7 ms·

The main problem is the terrible rent control system - with a lucky few getting rent-controlled first-hand contracts, and everyone else facing a cut-throat almo

The main problem is the terrible rent control system - with a lucky few getting rent-controlled first-hand contracts, and everyone else facing a cut-throat almost completely unregulated market of sub-letting. Rent control never works.

ChuckNorris89 4y ago
Of course it doesn't. The only way to bring down prices is to build more supply than the demand, but for some reason this elephant in the room is always ignored because always a million reasons come up against it, mostly being just NIMBYsm in disguise. Keeping a limited supply artificially price capped through regulations, sounds good at first, and will most likely be popular with clueless voters, but it will lead to shortages down the road and only the lucky few with money or connections will be able to afford. We had that in communism, except ironically, not with housing but with food and goods. Now the west has the opposite problem, everyone has plenty of food and iPhones, but no housing. Have Swedes never learned about this and the functioning of supply/demand in their excellent school system?
- varispeed 4y ago
  > but for some reason that route is never explored. The reason you are looking for is called corruption. There is a very strong lobby of landlords and the rich treating residential housing as a store of value. It offers better returns than keeping money in the bank and it is safer, especially if you are from a country where your assets could be in danger - it's much harder for foreign states to take control of the property, sell it and recover the monies. Here in the UK we have the same problem. Good percentage of the ruling party (and opposition) are landlords, there is a ton of foreign money coming in buying up properties left and right and they don't even care if they are rented out, because empty property gives good enough return. We even have banks start to move in this business as well. It has gone completely mad. But since big money is all over it and our security services are not interested in looking into it, nothing is going to change it will only get worse.
  - joshuaissac 4y ago
    > The reason you are looking for is called corruption. It could just be democracy. Homeowners are an important vote bank and they generally want house prices to rise. A government that substantially increased housing supply would cause house prices to drop, which would make homeowners unhappy.
    - im_down_w_otp 4y ago
      I try to remind people in the US that there’s exactly one constituency that wants affordable houses. People who don’t have houses yet. Everybody else wants housing to continue to be a growth investment, and thus increasingly unaffordable. Developers want to make & sell more expensive things. Lenders want to make more & bigger loans. Existing owners want the value of their most valuable asset to go “up & to the right”. That’s a very big hurdle to overcome politically. Even worse in the US where real estate investments are a central pillar of the broader economy, and if the “growth investment” patina of it starts to fade, then a cascading catastrophe will likely follow. The situation might be untenable as prices keep going up, but there are so many incentives working against any kind of intervention, that I never expect one to occur.
      - VirusNewbie 4y ago
        If someone owns a condo and wants to buy a mansion, does it make sense for them to hope all real estate appreciates in price vs depreciates?
        im_down_w_otp 4y ago
        If they want to maximize the sale price of their condo? Yes. They’ll just have to relocate to a different housing market to buy that mansion. You just described every Californian who upsized by moving out of state. They definitely wanted their condo, bungalow, or shack to get top dollar in their market.
      - maeil 4y ago
        > Everybody else wants housing to continue to be a growth investment Acting like non-NIMBYs don't exist is harmful and does a massive disservice to them. They do exist and they need to be praised instead of ignored.
- jjoonathan 4y ago
  Misguided handout-seeking poor are not stopping construction. Rent control doesn't solve the problem, but it doesn't cause the problem either. > NIMBYsm in disguise Yes, this is the real problem: the same capitalist incentive structure that pulls forward the future returns of a new housing investment also pulls forward the consequences of future supply normalization onto current owners. Capitalism also guarantees that these owners are the ones with power. It gives them the means and the motive to torpedo new development. So they do. Capitalism causes NIMBYism. Which is the real problem.
  - dogma1138 4y ago
    Forced rent control definitely causes a problem as it suppresses supply.
    - jjoonathan 4y ago
      We agree that suppressed supply is the problem. You think the suppression is caused by clueless and misguided poor people. I think the suppression is caused by clued-in rich people pursuing enormous financial malincentives. Do you disagree that the malincentives exist? Or do you think that clueless poor people are a more effective political bloc than clued-in rich people pursuing enormous financial malincentives?
      - dogma1138 4y ago
        You are still missing the point, rent controls restrict supply and even worse mobility they make the market far less efficient and more expensive for the majority of players under pretty much any rent control system.
        ChuckNorris89 4y ago
        >rent controls restrict supply and even worse mobility Exactly this. People love having rent control until they want to change apartment to upsize, downsize or move, and then realize they can't because the market is FUBAR.
- AdrianB1 4y ago
  You got the communist part wrong. If you are born in 1989 as your name suggests, I see why you got it wrong, like that entire generation and the generations after that, but it does not makes it right. Food shortage in Romania had a very different cause.
  - ChuckNorris89 4y ago
    What exactly did I get wrong?
    - AdrianB1 4y ago
      The food shortage situation.
styren 4y ago
I'm not sure, I live in a rent controller apartment and it certainly is great for the many people in my apartment who work in the city but could never pay the rents. Thankfully me and my girlfriend can afford and we're therefore planning to buy and lose our contract, but to be honest it probably going to go to someone who needs it. Because owning your own place, being able to modify it to your liking and having people that live there take care for it just makes it much better to own instead (in my opinion).
- gruez 4y ago
  > I'm not sure, I live in a rent controller apartment and it certainly is great for the many people in my apartment who work in the city but could never pay the rents. That's kind of like saying "What's so bad about zoning restrictions? I own a house and it's not affecting me at all!". Of course it's great for you and other people who have a rent controlled unit. The OP explicitly acknowledges this. The issue is for everyone else who doesn't have a rent controlled unit.
  - Tijdreiziger 4y ago
    If there were no rent control, all the units would go to the wealthy and everyone else would be driven out of the city.
    - friend_and_foe 4y ago
      Why is that? You've got to ask yourself this question, why would this happen? Because if you don't address the cause, you've got a "law of conservation of problems" and you just shift your problems from one place to another. Rent control doesn't solve problems, it moves problems to another part of the system, in this case, a housing system. So what is the core problem? The core problem is that there aren't enough dwellings in the city for everybody that needs to be there. If there were they wouldn't be so expensive. So figure out what you need to do to build more dwellings.
      - Tijdreiziger 4y ago
brabel 4y ago
Very true. I wanted to buy an investment property in Sweden, and rent it out while waiting for prices to go back up in a few years... but learned that this is not a thing here! If you want to rent out, you need permission of your building association, which normally won't give it... or you can buy a "detached house" (no association) which is usually much more expensive, but then you must deal with renters and find them yourself, as the real estate agents , apparently, are not allowed to handle that. WTF?! Makes me wonder how the heck prices got so bloody high in the big cities when investing in property is virtually impossible.
- deleted 4y ago
  [deleted]
- fy20 4y ago
  This is probably why there is a lack of construction then. In my city (small European capital) most new properties are marketed as investments - with the idea you buy and after a few years sell for more than you paid or rent it covering the mortgage. The real estate market here is still not amazing for the lowest earners, but for anyone even remotely middle class they are doing ok. On the supply side the number of properties is growing at a consistent rate. The biggest issue here is the total mortgage interest you pay is already 5% and EURIBOR is set to continue growing (mortgage interest is not fixed, it's recalculated every 6 months). For a lot of apartments in the city centre, the rental price is less than the equivalent mortgage payments if you were to buy today. A crash is likely coming, and the first thing that will be cut is new construction. However most people want apartments in the city... Last year I moved 20 minutes drive / 40 mins by bus into the suburbs and bought a 140sqm house. The price I paid was less than a new 50sqm apartment would cost anywhere close to the main parts of the city.
- nivenkos 4y ago
  I don't mind the control on BRFs stopping absentee landlords - as it helps to keep the prices for residents reasonable. But the rent-controlled first hand contracts system is ridiculous - that needs to be abolished to have a true market on direct rentals - so all residents could rent directly from the housing companies without landlord middlemen.
bombolo 4y ago
> Rent control never works. In italy 2nd hand rent is illegal… You just need that imo
Aeolun 4y ago
The Netherlands has a variation of this for newly built properties. The prices for new properties are controlled, but the prices for second hand properties are not. If you win the lottery, you get to buy a newly built house for like €250k, which will them immediately jump in price to €450k, because that’s the price you can now sell it for. It’s completely bonkers…
- EVa5I7bHFq9mnYK 4y ago
  If it's really a fair lottery, seems a better way to distribute a public resource (land) than rich people buying all the land and getting even richer from it.
  - Aeolun 4y ago
    It’s certainly better than nothing, but it kind of disincentivices people from building a ton of houses when they know they can get only half price from them. Much better to build a huge flat and rent it out.
klabb3 4y ago
Yes it’s true it didn’t work, and as someone who grew up in Stockholm I used to be very sour about the situation, still am to some extent. However, it’s worth pointing out that the transformation of rentals into condos (and a couple of other deregulation efforts) did lubricate the market, but only to a limited degree, and now we instead have these massive “investments” where the rest of the economy is held hostage due to everyone having huge loans. In short, there are massive red flag issues in all market forms, in a place like Stockholm. Which leads me to this crazy idea that what if the problem is instead a… lack of total amount of housing? Sweden is incredibly slow, expensive and bureaucratic to build new housing in, yet we’re urbanizing just as much as anyone else. To me, the government should have a clear policy goal of having housing supply keep up with population growth, at the very least. Now, I care less about HOW (everyone can argue about that until eternity) and more about just ensuring it happens, and not lagging behind decades. If politicians drag their feet, it should automatically switch over to dropping all non-essential regulations (that would put a blowtorch to their asses). In either case, I’m not in Sweden atm and I don’t feel particularly hyped about the coerced gambling I’d have to participate in if I were to settle there again permanently. It’s a shame, because it really destroys our ability to attract international talent in the startup world and so on.

ChuckNorris89 4y ago

Of course it doesn't. The only way to bring down prices is to build more supply than the demand, but for some reason this elephant in the room is always ignored because always a million reasons come up against it, mostly being just NIMBYsm in disguise. Keeping a limited supply artificially price capped through regulations, sounds good at first, and will most likely be popular with clueless voters, but it will lead to shortages down the road and only the lucky few with money or connections will be able to afford. We had that in communism, except ironically, not with housing but with food and goods. Now the west has the opposite problem, everyone has plenty of food and iPhones, but no housing. Have Swedes never learned about this and the functioning of supply/demand in their excellent school system?

varispeed 4y ago
> but for some reason that route is never explored. The reason you are looking for is called corruption. There is a very strong lobby of landlords and the rich treating residential housing as a store of value. It offers better returns than keeping money in the bank and it is safer, especially if you are from a country where your assets could be in danger - it's much harder for foreign states to take control of the property, sell it and recover the monies. Here in the UK we have the same problem. Good percentage of the ruling party (and opposition) are landlords, there is a ton of foreign money coming in buying up properties left and right and they don't even care if they are rented out, because empty property gives good enough return. We even have banks start to move in this business as well. It has gone completely mad. But since big money is all over it and our security services are not interested in looking into it, nothing is going to change it will only get worse.
- joshuaissac 4y ago
  > The reason you are looking for is called corruption. It could just be democracy. Homeowners are an important vote bank and they generally want house prices to rise. A government that substantially increased housing supply would cause house prices to drop, which would make homeowners unhappy.
  - im_down_w_otp 4y ago
    I try to remind people in the US that there’s exactly one constituency that wants affordable houses. People who don’t have houses yet. Everybody else wants housing to continue to be a growth investment, and thus increasingly unaffordable. Developers want to make & sell more expensive things. Lenders want to make more & bigger loans. Existing owners want the value of their most valuable asset to go “up & to the right”. That’s a very big hurdle to overcome politically. Even worse in the US where real estate investments are a central pillar of the broader economy, and if the “growth investment” patina of it starts to fade, then a cascading catastrophe will likely follow. The situation might be untenable as prices keep going up, but there are so many incentives working against any kind of intervention, that I never expect one to occur.
    - VirusNewbie 4y ago
      If someone owns a condo and wants to buy a mansion, does it make sense for them to hope all real estate appreciates in price vs depreciates?
      - im_down_w_otp 4y ago
        If they want to maximize the sale price of their condo? Yes. They’ll just have to relocate to a different housing market to buy that mansion. You just described every Californian who upsized by moving out of state. They definitely wanted their condo, bungalow, or shack to get top dollar in their market.
    - maeil 4y ago
      > Everybody else wants housing to continue to be a growth investment Acting like non-NIMBYs don't exist is harmful and does a massive disservice to them. They do exist and they need to be praised instead of ignored.
jjoonathan 4y ago
Misguided handout-seeking poor are not stopping construction. Rent control doesn't solve the problem, but it doesn't cause the problem either. > NIMBYsm in disguise Yes, this is the real problem: the same capitalist incentive structure that pulls forward the future returns of a new housing investment also pulls forward the consequences of future supply normalization onto current owners. Capitalism also guarantees that these owners are the ones with power. It gives them the means and the motive to torpedo new development. So they do. Capitalism causes NIMBYism. Which is the real problem.
- dogma1138 4y ago
  Forced rent control definitely causes a problem as it suppresses supply.
  - jjoonathan 4y ago
    We agree that suppressed supply is the problem. You think the suppression is caused by clueless and misguided poor people. I think the suppression is caused by clued-in rich people pursuing enormous financial malincentives. Do you disagree that the malincentives exist? Or do you think that clueless poor people are a more effective political bloc than clued-in rich people pursuing enormous financial malincentives?
    - dogma1138 4y ago
      You are still missing the point, rent controls restrict supply and even worse mobility they make the market far less efficient and more expensive for the majority of players under pretty much any rent control system.
      - ChuckNorris89 4y ago
        >rent controls restrict supply and even worse mobility Exactly this. People love having rent control until they want to change apartment to upsize, downsize or move, and then realize they can't because the market is FUBAR.
AdrianB1 4y ago
You got the communist part wrong. If you are born in 1989 as your name suggests, I see why you got it wrong, like that entire generation and the generations after that, but it does not makes it right. Food shortage in Romania had a very different cause.
- ChuckNorris89 4y ago
  What exactly did I get wrong?
  - AdrianB1 4y ago
    The food shortage situation.

styren 4y ago

I'm not sure, I live in a rent controller apartment and it certainly is great for the many people in my apartment who work in the city but could never pay the rents. Thankfully me and my girlfriend can afford and we're therefore planning to buy and lose our contract, but to be honest it probably going to go to someone who needs it. Because owning your own place, being able to modify it to your liking and having people that live there take care for it just makes it much better to own instead (in my opinion).

gruez 4y ago
> I'm not sure, I live in a rent controller apartment and it certainly is great for the many people in my apartment who work in the city but could never pay the rents. That's kind of like saying "What's so bad about zoning restrictions? I own a house and it's not affecting me at all!". Of course it's great for you and other people who have a rent controlled unit. The OP explicitly acknowledges this. The issue is for everyone else who doesn't have a rent controlled unit.
- Tijdreiziger 4y ago
  If there were no rent control, all the units would go to the wealthy and everyone else would be driven out of the city.
  - friend_and_foe 4y ago
    Why is that? You've got to ask yourself this question, why would this happen? Because if you don't address the cause, you've got a "law of conservation of problems" and you just shift your problems from one place to another. Rent control doesn't solve problems, it moves problems to another part of the system, in this case, a housing system. So what is the core problem? The core problem is that there aren't enough dwellings in the city for everybody that needs to be there. If there were they wouldn't be so expensive. So figure out what you need to do to build more dwellings.
    - Tijdreiziger 4y ago

brabel 4y ago

Very true. I wanted to buy an investment property in Sweden, and rent it out while waiting for prices to go back up in a few years... but learned that this is not a thing here! If you want to rent out, you need permission of your building association, which normally won't give it... or you can buy a "detached house" (no association) which is usually much more expensive, but then you must deal with renters and find them yourself, as the real estate agents , apparently, are not allowed to handle that. WTF?! Makes me wonder how the heck prices got so bloody high in the big cities when investing in property is virtually impossible.

deleted 4y ago
[deleted]
fy20 4y ago
This is probably why there is a lack of construction then. In my city (small European capital) most new properties are marketed as investments - with the idea you buy and after a few years sell for more than you paid or rent it covering the mortgage. The real estate market here is still not amazing for the lowest earners, but for anyone even remotely middle class they are doing ok. On the supply side the number of properties is growing at a consistent rate. The biggest issue here is the total mortgage interest you pay is already 5% and EURIBOR is set to continue growing (mortgage interest is not fixed, it's recalculated every 6 months). For a lot of apartments in the city centre, the rental price is less than the equivalent mortgage payments if you were to buy today. A crash is likely coming, and the first thing that will be cut is new construction. However most people want apartments in the city... Last year I moved 20 minutes drive / 40 mins by bus into the suburbs and bought a 140sqm house. The price I paid was less than a new 50sqm apartment would cost anywhere close to the main parts of the city.
nivenkos 4y ago
I don't mind the control on BRFs stopping absentee landlords - as it helps to keep the prices for residents reasonable. But the rent-controlled first hand contracts system is ridiculous - that needs to be abolished to have a true market on direct rentals - so all residents could rent directly from the housing companies without landlord middlemen.

bombolo 4y ago

> Rent control never works. In italy 2nd hand rent is illegal… You just need that imo

Aeolun 4y ago

The Netherlands has a variation of this for newly built properties. The prices for new properties are controlled, but the prices for second hand properties are not. If you win the lottery, you get to buy a newly built house for like €250k, which will them immediately jump in price to €450k, because that’s the price you can now sell it for. It’s completely bonkers…

EVa5I7bHFq9mnYK 4y ago
If it's really a fair lottery, seems a better way to distribute a public resource (land) than rich people buying all the land and getting even richer from it.
- Aeolun 4y ago
  It’s certainly better than nothing, but it kind of disincentivices people from building a ton of houses when they know they can get only half price from them. Much better to build a huge flat and rent it out.

klabb3 4y ago

Yes it’s true it didn’t work, and as someone who grew up in Stockholm I used to be very sour about the situation, still am to some extent. However, it’s worth pointing out that the transformation of rentals into condos (and a couple of other deregulation efforts) did lubricate the market, but only to a limited degree, and now we instead have these massive “investments” where the rest of the economy is held hostage due to everyone having huge loans. In short, there are massive red flag issues in all market forms, in a place like Stockholm. Which leads me to this crazy idea that what if the problem is instead a… lack of total amount of housing? Sweden is incredibly slow, expensive and bureaucratic to build new housing in, yet we’re urbanizing just as much as anyone else. To me, the government should have a clear policy goal of having housing supply keep up with population growth, at the very least. Now, I care less about HOW (everyone can argue about that until eternity) and more about just ensuring it happens, and not lagging behind decades. If politicians drag their feet, it should automatically switch over to dropping all non-essential regulations (that would put a blowtorch to their asses). In either case, I’m not in Sweden atm and I don’t feel particularly hyped about the coerced gambling I’d have to participate in if I were to settle there again permanently. It’s a shame, because it really destroys our ability to attract international talent in the startup world and so on.