Why would landlords not seek the highest possible rent without rent control?
Without rent control, rents can be kept constant, moved up, or moved down without having to consider the consequences for years to come. The ceiling is set by the market rate, but there isn’t a function driving all of the landlords to raise by the annually permissible maximum so they try to discover it instead.
Rent control is instituted in cities that have constrained housing supplies, so the demand is there. Landlords switch to raising rents in unison by the maximum allowable amount every year because that’s the only way to operate.
Landlords raise rent by the max allowed because they can. There is no “catch up” because the purpose is to protect renters against huge jumps.
I think rent controlled units that sit empty should be subject to a tax based on an escalating percentage of the market rent. You can own property to rent out, but in a city with a tremendous shortage of housing, you need to rent it out.
I lived in a building with affordable housing units and management decided they would rather not rent them out at all. Horrible.
They would just be taken off the market and then relisted later.
Forcing people to rent their properties and also forcing the price isn’t something I can get behind. People need to be able to choose what they do with their property.
People need homes, and there is a balance to be struck for the public good.
I’m pointing out that the “it’s my property I can do what I want” attitude needs to be balanced with public needs for housing, because society isn’t purely about optimising the content of your wallet, and extreme deregulation results in slums.
(Your linked paper there also says that rent control results in more properties having affordable rent at the low end of the market, but less overall rental property supply, indicating a reduction at the higher end. I’m good with that as a consequence, those who are better off can usually afford to get into purchasing a property. In some markets, like much of Australia, having fewer landlords and wannabe landlords competing to purchase properties would be a bonus. This actually looks like a win all round TBH.
tl;dr - congrats, you’ve used science to sell me on rent control)
Your conclusion is completely wrong.
What happens when you reduce the higher end of the rental property range? Do you think the people who would have been renting those properties simply vanish? Disappear from the rental market?
No, obviously they don't. So what are they doing instead? They're renting those mid-end properties instead. And what happens to the people who would have rented those mid-end properties that are now occupied by the wealthier renters? They get pushed to the low-end properties. What happens to the people who were trying to get into the low-end properties? They're pushed into being roommates or leaving the city.
Any policy that reduces overall housing supply is a loss for the low end. The way you're bending over backwards to try to imagine this as a good thing indicates something very wrong with your assumptions.
This is a case where someone has become so narrowly focused on hurting the people they perceive as wealthy (people who rent the expensive units) that even solutions that hurt the poor (policies which reduce housing supply) look like a good idea. This isn’t a good way to think.
Actually yes, entirely unironically.
We even have evidence of this dynamic in Melbourne. When various tax measures were taken that sucked some of the profit out of investment properties, making landlordism less attractive, we saw there was less competition for house purchasing from well-funded investors. This in turn allowed would-be owner-occupiers to buy more houses, as they were no longer forced into rentals they didn't want, no longer outcompeted by those with easier access to larger lines of credit. This reduces the population of people seeking rentals.
Result - decline in the absolute numbers of rental properties in the city, but an increase in rental property vacancy and a slight decrease in rents.
> Any policy that reduces overall housing supply is a loss for the low end.
Except it doesn't reduce the overall housing supply, because overall housing supply includes both rental properties and owner-occupied properties. Those houses don't just disappear.
You're making the (false) assumptions that there is no interplay between the two markets and that everyone that lives in a rented house wants to live in a rented house.
Why is this so difficult? We will try absolutely anything except to allow enough housing to be built, and then ask why there isn't enough housing. It's madness.
If there isn't enough housing, no amount of shenanigans can overcome that inconvenient fact, except to build more housing. That's it. That is the only thing which can alleviate a housing shortage.
Which, they do all the time, even in places like Brooklyn. It’s been happening for decades. But as you can imagine, it’s a long and arduous process. It’s not like erecting an apartment complex in the middle of a big plain of land in Texas.
We have a severe housing shortage and these are developers building high-rise apartments. This isn’t me saying you should be forced to rent your second bedroom.
They are getting permits and incentives _to build housing_.
It's honestly absurd to read this thread because everyone who has ever rented in the SF bay area knows this, yet there's a whole discussion based on some half-assumed idea of what the system is.
Blaming this on rent control? This entire take is absurd. Because of the simple fact that landlords, especially using this software, do this in cities without rent control.
Unless now type arguing that Berkley rent control forces landlords in cities without rent control to seek maximum rents...
Rent control is flawed, limiting housing stock is flawed. But blaming landlord's pricing behavior on this is obviously false. Simply because it happens without rent control.
Rent control is one of the few topics where the vast majority of economists agree on something. It makes people who don't understand second-order effects really angry when the conclusion doesn't match what they want to see, but it's been proven out across the world so many times that anyone who refuses to acknowledge the real problems with rent control is either uninformed or denying reality at this point.
You just want to talk about rent control. Even when it's not the issue at hand. It's the equivalent of watching a kid fall and skin his knee and someone steps forward to get on a soap box about rent control.
Rent control can be bad, but it's not even close to the cause of every problem in housing. Most importantly, it's not the cause here, and it's absurd to say it is.
No one is entitled to be a lazy landlord taxing other people's existence and its extremely rare for a landlord to have built new houses, they mostly gatekeep the existing housing.
People in california need to take advantage of a populace willing to vote for constitutional amendments and override the politicians.
By legislating prices and price changes, the signal is muddied, and market participants cannot take action to match the movements of the supply and demand curves.
Prop 13’s property tax rate increase cap is also price fixing. These kinds of laws are mostly ways to enrich and reward those who got or were born somewhere first, and run counter to the vaunted meritocracy that a so called free market can encourage.
Edit: The most helpful thing the government can do is maximize price transparency, so the smaller entity can be on equal footing with the bigger entity about which way prices are moving. Tenant agreements should be public record, like land sales are, and that would not only help cops with kicking out squatters, but also give renters more power in negotiations.
I agree that Prop 13 is god awful.
There is no shortcut though, the incentives have to be set right, and there has to be patience for the results to show. Unfortunately, long term benefit at the expense of the short term is a core weakness in democracy.
Market reactions are instant. Once the policy is fixed we don't have to wait for a generation
Rent control schemes don’t work like this, except in completely broken policies.
Landlords are given an allowance for rent control increases year over year. The point is that they basically have to take the maximum allowed every year to avoid getting stuck.
Rent control crushes supply to the degree that the rent control caps rents below the actual market rate.
If you're lucky enough to get rent controlled housing then you're in good shape. But good luck getting it when things get far enough down the timeline.
Rent fixing is the other side where supply is manipulated to extract the maximum profit. In this case the coordinated rent pricing action behaves like an oligopoly.
If the balance is far enough off that everything turns into commercial real estate, that can be solved, too.
By this logic San Francisco should be one of the cheapest places in the world to build
Landlord input a desired vacancy rate or time on Market, and service suggests the right price.