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Comment by tokenadult | Hacker News Reader

I think there should absolutely be a rent stabilization law -- everywhere

Do you think this on the grounds of economic theory? The empirical finding is that rent control laws limit the supply of rental housing unduly wherever they are enforced. What's a successful example of a place with a "rent stabilization law"?

http://www.econlib.org/library/Enc/RentControl.html

http://econjwatch.org/articles/rent-control-do-economists-ag...

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The first article you link actually suggests, sort of indirectly, that NYC is an example of a place with successful rent-stabilization. The article argues that the reason NYC hasn't been destroyed by rent control is that it liberalized rent control into the more flexible rent stabilization (which allows market-driven changes, just within certain year-to-year rate limits), which mitigated the worst problems of rent control.

I don't really have a worked-out position on the question, but I'd tentatively think that stabilization that doesn't amount to de-facto freezes would avoid some of the worst problems, since prices would track the market, just with a lag, as opposed to never doing so. For example, the problem with CA's Prop 13 isn't that it limits the y-on-y assessment increase for property-tax purposes, but that it limits it to 2% per year, not accounting for inflation, which is such an absurdly low limit that assessments will never track market prices, even in a delayed sense. Esp. since in years with >2% inflation it actually mandates a cut in real valuation. (Also, if I had my way, I'd remove the inheritability of rent-stabilized rents and Prop-13 valuations, to avoid any weirdness crossing generational lines.)

You seem to be conflating "rent control" and "rent stabilization", which are two different things.

Also, these economists appear to be ignoring a simple practical matter.

The idea behind most rent regulation is to avoid pricing low-income-but-necessary-to-basic-function people out of an area. These are, basically, the garbagemen and janitors and cooks and such, who can quickly find themselves priced out of anything within a reasonable distance of the city.

This results in a corresponding shortage of those services in the city, and prices for those services increase until even the wealthy -- who can still afford the higher rents -- are not willing to bear those costs to remain in the area, and begin leaving.

This can happen surprisingly quickly. In modern environments where many lease agreements come up for renewal at essentially the same time, it can happen frighteningly quickly, far more quickly than new construction can hope to "correct" the housing shortage.

That's the stated justification. The real reason is that politicians of certain stripes enjoy redistributing wealth from the landlord class to the tenant class and getting rewarded with votes for it, so the stated reason is disingenuous anyway, but let's examine the stated reason carefully.

Has this ever actually happened? Has any city ever run out of garbagemen and janitors due to a lack of rent control? I have never heard of anything like this happening, even in extremely expensive cities with free rental markets.

Yes, this happened in San Jose during the last bubble, when Firefighters and Police couldn't afford to live in the city.

Who on minimum wage can afford to drive a car for an hour to work each way?

So they should be paid better, and the burden spread among the constituents of those services. Not pinned on landlords.

As long as the rules are reasonably stable, it's not "pinned on landlords", because they presumably already took those considerations into account when purchasing their property, so everything is priced in already, and it's a wash from their perspective. The only people really injured would be those who purchased property under one regulatory regime, and then unexpectedly had it changed out from under them to a different regulatory regime.

Well that's even worse, as the whole cost is pinned not just on landlords but on a single generation of landlords. Bam, I just took away hundreds of thousands of dollars of your money with a stroke of a pen, how do you feel about that?

Much better overall if the increased cost merely gets reflected in a rise in wages for unskilled labour in the city. If indeed it ever is an actual problem which I don't believe it is.

But it does matter, because it tends to be a disincentive to get into the landlording business, which tends to further decrease inventory, which tends to make the problem worse, which tends to necessitate more onerous regulation, etc.

I mean, hell. It would even be an improvement to just levy a tax on all landlords to pay for a housing stipend for public workers. That way it's evenly spread among landlords instead of just the ones unlucky enough to have ultra-tenacious tenants.

That's called the free market, no?

If someplace is paying minimum wage and can't find people to fill the positions (due to high housing/transportation costs), they'll have to raise the wages or close down.

This actually happened in Calgary, Canada a few years back. McDonald's was paying 50-100% more than minimum wage in order to attract employees. Stores actually closed on Sunday because they couldn't find staff.

> redistributing wealth from the landlord class to the tenant class

This may be true, but SF rental property values are extremely high, indicating investors are more than willing to make long-term bets on the value of rent-controlled units.

In practice areas with rent control have higher rents than those without it. So I don't really see how this argument could at all be valid.

Rent stabilization (if applied fairly; New York's 1947-era rent control doesn't qualify) is a good thing, but it's a temporary fix. It's only one part of the solution, because it doesn't do anything to fix an intrinsic shortage.

More necessary is taxing landlords and owners of large amounts of real estate (anyone owning real estate at more than 12 times the average pre-tax income in an area qualifies) at very high rates and using the funds to build the best public transit system in the world-- a long-term solution that obviates the need for stabilization in the first place.

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