, but it certainly does work.

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It works in the sense that the system keeps existing, but it doesn't work in the sense that affordable rental housing exists for everyone.

Ask anyone actually living in Stockholm, and you'll hear how the system really works. Last I heard there was a 20 year wait to get an apartment the legal way.

Supply and demand determines rent; if you have enough supply and also rent control, then you'll have have rent control that magically "works".

But it's always supply and demand that gets the upper hand in the end. If there's a shortage of supply, and you put in more market rules & regulations, costs will shift elsewhere (like the broker in the article) or the black market will simply grow to clear the market.

I'm sure it works for the residents of Stockholm, but not so much for all sorts of people who would move to Stockholm but can't wait in line 10 years for an apartment.

Yes that's right! 10 years is an understatement. It means simply that the city is "locked out" for everyone but locals who inherited rental contract from their grandfathers, or multimillionaire cash buyers.

Maybe this is the hack for managing city growth

Why do you want successful cities to stop growing? Especially ones that have zero desire to stop attracting employers. Offices take up very little space so if you let developers build commercial real estate you will always have a mismatch between housing and jobs if you stop building residential real estate. This will displace lower income people in the end and lead to gentrification rather than a stop to growth.

Having a mechanism to reduce growth is actually great.

It's hard to increase transportation infrastructure in a built-up area. And when you do, everybody says it didn't work because traffic is still bad or trains are still overfull. But they never notice that population increased during construction. If you could stop growth, then your transportation needs stabilize.

Doesn't really feel fair to me though, because it's so hard to move into the closed city.

Personally, I'm a fan of limiting rent increases to a max of something like 5-10% per year. Not so much that it's a total hardship to deal with a max increase; not so little that landlords have to do max increases every year or get way off market; also not so little that a landlord can't catch up later if they purposefully lag on increases to keep a preferred tenant.

…and why should the current residents of Stockholm give a toss about the people who aren't there but want to move in and drive up prices?

I don't think anyone said they should. However, to the extent that the housing policies are determined by larger-than-local government agencies, there shouldn't be some citizens getting a large benefit and similar citizens getting the shaft.

Because of economies of scale, the incremental increase in tax revenue that a new resident provides is more money than it costs to have one more resident in the city.

> It creates awful social distortions and indirect costs, but it certainly does work.

I don't think this meets the criteria most would consider “working”.

Sweden is often used as a case study in how rent controls lead to housing shortages.

Rent control tries to make housing more affordable by reducing the cost, which immediately reduces the supply. At that point, rent control ends up increasing housing costs.

Theory and real-world case studies mean that this is so obvious, that I just assume anyone that's passed economics 101 and is advocating for rent control is either grossly incompetent, currently very drunk, or is disingenuous and actually wants to use the power of the government to make sure other people cannot obtain secure and stable housing.

> Theory and real-world case studies mean that this is so obvious, that I just assume anyone that's passed economics 101 and is advocating for rent control is either grossly incompetent, currently very drunk, or is disingenuous and actually wants to use the power of the government to make sure other people cannot obtain secure and stable housing.

Or they are one of the lucky few living in a rent controlled apartment.

Well, you can't have a working democracy, market economy, and affordable housing at same time. Something has to give.

I'm fascinated by this statement. Where does it come from?

Well, remove democracy and what people want on a local level (preserve and grow value of their owned homes by limiting development) will not matter - and developers will built out so many homes housing will become affordable. Like in Russia for example - housing is cheap there exactly because it is an industrialised nation without democracy.

Remove market economy and the Party will distribute housing as it sees fit, and you have affordable housing, like in the Soviet Union.

Otherwise, inevitably housing will cease to be accessible once a bit more than 50% of population is happy with their housing conditions - then they will vote for people who will help them build value of their house by locking out the underhoused minority.

I can't see a fix to this that won't undermine either democracy (by somehow making people's political choices matter less or not at all, openly or covertly, aka "Putin elections"), or market economy. Both of which sounds worse than just putting up with unaffordable housing.

Sweden had all three before rent control was "temporarily" instituted during WW2.

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