26 ms·

Rent control will make housing shortages worse?

164 points by baron816 7y ago

smitty1e 7y ago
Basic Economics, by Thomas Sowell[1] There seems to be a requirement that policy makers not have read this book. [1] https://www.amazon.com/Basic-Economics-Fifth-Common-Economy/dp/B00PKQMFT8/ref=sr_1_1 https://www.amazon.com/Basic-Economics-Fifth-Common-Economy/...
rthompsonhi 7y ago
Rent is going to be a thing of the past as landlords decide to just sell their real estate.
- baggy_trough 7y ago
  Certainly some landlords will do that as rent control shifts their business into unprofitability. Result: less rental housing stock.
- chrisdhoover 7y ago
  How will that even work? San Francisco has multi tenant apartment building and restrictions on condo conversions.
- RcouF1uZ4gsC 7y ago
  Now they have the option instead of selling it, to make it a full time AirBnb rental.
  - negrit 7y ago
    Many cities are actually regulating/pushing regulations against short-term rentals.
    - asdff 7y ago
      With zero enforcement
      - negrit 7y ago
        Absolutely not true
thrill 7y ago
Absolutely. A market adjusts far more rapidly to match supply and demand than any committee ever could, especially as groups of people that set prices have agendas other than seeking movement to a balanced price.
- tonyarkles 7y ago
  Hmmm, I wish that were true. It seems like it would be, but my (Canadian) province’s two major cities are showing how glacially slow the market is reacting to an oversupply. Cheap interest rates mean that for a lot of builders who overbuilt, it’s cheaper to pay the 2-3% interest for the year than to lower prices 10-20%. Our prices went up like a rocket around 2006-2008, and are very very gradually dropping back down. There was, of course, no significant salary increase in the same time period, or since then, so entering the housing market for first time buyers has been much more very difficult than it was in the past.
  - dantheman 7y ago
    Most markets take awhile to sort out the proper price. The proper price is not based on any one commodity, it can be seen as an optimization problem. As the price goes down certain other industries can move in, and then the price will stabalize or even begin to increase again. This is how neighborhoods go from expensive -> cheaper -> gentrification -> expensive.
  - asdfasgasdgasdg 7y ago
    Which cities are these? It's (I think) pretty well known that housing prices are a little sticky. Even if the market reacts to changes in supply and demand, nobody wise says it reacts instantly. But, I think there's also a chance you've been misled as to exactly how much oversupply there is.
    - tonyarkles 7y ago
      Saskatoon (worse) and Regina (not as bad). For a long read about Saskatoon, see https://jbuc61.wordpress.com/ https://jbuc61.wordpress.com/ We recently moved from Saskatoon to Regina, and our family sold the Saskatoon house. We priced it slightly below market and it sold in 3 days, but there were many similar houses that had been on the market for months. The buyer tried to flip it (it needed love for sure); I'd guess $15-20k worth of supplies plus his own labour. It sat on the market for a long time, and ultimately sold for only $40k more than he paid us for it.
tehjoker 7y ago
It's not like landlords provide housing to fulfill human need, they only serve people with money. Rent control might make them sad and build less, that's why we need to go further and provide universal public housing. https://www.jacobinmag.com/2016/10/housing-crisis-rent-landlords-homeless-affordability/ https://www.jacobinmag.com/2016/10/housing-crisis-rent-landl...
- RhodesianHunter 7y ago
  No, we don't need anything fancy or government funded. We just need to let builders build.
  - tehjoker 7y ago
    We have more empty houses than homeless people by >> 3x. This is a problem of distribution. Also, why should I pay someone who does nothing for me 1/3 or more of my income? They just own a piece of paper, thus extract rents and victimize people that can't pay. People must be housed, the landlords should be cast out into the cold.
    - zip1234 7y ago
      I agree with you on the first point but not sure I understand the second. People had to pay to build or buy the property. For example, my uncle built a 12 unit apartment building. He paid the mortgage on it, maintained it, and took care of it for 30 years until the mortgaged was paid off. Was he victimizing the people that paid him to live there?
      - tehjoker 7y ago
        If he evicted any of them, refused reasonable accommodations, or made a profit off it in excess of the labor and services he provided. This is an old joke, but why should we show any deference to a person we literally call Lord?
      - asdff 7y ago
        Depends on how much he was charging. I have no problem with paying to cover the cost of running the building, including labor, but I do take issue with my rent payment being used to pay off a bimmer while the building falls apart.
fuzz4lyfe 7y ago
I like to test my world view as policies are enacted. Decide a concrete measure for a particular outcome, write it down and check the results once a year (I do it on new years day). These rent control measures are a great target for this regime.
- fbonetti 7y ago
  Why don’t you just check out the numerous other historical examples of rent control and see how they turned out.
- emmelaich 7y ago
  You could publish predictions on http://longbets.org/ http://longbets.org/ and make some money!
djrobstep 7y ago
Every time rent control comes up, you get a lot of Econ 101 critique of it, but really, rent control is fine and can even encourage new development. This is a good discussion of it: https://www.fresheconomicthinking.com/2019/09/rent-control-is-totally-normal-price.html https://www.fresheconomicthinking.com/2019/09/rent-control-i... Like a lot of economic critique, rent control criticism is driven from cultural allegiance to landlords and the rentier class, rather than good faith.
- leftyted 7y ago
  > Like a lot of economic critique, rent control criticism is driven from cultural allegiance to landlords and the rentier class, rather than good faith. What a bizarre claim. There's plenty of "good faith" criticism of rent control. People think different things. You're allowed to advocate rent control. But assuming bad faith because "I am right" or "my opponents are in the thrall of the rentier class" is just astonishing.
  - djrobstep 7y ago
    Don't be naive. Think of key debates on economic issues: Deregulation, monetary policy, minimum wage, rent control, taxation, etc. People's opinions on these is overwhelmingly driven by their political values. Trump doesn't love the Laffer Curve for its abstract mathematical beauty or essential truth - it's merely a rhetorical device for justifying the policies that he and other wealthy interests prefer.
    - rcoveson 7y ago
      "Assume good faith" and "avoid ad hominem" are not "naive." They are necessary. You simply cannot have a fruitful discussion without both parties agreeing on those rules. Even if you are convinced that your opposing party is not arguing in good faith, it is still in your best interest and the interest of those observing that you argue your own side using proper technique. If you have given up on this, there's no point in participating at all.
wind0w 7y ago
Housing should not be a commodity. Rent control is a solution to a specific problem of housing being a commodity -- landlords spiking tenants' rents, forcing them to relocate. It isn't a solution to the housing shortage. The solution to the housing shortage, which, for example Bernie Sanders proposes in his plan and this article fails to mention, is dramatically expanding affordable public housing. There is simply no other solution to the housing crisis than to decommodify housing, considering it a public good and a right. The unregulated market has never and will never provide affordable housing to all on its own. Economists love to criticize rent control because in some abstract economic sense it is "bad", but most people don't care about the market efficiency (Which mostly means maximizing profit to landlords and developers) of the housing market. They care that their communities are not destroyed by gentrification and that they are able to stay in their homes without being dislocated, both goals that rent control is successful at achieving.
- fortran77 7y ago
  We need more housing if there's a housing shortage. Build more.
  - wind0w 7y ago
    I agree -- but we need public housing. The market does not build affordable housing. Libertarians have this idea that the housing market is restricted by government regulation and just needs to be freed in order to flourish. In actuality, the only reason there is any affordable or low-income housing in the U.S. is because of government money (Section 8, LIHTC, public housing, etc). Homelessness is a totally solvable problem, and any place that has solved it knows the solution: build enough homes for people to live in, through state-funded programs!
    - UnpossibleJim 7y ago
      I'm genuinely curious where the seemingly new faith in federal government has come from, while criticism of local government (police action, city and town policies, county actions) seem to be on the rise. I'm neither Democrat nor Republican. Both parties have become too corrupted to support in any legitimate way, and I tend to only look at what policies any candidate supports, which is getting more and more difficult, as everything is in 20 second sound bites. But broad federal government as opposed to local government always seemed far more disconnected and I'm curious as to why the boost in popularity of this centralization in federal power on "both" sides, seemingly.
nicky19890202 7y ago
The housing problem has always been the biggest problem for mankind and the most basic problem for mankind.
tempsy 7y ago
The California bill is hardly a win for renters. How many renters who do not currently have rent control have their rents go up on average of 8% a year? I have lived in SF since 2012 in non rent controlled units and have never experienced that. The only units I’ve seen that have rent increases that are greater than 10% are the new luxury high rises, which will continue to be exempt. The only landlords I really see this impacting are the corporate landlords like Avalon that manage older rentals and squeeze rentals as much as they can.
- pkaye 7y ago
  I just did the calculation on an apartment I rented back in 2000 in Fremont. It was $1300 back in 2000 and $3200 now. So that is about 4.6% increase per year. And this was a new apartment back then with pool, gym, covered parking, laundry in unit, close to BART. Are people really seeing rates increase more than 8% per year all around the bay area?
  - asdff 7y ago
    Maybe not consistently year over year, but bursts of rent increase can happen to people and blindside them financially. Preventing price gouging is what this law is intended for.
    - pkaye 7y ago
      I have a feeling though that landlords who used to do 5% now think it is acceptable to do 8%. Obviously the market demands will restrict the increases further but the law kind of codifies what is not price gouging. I guess we will see in a few years.
  - tempsy 7y ago
    Only in luxury high rises
  - mattm 7y ago
    Friends of mine were hit with a 20% increase last year.
dantheman 7y ago
The housing problem is because CA et al fight new construction. This does far more to hurt renters than anything else: https://www.latimes.com/local/lanow/la-me-ln-housing-bill-council-20180326-story.html https://www.latimes.com/local/lanow/la-me-ln-housing-bill-co...
- knubie 7y ago
  I see this conventional wisdom posted a lot here on hacker news and other forums, but is it really true? There are plenty of high density cities with high housing costs.
  - zanny 7y ago
    High housing costs are always, without fail, a regulatory problem. If the rents are high because of a lack of available units, you build more units or make more units available. If you are at peak carrying capacity in a given city you need to expand infrastructure (vertically or horizontally) to support more & denser development. The trick is both can require public spending to make work. You can't just rezone and let a city go and expect magic in the first case scenario. You often need government subsidized building of cheap apartments to spur the economy to build up and attract investment / higher paying residents to build generalized housing. Most developers are looking for the highest margin building they can do, and while in theory any potential profit from building should eventually be met there are only so many construction companies, especially urban highrise class builders, and they prioritize the best deal.
    - sethammons 7y ago
      > If you are at peak carrying capacity in a given city you need to expand infrastructure... Why not say, "sorry, we are full"?
      - selectodude 7y ago
        Because here in the United States that isn’t something that you can say.
CriticalCathed 7y ago
I don't buy it. Even with strong rent control or tenant rights laws, there's still a glut of profit to be extracted as a landlord. I understand the arguments, and somewhat agree with the purported models of behavior that say rent control will make things worse or at best maintain the status quo. The whinging about rent control strikes me as misunderstanding the differences between modern rent control legislation and the policies of the 20th century, and also pure libertarian whinging. The arguments against rent control are econ 101 mealy mouth crap that is not even representative of all econ theory. I own four houses outright and rent three of them out to families, and I'm currently invested in a quadplex whose rents I use to pay the loan off; and I'm about to leverage all of these properties to invest in a 20 unit apartment complex. Even considering taxes, maintenance, legal expenses, etc. I am pulling in so much raw cash that I foresee that I will be able to expand my business indefinitely -- even with Oregon's new rent control and tenant rights law.
- deelowe 7y ago
  I'm a landlord too and would love rent control in my area. No where else is a 8-10% increase year over year tolerable, but in rent controlled areas, it's the norm.
  - CriticalCathed 7y ago
    It really isn't. You pretend like rent control laws force everyone to raise rent every year double the rate of inflation. That isn't the case, and if they did they'd price themselves out of the market. Rents are competitive in Oregon, and I imagine they'll get even more competitive. The biggest hassle with rental property, as you are well aware I am sure, isn't the government -- it's shitty tenants.
    - deelowe 7y ago
      The biggest hassle is maintenance and turnover. I've never had a shitty tenant in over 10 years of operation b/c I do a good job screening. It'd be much better if I could lock in a tenant and simply raise the rent each each, but where I live housing is plentiful and if I did that, they'd move.
kingkawn 7y ago
Good landlords provide vital public service, and should be able to charge a slight premium as compensation. This is different than speculators who boot out tenants to take advantage of market swings.
- zelly 7y ago
  There will be no incentive to be a good landlord when it legally can't net you more money than being a bad one. NYC made a law that banned landlords from doing more than some percentage worth of capital improvements. The result is nobody improves anything, and the buildings and living quality just gets worse for everybody.
  - kingkawn 7y ago
    That hasn’t been the result in nyc to date, and there were plenty of abusive, negligent landlords before. The only difference with the new laws is that tenants have enhanced legal rights to prevent that abuse.
- asdff 7y ago
  I'd love to find a good landlord! Out of the 5 I've had the pleasure of doing business with across 3 cities, they've all cut corners and done the bare minimum. There is zero incentive to raise the bar.
deleted 7y ago
[deleted]
archie2 7y ago
Get out of California while you still can. Gavin Newsom is hell bent on completely destroying it.
deleted 7y ago
[deleted]
jayd16 7y ago
All these comments and threads fail to understand the purpose of rent control. It is not to provide the most efficient housing to new residents but to protect existing residents from being priced out. Until there's a better solution than "tough shit" these policies will continue to be popular.
- chronic71819 7y ago
  > Until there's a better solution than "tough shit" these policies will continue to be popular. Why do we need a better solution than "tough shit"? Not everyone is entitled to live where they want. If you want that, try Europe.
  - pixl97 7y ago
    Because we make lots of policies that make housing hard to build in the first place.
  - CreRecombinase 7y ago
    If you don't think you need a better solution then you have to admit you need a better argument; it seems like a lot of voters disagree with you.
    - V-eHGsd_ 7y ago
      > it seems like a lot of voters disagree with you. I don't know man, appealing to the authority of the collective wisdom of the voters seems like a pretty shaky foundation on which to base an argument these days.
      - 0xB31B1B 7y ago
        The parent comment was “if you want this policy, tough shit move to Europe”. If the policy is popular here, why doesn’t parent comment move?
        7y ago
rolltiide 7y ago
Ask a rent control proponent what market rate actually is and you’ll see why they gravitate towards these bandaids People view “market rate” as “expensive so lets do something so people can afford housing” , distinct from “influenced by supply and demand and a rent control solution further constricts the supply of non controlled units further exacerbating inequality”
zelly 7y ago
If this were true, and I'm inclined to believe it is, then shouldn't current landlords be campaigning for rent control? It basically gives them a monopoly. Rent control serves as price fixing to keep out competitors. The entrance fee (to build a new building) is too high for the returns compared to alternative investments. For current landlords, it's a trade-off of lower short-term profit for long-term stability. Isn't stability the reason you invest in real estate (as opposed to say the S&P500)?
- asdfadsfgfdda 7y ago
  The value of an asset is determined by the expected return to investors (i.e. rent). If you reduce expected returns by limiting rent, your asset (the apartment building) is suddenly worth less. But the typical rent control regulation only covers older building. If you are a developer of new apartments, you can benefit here. Your competition is under rent control, so their current tenants have a strong incentive to remain in older buildings. This reduces supply, and your new apartment building can raise prices.
bradlys 7y ago
I'm sure this is being posted because California's state wide rent control is going into effect soon enough. Of course - my rent was just jacked up again. Got the letter in the mail today. (Now paying about 22% more than two years ago) Landlord needed to get another 10%+ rent increase in before they're under rent control. Figured this would happen. Just sad to see it actually go through. So much for protecting existing renters...
- firstplacelast 7y ago
  I've been living in the same place for 3 years in CA, right on the beach. Have not had any rent increase in that time. It's probably a rarity, but pretty sure this will ensure mgmt raises prices to the max every year as they know they can't do large increases when they need it. So this will likely hurt many, many other renters. Not to mention makes it harder to move across town (they'll do massive rent increases every time a unit is vacant in anticipation of not being able to do it while you're there) and will hurt any newcomers to the state (ya know the same shit we like to bitch about Boomers doing).
- elgenie 7y ago
  Well, of course, because that's what the bill is forcing your landlord to do. If they, looking at housing starts and the economy and projecting out, think that there's a chance that there'll should be a 40% increase over five years, they now have to raise your rent to have a chance to get there and also know that the other landlords in the quasi-market that they're competing with will be doing the same.
- pontifier 7y ago
  Check the wording on the bill... I think that isn't actually allowed. I seem to remember that your rent in Jan 2020 must be lowered to what it was in March 2019. Edit: text from https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB1482 https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml... "...The bill would provide that these provisions apply to all rent increases occurring on or after March 15, 2019. The bill would provide that in the event that an owner increased the rent by more than the amount specified above between March 15, 2019, and January 1, 2020, the applicable rent on January 1, 2020, shall be the rent as of March 15, 2019, plus the maximum permissible increase, and the owner shall not be liable to the tenant for any corresponding rent overpayment..."
sysbin 7y ago
I wish there was a requirement of building 'x' homes before you can build 'y' and rinse & repeat. Need incentives or people just build the best contract deal.
pier25 7y ago
Here's the episode about rent control on Freakonomics: http://freakonomics.com/podcast/rent-control/ http://freakonomics.com/podcast/rent-control/ If you don't know the podcast (or the books) I highly recommend those.
bluquark 7y ago
This article ignores the political dynamics. Pro-supply policies like zoning reform are much more popular when bundled with anti-displacement measures, which address people's anxiety about them. A mild level of rent control such as the new California law is not nearly as damaging to supply as policies like strict height limits. Knowing that rent control isn't fully optimal, I'd still gladly trade one for the other.
skybrian 7y ago
Can't read the article so I don't know if they cover it, but this whole topic is unproductive due to binary thinking. The mild rent control being enacted statewide in Oregon and California doesn't seem much like the strict rent control resulting in people having far below-market rents?
- asdff 7y ago
  It really just prevents price gouging. I believe on average market rents rise at a lower rate than these rent control measures allow, and rent control doesn't apply to new builds.
crashedsnow 7y ago
Yeah! I should have rent control! I should be able to live where I want and pay below the market value. Screw the free market, I want to live in someone else's house and pay them less than it's worth. I don't care if their costs go up due to increased maintenance costs, or inflation, or wage increases. I don't care if the value of their property increases due to basic, fundamental, elementary economics like supply and demand, and their property taxes increase. Screw them. It's my right to live where I really really want to live. I especially don't care that nobody else can move to where I live because there are no new houses being built, and therefore no new money into the local economy. I'm not moving to a more affordable area, why should I? And I'm definitely not going to save money for a deposit so I can borrow money at some of history's lowest ever interest rates. Then I'd be working for the man. Screw that, I've got avocado toast to pay for.
- asdfasgasdgasdg 7y ago
  On the plus side, anybody who gets in to owning apartment buildings at this point knows the score. The risk is not that you won't be able to find tenants. The risk is that you won't be able to charge them enough to make a profit (because of regulation). If you don't want to roll the dice, don't invest in rental housing. You can't claim that you didn't have notice. If you want good performing investments, you'd better prepare to be a slumlord, or you'd better invest somewhere else. I say this as an opponent of rent control. The people you should feel sorry for are not the owners. It is all the people who want to come to SF, would have a better life in SF, would have a lower impact on the environment, would be more productive and make this a better country, who can't because housing prices are so high and there are no vacant units.
- hnarn 7y ago
  I feel like this comment is way below par for HN.
  - imtringued 7y ago
    It is successful at showing the root cause: people don't want to change.
- 7y ago
WillPostForFood 7y ago
What's up with the modified title? The article title is "Rent control will make housing shortages worse" - statement, not "Rent control will make housing shortages worse?" - question
equalunique 7y ago
I'm not an expert on this, and as such, I would like to "favorite" this submission on HN without actually bestowing upon it a "point." I'm not informed enough to feel confident in endorsing this with the point that comes with "favoriting," rather, I just want to save this submission in the discussion in the comments for later.
cowpig 7y ago
So many people in this message board hold strong normative opinions of free markets (namely, that they are inherently good) and don't understand the basics of them. It surprises me, because economics seem so aligned with this board's interests, and usually the conversations about these kinds of topics here are informed or at least interesting. The "free market" seems to always be an exception. Here are a few _basic economic_ reasons why you might not want a "free" market to determine the price of some good: 1. It's "free" but not actually free. For a free market to exhibit the beautiful self-organization and maximization of surplus, you need: a. Zero-cost (or at least low-barrier), voluntary entry/exit from the marketplace b. Many participants c. Information transparency (a) doesn't apply to housing, healthcare, food, or anything else that's required for survival, so there are no theoretical guarantees about "free" markets in those cases. 2. Self-organization and maximal surplus are not sufficient. This is a question of values, and usually is a question of valuing equality over efficiency. You might want, for example, for everyone to have a access to something (like a home) even if it comes at an economic cost. 3. There are costly externalities. Sometimes markets can self-organize and provide efficient distribution of resources, but also cause a lot of problems that aren't captured in the supply/demand curve. For example, not having a home might cause you to do things that is socially harmful that you wouldn't otherwise do. Like using the sidewalks as a toilet.
- cowpig 7y ago
  I also want to challenge an implicit assumption made in the article, namely that rent control inherently limits housing supply. Suppose rentals were simply banned. That is, you can only buy, and the rental market was eliminated. Would housing supply disappear? I'd argue no, that you'd simply end up with more longer-term, higher-rate (to compensate for default-risk) mortgages. Which might be a good thing. You wouldn't have to worry about 40-year residents being suddenly forced out of their homes any more, and still have a "free" market.
pimmen 7y ago
In Sweden we have a history of a very strict rent control (which will probably be scrapped for newly built homes, because of current politics) while also handing a lot of power to the local governments to regulate housing. There are a lot of reasons Sweden has absurd real estate prices (the Gothenburg area in Sweden, which is the seat of moderately famous Volvo, has real estate prices close to the Seattle area which is the seat of Boeing, Amazon and Microsoft while the median incomes are not even remotely similar), and why the bulk of the price hike happened during the last decade, but a big one that's often overlooked is that local governments don't want rentals. Because of rent control they are mostly inhabited by low income earners, who pay less tax. Rent control is set by the national government agencies, who of course don't care where you live, they want everyone to have a decent home without being gouged. Not saying that rent control is necessarily a bad thing, but if implemented on a national level they give local governments less tools to get rid of poor people. In the end, they'll find a way, and that might create even more problems.

164 points by baron816 7y ago

Basic Economics, by Thomas Sowell[1] There seems to be a requirement that policy makers not have read this book. [1] https://www.amazon.com/Basic-Economics-Fifth-Common-Economy/dp/B00PKQMFT8/ref=sr_1_1 https://www.amazon.com/Basic-Economics-Fifth-Common-Economy/...

rthompsonhi 7y ago

Rent is going to be a thing of the past as landlords decide to just sell their real estate.

baggy_trough 7y ago
Certainly some landlords will do that as rent control shifts their business into unprofitability. Result: less rental housing stock.
chrisdhoover 7y ago
How will that even work? San Francisco has multi tenant apartment building and restrictions on condo conversions.
RcouF1uZ4gsC 7y ago
Now they have the option instead of selling it, to make it a full time AirBnb rental.
- negrit 7y ago
  Many cities are actually regulating/pushing regulations against short-term rentals.
  - asdff 7y ago
    With zero enforcement
    - negrit 7y ago
      Absolutely not true

thrill 7y ago

Absolutely. A market adjusts far more rapidly to match supply and demand than any committee ever could, especially as groups of people that set prices have agendas other than seeking movement to a balanced price.

tonyarkles 7y ago
Hmmm, I wish that were true. It seems like it would be, but my (Canadian) province’s two major cities are showing how glacially slow the market is reacting to an oversupply. Cheap interest rates mean that for a lot of builders who overbuilt, it’s cheaper to pay the 2-3% interest for the year than to lower prices 10-20%. Our prices went up like a rocket around 2006-2008, and are very very gradually dropping back down. There was, of course, no significant salary increase in the same time period, or since then, so entering the housing market for first time buyers has been much more very difficult than it was in the past.
- dantheman 7y ago
  Most markets take awhile to sort out the proper price. The proper price is not based on any one commodity, it can be seen as an optimization problem. As the price goes down certain other industries can move in, and then the price will stabalize or even begin to increase again. This is how neighborhoods go from expensive -> cheaper -> gentrification -> expensive.
- asdfasgasdgasdg 7y ago
  Which cities are these? It's (I think) pretty well known that housing prices are a little sticky. Even if the market reacts to changes in supply and demand, nobody wise says it reacts instantly. But, I think there's also a chance you've been misled as to exactly how much oversupply there is.
  - tonyarkles 7y ago
    Saskatoon (worse) and Regina (not as bad). For a long read about Saskatoon, see https://jbuc61.wordpress.com/ https://jbuc61.wordpress.com/ We recently moved from Saskatoon to Regina, and our family sold the Saskatoon house. We priced it slightly below market and it sold in 3 days, but there were many similar houses that had been on the market for months. The buyer tried to flip it (it needed love for sure); I'd guess $15-20k worth of supplies plus his own labour. It sat on the market for a long time, and ultimately sold for only $40k more than he paid us for it.

tehjoker 7y ago

It's not like landlords provide housing to fulfill human need, they only serve people with money. Rent control might make them sad and build less, that's why we need to go further and provide universal public housing. https://www.jacobinmag.com/2016/10/housing-crisis-rent-landlords-homeless-affordability/ https://www.jacobinmag.com/2016/10/housing-crisis-rent-landl...

RhodesianHunter 7y ago
No, we don't need anything fancy or government funded. We just need to let builders build.
- tehjoker 7y ago
  We have more empty houses than homeless people by >> 3x. This is a problem of distribution. Also, why should I pay someone who does nothing for me 1/3 or more of my income? They just own a piece of paper, thus extract rents and victimize people that can't pay. People must be housed, the landlords should be cast out into the cold.
  - zip1234 7y ago
    I agree with you on the first point but not sure I understand the second. People had to pay to build or buy the property. For example, my uncle built a 12 unit apartment building. He paid the mortgage on it, maintained it, and took care of it for 30 years until the mortgaged was paid off. Was he victimizing the people that paid him to live there?
    - tehjoker 7y ago
      If he evicted any of them, refused reasonable accommodations, or made a profit off it in excess of the labor and services he provided. This is an old joke, but why should we show any deference to a person we literally call Lord?
    - asdff 7y ago
      Depends on how much he was charging. I have no problem with paying to cover the cost of running the building, including labor, but I do take issue with my rent payment being used to pay off a bimmer while the building falls apart.

fuzz4lyfe 7y ago

I like to test my world view as policies are enacted. Decide a concrete measure for a particular outcome, write it down and check the results once a year (I do it on new years day). These rent control measures are a great target for this regime.

fbonetti 7y ago
Why don’t you just check out the numerous other historical examples of rent control and see how they turned out.
emmelaich 7y ago
You could publish predictions on http://longbets.org/ http://longbets.org/ and make some money!

djrobstep 7y ago

Every time rent control comes up, you get a lot of Econ 101 critique of it, but really, rent control is fine and can even encourage new development. This is a good discussion of it: https://www.fresheconomicthinking.com/2019/09/rent-control-is-totally-normal-price.html https://www.fresheconomicthinking.com/2019/09/rent-control-i... Like a lot of economic critique, rent control criticism is driven from cultural allegiance to landlords and the rentier class, rather than good faith.

leftyted 7y ago
> Like a lot of economic critique, rent control criticism is driven from cultural allegiance to landlords and the rentier class, rather than good faith. What a bizarre claim. There's plenty of "good faith" criticism of rent control. People think different things. You're allowed to advocate rent control. But assuming bad faith because "I am right" or "my opponents are in the thrall of the rentier class" is just astonishing.
- djrobstep 7y ago
  Don't be naive. Think of key debates on economic issues: Deregulation, monetary policy, minimum wage, rent control, taxation, etc. People's opinions on these is overwhelmingly driven by their political values. Trump doesn't love the Laffer Curve for its abstract mathematical beauty or essential truth - it's merely a rhetorical device for justifying the policies that he and other wealthy interests prefer.
  - rcoveson 7y ago
    "Assume good faith" and "avoid ad hominem" are not "naive." They are necessary. You simply cannot have a fruitful discussion without both parties agreeing on those rules. Even if you are convinced that your opposing party is not arguing in good faith, it is still in your best interest and the interest of those observing that you argue your own side using proper technique. If you have given up on this, there's no point in participating at all.

wind0w 7y ago

Housing should not be a commodity. Rent control is a solution to a specific problem of housing being a commodity -- landlords spiking tenants' rents, forcing them to relocate. It isn't a solution to the housing shortage. The solution to the housing shortage, which, for example Bernie Sanders proposes in his plan and this article fails to mention, is dramatically expanding affordable public housing. There is simply no other solution to the housing crisis than to decommodify housing, considering it a public good and a right. The unregulated market has never and will never provide affordable housing to all on its own. Economists love to criticize rent control because in some abstract economic sense it is "bad", but most people don't care about the market efficiency (Which mostly means maximizing profit to landlords and developers) of the housing market. They care that their communities are not destroyed by gentrification and that they are able to stay in their homes without being dislocated, both goals that rent control is successful at achieving.

fortran77 7y ago
We need more housing if there's a housing shortage. Build more.
- wind0w 7y ago
  I agree -- but we need public housing. The market does not build affordable housing. Libertarians have this idea that the housing market is restricted by government regulation and just needs to be freed in order to flourish. In actuality, the only reason there is any affordable or low-income housing in the U.S. is because of government money (Section 8, LIHTC, public housing, etc). Homelessness is a totally solvable problem, and any place that has solved it knows the solution: build enough homes for people to live in, through state-funded programs!
  - UnpossibleJim 7y ago
    I'm genuinely curious where the seemingly new faith in federal government has come from, while criticism of local government (police action, city and town policies, county actions) seem to be on the rise. I'm neither Democrat nor Republican. Both parties have become too corrupted to support in any legitimate way, and I tend to only look at what policies any candidate supports, which is getting more and more difficult, as everything is in 20 second sound bites. But broad federal government as opposed to local government always seemed far more disconnected and I'm curious as to why the boost in popularity of this centralization in federal power on "both" sides, seemingly.

nicky19890202 7y ago

The housing problem has always been the biggest problem for mankind and the most basic problem for mankind.

tempsy 7y ago

The California bill is hardly a win for renters. How many renters who do not currently have rent control have their rents go up on average of 8% a year? I have lived in SF since 2012 in non rent controlled units and have never experienced that. The only units I’ve seen that have rent increases that are greater than 10% are the new luxury high rises, which will continue to be exempt. The only landlords I really see this impacting are the corporate landlords like Avalon that manage older rentals and squeeze rentals as much as they can.

pkaye 7y ago
I just did the calculation on an apartment I rented back in 2000 in Fremont. It was $1300 back in 2000 and $3200 now. So that is about 4.6% increase per year. And this was a new apartment back then with pool, gym, covered parking, laundry in unit, close to BART. Are people really seeing rates increase more than 8% per year all around the bay area?
- asdff 7y ago
  Maybe not consistently year over year, but bursts of rent increase can happen to people and blindside them financially. Preventing price gouging is what this law is intended for.
  - pkaye 7y ago
    I have a feeling though that landlords who used to do 5% now think it is acceptable to do 8%. Obviously the market demands will restrict the increases further but the law kind of codifies what is not price gouging. I guess we will see in a few years.
- tempsy 7y ago
  Only in luxury high rises
- mattm 7y ago
  Friends of mine were hit with a 20% increase last year.

dantheman 7y ago

The housing problem is because CA et al fight new construction. This does far more to hurt renters than anything else: https://www.latimes.com/local/lanow/la-me-ln-housing-bill-council-20180326-story.html https://www.latimes.com/local/lanow/la-me-ln-housing-bill-co...

knubie 7y ago
I see this conventional wisdom posted a lot here on hacker news and other forums, but is it really true? There are plenty of high density cities with high housing costs.
- zanny 7y ago
  High housing costs are always, without fail, a regulatory problem. If the rents are high because of a lack of available units, you build more units or make more units available. If you are at peak carrying capacity in a given city you need to expand infrastructure (vertically or horizontally) to support more & denser development. The trick is both can require public spending to make work. You can't just rezone and let a city go and expect magic in the first case scenario. You often need government subsidized building of cheap apartments to spur the economy to build up and attract investment / higher paying residents to build generalized housing. Most developers are looking for the highest margin building they can do, and while in theory any potential profit from building should eventually be met there are only so many construction companies, especially urban highrise class builders, and they prioritize the best deal.
  - sethammons 7y ago
    > If you are at peak carrying capacity in a given city you need to expand infrastructure... Why not say, "sorry, we are full"?
    - selectodude 7y ago
      Because here in the United States that isn’t something that you can say.

CriticalCathed 7y ago

I don't buy it. Even with strong rent control or tenant rights laws, there's still a glut of profit to be extracted as a landlord. I understand the arguments, and somewhat agree with the purported models of behavior that say rent control will make things worse or at best maintain the status quo. The whinging about rent control strikes me as misunderstanding the differences between modern rent control legislation and the policies of the 20th century, and also pure libertarian whinging. The arguments against rent control are econ 101 mealy mouth crap that is not even representative of all econ theory. I own four houses outright and rent three of them out to families, and I'm currently invested in a quadplex whose rents I use to pay the loan off; and I'm about to leverage all of these properties to invest in a 20 unit apartment complex. Even considering taxes, maintenance, legal expenses, etc. I am pulling in so much raw cash that I foresee that I will be able to expand my business indefinitely -- even with Oregon's new rent control and tenant rights law.

deelowe 7y ago
I'm a landlord too and would love rent control in my area. No where else is a 8-10% increase year over year tolerable, but in rent controlled areas, it's the norm.
- CriticalCathed 7y ago
  It really isn't. You pretend like rent control laws force everyone to raise rent every year double the rate of inflation. That isn't the case, and if they did they'd price themselves out of the market. Rents are competitive in Oregon, and I imagine they'll get even more competitive. The biggest hassle with rental property, as you are well aware I am sure, isn't the government -- it's shitty tenants.
  - deelowe 7y ago
    The biggest hassle is maintenance and turnover. I've never had a shitty tenant in over 10 years of operation b/c I do a good job screening. It'd be much better if I could lock in a tenant and simply raise the rent each each, but where I live housing is plentiful and if I did that, they'd move.

kingkawn 7y ago

Good landlords provide vital public service, and should be able to charge a slight premium as compensation. This is different than speculators who boot out tenants to take advantage of market swings.

zelly 7y ago
There will be no incentive to be a good landlord when it legally can't net you more money than being a bad one. NYC made a law that banned landlords from doing more than some percentage worth of capital improvements. The result is nobody improves anything, and the buildings and living quality just gets worse for everybody.
- kingkawn 7y ago
  That hasn’t been the result in nyc to date, and there were plenty of abusive, negligent landlords before. The only difference with the new laws is that tenants have enhanced legal rights to prevent that abuse.
asdff 7y ago
I'd love to find a good landlord! Out of the 5 I've had the pleasure of doing business with across 3 cities, they've all cut corners and done the bare minimum. There is zero incentive to raise the bar.

deleted 7y ago

[deleted]

archie2 7y ago

Get out of California while you still can. Gavin Newsom is hell bent on completely destroying it.

deleted 7y ago

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jayd16 7y ago

All these comments and threads fail to understand the purpose of rent control. It is not to provide the most efficient housing to new residents but to protect existing residents from being priced out. Until there's a better solution than "tough shit" these policies will continue to be popular.

chronic71819 7y ago
> Until there's a better solution than "tough shit" these policies will continue to be popular. Why do we need a better solution than "tough shit"? Not everyone is entitled to live where they want. If you want that, try Europe.
- pixl97 7y ago
  Because we make lots of policies that make housing hard to build in the first place.
- CreRecombinase 7y ago
  If you don't think you need a better solution then you have to admit you need a better argument; it seems like a lot of voters disagree with you.
  - V-eHGsd_ 7y ago
    > it seems like a lot of voters disagree with you. I don't know man, appealing to the authority of the collective wisdom of the voters seems like a pretty shaky foundation on which to base an argument these days.
    - 0xB31B1B 7y ago
      The parent comment was “if you want this policy, tough shit move to Europe”. If the policy is popular here, why doesn’t parent comment move?
      - 7y ago

rolltiide 7y ago

Ask a rent control proponent what market rate actually is and you’ll see why they gravitate towards these bandaids People view “market rate” as “expensive so lets do something so people can afford housing” , distinct from “influenced by supply and demand and a rent control solution further constricts the supply of non controlled units further exacerbating inequality”

zelly 7y ago

If this were true, and I'm inclined to believe it is, then shouldn't current landlords be campaigning for rent control? It basically gives them a monopoly. Rent control serves as price fixing to keep out competitors. The entrance fee (to build a new building) is too high for the returns compared to alternative investments. For current landlords, it's a trade-off of lower short-term profit for long-term stability. Isn't stability the reason you invest in real estate (as opposed to say the S&P500)?

asdfadsfgfdda 7y ago
The value of an asset is determined by the expected return to investors (i.e. rent). If you reduce expected returns by limiting rent, your asset (the apartment building) is suddenly worth less. But the typical rent control regulation only covers older building. If you are a developer of new apartments, you can benefit here. Your competition is under rent control, so their current tenants have a strong incentive to remain in older buildings. This reduces supply, and your new apartment building can raise prices.

bradlys 7y ago

I'm sure this is being posted because California's state wide rent control is going into effect soon enough. Of course - my rent was just jacked up again. Got the letter in the mail today. (Now paying about 22% more than two years ago) Landlord needed to get another 10%+ rent increase in before they're under rent control. Figured this would happen. Just sad to see it actually go through. So much for protecting existing renters...

firstplacelast 7y ago
I've been living in the same place for 3 years in CA, right on the beach. Have not had any rent increase in that time. It's probably a rarity, but pretty sure this will ensure mgmt raises prices to the max every year as they know they can't do large increases when they need it. So this will likely hurt many, many other renters. Not to mention makes it harder to move across town (they'll do massive rent increases every time a unit is vacant in anticipation of not being able to do it while you're there) and will hurt any newcomers to the state (ya know the same shit we like to bitch about Boomers doing).
elgenie 7y ago
Well, of course, because that's what the bill is forcing your landlord to do. If they, looking at housing starts and the economy and projecting out, think that there's a chance that there'll should be a 40% increase over five years, they now have to raise your rent to have a chance to get there and also know that the other landlords in the quasi-market that they're competing with will be doing the same.
pontifier 7y ago
Check the wording on the bill... I think that isn't actually allowed. I seem to remember that your rent in Jan 2020 must be lowered to what it was in March 2019. Edit: text from https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB1482 https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml... "...The bill would provide that these provisions apply to all rent increases occurring on or after March 15, 2019. The bill would provide that in the event that an owner increased the rent by more than the amount specified above between March 15, 2019, and January 1, 2020, the applicable rent on January 1, 2020, shall be the rent as of March 15, 2019, plus the maximum permissible increase, and the owner shall not be liable to the tenant for any corresponding rent overpayment..."

sysbin 7y ago

I wish there was a requirement of building 'x' homes before you can build 'y' and rinse & repeat. Need incentives or people just build the best contract deal.

pier25 7y ago

Here's the episode about rent control on Freakonomics: http://freakonomics.com/podcast/rent-control/ http://freakonomics.com/podcast/rent-control/ If you don't know the podcast (or the books) I highly recommend those.

bluquark 7y ago

This article ignores the political dynamics. Pro-supply policies like zoning reform are much more popular when bundled with anti-displacement measures, which address people's anxiety about them. A mild level of rent control such as the new California law is not nearly as damaging to supply as policies like strict height limits. Knowing that rent control isn't fully optimal, I'd still gladly trade one for the other.

skybrian 7y ago

Can't read the article so I don't know if they cover it, but this whole topic is unproductive due to binary thinking. The mild rent control being enacted statewide in Oregon and California doesn't seem much like the strict rent control resulting in people having far below-market rents?

asdff 7y ago
It really just prevents price gouging. I believe on average market rents rise at a lower rate than these rent control measures allow, and rent control doesn't apply to new builds.

crashedsnow 7y ago

Yeah! I should have rent control! I should be able to live where I want and pay below the market value. Screw the free market, I want to live in someone else's house and pay them less than it's worth. I don't care if their costs go up due to increased maintenance costs, or inflation, or wage increases. I don't care if the value of their property increases due to basic, fundamental, elementary economics like supply and demand, and their property taxes increase. Screw them. It's my right to live where I really really want to live. I especially don't care that nobody else can move to where I live because there are no new houses being built, and therefore no new money into the local economy. I'm not moving to a more affordable area, why should I? And I'm definitely not going to save money for a deposit so I can borrow money at some of history's lowest ever interest rates. Then I'd be working for the man. Screw that, I've got avocado toast to pay for.

asdfasgasdgasdg 7y ago
On the plus side, anybody who gets in to owning apartment buildings at this point knows the score. The risk is not that you won't be able to find tenants. The risk is that you won't be able to charge them enough to make a profit (because of regulation). If you don't want to roll the dice, don't invest in rental housing. You can't claim that you didn't have notice. If you want good performing investments, you'd better prepare to be a slumlord, or you'd better invest somewhere else. I say this as an opponent of rent control. The people you should feel sorry for are not the owners. It is all the people who want to come to SF, would have a better life in SF, would have a lower impact on the environment, would be more productive and make this a better country, who can't because housing prices are so high and there are no vacant units.
hnarn 7y ago
I feel like this comment is way below par for HN.
- imtringued 7y ago
  It is successful at showing the root cause: people don't want to change.
7y ago

WillPostForFood 7y ago

What's up with the modified title? The article title is "Rent control will make housing shortages worse" - statement, not "Rent control will make housing shortages worse?" - question

equalunique 7y ago

I'm not an expert on this, and as such, I would like to "favorite" this submission on HN without actually bestowing upon it a "point." I'm not informed enough to feel confident in endorsing this with the point that comes with "favoriting," rather, I just want to save this submission in the discussion in the comments for later.

cowpig 7y ago

So many people in this message board hold strong normative opinions of free markets (namely, that they are inherently good) and don't understand the basics of them. It surprises me, because economics seem so aligned with this board's interests, and usually the conversations about these kinds of topics here are informed or at least interesting. The "free market" seems to always be an exception. Here are a few _basic economic_ reasons why you might not want a "free" market to determine the price of some good: 1. It's "free" but not actually free. For a free market to exhibit the beautiful self-organization and maximization of surplus, you need: a. Zero-cost (or at least low-barrier), voluntary entry/exit from the marketplace b. Many participants c. Information transparency (a) doesn't apply to housing, healthcare, food, or anything else that's required for survival, so there are no theoretical guarantees about "free" markets in those cases. 2. Self-organization and maximal surplus are not sufficient. This is a question of values, and usually is a question of valuing equality over efficiency. You might want, for example, for everyone to have a access to something (like a home) even if it comes at an economic cost. 3. There are costly externalities. Sometimes markets can self-organize and provide efficient distribution of resources, but also cause a lot of problems that aren't captured in the supply/demand curve. For example, not having a home might cause you to do things that is socially harmful that you wouldn't otherwise do. Like using the sidewalks as a toilet.

cowpig 7y ago
I also want to challenge an implicit assumption made in the article, namely that rent control inherently limits housing supply. Suppose rentals were simply banned. That is, you can only buy, and the rental market was eliminated. Would housing supply disappear? I'd argue no, that you'd simply end up with more longer-term, higher-rate (to compensate for default-risk) mortgages. Which might be a good thing. You wouldn't have to worry about 40-year residents being suddenly forced out of their homes any more, and still have a "free" market.

pimmen 7y ago

In Sweden we have a history of a very strict rent control (which will probably be scrapped for newly built homes, because of current politics) while also handing a lot of power to the local governments to regulate housing. There are a lot of reasons Sweden has absurd real estate prices (the Gothenburg area in Sweden, which is the seat of moderately famous Volvo, has real estate prices close to the Seattle area which is the seat of Boeing, Amazon and Microsoft while the median incomes are not even remotely similar), and why the bulk of the price hike happened during the last decade, but a big one that's often overlooked is that local governments don't want rentals. Because of rent control they are mostly inhabited by low income earners, who pay less tax. Rent control is set by the national government agencies, who of course don't care where you live, they want everyone to have a decent home without being gouged. Not saying that rent control is necessarily a bad thing, but if implemented on a national level they give local governments less tools to get rid of poor people. In the end, they'll find a way, and that might create even more problems.