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At the cost of further disincentives to actually building more housing. What a great idea. Every field of economics agrees that rent control causes harm to the
by pitaj 7y ago
At the cost of further disincentives to actually building more housing. What a great idea.
Every field of economics agrees that rent control causes harm to the people it's supposed to help.
- tmh79 7y agothis doesn't impact new buildings (only buildings older than 15 years old), its impact on housing creating is miniscule compared with the regulatory barriers of zoning and cost barriers of impact fees and construction costs.
- 0xEFF 7y agoThe value of a new building is lower because it’s expected future value is lower.
- tmh79 7y agoThe value of a new building (for finance purposes, IE getting a loan for construction) is based on the DFCF over the next 15 years, this is an industry standard. This rent control implementation doesn't start until the building is 15 years old, it will not impact real estate finance for new buildings.
- 0xEFF 7y agoMy point is when the new building is sold after being built and rented up, it’s value to a buyer is lowered by the rent control.
- 52-6F-62 7y agoIn a vacuum, yes. Just as much as on paper 0.1+0.2=0.3 but in most floating point implementations it doesn’t. In application Toronto has seen the opposite effect to what you describe. We hear this argument over and over as we just had our rent control stripped, but it’s counter to the experience. Here’s one write-up: https://urbantoronto.ca/news/2018/11/people-why-universal-rent-control-worth-fighting https://urbantoronto.ca/news/2018/11/people-why-universal-re...
- pitaj 7y agoYour article says this: > So far, empirical evidence shows that rent control has not crippled the purpose-built rental market. But the economic concensus is exactly the opposite. https://www.economist.com/the-economist-explains/2015/08/30/do-rent-controls-work https://www.economist.com/the-economist-explains/2015/08/30/... https://www.nytimes.com/2018/10/12/business/economy/rent-control-explained.html https://www.nytimes.com/2018/10/12/business/economy/rent-con... https://www.businessinsider.com/does-rent-control-work-no-it-actually-increases-rent-prices-for-most-people-2015-9 https://www.businessinsider.com/does-rent-control-work-no-it... https://www.bloomberg.com/opinion/articles/2018-01-18/yup-rent-control-does-more-harm-than-good https://www.bloomberg.com/opinion/articles/2018-01-18/yup-re... https://www.nytimes.com/1989/05/30/opinion/how-rent-control-hurts-the-poor.html https://www.nytimes.com/1989/05/30/opinion/how-rent-control-...
- 52-6F-62 7y agoThe article continues beyond that line. They outline, with numbers, the practical effects of rent control in the sample size of metro Toronto. I’m not an economist but I didn’t think consensus was a valid benchmark against empirical data.
- rtkwe 7y agoThose (The few of those I could actually read, thanks paywalls!) all focused on the effects on owners bringing rental units out of the market and don't really show that there was an overall decrease in the number of housing units available. The economist article for example doesn't have any real info on the effect of rent control just the fairly standard arguments about it affecting the willingness of land owners to build.
- toast0 7y ago> Every field of economics agrees that rent control causes harm to the people it's supposed to help. Is that for rent control as in New York or San Francisco, where the allowed rent increases are very small; or for rent control as in San Jose (8% until reduced to 5% in 2016) or Oregon, or maybe this bill, where the allowed rent increase is larger than most of market increases? A limit of 5% + inflation is probably more than most markets in most years, and more importantly, is a big enough limit that most leases will be able to catch up to the market over a few years. So, this would still distort the rental market, but in a much more limited way, that may be more likely to actually help people.