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> rent controls are damaging To whom? Rent controls redistribute the value capture from gentrifying neighborhoods away from landlords and towards longtime res

by CPLX 7y ago

> rent controls are damaging To whom? Rent controls redistribute the value capture from gentrifying neighborhoods away from landlords and towards longtime residents. That's what they're intended to do, and they do that.

Rebelgecko 7y ago
Anecdotally, I know multiple people that have turned down better paying (and arguably better for society) jobs because they would have to move but don't want to give up on their current rent-controlled apartment. What seems to always end up happening is that new residents subsidize the rent controlled ones, which creates this weird lock-in dynamic because people can't afford to move into equivalent housing literally next door. Rent control also gives landlords an incentive to encourage older residents to move. Sometimes they do this with big payouts to people that are willing to leave (I know someone that got offered $10k to leave his current place, but I've heard of payments as high as $50k). Less scrupulous landlords try to accomplish the same thing by letting the living conditions deteriorate to the bare minimum level that code enforcement will tolerate (or lower than the bare minimum, because they know that certain groups of people such as undocumented immigrants are reluctant to contact the authorities).
- CPLX 7y ago
  > What seems to always end up happening is that new residents subsidize the rent controlled ones Not really. It's landlords that subsidize rent controlled tenants. The system is redistributive. The value that would have gone to landlords in an increasing rent environment goes to the tenant instead. Theoretically it can distort the market, provide disincentives to building housing, etc etc. But those are second order effects, and situational, and often very arguable. In economics terms the subsidy flows from property owner to tenant.
  - Rebelgecko 7y ago
    > It's landlords that subsidize rent controlled tenants. Are there any studies showing the extent to which that is true? I would be curious to see what fraction of the rent control is paid for by landlords vs new tenants. My intuition would be that rent control reduces the supply of market-value housing, which would lead to prices increasing even more (even before you take into account a landlord wanting to compensate for the money they're not making from rent controlled apartments).
    - chimeracoder 7y ago
      > Are there any studies showing the extent to which that is true? There are actually plenty of studies that show that it's not true. Some of them are linked elsewhere in this thread. Your intuition is, in fact, correct and supported by a vast body of empirical research. This is one of the least-controversial topics among economists. It's very difficult to find a topic on which there's more academic consensus than rent control and its effects. But people dig their heels in and refuse to acknowledge it, even when there's copious research behind it. As Paul Krugman put it, "So now you know why [people say] economists are useless: when they actually do understand something, people don't want to hear about it."
      - CPLX 7y ago
        I have a degree in economics, I'm aware of the concepts being discussed. Consensus changes. Right now many neoliberal market-fundamentalist theories are not holding up well in the context of history. Several things that are taken as gospel by economists, such as free trade is always good, or that low unemployment is too dangerous because it causes inflation, appear now in retrospect to have caused a lot of misery for the middle and lower classes.
        chimeracoder 7y ago
        > I have a degree in economics, So do I. > Consensus changes. Sometimes, it does. In this case, it hasn't. The consensus on this topic is strong.

by CPLX 7y ago

Rebelgecko 7y ago

Anecdotally, I know multiple people that have turned down better paying (and arguably better for society) jobs because they would have to move but don't want to give up on their current rent-controlled apartment. What seems to always end up happening is that new residents subsidize the rent controlled ones, which creates this weird lock-in dynamic because people can't afford to move into equivalent housing literally next door. Rent control also gives landlords an incentive to encourage older residents to move. Sometimes they do this with big payouts to people that are willing to leave (I know someone that got offered $10k to leave his current place, but I've heard of payments as high as $50k). Less scrupulous landlords try to accomplish the same thing by letting the living conditions deteriorate to the bare minimum level that code enforcement will tolerate (or lower than the bare minimum, because they know that certain groups of people such as undocumented immigrants are reluctant to contact the authorities).

CPLX 7y ago
> What seems to always end up happening is that new residents subsidize the rent controlled ones Not really. It's landlords that subsidize rent controlled tenants. The system is redistributive. The value that would have gone to landlords in an increasing rent environment goes to the tenant instead. Theoretically it can distort the market, provide disincentives to building housing, etc etc. But those are second order effects, and situational, and often very arguable. In economics terms the subsidy flows from property owner to tenant.
- Rebelgecko 7y ago
  > It's landlords that subsidize rent controlled tenants. Are there any studies showing the extent to which that is true? I would be curious to see what fraction of the rent control is paid for by landlords vs new tenants. My intuition would be that rent control reduces the supply of market-value housing, which would lead to prices increasing even more (even before you take into account a landlord wanting to compensate for the money they're not making from rent controlled apartments).
  - chimeracoder 7y ago
    > Are there any studies showing the extent to which that is true? There are actually plenty of studies that show that it's not true. Some of them are linked elsewhere in this thread. Your intuition is, in fact, correct and supported by a vast body of empirical research. This is one of the least-controversial topics among economists. It's very difficult to find a topic on which there's more academic consensus than rent control and its effects. But people dig their heels in and refuse to acknowledge it, even when there's copious research behind it. As Paul Krugman put it, "So now you know why [people say] economists are useless: when they actually do understand something, people don't want to hear about it."
    - CPLX 7y ago
      I have a degree in economics, I'm aware of the concepts being discussed. Consensus changes. Right now many neoliberal market-fundamentalist theories are not holding up well in the context of history. Several things that are taken as gospel by economists, such as free trade is always good, or that low unemployment is too dangerous because it causes inflation, appear now in retrospect to have caused a lot of misery for the middle and lower classes.
      - chimeracoder 7y ago
        > I have a degree in economics, So do I. > Consensus changes. Sometimes, it does. In this case, it hasn't. The consensus on this topic is strong.