100 Years of Rent Control in Sweden
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Proponents of a free market solution to this problem point out the disincentive effect it has on building new rental housing by depressing possible profits. Getting rid of the price control should encourage building and thus, by increasing supply, keep rental prices low... BUT. Won't profits be kept low then, perpetuating the disincentive to build? I mean, If depressed profit opportunities are the problem, housing cost must rise for them to become enticing.
So, as I understand it a free housing market, all other things being equal, cannot provide a solution to the "people being driven out of their homes" problem.
But, please, enlighten me if I'm mistaken.
And you did not address the problem. Or maybe you don't think it is a problem.
PS: I'm well versed in Austrian economics. But theory, hypotheticals and thought experiments don't represent every real, empirical issue.
FTFY. It really boils down to that. Is it a hardship? Sure, but really insidious way that rent controls hurt society is stealing from future generations to benefit folks in the present who already are being given a sweet heart deal. It does so by creating incentives to block any redevelopment. The problem with rent control is that, where it is in effect, it is the primary cause of the exact problem it is trying to solve (but only for incumbents).
If we really cared about people's stability, we could simply create a system where maximum rent increases are limited, but the percentage increase goes up every year. E.g. max rent increase year 1: 1%. Year 2: 2%. Year 3: 4%, Year 4: 8%... etc. If the rent ever doesn't double, the percentage increases start over. You get prevention against wild changes in rent, and you've got about a decade before seeing potentially dramatic rent increases, but rents can still get back to market levels given enough time.
And you may have "fixed that for me" by rephrasing what I said but you also did not address what I had brought up before you fixed it up.
Do you think people being driven out of their homes and neighbourhoods by rapidly increasing housing costs a problem?
If so, we can discuss about the means to mitigate it. If not, I guess we'll have to agree to disagree.
Where I live, we would call laws that allow rents to return to market-rate eventually "rent-stabilization," and laws that keep below market rates indefinitely "rent controls." I think in most of the examples we are talking about, especially in the case of Sweden, we are talking about the latter.
>Do you think people being driven out of their homes and neighbourhoods by rapidly increasing housing costs a problem?
They aren't being driven out of "their homes." They hold a lease to temporarily occupy a residence that is the property of someone else. Nobody likes to frame it this way, but it's what's actually happening.
I want to keep people in the cities they want to live in, but not just for this generation. If we want to let people live in cities they want to live in (even people who already live there), we need to just supply the amount of housing to bring the cost down... which is doing exactly the opposite of "protecting" people in their current housing by locking it down in perpetuity.
Rent-control makes perfect sense for people who receive it. When viewed through Rawls' veil of ignorance, it is obviously, wildly unjust. If we want to deal with inequality in housing, we need to deal with the monetary inequality, and not create a band-aid, like rent-control, that actively makes the problem worse in the long run.
I think the main reason why rent-control is used is that people don't want their city to change, but they don't want it to become more expensive. Rent-control allows people to have their cake, and eat it too. It just comes at the price of creating a type of informal aristocracy.
> Rent-control allows people to have their cake, and eat it too. It just comes at the price of creating a type of informal aristocracy.
So somebody who inherited property which their grandparent bought 40 years ago (for super cheap) and never had to worry about anything because of that is OK. But laws that try to limit speculation and exploitation of people who were not so lucky… that is creating informal aristocracy.
Sorry to break it to you but the aristocracies are already in place and rent control is one of ways how societies try to tackle them. I personaly dont think rent control is very effective one but somebody is atleast trying to do something.
As I said before:
>If we want to deal with inequality in housing, we need to deal with the monetary inequality
So when you say things like:
>So somebody who inherited property which their grandparent bought 40 years ago (for super cheap) and never had to worry about anything because of that is OK.
I'm confused, because the issue of property ownership and inheritance is it's own issue. Trying to solve the property ownership problem with a make-shift scheme like perpetual rent control, again, makes things worse. This problem is notable, and particularly tricky, because the soviet union (urban russia, afaik), had housing problems very similar to the ones of Stockholm on account of the fact that it was politically unpopular to redevelop city centers to increase housing capacity, and instead you get large undesirable housing blocs on the outer edges of cities, simply because all the incumbents wanted to keep their valuable properties, even though they weren't technically owned.
The problem of unaffordable housing is solved by creating and incentivizing oversupply.
Let's say I accept your phrasing and naming of the problem & solution.
Given that one big consequence of managed housing economics is depressed profits, how can "free market" supply increases lower housing costs? Won't profits suffer then? Reducing incentives to build?
As I see it, and said in the original comment, for supply to increase, price cannot decrease. It can only increase for building to be more enticing than with rent stabilization/control.
Not sure how this is beneficial to future generations.
The problem of unaffordable housing is solved by creating and incentivizing an artificial oversupply of housing.
There are many ways to do this. Vienna, for example, did this with public housing. Econ nerds will argue for a land value tax. Houston, Texas, does it in the worst way possible... by creating an unsustainable sprawling mess that will collapse in exactly the way that Strong Towns predicts.
>how can "free market" supply increases lower housing costs?
Ultimately, if we eliminate the political/regulatory constraints for the sake of argument, the cost of housing is just the marginal cost of building the next unit of housing. There isn't any way around that, so if you want to live in Manhattan, say where high rises exists, the marginal cost of housing will be more expensive than, say, a tiny house in woods somewhere.
If that marginal cost of housing becomes unaffordable, even for the government, then we have a real economic problem that needs to be solved apart from housing. We are dealing with that in California, as simply the cost to actually build something is has become so inflated, that it is unaffordable for the city to even build public housing.
How we can get people to create an oversupply of housing in a private market, we could do in various ways. Property taxes is the easiest: land value taxes, or say, high property taxes with a large discount for each resident that lives in the taxable area. Ultimately, in this view, housing should be a cost... not an investment. Because under the rubric I put forward, there is no reason housing should appreciate in price in real terms far beyond the marginal cost of the housing itself.
While there are ways to do this practically, the problem is that they tend to be politically unpopular for the reasons I listed earlier... people don't actually like change, or density, and will often vote against it whenever they can. Dealing with this is a political problem... one that requires having difficult conversations with both capitalists and socialists about what we actually want, and whether we want affordable housing, or whether we want a "kind of place" to live in, because we usually can't do both in the most desirable areas to live.
It's a tough problem, and it's one I've thought deeply about for decades as I've unfortunately grown up in, and live in since, high-demand areas with increasingly unattainable housing situations, and I've heard all the argument, and think most people are not typically concerned about creating sustainable solution over quick-fixes.
And I thought you were advocating for free markets, yes, since you talked about "market rate". Sorry for the wrong inference.
And just to be clear, I'm not a proponent of rent control, maybe rent stabilization as you said. I think, in general, people being able to keep living where the lived for a long time is a social good of great value and that we should try to implement housing policies that will make that possible.
No, prices and rents in the most desirable areas should creep down toward "the marginal cost to create housing" as we create an oversupply. It will never actually get there, because people will need/want to create a profit, but it should find its way toward an equilibrium near there.
The only reason why they might bump up temporarily is only that new housing is more expensive than "used" (existing) housing, so when new housing comes on the market it, it becomes the most desirable, and is priced the highest, but that should reduce the price of existing housing.
This is your basic supply curve, though many people will argue (without much sense), that supply curves somehow don't apply to housing.
>And I thought you were advocating for free markets, yes, since you talked about "market rate". Sorry for the wrong inference.
I'm a strong believer in markets generally, though not necessarily "free" markets, because I think incentivizing and disincentivizing things we collectively want/don't want is one of the best ways to create general welfare for most people.
The reason I advocate for markets in housing is two-fold.
Firstly, housing is notoriously easy to hoard and sublet, which makes it ripe for abuse in a subsidized system. If we give people housing at significantly below market prices (that is prices below what they could get an equivalent unit for today), we should expect "dishonest" people to sublease that housing to capture that value. This is commonplace in San Francisco, where I live, that folks with rent-controlled units regularly bring in roommates or subtenants and charge them market rates, and just pocket the difference. Yes it's illegal, but it's a civil matter, and would require an expensive lawsuit against your roommate to solve, which would then likely end up with you looking for another unit at market rate anyway, so it's impractical to enforce.
The other reason is land-hoarding. As we see in Stockholm, and in long-term rent controlled tenants in San Francisco, we see people paying below market rates, and then they tend to have more space than average. This is simply cause by the fact that, all things being equal (in price), more space is desirable to less. So this is a major inefficiency for everyone else who needs housing and would be willing to settle for less space. My utilizing markets, we will see people more willing to use space efficiently being allocated more units.
This is why I want to see markets (or at least lotteries), with at least semi-regular lease renewals, even in socialist systems. When housing isn't perpetual, people will vote to provide that good to everyone, and not just themselves (especially when difficult trade-offs must be made to do this). I want people to have skin in the game, where they know that if we aren't taking care of everyone, they themselves are at risk of being left behind.
If prices stay somewhat the same without rent control, where is the incentive to build more housing?
I'm confused by this. Housing prices are high, exactly because it's effectively impossible to build housing in the most expensive cities. Building housing in these cities is extremely profitable, it's just difficult, if not impossible, to build.
627 days, just for the permit: This data shows the staggering timeline to build homes in S.F.: https://www.sfchronicle.com/sf/article/housing-permits-san-f...
>The typical applicant currently waits a staggering 627 calendar days before obtaining a full building permit from the city to construct a multifamily housing project, and 861 days before gaining the same approval for a single-family residence, the analysis found.
This has little to do with poor profit opportunities insofar as housing is concerned, and everything to do with incumbents (both home-owners and rent-controlled renter) explicitly trying to thwart new construction wherever possible. Home-owners want shortages to protect their property values. Rent-controlled renters want to block development because it might incentivize their landlords to redevelop the property they live in (this is specific to California laws).
>how can removing rent control spell more profit opportunities for private interests without increasing price?
>If prices stay somewhat the same without rent control, where is the incentive to build more housing?
The answer is volume. If I have one unit that rents for $4000/month, but I redevelop to create 3 units that rent at $3000/month, I effectively increase my profits by $5000/month, while lowering local rents by $1000/month. Everybody wins.
Now, if someone has rent-control at $1000/month, then I'm not going to argue that their rent isn't going to go up. It will, but it should. Because someone somehow living at a price that is artificially $3000/month cheaper than their neighbors is obviously unjust, I see little reason to preserve this inequality beyond political practicalities. Were these volume discounts don't exist, rent-controls are generally benign, however, as discussed before, they won't be benign for long, because the cause a lack of development, which will create a shortage over time.
I obviously think these systems are entrenched, and should be phased out. I don't think that rent controls should be preserved indefinitely, but even if we were to completely change the system tomorrow, I understand that people have built their lives around these inequalities, and should have 5-10 years (minimum) for these inequalities to be eliminated.
And then, if gentrification, immigration, tourism or any other external "shock" brings new, richer or more desperate demand for housing, landlords can raise prices as high as they can go, making housing precarious for lots of people.
As per your comment, I'd say zoning laws and NIMBY are bigger fruits hanging lower than rent stabilization.
I see robust public housing as only sustainable solution for people getting priced out of a neighborhood.
>As per your comment, I'd say zoning laws and NIMBY are bigger fruits hanging lower than rent stabilization.
Again, I support some form of stabilization, but my entire point is that the NIMBY policies are, in large part, caused by the policy of rent-control itself. I could go into how 'golden handcuffs' cause this, but I feel like I've talked your ear off too much already.
You obviously care a lot about this, I only wish I could communicate my complicated position better.
I also think that rent control that fix a price without any way to increase it are harmful. I'm definitely not willing to maintain any of these.
Not sure about rent control and NIMBY, though. Property owners, be it condos or houses, are pretty much also in thrall of this pernicious mind disease.
And yes, I do care a lot about this. Did it show? Heheh. I think we made great strides here and thank you for your time and patience.
PS: my ears can take a lot, don't worry!
That's not what's actually happening.
In Sweden, a first-hand rental agreement is effectively for life ... actually, even longer as the tenancy be inherited by your spouse and children. The regional rent tribunal can and do override a landlord's decision to terminate the lease.
If you are talking metaphor, the "lord" in "landlord" is a far clearer sign of aristocracy. Capital can be passed down through multiple generations, as the Wallenberg family well knows - now in their fifth generation of ownership.
Up until 2003 the Kingdom of Sweden had an actual aristocracy.
Renters like me were never part of it.
Perpetual and especially heritable property use (regardless of technical ownership), that exists well below market rates, is a form of landed aristocracy, just without the pomp and titles.
I would say the very same thing about property owners who have perpetual and heritable property tax exemptions or perks, and I do in the case of California.
I know you don't know what a first hand contract means, because you incorrectly asserted leases let someone "temporarily occupy a residence", when in Sweden it can be for the life of the renter.
Furthermore, while that right can be extended to your wife or children, technically speaking it isn't "inherited" and it isn't simply passed on to your children like a title of nobility would be. You must have lived together for several years, making your home actually your wife/child's home too.
Instead of "inherited" like I wrote, it's more like your landlord is required to recognize that additional resident as a new leaser, even if that name isn't on the original contract.
And unlike aristocracy, as a renter, you have only limited abilities to remodel. You can't decide on your own to convert the living room and dining room into a great room, or to tear down and replace the bathroom. Only the landlord can make that decision.
So, how this is like an aristocracy?
> If you have a piece of property, that is reserved for your exclusive use
That's another way I can tell you are not Swedish.
In the US you can buy up 160 acres, post "no trespassing" signs, and have the government help enforce your exclusive property rights.
In Sweden, that prohibition is illegal - most of your land (except that closest to your home) is not for your exclusive use. Others have the right of public access, and trying to enforce exclusivity would considered distasteful, if not immoral.
> very same thing about property owners who
You may not like the obligations under the Treaty of Guadalupe Hidalgo, and probably don't like various perpetuity clauses in treaties made with Native American nations, but that doesn't make it meaningful to say those property owners who have perpetual and heritable property tax exemptions are therefore members of an aristocracy.
I mean I'm not really finding anything I disagree with here. I'm familiar with right to roam laws, but to say they allow "access" is in someone passing through, is still, for practical purposes "exclusive use."
When you say it isn't "technically" inherited, I mean only that it is de facto inherited, again, a kind of aristocracy.
I cannot say I am super familiar with the Treaty of Guadalupe Hidalgo, as that is from nearly two centuries ago, and was the result of war. But I generally agree with your point about Native American nations. I see the argument that Native American nations as generally more reasonable in that, they are treated as at least quasi-independent states, but I wish that that independence were either more fully recognized or eventually sunset, because, yes, I see having a special class of people within a nation as inherently problematic, and while I wish the circumstances that brought us to a the place we are were different, we are born into the world that we are born into.
When a system of de facto privileges, especially when heritable, is set in place in a society, I'm not going to in support of it, especially when, those privileges make life more challenging for those who weren't in a place to take advantages of them when they were conferred.
In late Middle Ages England, I could be a copyhold tenant to the mesne lord, with the copyhold passed on by inheritance to my heir, following the traditional inheritance scheme of the manor.
I do not own the land - the mesne lord does. Yet I have the right to live there, and the right to pass on that right through inheritance.
According to you, that makes me - a copyholder - part of the aristocracy?!
No. That's an absurd re-definition.
You may want the equivalent of new enclosure laws so that complicated traditional land use practices which give a peasant the inheritable right to graze a few sheep in the local commons is replaced by the simple exclusive control of a local lord. That's how lords and capital holders traditionally gain more power and control.
That still doesn't mean it's meaningful to say those peasants were part of the aristocracy.
You grew up in a culture which prioritizes a certain view of land ownership that dates back the feudal system, then over time the local lords gained strong control over the land and government, followed by the imperial era where land possession and exclusive control brought in untold riches. You and I come from an ex-colony of that imperial system, which respected private land and exclusive ownership only when it involved certain people - for others it could be taken by force. "A man's home is his castle" was only valid for rich white men, and those with implied fealty to rich white men (aka "real Americans").
Sweden never had a feudal system, nor (despite being a kingdom) a strong form of aristocracy. Socialism has a much stronger history here than in the US. Its traditions are therefore different. Don't try to interpret it all through what appears to be an understanding of 19th century English aristocracy.
And even if I'm completely wrong, who care? Inheritable land ownership and nepotistic transfer of corporate ownership lead to extreme centralizations of power which cannot be matched by a Swedish rental agreement. The Wallenberg family controls a substantial fraction of the Swedish economy. A first-hand rental contract had limited use of about 80 square meters.
In bigger european cities gets to wierd situations because investors buy houses/flats as investment and know that they will make big $$$ just over time as the price of the flat increases. Renting it out is work, flat gets used (looses value) and whats worse if you (and all other investors) keep it empty you increase prices of rent/property everywher. In other words you might hurt your investment. So people keep it empty or set insanely high rent prices exploiting the desperate people looking for anything.
Its crazy how many empty flats around me there are yet we are in “housing crisis”.
Instead of price control first regulation we would need is not allow empty flats just laying there. Also we should accept that housing is human right and not allow it to be tool to exploit masses. So stop home speculation by for example progresively more taxing owning every home after the first one. Companies that own/manage rentals should be under extra scrutiny just like energy/water companies are. Having safe space to sleep is as much human right/need as access to water.
A free-er market in itself only won't help urban people keep their roof.
If mom and pop own a building and live in the building, then I don’t agree with this.
But if an investment firm owns multiple properties, then yes. This seems like a useful regulation in a housing crisis. There are rules in finance specific to finance markets. Why not rules specific to housing that regulate perverse situations?
Unless you have money or you're well connected to the ruling elite.
I don’t follow the logic. It doesn’t destroy the property or take it out of supply, it just means someone might not purchase it specifically to rent it out. Which in turn means less demand buying houses overall, which means more opportunities for people to buy (if they want?)
If you increase the returns to building ownership then people will build more buildings. Which lowers prices.
Capping supply by decreasing the returns leads to less supply, other things equal.
That is what I'm trying to understand, since a lot of people here imply that "increase in supply will lower prices".
In the model, the price of a unit will change as you adjust either supply or demand. If there is lots of demand and little supply, the price is high. If there is lots of supply, the demand cannot force the price higher. Assuming the seller wants to sell, they have to compete with other sellers. The more units for sell, the less negotiating power they have because someone more desperate can sell cheaper.
My point is: prices will have to increases for supply to increase as well. Saying that increasing supply will keep prices low makes no sense if right now prices are too low for private interests to build more housing.
Supply won't keep prices "low" and certainly not lower than they are now. How would that work? How would they make profit?
But it also strongly disincentivizes potential investors in building new rental properties. Which makes perfect sense,if you inherited 5million euro would you spend it building rent controlled apartments or put into stocks&bonds?
https://austin.culturemap.com/news/real-estate/texas-propert...
You're comparing $3.9T to $2.4T, but that's still not the metric you look at. It's whether you're a landlord in a town of 5,000, a mid-sized city, or a 2M metro, and what the local economy looks like.
> California vacancy rates speak for themselves
This goes two ways. On one hand, it's an opportunity. On the other, it's an opportunity a lot of people clearly don't want to take.
> Texas also has the nation’s 7th highest property tax rate
As long as it's consistent and the regulators allow it, you just pass it on to tenants. CA's Prop 13, while making overall property taxes lower, puts you at a weird disadvantage compared to incumbent landlords.
^ Couple this situation with no restrictions (in fact encouragement) on foreign buyers for many many years, and you have condos sitting empty, condos rented out for amounts nobody can afford, and condos turning into airbnbs for rich tourists. From what I gather, both Toronto and Vancouver are a real mess because of this.
This should change with the new Anti-AirBNB(Short term rental) rules at municipal, provincial, and federal (CRA) levels.
The regulations actually attempts to answer this. They might not work well but atleast somebody is trying to do something.
The notion that if you got rid of the regulation and suddently situation would fix itself is suspiciously naive.
Brilliant.
I think the solution is to overbuild like crazy. Particularly in Canada where there is infinite land. People will be less interested in speculating as there is no supply limit. Cheap real estate is a net good for humanity.
2. Existing rentals are converted to condominiums, because that is more profitable
If you can afford to buy a condominium, great. If not, there is always the public housing company. I hope you're not in a hurry though because the typical waiting time to get a rental in Stockholm is 7-11 years.
> there's a queue for rentals, so you register that you want to rent in Stockholm, and then you get put on a list, and then wait two years for it to be your turn
Price capping any good -- housing, fuel, food -- by definition produces a shortage.
A shortage is when there is more demand than supply at the market price.
And artificially lowering the market price increases the amount demanded and reduces the amount supplied.
False, rent controls isn't about shortage it is about land lords raising rents for people who already live there and since it is so much work to move people will stay and pay overpriced rent.
Then that rent control easily leads to the shortage and extremely high prices for new entrants, but that was never the original goal.
Lol... yes. Given that Stockholm has 15 year waitlists I think that you could say that the "waiting times" can now be measured in literal lifetimes. If you wanted to spend your 20's in Stockholm... best we can do is get you there in your late 30s, when you settle down.
From: https://qz.com/264418/why-its-nearly-impossible-to-rent-an-a...
>There are two main factors underlying this phenomenon. First, the city wait list for a new apartment is now 15 years on average, or 7.7 years in the Greater Stockholm region. Second, Stockholmers live alone. Very alone. In fact, Sweden has the lowest number of persons per household in the OECD, with just 1.99 persons per household, compared to the OECD average of 2.63. And in Stockholm, that numbers is 2.1, almost the lowest for any capital in the world, while the average household size comes in at 41 sq m, on par with other countries.
- it is quite common to sub-let ("andrahandsuthyring"/"renting in second-hand") where you rent from another renter (who in turn has the "first hand" contract with the landlord). This is legal and is quite different from other countries where it is common to see "no sub-letting" on every single rental contract you will ever see. So you do not have to sit in this queue (the queue is for first hand contracts) to live in Stockholm as a renter; but you may end up moving fairly often as second hand contracts are very often time limited.
- the quote "93% of swedes live in municipalities with a housing shortage" sounds bad, but what does this exactly mean - how bad are the shortages in each municipality, why is there a shortage, what is the divide of rural vs city municipality shortages. Also, a sizeable chunk of the population lives in Stockholm/Gothenburg/Malmö that are likely some of the key municipalities in this number, so it's likely that much less than 93% of municipalities suffer from a housing shortage.
- the rent that a landlord can ask for depends on many things, including the "modernness" of the apartment (both in terms of e.g. putting in a new floor, and in terms of appliances). This has the downside that the landlord may decide to modernise the apartment and now you have to pay (a bit) more rent without having a say in the matter. On the other hand it means that landlords have an incentive to keep the apartments in decent condition and not just let things get old and not bother replacing them. You could see this as a positive or negative, depending on your point of view and financial situation.
The article says that the rental market in "Sweden is a big mess", but this of course is quite a generalisation and simplification; and how to tackle housing supply and demand in many (all?) countries is a complex and difficult issue. Regarding demand for accommodation outstripping supply in Stockholm & Gothenburg, this is pretty common to other major cities, pretty much everywhere around the globe. Does rent control help or hinder? The article doesn't compare to other countries going through similar conditions that tried other methods, so it's hard to tell.
Some ideas for improving housing supply/demand situation:
- Building more (duh!). For individuals with some spare land there is a class of house called an "Attefallshus" you can build up to 30m2 and rent out if you wish.
- Better public transport late into the night out into suburbs and to nearby towns. Bike paths and affordable electric bikes/scooters to make living not in the centre and still enjoying the amenities possible.
- Investment in/encouraging private sector investment in smaller towns and cities, so the spread of demand for housing due to work is more spread across the country.
- Encouraging working remote or hybrid schedules, so employees feel they can live further out.
In the modern post-2007 world, capital in massive amounts is travelling to every corner of the West, and also capital from other systems into the West, to own, not rent. The reason to own is to capture the value increase in the market - renters get none of that.
Established theories about economic adjustment of rent prices are like tales of why the dogs nose is cold, or why it rains after a certain holiday. Many modern accepted economic theories are repeatedly disproved. Economic theory is half marketing and alcohol IMO. wave from the Coastal West USA
is this literally true? no.. but neither are the Milton Friedman Chicago Economics theories, so who is "correct" ? see "manufacturing consent" .. "manufacturing desire" .. post-industrial supply chain economics .. history of the savings and loan institutions in America .. more ..
Just like with roads, more lanes means more cars. More flats can also mean more people moving to the cities.
I don't think anyone would look at Tokyo and be like, yeah more apartments is the solution. It's been what they have been doing forever, and the population and cost of the apartments just keep going up.
Tokyo is a surprisingly affordable megacity because of housing availability.
(gift article, no ad wall) https://www.nytimes.com/2023/09/11/opinion/editorials/tokyo-...
My understanding that one thing that is unique in Japan is that housing is not an investment vehicle for preserving wealth. Housing is a consumable -- not an investment, and old houses actually lose value (most prefer buying new). Part of it is due to the fact that it's earthquake prone, so houses are ephemeral anyway.
> In the past half century, by investing in transit and allowing development, the city has added more housing units than the total number of units in New York City. It has remained affordable by becoming the world’s largest city. It has become the world’s largest city by remaining affordable.
> Those who want to live in Tokyo generally can afford to do so. There is little homelessness here. The city remains economically diverse, preserving broad access to urban amenities and opportunities. And because rent consumes a smaller share of income, people have more money for other things — or they can get by on smaller salaries — which helps to preserve the city’s vibrant fabric of small restaurants, businesses and craft workshops.
What's the average Tokyo rent rn?
https://www.statista.com/statistics/1202559/japan-rent-for-a...
About US$755.
The best way to make rent affordable is increasing land value tax to incentivize building and reduce income taxes.
It's an extremely bad tax if you are a land speculator, but the point of the tax is land speculators are the penultimate example of those who become rich for being rich without actually adding value to the system.
I still hear notions that rent control works and that capitalists just don't want you to know one weird trick! Or that absolute rent control doesn't work, but limiting how much rent can increase year over year does (no). Models where rents are allowed to be raised when tenants move out also have the unfortunate effect of strongly impairing peoples ability to freely move to a new home in a more suitable location for them as their personal and professional life changes, not just impairing new development. Not to mention the renoviction phenomenon, and landlords making their tenants life hell to force them to move.
I think the only argument you could make for rent control is as a protective against monopolisation/price fixing/cartel behaviour amongst landlords who would love to jack prices up above market value using price fixing software like realpage which are a new phenomenon. But it seems like a rather blunt instrument to accomplish that.
I live in a country that was run by the communists until ~30 years ago, and we built A LOT of housing... until 30 years ago.
They would find an underdeveloped area, build a factory there, build apartment buildings and the city would grow. In existing cities, if there was a need for more apartments, new apartment building blocks were build, and then more, then a school, kindergarden, cultural center, and everything else, and then more apartment buildings.
What if you wanted a private house? You could build it yourself... sometimes literally. Papers were either simplified or you could "forget" about them for a bit, start building and "legalize" stuff after, you could get your buddies to come and help you and you could build stuff on your own, every weekend for 2, 3, 5 years, to get a house to move in to, so you could save on (already cheap government) rent, to finish the second flood, and maybe even put some insulation on.
Clearly, we didn't have a housing problem.
Then the 90s came, no more yugoslavia, the new government didn't want to deal with the upkeep of thousands of buildings and sold the apartments off to current renters for really really cheap (now, compared to a cost of a new car).
Then we got some closing down of factories due to end of communism and a mix of people living in factory cities protesting against those remaining factories (pollution, noise, traffic, ....) and even more ofthose factories closing down.. So people have to drive (mostly) to the capital city to work, because they don't want anything new built in their small towns.
Then we got more and more regulation on building houses, so no way to do anything by yourself anymore, no ore friends helping you, etc. Also, papers first, and just the communal taxes cost approximately the same as bricks and cement do, probably a roof too.
Then more land regulation.. natura 2000, farming land must stay farming, no building here, no there... and we literally have cornfields and cows within our ringroad, next to highways and older 10+ story apartment buildings.
At the same time, more and more people want to move from smaller cities to the capital.
Then we started gentrification in the city center... make it look nice for the tourists, close down the streets for cars (supposedly for more space for pedestrians), rent out that space to restaurants to put tables on (so even less space for pedestrians than before, with cars there), loud music, no car access, and "normal" people move out, since noone wants to live above a hoarde of drunk tourists drinking every night, especially if you have a small kid or something.
Then airbnb happened, and new apartment buildings have people buy multiple apartments at once just for airbnb.
So yeah, we're fucked. Sooner or later someone is going to get his retirement calculated (before you retire you get a calculation), look at the number there, look at the rent, and hopefully, instead of just committing suicide (like a lot of our people already do), take some policians with him.
TLDR: government used to build stuff and let people build stuff, now no building by the government, no building by the people, concentration in (mostly one) large city, and airbnb
tl;dr: rent control bad.
> The status of the housing market today is that:
- 93% of swedes live in municipalities with a housing shortage,
- the share of rental apartments is on a continuous decline (in Stockholm it went from 54% to 36% in the last 30 years),
- there are long waiting times for first-hand contracts,
- there is a substantial black market and
- compared to the condominium market, the rental market is more segregated.
1. Subject to physiological and environmental safeguards like water supply and waste disposal for inhabitants, temperature, humidity and air healthiness, fire and earthquake safety, noise pollution, stormwater management.
As always, there is a compromise to be found, and so we have planning systems.