5 ms·
Rent control effects: An almost complete review of the literature
- freitzkriesler2 2y agoThe better option is to turn those renters into owners for both residential, commercial, and industrial. Eliminate the rent seeking class as a set of buyers from the real estate pie and force developers through permitting to only sell — not lease their properties. Those who disagree will always be some form of a landlord. Remember, landlords provide housing the same way scalpers provide tickets.
- mistrial9 2y agoAn adult woman in Southern California whose family built a rental unit business in the 1950s, declared about $840,000 personal income in one recent tax year.. no property sales, no other business interests.. taxes on that income were about $250,000, including California State taxes, leaving about $50,000 per month passive income, month after month, year after year.
- deleted 2y ago[deleted]
- f1shy 2y agoI would really really, honestly know why the downvotes… Is a too simplistic view? If so, what is the enlightened view?
- mistrial9 2y agoguess -- "eliminate the rent seeking class" is directly threatening to the rent-seeking class members here, who directly downvote without discussion?
- freitzkriesler2 2y agoPrecisely. They know they're leaches .
- deleted 2y ago[deleted]
- tonfa 2y agoNot every country works the same, coming from a place with low home ownership (40%, mostly in countryside). Some ideas of what can be different: - lower flexibility (non liquid and concentrated investment) - many people will end up with majority of their savings in real estate instead of more productive part of the economy (companies, etc.) - might discourage people from seeking opportunities elsewhere if there's a high cost of selling/buying houses - in cities institutional owners (here a lot of buildings are owned by pension funds) can take a better care of multi family buildings (compared to a fragmented ownership where some owners might block even value preserving investment), it's also easier to mandate policies (e.g. better isolation, etc) for those institutional owners
- freitzkriesler2 2y ago[flagged]
- readthenotes1 2y agoI introduced myself to you in your comment currently "above":)
- tonfa 2y ago> I have yet to ever meet these types of people where renting ever makes sense. They clearly don't exist. As I mentioned, not every country is the same :) Most buy vs. let simulation will tell you not to buy in over priced swiss cities. I'm happy to have pension funds take care of my housing needs for their 1 or 2% return and invest my equity in stock market instead of tying 1 or 2M on housing.
- freitzkriesler2 2y agoBecause there are landlords here who are seething at a radical concept.
- miggol 2y agoI think outlawing rental property is a fun and radical idea but it does of course ignore the practical reasons people seek to rent housing rather than own it. They might want temporary or shared housing, or prefer to outsource the responsibility and liability of homeownership. All renting of housing should be well regulated and good housing policy must be comprehensive, covering both the supply and demand side of the equation.
- f1shy 2y agoI interpreted the idea as making people who must live in rent (but would like otherwise) able to buy. Of course there is need to rent, fir vacacions, or while moving temporally
- freitzkriesler2 2y agoWe have short term rentals. Theyre called hotels and will still exist. Even crazier is the concept that there are hotels with kitchens in them where you can live in short term.
- pg_bot 2y agoThere are many situations where renting is advantageous to owning.
- jandrewrogers 2y agoI suppose it never occurred to you that many people actively avoid owning a residence, preferring to rent even when they could easily afford to buy a residence with cash? In your world these people don't exist yet inexplicably I know several. Landlords are providing a service that many people literally want to pay for.
- aprilthird2021 2y agoBut as a policy proposal, those people will be inconvenienced just like landlord. OP could consider such people exist but also consider rent-seeking such a negative element in the economy that he'd rather eliminate that choice even for people who want it. Much like title loans
- freitzkriesler2 2y agoI have yet to ever meet these types of people. They clearly don't exist. The fact that landlords think they provide a service is comical. You don't. Homes can be bought and sold within a year very easily even in 2nd and 3rd tier markets. I know because I've done it. The fact that the settlement period for home buying/selling takes so long is a technical problem that can be easily fixed with NFTs and other technology. You are a leach and provide 0 service.
- readthenotes1 2y agoHi! I'm readthenotes. I preferred renting for ease of mobility and avoiding buying during a housing bubble. In my area, there is significant financial friction in house transactions. It takes living in the house at least 2 years to soak those costs (having done it twice). In one of those houses, I got another year with two 6 month rentals, both to people relocating who didn't want to be forced to buy immediately (I believe the first person wanted to save up money before buying his Permanent home and the other just wanted time to get used to the new city). In my own rental situation, I thoroughly enjoyed the flexibility of a low friction end to my residence. We will probably never meet in person, but I believe there are plenty like me.
- marssaxman 2y ago
- aprilthird2021 2y agoJust curious how this will allow for short term stays of 1-2 years in an area for, say a visiting fellowship, a seasonal job, etc. The problem is that homes are so expensive, average people cannot afford to even make enough payments on a home to meaningfully own it in 3-4-5 years. Maybe you're suggesting rent convert to partial equity in a home?
- freitzkriesler2 2y agoI've bought and sold homes in a year or 2 time frame many times even in 2nd or 3rd tier markets. You have closing costs which each your deposit and then for the year your mortgage pays down the costs. Those closing cost fees are the middle men fees entirely. They are there because home buying and selling is a comically antiquated process that can be fixed easily with a technical solution. There's no reason home buying cannot have settlement periods of 5 days.
- readthenotes1 2y agoWhen I got my first full-time job, my step-mom encouraged me to buy a condo near work. I resisted, and moved 3 times in the next 5 years at that job. I moved about every 2 years during my 20s and 30s. Renting allowed that. Owning would have prohibited it.
- 58028641 2y agoTo decrease rent, increase supply. This isn't complicated.
- CoastalCoder 2y ago> To decrease rent, increase supply. This isn't complicated. I wonder. If it's that simple, do you have a theory for why it's not the go-to solution that gets implemented? And, is it true that every solution requires increased supply? E.g., is migration, or changes in job location, not an option?
- ls612 2y agoAs long as population continues to increase, if you want the same living conditions as your parents on similar economic terms supply will need to increase.
- aprilthird2021 2y agoBecause many people's largest investment in life is their home, in countries like the US and Canada where this issue is prevalent. More supply can reduce the value of that asset, so people fight it, especially if they have financially planned for that asset to appreciate over time
- readthenotes1 2y agoI believe that the fight is more by developers than residents. It's a zoning outcome, after all, and most people, I suspect, don't keep on top of that being too busy with the lives
- aprilthird2021 2y agoMaybe you are right. I live in the bay area and people here who lucked out buying a house in a normal time at a normal value have nothing to do but show up at all sorts of public hearings, meetings, etc. and shout down any kind of new development
- mdorazio 2y agoFor those who just want a summary, the conclusion is... it's complicated. From the paper: "Rent controls appear to be quite effective in terms of slowing the growth of rents paid for dwellings subject to control. However, this policy also leads to a wide range of adverse effects affecting the whole society." So you get the first order effect you wanted "rent stays low in the area" but you get all kinds of adverse second order effects (higher rents outside controlled areas, poorer maintenance, lower new construction rates, etc.)
- dmix 2y agoThat's the reason it keeps being tried. The side effects are wide, disparate, and over long timelines so it's easy to obscure the net negatives to the public. That plus "If construction rates decline that's the next generations problem. All I want is lower rent now". Which is an effective political gambit.
- soramimo 2y agoMy mental model of rent control is that it's a policy of that favors those "that are already there" at the expense of "newcomers". A special case of this is favoring older generations vs. younger generations. For instance, in Berlin I know people that have locked in a low rent on an old contract who chose to say in their rental despite owning real estate close by. So for them - who have been there for decades - rent is very affordable. On the flipside, it's very common for dozens or close to a hundred people showing up for open houses when a new rental comes onto the market (still at the prescribed low rates!). Since landlords can freely choose between so many potential tenants they will pick high income, high stability tenants, making it very hard for younger or lower income folks to get into the rental market.
- snapplebobapple 2y agoIf the rent control is binding enough to deter maintenance it is questionable whether it is even good for those already there in the long run
- em500 2y ago> So you get the first order effect you wanted "rent stays low in the area" It's not even clear that you get that. The conclusion only states that rent stays low for the dwellings subject to rent control, not for the area.
- dmix 2y agoPrice controls always make the problem worse directly or indirectly. But its perfect for politicians who don't care about that or don't bother to look at economic history. Something too expensive? Just force the price to be lower. It's such a simple message that it will be one of those things every generation will 'rediscover' as the solution to everything.
- f1shy 2y agoIt is relatively easy, if it is not attractive, because of the price, less people will offer, there will be less offer, less quality, even to the extrem of no offer at all. I’ve seen it over and over again. I have never seen a good result of price control politics. I please ask the down-voters to show me examples where it succeeded. There must be some example somewhere
- owisd 2y agoThe problem is the subjective definition of "succeeded", it's never going to succeed on all counts because the problem rent controls is dancing around is not enough supply, and so the solution it's offering is just to change who the winners and losers are in a way that is more acceptable to voters than the status quo. So by that measure they're a success in all the places where voters keep voting for them.
- HDThoreaun 2y agoRent control is especially insidious because it is almost enacted on a local level. That means the people benefitting are the ones who get to vote on it, and the people most hurt have no say. Basically the left wing version of exclusionary zoning.
- tonfa 2y agoSome of the conclusions are weird, e.g. negative impact on new constructions: > This could involve the construction of public housing or financial support for private investors engaged in social housing development. Consequently, the total number of completed dwellings can remain steady or even rise, potentially leading to a misinterpretation of rent control's impact as beneficial. I'm not quite sure why this wouldn't count as beneficial. The place I live even has such a goal (30% non-profit landlords, renters usually become member of the non-profit when they rent).
- jmalicki 2y agoThey're not saying that "construction of public housing or financial support for private investors engaged in social housing development" is not beneficial. They're saying that the "null hypothesis" of "mainstream chicago-school economics" would be: 1. The above laws would be beneficial to construction of low-income housing 2. rent control would be detrimental to construction of low-income housing When some of the laws did both at once, it is hard to disentangle the effects, and the study is calling out that the confounding variable of the aforecited amendments to rent control laws is not well controlled for, calling into question the overall conclusions.
- marvinboner 2y ago[flagged]
- deleted 2y ago[deleted]
- blentrop 2y agoThree bigger issues I think is short time rentals; like Airbnb and the like, lowering the available housing for the rest of the population. Regulation on the amount of holiday rentals would aliviate some of the pressure on the market. Taxation on empty apartments, second house and higher as more properties a single entity can have. Housing should be seeing as a social right and not as an investment. Law should reflect that
- readthenotes1 2y ago"rights" are burdens on others. Why should I be forced to pay for someone else's house? How would you force the tenent to maintain it? How would you control them to maintain the peace? The homeless in my family are so because they are too dangerous to have in any of our homes, and apparently that's a fairly common theme. As a social "right", it must be available to all, not just those down on their luck, or whatever virtue is appreciated by the ruling class. Of course, there may be some places where government housing projects worked splendidly and economically efficiently, but that is surely the exception. Edit: You can find other negative consequences of government-built housing, but I will leave with https://en.m.wikipedia.org/wiki/Grenfell_Tower_fire https://en.m.wikipedia.org/wiki/Grenfell_Tower_fire and the chilling story near the beginning of _The Fifth Discipline_
- HDThoreaun 2y agoOr we can just build enough housing to satisfy the tourists and the locals