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The cities listed as having rent control are Berlin, Barcelona, Amsterdam and Paris. And you can add New York. When one thinks of failed cities, these do not co

The cities listed as having rent control are Berlin, Barcelona, Amsterdam and Paris. And you can add New York. When one thinks of failed cities, these do not come to mind. In fact, one could do worse than being more like them. And clearly rent control does not kill a city or economy or quality of life. And actually, a list of the most miserable cities is going to be overwhelmingly rent control free. Edit: for clarification, I am claiming there is _no_ evidence for a causal relationship between the presence or absence of rent control. Any inferred relationship is entirely conjectural and completely unsupported by evidence: cities obviously prosper perfectly well with rent control.

kahnjw 7y ago
You're suggesting there is some causal relation here that I'm not sure exists. Desirable cities have housing crises. Those cities implement policies to attempt to abate these crises. Ironically, theory says that restrictions like this make the crises worse: what incentive does it give renters except to hold their leases, thereby further restricting supply? That theory seems to hold up in a most cities, see SF, LA, London, NY etc. The introduction of rent control did nothing but to reduce housing availability and increase prices.
- TomMckenny 7y ago
  On the contrary, I claim there is no causal relationship. In particular, no actual evidence that it hurts a city. For example: on what evidence would we say NYC was hurt by rent control? Rent control started in the 1920s and was quite strong for decades, yet NYC continued to out grow dozens of potential competitor cities without it. Therefore at worst, rent control had no measurable effect on growth.
  - pzone 7y ago
    Here is a relatively famous study on rent control in Cambridge, Massachusetts. It identifies billions of dollars that resulted from the end of rent control in 1994, controlling for other economic trends. https://www.nber.org/digest/oct12/w18125.html https://www.nber.org/digest/oct12/w18125.html Although the year 1994 in a city a few miles away isn't exactly the same as New York, it seems far fetched to argue we wouldn't observe the same thing if we ended rent control here today.
    - TomMckenny 7y ago
      It raised land prices by billions of dollars, it did not produce wealth or additional housing (as seen by a flat population growth). The economy did not leap forward and far from easing housing shortage, it simply raised the cost of existing stock. The only change was a spurt in home owner improvements likely financed by mortgages against increased valuation It is indeed a fine example of how eliminating rent control does not result in new housing. So yes, if you eliminate what rent control there is in NY (which is limited to old buildings), their value would sky rocket along with rental income and the incentive to replace them with larger buildings would disappear.
      - kahnjw 7y ago
        The point isn’t about the supply of new construction but rather about supply of open leases. Rent control incentivized renters to stay put thereby reducing supply for potential residents. Limiting supply increases prices which further incentivized renters to stay put. And on and on. Removing rent control hurts current renters in the short term. It also removes restrictions on supply that improve the overall health of the market over a longer time horizon.
        TomMckenny 7y ago
        >Removing rent control hurts current renters in the short term. It also removes restrictions on supply that improve the overall health of the market over a longer time horizon. I'm just seeking proof of that. There are limitless alternative even contradictory theories. Why, other than matching preconceived world views, do we choose one over the other without evidence? In the Cambridge example 25 years have passed but there is, as you say, no additional housing and prices have risen further. Nor was there any burst of economic growth. In what way and to what end has the market become healthier? And if it does not increase supply of new construction then it is zero sum gain. It merely benefits one group, in this case landlords and new residents, over old residents and tenants generally. And the harm done is not temporary, the increased outlay in housing is permanent regardless of who is paying it. And wealth is transferred to unproductive literal rent seeking from productive activities such as consumption, employment and businesses (who now have bigger payrolls just to pass through employees to housing). And now, with transient population replacing a permanent one, interest in long term undertakings such as mass transit and community undertakings such as environment, homelessness or even economic stimulus also wane. The correct solution is to add more housing which evidently is unconnected to rent control. Certainly on existing units.
- omegaworks 7y ago
  >Ironically, theory says that restrictions like this make the crises worse The economic theory alluded to doesn't take into account intangible factors like community cohesiveness, economic precarity and the effects of that on mental health. These things are real and have an impact on the wellbeing of residents. Housing security is the foundation on which an individual's ability to produce and prosper is based. Housing isn't a commodity to the people living in it and economic theory that reduces the complexities of housing to market-based supply and demand are intentionally selling a value system that prioritizes the transfer and accumulation of capital above all other needs.
  - nerfhammer 7y ago
    supply is how much of a thing is available to be had; demand is how much people want that thing. If there isn't much of a thing and people want it a lot, it will be difficult to get. Acting offended at the reference to the existence of these variables does not eliminate their effects.
    - omegaworks 7y ago
      >Acting offended at the reference to the existence of these variables does not eliminate their effects. That you take my statement of fact as an expression of offense speaks to your limited understanding of the qualitative aspects of housing.
nerfhammer 7y ago
No one with think to bother with rent control in a "failed city" where no one wanted to live in the first place. Why would a city where rents were falling or there was a huge vacancy rate enact rent control? Should we therefore think that the lack of rent control caused them to be miserable or vice versa? (Is that not what you're implying?)
- kyruzic 7y ago
  He's implying that contrary to what economists say, and hackernews believes, rent control does not ruin cities. You just made the rest up.
refurb 7y ago
You’re ignoring history. Rent control resulted in dilapidated buildings being burnt down for insurance money in NYC.
- SiempreViernes 7y ago
  How is a bit of arson a contradiction to the statement that NY isn’t a failed city?
  - koolba 7y ago
    The city does not have to totally fail for its housing policies to be a failure.
qarlow 7y ago
Honestly it doesn't really matter. The title is even factually incorrect, rent control worked in Sweden for much of the 20th century producing a better standard of living at a lower cost and very likely contributing to probably the most successful startup scene in Europe. Vienna would probably be another example, regularly ranking as the most livable city in the world. But the economist is a political publication. They are in support of free markets and against government intervention. That is why they see no problem with foreign investments, cheap credit or private interests. They don't mention the relation between rents and property values, or anything to do with how to actually lower rent. That you can't keep up with rapidly increasing demand by supplying a hard to come by resource like housing isn't weird from an economic perspective. Which is exactly what we have seen repeatedly in the cities that have tried. But it is of course from a political one where markets can never be free enough. So that is what their anonymous author is going to tell us. They should really call themselves the ideologist at this point.
zone411 7y ago
If we're going to go by these types of correlations, let's add another market with rent control, San Francisco, and you have the two most expensive rental markets in the U.S. Amsterdam, Paris, and Berlin are the top 3 out of 4 on this list of cities with the fastest growing rent prices in Europe: https://www.businessinsider.com/the-7-european-cities-where-house-prices-are-growing-the-fastest-2018-2#5-brussels-43-house-prices-in-the-belgian-capital-ticked-up-43-to-230-per-square-foot-in-2017-3 https://www.businessinsider.com/the-7-european-cities-where-.... It seems that a stringent rent control law was only imposed in Barcelona this year.
TheCoelacanth 7y ago
Only 1% of units in NYC are rent-controlled. It needs to have been built before 1947 and the tenant must have lived there continuously since 1971.
- TomMckenny 7y ago
  Indeed, NYC rent control has been weakening since the 70s. And the annual rental increase 1970 to now is roughly double what it was 1920 to 1970. Yet for housing, 1920 to 1970 saw roughly 50% growth while 1970-now saw roughly 20%

kahnjw 7y ago

You're suggesting there is some causal relation here that I'm not sure exists. Desirable cities have housing crises. Those cities implement policies to attempt to abate these crises. Ironically, theory says that restrictions like this make the crises worse: what incentive does it give renters except to hold their leases, thereby further restricting supply? That theory seems to hold up in a most cities, see SF, LA, London, NY etc. The introduction of rent control did nothing but to reduce housing availability and increase prices.

TomMckenny 7y ago
On the contrary, I claim there is no causal relationship. In particular, no actual evidence that it hurts a city. For example: on what evidence would we say NYC was hurt by rent control? Rent control started in the 1920s and was quite strong for decades, yet NYC continued to out grow dozens of potential competitor cities without it. Therefore at worst, rent control had no measurable effect on growth.
- pzone 7y ago
  Here is a relatively famous study on rent control in Cambridge, Massachusetts. It identifies billions of dollars that resulted from the end of rent control in 1994, controlling for other economic trends. https://www.nber.org/digest/oct12/w18125.html https://www.nber.org/digest/oct12/w18125.html Although the year 1994 in a city a few miles away isn't exactly the same as New York, it seems far fetched to argue we wouldn't observe the same thing if we ended rent control here today.
  - TomMckenny 7y ago
    It raised land prices by billions of dollars, it did not produce wealth or additional housing (as seen by a flat population growth). The economy did not leap forward and far from easing housing shortage, it simply raised the cost of existing stock. The only change was a spurt in home owner improvements likely financed by mortgages against increased valuation It is indeed a fine example of how eliminating rent control does not result in new housing. So yes, if you eliminate what rent control there is in NY (which is limited to old buildings), their value would sky rocket along with rental income and the incentive to replace them with larger buildings would disappear.
    - kahnjw 7y ago
      The point isn’t about the supply of new construction but rather about supply of open leases. Rent control incentivized renters to stay put thereby reducing supply for potential residents. Limiting supply increases prices which further incentivized renters to stay put. And on and on. Removing rent control hurts current renters in the short term. It also removes restrictions on supply that improve the overall health of the market over a longer time horizon.
      - TomMckenny 7y ago
        >Removing rent control hurts current renters in the short term. It also removes restrictions on supply that improve the overall health of the market over a longer time horizon. I'm just seeking proof of that. There are limitless alternative even contradictory theories. Why, other than matching preconceived world views, do we choose one over the other without evidence? In the Cambridge example 25 years have passed but there is, as you say, no additional housing and prices have risen further. Nor was there any burst of economic growth. In what way and to what end has the market become healthier? And if it does not increase supply of new construction then it is zero sum gain. It merely benefits one group, in this case landlords and new residents, over old residents and tenants generally. And the harm done is not temporary, the increased outlay in housing is permanent regardless of who is paying it. And wealth is transferred to unproductive literal rent seeking from productive activities such as consumption, employment and businesses (who now have bigger payrolls just to pass through employees to housing). And now, with transient population replacing a permanent one, interest in long term undertakings such as mass transit and community undertakings such as environment, homelessness or even economic stimulus also wane. The correct solution is to add more housing which evidently is unconnected to rent control. Certainly on existing units.
omegaworks 7y ago
>Ironically, theory says that restrictions like this make the crises worse The economic theory alluded to doesn't take into account intangible factors like community cohesiveness, economic precarity and the effects of that on mental health. These things are real and have an impact on the wellbeing of residents. Housing security is the foundation on which an individual's ability to produce and prosper is based. Housing isn't a commodity to the people living in it and economic theory that reduces the complexities of housing to market-based supply and demand are intentionally selling a value system that prioritizes the transfer and accumulation of capital above all other needs.
- nerfhammer 7y ago
  supply is how much of a thing is available to be had; demand is how much people want that thing. If there isn't much of a thing and people want it a lot, it will be difficult to get. Acting offended at the reference to the existence of these variables does not eliminate their effects.
  - omegaworks 7y ago
    >Acting offended at the reference to the existence of these variables does not eliminate their effects. That you take my statement of fact as an expression of offense speaks to your limited understanding of the qualitative aspects of housing.

nerfhammer 7y ago

No one with think to bother with rent control in a "failed city" where no one wanted to live in the first place. Why would a city where rents were falling or there was a huge vacancy rate enact rent control? Should we therefore think that the lack of rent control caused them to be miserable or vice versa? (Is that not what you're implying?)

kyruzic 7y ago
He's implying that contrary to what economists say, and hackernews believes, rent control does not ruin cities. You just made the rest up.

refurb 7y ago

You’re ignoring history. Rent control resulted in dilapidated buildings being burnt down for insurance money in NYC.

SiempreViernes 7y ago
How is a bit of arson a contradiction to the statement that NY isn’t a failed city?
- koolba 7y ago
  The city does not have to totally fail for its housing policies to be a failure.

qarlow 7y ago

Honestly it doesn't really matter. The title is even factually incorrect, rent control worked in Sweden for much of the 20th century producing a better standard of living at a lower cost and very likely contributing to probably the most successful startup scene in Europe. Vienna would probably be another example, regularly ranking as the most livable city in the world. But the economist is a political publication. They are in support of free markets and against government intervention. That is why they see no problem with foreign investments, cheap credit or private interests. They don't mention the relation between rents and property values, or anything to do with how to actually lower rent. That you can't keep up with rapidly increasing demand by supplying a hard to come by resource like housing isn't weird from an economic perspective. Which is exactly what we have seen repeatedly in the cities that have tried. But it is of course from a political one where markets can never be free enough. So that is what their anonymous author is going to tell us. They should really call themselves the ideologist at this point.

zone411 7y ago

If we're going to go by these types of correlations, let's add another market with rent control, San Francisco, and you have the two most expensive rental markets in the U.S. Amsterdam, Paris, and Berlin are the top 3 out of 4 on this list of cities with the fastest growing rent prices in Europe: https://www.businessinsider.com/the-7-european-cities-where-house-prices-are-growing-the-fastest-2018-2#5-brussels-43-house-prices-in-the-belgian-capital-ticked-up-43-to-230-per-square-foot-in-2017-3 https://www.businessinsider.com/the-7-european-cities-where-.... It seems that a stringent rent control law was only imposed in Barcelona this year.

TheCoelacanth 7y ago

Only 1% of units in NYC are rent-controlled. It needs to have been built before 1947 and the tenant must have lived there continuously since 1971.

TomMckenny 7y ago
Indeed, NYC rent control has been weakening since the 70s. And the annual rental increase 1970 to now is roughly double what it was 1920 to 1970. Yet for housing, 1920 to 1970 saw roughly 50% growth while 1970-now saw roughly 20%