14 ms·

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

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.
  - tom_mellior 6y ago
    > If there are more units then there are renters, prices have to fall to meet demand. Not if it's so cheap to keep empty apartments around that you would rather not make money now, in the hope that you will be able to make more money in the future. It's not exactly the same, but around here there is a huge oversupply of spaces for shops/restaurants. Owners prefer to keep them empty rather than have someone give them money. EDIT: Well, maybe it's not actually oversupply. There might actually be a lot of demand, but not at the excessive prices landlords demand.
    - gruez 6y ago
      >Not if it's so cheap to keep empty apartments around that you would rather not make money now, in the hope that you will be able to make more money in the future. Ironically rent control laws that cause this. Accepting a lower rent now would mean locking in a lower monthly rate for the future, whereas if you left it empty you can hope that the rental market will recover and charge high rents in the future.
      - brmgb 6y ago
        If only the state could heavily tax empty apartments and cap resell price to counter that. But wait, it actually can. Pushing renters and speculators out of the housing markets in favor of people who actually want to settle in the city is probably the best you can do as a municipality.
La1n 6y ago
>So you're driving out renters, who are typically less affluent, in favor of the wealthy. But the landlords who owned (often own many) them were also wealthy. So you are replacing landlords with people who actually live there.
- gruez 6y ago
  >So you are replacing landlords with people who actually live there. ...who are now saddled with decades of mortgage payments, and have a high percentage of their net worth being tied up in a not very well diversified asset class.
  - walshemj 6y ago
    But you are buying an asset instead of just paying rent.
    - gruez 6y ago
      That's the point. People are forced concentrating their wealth into a single asset.
      - bluGill 6y ago
        Which can be good or bad. If land prices are increasing faster than inflation it is bad unless they can get out before the bubble pops. Obviously if they bought too high that is a bad investment. Lets ignore this and assume a sane market where values mostly are similar to inflation. While property increases with inflation are not nearly as good an investment as investments that do better than inflation, it isn't as bad as it sounds. The whole point of buying property in this case is a place to live. So in 30 years you no longer have a rent payment at all, and in between your rent never goes up. This payment situation needs to be factored in to the calculation since you will be living someplace no matter what. (unless you would normally live in a cardboard box) As a result people who invest in property to live in need to invest a much smaller portion of their total portfolio into something else. And since this is a place to live it doesn't matter how well it performs overall since you are not selling (at least not until you go to a nursing home which you can/should insure for). Let me point out that rent doesn't increase when you own property. So if you invest just the difference between market rent and your rent over the years you will have more money to invest. Now that money doesn't have as long to grow (since it isn't front loaded as much), but owning is still a good part of a long term portfolio. Note that the above makes some assumptions that may not be true, or that could be true but you don't want to for lifestyle reasons. That is perfectly fine - there is no one size fits all. Every situation is different, you need to make your own decisions as best you can. The first assumption above is you live there for the rest of your life (some amount of trading is allowed, but be careful as each trade is costly), the second is you pay off the dwelling.

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.
- tom_mellior 6y ago
  > If there are more units then there are renters, prices have to fall to meet demand. Not if it's so cheap to keep empty apartments around that you would rather not make money now, in the hope that you will be able to make more money in the future. It's not exactly the same, but around here there is a huge oversupply of spaces for shops/restaurants. Owners prefer to keep them empty rather than have someone give them money. EDIT: Well, maybe it's not actually oversupply. There might actually be a lot of demand, but not at the excessive prices landlords demand.
  - gruez 6y ago
    >Not if it's so cheap to keep empty apartments around that you would rather not make money now, in the hope that you will be able to make more money in the future. Ironically rent control laws that cause this. Accepting a lower rent now would mean locking in a lower monthly rate for the future, whereas if you left it empty you can hope that the rental market will recover and charge high rents in the future.
    - brmgb 6y ago
      If only the state could heavily tax empty apartments and cap resell price to counter that. But wait, it actually can. Pushing renters and speculators out of the housing markets in favor of people who actually want to settle in the city is probably the best you can do as a municipality.

La1n 6y ago

>So you're driving out renters, who are typically less affluent, in favor of the wealthy. But the landlords who owned (often own many) them were also wealthy. So you are replacing landlords with people who actually live there.

gruez 6y ago
>So you are replacing landlords with people who actually live there. ...who are now saddled with decades of mortgage payments, and have a high percentage of their net worth being tied up in a not very well diversified asset class.
- walshemj 6y ago
  But you are buying an asset instead of just paying rent.
  - gruez 6y ago
    That's the point. People are forced concentrating their wealth into a single asset.
    - bluGill 6y ago
      Which can be good or bad. If land prices are increasing faster than inflation it is bad unless they can get out before the bubble pops. Obviously if they bought too high that is a bad investment. Lets ignore this and assume a sane market where values mostly are similar to inflation. While property increases with inflation are not nearly as good an investment as investments that do better than inflation, it isn't as bad as it sounds. The whole point of buying property in this case is a place to live. So in 30 years you no longer have a rent payment at all, and in between your rent never goes up. This payment situation needs to be factored in to the calculation since you will be living someplace no matter what. (unless you would normally live in a cardboard box) As a result people who invest in property to live in need to invest a much smaller portion of their total portfolio into something else. And since this is a place to live it doesn't matter how well it performs overall since you are not selling (at least not until you go to a nursing home which you can/should insure for). Let me point out that rent doesn't increase when you own property. So if you invest just the difference between market rent and your rent over the years you will have more money to invest. Now that money doesn't have as long to grow (since it isn't front loaded as much), but owning is still a good part of a long term portfolio. Note that the above makes some assumptions that may not be true, or that could be true but you don't want to for lifestyle reasons. That is perfectly fine - there is no one size fits all. Every situation is different, you need to make your own decisions as best you can. The first assumption above is you live there for the rest of your life (some amount of trading is allowed, but be careful as each trade is costly), the second is you pay off the dwelling.