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"Price changes in the regulated market dropped relative to those in the 13 other cities. That’s because real estate loses value if its future cash flows to land

by crote 6y ago

"Price changes in the regulated market dropped relative to those in the 13 other cities. That’s because real estate loses value if its future cash flows to landlords are capped. There was also an acceleration of apartments going up for sale, as landlords tried to cash out of their now less profitable investments." & "And whenever somebody does move out — when moving to another city, for example — the landlord tends to sell the unit rather than re-let it." Sounds like it is a massive success? Those units don't magically disappear, they are bought - by homeowners. It seems like the landlords were artificially driving up the housing market while not adding any value. The only problem here is that they limited it to pre-2014 apartments. Maybe they should just extend it to all apartments instead.

wendyshu 6y ago
Maybe read an economics textbook before opining on economics?
- dang 6y ago
  Hey, can you please omit personal swipes from your HN comments? We're trying for something quite different here: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html. If you know more than others, that's great. If you're going to post about it, please share some of what you know so the rest of us can learn. Just putting the other person down doesn't help, and poisons the atmosphere. https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sort=byDate&type=comment&query=share%20know%20learn%20by:dang https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
awillen 6y ago
So you're driving out renters, who are typically less affluent, in favor of the wealthy. Whether or not you call that success or failure depends on what you're trying to achieve, but usually these sorts of actions are trying to create housing affordability. Taking most of the supply off the market for new renters (by selling to people who can afford to buy and by incentivizing those who were already renting to stay for as long as possible) definitely does not create an affordable situation for those who need it. Without creating more supply, you end up with one of two problems for folks at the bottom. Either you don't regulate housing, and their prices go up too much for many to afford, or you do something like this and you keep the existing stock affordable but guarantee that there won't be nearly enough stock for all the people (at the bottom of the economic ladder, at least) who want it. In this case, you're not helping poorer folks as a class, you're only helping the specific set of poorer folks who were already renters (and who don't need to move into a bigger place, since they can't leave their current rentals). If you want to move to Berlin and you're not rich, you're SOL. That certainly doesn't seem to be the intended effect, so based on that I don't think it's fair to call it a massive success.
- ycombinatorrio 6y ago
  I learned a new word SOL (S*t outta luck)
  - delecti 6y ago
    Or its more appropriate alternative, "sore outta luck". Edit: Not to criticize the profanity version, I prefer it, just offering an alternative that doesn't need to be censored.
- sudosysgen 6y ago
  This is not how it works. Without the possibility to rent out or consolidate homeownership, the inflationary pressure on home prices collapses. You create an insane level amount of supply for homeownership on this market. An absolutely insane level. Indeed, the vast majority of increase in housing prices is because rents are so high that 7% YoY returns are possible. Without these returns, then there is no way to justify inflation in housing prices for simple homeowners. If somehow millions of people do buy houses in Berlin, then you build public housing to undercut the price of housing. The idea that your scenario will happen is not really rooted in fact. To me, it seems like a way to rationalize the principle that rent control must always fail - whereas in the real world it doesn't, see Vienna. Homeownership in Berlin is very low, at 17% or so. The absolute majority of the housing market is based on renting out units. Before saturation of homeownership happens, a gulf remains.
  - gruez 6y ago
    >This is not how it works. Without the possibility to rent out or consolidate homeownership, the inflationary pressure on home prices collapses. No, as we seen in north america that's not really true. Homes can go up on speculation alone. >You create an insane level amount of supply for homeownership on this market. An absolutely insane level. Is homeownership a necessary component of this? Creating a insane level of supply for apartment rental achieves the same thing. If there are more units then there are renters, prices have to fall to meet demand.
sologoub 6y ago
> The caps represent a windfall to one group of tenants: those, whether rich or poor, who are already ensconced in regulated apartments. Simultaneously, they hurt all other groups — especially young people and those coming from other cities — by all but shutting them out of the market. That’s not success, that’s picking winners and losers. Same as with SF Bay Area, Santa Monica (in LA) and any other place with rent control - being in place early makes you a winner. Finding a vacant rent stabilized place is like winning a lottery. Problem is what do you do with young people that should be moving out, or moving to the city for school? Only real answer to housing is to build more of it. Else, you force people to move, pay more and/or cram ever more bodies into the same space. The latter is also what makes poor much more vulnerable, and not just in the pandemic.
- smnrchrds 6y ago
  I think that quote refers to American style of rent control that is tied to the tenant, as opposed to the German style that is tied to the building.
  - ben_w 6y ago
    Unfortunately, Berlin-style appears to mean “moving is almost impossible because 50 other people also want to view the same flat as you at the same time you’re looking at it, and you literally can’t outbid them”. That was my experience, anyway. I eventually found a house share to get started, and after I arrived a hooked up with someone who happened to already have a place big enough for me to move into. If I move within the city again, it will have to be by buying a place.
- walshemj 6y ago
  Which in a lot of cases will be brought by speculators see London sf and Vancouver
- AlexandrB 6y ago
  > being in place early makes you a winner Isn't this just the housing market in general? Why should renters not benefit from the same dynamics that owners do?
cbmuser 6y ago
The problem is that's virtually impossible to find new in apartments these days. This law only benefits tenants who already have an apartment in Berlin, anyone else is completely out of luck. Source: I live in Berlin.
- Tenoke 6y ago
  Of everyone I know, the very few who looked for and somehow got a new flat right now benefit even more as they don't need to fear any backrent - their rent is lower from the start. In my case, yes I benefit from the lowered rent but it's even harder to move if I want to (which I would if it was easier), I might owe a pretty big amount if the law is overturned, my flat is now getting sold and the other tenants are writing on the walls and threatening 'war' over the sale (even though realistically nobody here can be kicked out for 10-11 years after the sale).
bdowling 6y ago
> Those units don't magically disappear, they are bought - by homeowners. I think you're assuming that the units are bought by owner-occupants and not other investors who have higher risk tolerance or who are betting that the law won't survive review by higher courts.

by crote 6y ago

wendyshu 6y ago

Maybe read an economics textbook before opining on economics?

dang 6y ago
Hey, can you please omit personal swipes from your HN comments? We're trying for something quite different here: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html. If you know more than others, that's great. If you're going to post about it, please share some of what you know so the rest of us can learn. Just putting the other person down doesn't help, and poisons the atmosphere. https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sort=byDate&type=comment&query=share%20know%20learn%20by:dang https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...

awillen 6y ago

So you're driving out renters, who are typically less affluent, in favor of the wealthy. Whether or not you call that success or failure depends on what you're trying to achieve, but usually these sorts of actions are trying to create housing affordability. Taking most of the supply off the market for new renters (by selling to people who can afford to buy and by incentivizing those who were already renting to stay for as long as possible) definitely does not create an affordable situation for those who need it. Without creating more supply, you end up with one of two problems for folks at the bottom. Either you don't regulate housing, and their prices go up too much for many to afford, or you do something like this and you keep the existing stock affordable but guarantee that there won't be nearly enough stock for all the people (at the bottom of the economic ladder, at least) who want it. In this case, you're not helping poorer folks as a class, you're only helping the specific set of poorer folks who were already renters (and who don't need to move into a bigger place, since they can't leave their current rentals). If you want to move to Berlin and you're not rich, you're SOL. That certainly doesn't seem to be the intended effect, so based on that I don't think it's fair to call it a massive success.

ycombinatorrio 6y ago
I learned a new word SOL (S*t outta luck)
- delecti 6y ago
  Or its more appropriate alternative, "sore outta luck". Edit: Not to criticize the profanity version, I prefer it, just offering an alternative that doesn't need to be censored.
sudosysgen 6y ago
This is not how it works. Without the possibility to rent out or consolidate homeownership, the inflationary pressure on home prices collapses. You create an insane level amount of supply for homeownership on this market. An absolutely insane level. Indeed, the vast majority of increase in housing prices is because rents are so high that 7% YoY returns are possible. Without these returns, then there is no way to justify inflation in housing prices for simple homeowners. If somehow millions of people do buy houses in Berlin, then you build public housing to undercut the price of housing. The idea that your scenario will happen is not really rooted in fact. To me, it seems like a way to rationalize the principle that rent control must always fail - whereas in the real world it doesn't, see Vienna. Homeownership in Berlin is very low, at 17% or so. The absolute majority of the housing market is based on renting out units. Before saturation of homeownership happens, a gulf remains.
- gruez 6y ago
  >This is not how it works. Without the possibility to rent out or consolidate homeownership, the inflationary pressure on home prices collapses. No, as we seen in north america that's not really true. Homes can go up on speculation alone. >You create an insane level amount of supply for homeownership on this market. An absolutely insane level. Is homeownership a necessary component of this? Creating a insane level of supply for apartment rental achieves the same thing. If there are more units then there are renters, prices have to fall to meet demand.

sologoub 6y ago

> The caps represent a windfall to one group of tenants: those, whether rich or poor, who are already ensconced in regulated apartments. Simultaneously, they hurt all other groups — especially young people and those coming from other cities — by all but shutting them out of the market. That’s not success, that’s picking winners and losers. Same as with SF Bay Area, Santa Monica (in LA) and any other place with rent control - being in place early makes you a winner. Finding a vacant rent stabilized place is like winning a lottery. Problem is what do you do with young people that should be moving out, or moving to the city for school? Only real answer to housing is to build more of it. Else, you force people to move, pay more and/or cram ever more bodies into the same space. The latter is also what makes poor much more vulnerable, and not just in the pandemic.

smnrchrds 6y ago
I think that quote refers to American style of rent control that is tied to the tenant, as opposed to the German style that is tied to the building.
- ben_w 6y ago
  Unfortunately, Berlin-style appears to mean “moving is almost impossible because 50 other people also want to view the same flat as you at the same time you’re looking at it, and you literally can’t outbid them”. That was my experience, anyway. I eventually found a house share to get started, and after I arrived a hooked up with someone who happened to already have a place big enough for me to move into. If I move within the city again, it will have to be by buying a place.
walshemj 6y ago
Which in a lot of cases will be brought by speculators see London sf and Vancouver
AlexandrB 6y ago
> being in place early makes you a winner Isn't this just the housing market in general? Why should renters not benefit from the same dynamics that owners do?

cbmuser 6y ago

The problem is that's virtually impossible to find new in apartments these days. This law only benefits tenants who already have an apartment in Berlin, anyone else is completely out of luck. Source: I live in Berlin.

Tenoke 6y ago
Of everyone I know, the very few who looked for and somehow got a new flat right now benefit even more as they don't need to fear any backrent - their rent is lower from the start. In my case, yes I benefit from the lowered rent but it's even harder to move if I want to (which I would if it was easier), I might owe a pretty big amount if the law is overturned, my flat is now getting sold and the other tenants are writing on the walls and threatening 'war' over the sale (even though realistically nobody here can be kicked out for 10-11 years after the sale).

bdowling 6y ago

> Those units don't magically disappear, they are bought - by homeowners. I think you're assuming that the units are bought by owner-occupants and not other investors who have higher risk tolerance or who are betting that the law won't survive review by higher courts.