6 ms·

Ditto. > "The only solution..." I wonder as a thought experiment, if the city keeps buying more houses to fix the "problem", it might eventually become the do

Ditto. > "The only solution..." I wonder as a thought experiment, if the city keeps buying more houses to fix the "problem", it might eventually become the dominant landlord, and then in order to raise revenue, it might find that it has to increase rents on its rent-controlled housing...

detaro 9y ago
Sure, the city also raises rents when necessary. The cities real estate companies are expected to be profitable, just while keeping to other policies than "maximize profit". An option which is at least in Berlin is often offered to investors, but not always taken. (The city offers a guarantee to not interfere with a deal in exchange for concessions on how the buildings are managed, which allows to achieve the policy goals without having to invest itself. Private investors of course then often prefer other, more lucrative investments). Keeping existing supply cheap is useful for the cities inhabitants, but additional demand has also to be matched to not make this a conflict forever (and Berlin has afaik a lower rate than other German cities in approving new projects).
mseebach 9y ago
Rent control is an instance of "chang[ing] the laws of supply and demand". If you need it, you didn't provide a solution. The "build, baby, build" solution would keep supply in line with demand, and prices would be stable on their own. Having rent control even if you don't need it (out of concern for long term tenancy security), you will just create a constituency with a vested interest in you not building any more. Also, strictly speaking, building is not the only solution. Curbing demand by making the city less attractive would also be a solution.
- sbenitoj 9y ago
  Ha, you're right that making the city less appealing would also fix the "problem" (lower prices), and I almost included that in my post because strictly speaking it's true...but honestly I didn't want to give politicians any ideas!!
  - majormajor 9y ago
    And there you run into the problem: "building more" and "making the city less appealing" are one and the same to a huge proportion of people. "Why should I pay higher rents or deal with worse traffic/more crowded infrastructure just because you think my neighborhood is suddenly cool or because you're looking to stash a bunch of money in my country?"
    - mseebach 9y ago
      Luckily, without constraints on supply and demand, those things will quickly balance each other out. And if your rent went up, supply didn't. Supply, not gentrification, is the problem in the SF/NY/Londons of the world.
      - majormajor 9y ago
        Induced demand can cause both to go up, for extra fun times. You also seem to have missed the "or" presented by my hypothetical low-to-medium-density-city-dweller: either rents and housing prices get higher when you decide to move to my area, or my life changes in ways I don't want as a side effect of your increased supply. So now let's imagine I own property and can vote, etc. Which of those scenarios do you think this person is going to support? The one that at least gives me a nice valuable house, I'm betting. You still want to move here? Make it worth my while $$$-wise. I don't think most policy proposals for increasing density have enough obvious upsides for the incumbents to be very realistic.
        Eridrus 9y ago
        One of the interesting political tidbits I read was an article about a homeowner who had started voting against zoning laws because gentrification was making it so bad that their kids would have to move far away to be able to afford rent. You only get the realise the benefits of increased property values if you move away. A more valuable house also means more property taxes (unless you live in CA).

detaro 9y ago

Sure, the city also raises rents when necessary. The cities real estate companies are expected to be profitable, just while keeping to other policies than "maximize profit". An option which is at least in Berlin is often offered to investors, but not always taken. (The city offers a guarantee to not interfere with a deal in exchange for concessions on how the buildings are managed, which allows to achieve the policy goals without having to invest itself. Private investors of course then often prefer other, more lucrative investments). Keeping existing supply cheap is useful for the cities inhabitants, but additional demand has also to be matched to not make this a conflict forever (and Berlin has afaik a lower rate than other German cities in approving new projects).

mseebach 9y ago

Rent control is an instance of "chang[ing] the laws of supply and demand". If you need it, you didn't provide a solution. The "build, baby, build" solution would keep supply in line with demand, and prices would be stable on their own. Having rent control even if you don't need it (out of concern for long term tenancy security), you will just create a constituency with a vested interest in you not building any more. Also, strictly speaking, building is not the only solution. Curbing demand by making the city less attractive would also be a solution.

sbenitoj 9y ago
Ha, you're right that making the city less appealing would also fix the "problem" (lower prices), and I almost included that in my post because strictly speaking it's true...but honestly I didn't want to give politicians any ideas!!
- majormajor 9y ago
  And there you run into the problem: "building more" and "making the city less appealing" are one and the same to a huge proportion of people. "Why should I pay higher rents or deal with worse traffic/more crowded infrastructure just because you think my neighborhood is suddenly cool or because you're looking to stash a bunch of money in my country?"
  - mseebach 9y ago
    Luckily, without constraints on supply and demand, those things will quickly balance each other out. And if your rent went up, supply didn't. Supply, not gentrification, is the problem in the SF/NY/Londons of the world.
    - majormajor 9y ago
      Induced demand can cause both to go up, for extra fun times. You also seem to have missed the "or" presented by my hypothetical low-to-medium-density-city-dweller: either rents and housing prices get higher when you decide to move to my area, or my life changes in ways I don't want as a side effect of your increased supply. So now let's imagine I own property and can vote, etc. Which of those scenarios do you think this person is going to support? The one that at least gives me a nice valuable house, I'm betting. You still want to move here? Make it worth my while $$$-wise. I don't think most policy proposals for increasing density have enough obvious upsides for the incumbents to be very realistic.
      - Eridrus 9y ago
        One of the interesting political tidbits I read was an article about a homeowner who had started voting against zoning laws because gentrification was making it so bad that their kids would have to move far away to be able to afford rent. You only get the realise the benefits of increased property values if you move away. A more valuable house also means more property taxes (unless you live in CA).