6 ms·

The redistribution of housing wealth caused by rent control (2023) [pdf]

82 points by luu 4mo ago

deleted 4mo ago
[deleted]
roenxi 4mo ago
> This paper studies the effects of rent control on the housing wealth of renters, landlords, and homeowners. Over the nine months following the passage of rent control in St. Paul, Minnesota in 2021, average property values fell by 4.4% to 5.8%. This seems like too short-term a study. The argument against artificially holding prices down is that people won't produce as much as they would otherwise and people won't be able to get the thing they would otherwise buy. So what we're predicting a rent control policy will do is cause a shortage of rental accommodation in the area. Now how that expresses itself in an accounting sense, who knows (probably the economists). Good question to study. But I doubt the impacts of rent control would appear in the market this quickly, it'd take years for the market signals to be measurable. Initially rent controls will probably be set near the previously ideal market price, I'd guess there are a lot of 12 month leases and housing construction projects probably don't reset that quickly either.
- heylook 4mo ago
  > But I doubt the impacts of rent control would appear in the market this quickly, it'd take years for the market signals to be measurable. Hard disagree. Rational investors have no problem whatsoever projecting the impact to future cash flows and adjusting the amount they're willing to pay now. That's like saying the stock market wouldn't respond quickly to changes in next year's tax law.
  - tverbeure 4mo ago
    I think you're wildly overestimating the rationality of investors.
    - WalterBright 4mo ago
      If you're smarter than other investors, you can make a lot of money doing the opposite of what they do.
      - WalterBright 4mo ago
        The failures and dislocations and "unanticipated" side effects of rent control are always a consequence of the Law of Supply and Demand. You cannot repeal that law, though they try again and again and again.
      - stymaar 4mo ago
        In a beauty contest, being right alone against everyone else just makes you lose. Markets can remain irrational much longer than you can remain solvent.
    - jjav 4mo ago
      If other investors are irrational that's a wonderful arbitrage opportunity. But good arbitrage opportunities are rare and don't last very long, so maybe they are rational.
      - rcxdude 4mo ago
        That does depend on the underlying market. Often you can make money (especially as a small participant) only if you can predict when the other participants in the market will snap back to reality. This can be pretty difficult when the market is more detached from the underlying activity it's supposed to represent (and property markets are often not very transparent or fast-moving).
      - tverbeure 4mo ago
        You’re really asking for a Keynes comment here. :-) He flirted with bankruptcy multiple times.
  - ameon 4mo ago
    both can be true if we separate short-term from a long-term effect. Panic or other emotional reactions are quick, that's for sure.
  - avs733 4mo ago
    Except the housing market, especially the rental market, is still significantly driven by small rental property owners and is a significant source of generational wealth transfer. Starting with the assumption that all or even most investors / actors are rational is a continuing pox on both economic scholarship and societal thinking
    - joshribakoff 4mo ago
      It doesn’t require all or most investors to act rational. A small percentage of rational actors still moves prices.
      - dwallin 4mo ago
        Moving prices is not the same as moving the market, and famously the market might cause them to go insolvent faster then the market goes rational. Which would mean that they weren’t actually rational and this is all circular reasoning?
    - datadrivenangel 4mo ago
      actors are in aggregate rational and self interested, but emotions are important.
  - roenxi 4mo ago
    In a highly liquid commodity market full of professional traders, I'd agree. But the housing market isn't that liquid over 9 months and there are a lot of small timers. It seems more likely there'd be some sort of initial wobble as sophisticated participants reposition, then a period of calm, then the actual impacts set in over a few years. It might not happen that way - someone does need to check - but at 9 months I wouldn't read much in to this study. The physical market would still be reorganising and it seems entirely possible that the eventual impacts are just different than what this study suggests. I'd want a period of more like 5 years to be confident that the data had given everyone in the market enough time to feel the impacts of artificially low rents and reposition appropriately.
    - heylook 3mo ago
      "It seems more likely..." "It might not happen that way..." "someone does need to check..." "seems entirely possible..." "I'd want more like 5 years to be confident..." Lot of different ways to say you don't know anything at all. This isn't a new market. This isn't the first time laws have changed in this way. This isn't the first time they've had this effect. We already know all of this. You're just waffling and enjoying the sound of your own voice.
  - pushcx 4mo ago
    The stock market has liquidity, fungibility, low transaction costs, etc etc. https://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/ https://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terri...
  - servo_sausage 4mo ago
    You probably won't see new commencement of building projects, but it probably doesn't mean ongoing projects would be scrapped... And these things have a lead time of years
    - Schiendelman 4mo ago
      You don't have to build for the market to change - the projection of future rents changes behavior in more efficiently operationalized landlords.
  - AnthonyMouse 4mo ago
    > Rational investors have no problem whatsoever projecting the impact to future cash flows and adjusting the amount they're willing to pay now. That's not accounting for the time value of money. Suppose you have a rental unit and before rent control you were planning to rent it out. That now has far less attractive returns and it suddenly makes more sense to sell it as a condo to an occupant rather than keeping it to rent it out. Likewise, other prospective landlords no longer want to buy it at the previous market price (returns went down and they can invest in stocks or housing in some other city instead), so the short-term effect is to increase the number of property sellers and decrease the number of buyers. Short-term, property values going down is the expected thing. But construction going down is also the expected thing, for the same reason. If property values are lower then the number of viable construction projects is lower and less construction happens. The lack of construction then continues until rents, even after rent control, are high enough to justify more construction, i.e. are even higher than they were originally, because now to justify the same investment as before you need the current rent to be high enough to account for the inability to increase it later. And with less construction happening, that's the natural result in a growing area. More people have to bid on the same number of units, rents go up. So the short-term effect is lower real estate prices, the long-term effect is higher. Now you say, if we expect real estate costs to be higher later, why don't investors take advantage? Which is the "time value of money" issue. If you invest there now because the prices will be high later, what do you do with the property in the meantime? If you don't rent it out, paying $1 today to get $1 in ten or twenty years is dumb, so you only buy if the current price is at a discount. If you do rent it out, then you'd be stuck trying to sell a building with a rent-controlled tenant, which isn't worth as much as the same building as empty as you bought it which you could sell as condos or rent out at current rents instead of price controlled ones, and then you still need a discount. And so the current seller has to provide a discount even if the real estate costs will be higher in a few years.
    - linkregister 4mo ago
      This argument presupposes multiple levels of assumption. By the point where the assertion is made that construction costs would drop, the prediction's error bars equal the entire range. There's no reason to believe that construction companies would accept jobs at prices below the cost of materials and labor. Construction companies frequently let workers go rather than accept large negative cash flows.
- vannevar 4mo ago
  The plot on page 39 certainly looks like the St Paul market turned somewhere around July of 2020, over a year before the rent control, and the downward trend accelerated over the next couple of years. I'm skeptical of the authors' ability to tease out the contribution of rent control to a process that had already begun well before the alleged causal event.
  - colechristensen 4mo ago
    It's terribly hard to isolate rent because of the supply/demand shock (in geographically dependent directions) that COVID had on the market. It made people move, a lot of people got a lot of free money and were out of work, among many other changes.
  - ryukoposting 4mo ago
    I lived there at the time. The George Floyd riots were in late May/early June 2020. I went to the protests by the police station in the Powderhorn neighborhood, that's the police station that got burned down. I got the hell out before that, though. Most of the damage was concentrated in Minneapolis, a little south of the river. But what happens in Minneapolis affects St. Paul, and vice versa. St. Paul wasn't unscathed, either. Property values dipped as a result of the riots, and I'd go find more evidence of that if it wasn't just taken as a fact by the people who live there. There was also an arson on a construction site in downtown St. Paul later that summer that spooked a lot of folks too. There's also George Floyd Square, an ad-hoc memorial at the intersection where he was murdered. For reasons beyond me, this was a source of controversy for well over a year, and I know a lot of MN righties who took the city's willingness to leave the memorial there as "capitulating to crime" or something. In short, don't use Twin Cities property values in the early 2020s to make generalizations about economics or policy. It took years for those scars to heal. Things didn't really go back to normal until 2023 at the absolute earliest, and some things haven't ever gone back to the way they were.
    - MAustriaGA 4mo ago
      [flagged]
- WalterBright 4mo ago
  The key to understanding the effects of rent control is understanding the Law of Supply and Demand. Artificially holding down rents will result in housing shortages. The lower the rent controlled price, the worse the shortage. If the rent goes too low, the building owner will stop doing maintenance. Eventually, the building gets abandoned.
  - uoaei 4mo ago
    Supply and demand is and always has been a useful first-order approximation. Reality is a lot more complicated. Dear reader, never believe anyone who says a serious societal problem is "just" anything. Especially on the internet when they use merely a pesudonym to assert their authority. Especially when the person behind the pseudonym is a one-time washed-out author desperately clinging to their housing stock in Atherton.
    - WalterBright 4mo ago
      [flagged]
      - uoaei 4mo ago
        No, it's not a law in the same way as physical laws. Most of the failures in economics of the past 50 years can be mostly directly attributed to a fatal overcommitment to the belief that these attributed relations are incontrivertible. What really exists, closest to the limit we will call "hard science" or "physics", is the microcosmic focus on individuals interacting in a market. Everything else -- supply and demand as a theory definitely included -- is a statistical extrapolation from micro-scale interactions. Hence the label of "dismal science". It's dismal because every hardline assumption is inevitably contravened by real life physics.
        danaris 4mo ago
        No, no, see, of course it's a law! Now, I'll explain it to you: First, assume a spherical economy in a frictionless vacuum... (/s)
- rcxdude 4mo ago
  I think this argument depends on what exactly is constraining supply: if prices are at a level where there is still a profit to be made building new housing, it will be built anyhow. If developers and landlords truly are capturing an outsize fraction of the value in building and renting new property, then it might redistribute that value without affecting supply. But in that case the supply is being constrained by something else and it might be better overall to focus on relieving that constraint instead (property development and rental is an area with lots of room for creative accounting, and it seems to vary a lot who is making money and how, I would love to see some detailed breakdown on this).
- xtiansimon 4mo ago
  > “…average property values fell by 4.4% to 5.8%” I’m not clever enough to follow these arguments, but I’m struck by the idea of home prices going down in the face of so much demand. And I think it’s a miracle to have discovered such a lever.
- inigyou 4mo ago
  easy work around for that btw: don't control new construction (unless it replaced controlled old construction. no demolishing and rebuilding just to avoid control)
- port11 4mo ago
  I propose the Invisible Hand… ahm, Grenade: it is likely impossible that a thread about rent control can exist without it being quickly dismissed because of the Free Market. Housing policy debate is not allowed nuance, as unregulated capitalism is the ultimate goal of Humanity.
vlovich123 4mo ago
> Over the nine months following the passage of rent control in St. Paul, Minnesota in 2021, average property values fell by 4.4% to 5.8% This to me is the big one. So in addition to rents being more affordable (even if wealthier renters capture most of the gains) limiting the rental market profits also makes houses more affordable to buy? The paper is trying to argue this is bad, but I’m not seeing it. It’s almost like “rent-seeking behavior” is a negative pejorative of an actor’s actions that negatively influence the market.
- hollerith 4mo ago
  It's worrying because it reduces the incentive to build more housing.
  - dreambuffer 4mo ago
    How do you quantify "incentive"? Is a landlord really looking at 5% lower property value and deciding it's not worth investing? Is this even true in aggregate?
    - SpicyLemonZest 4mo ago
      Yes. Since the source paper was written, St. Paul has realized that this is the case and rolled back rent control on new construction to hopefully solve the problem. (https://minnesotareformer.com/2025/05/08/st-paul-walks-back-rent-control/ https://minnesotareformer.com/2025/05/08/st-paul-walks-back-...)
      - dreambuffer 4mo ago
        So they're losing out on a few dozen new units, but it is made up for by renters across the board having to pay less rent and thus having more money to put into the economy? Seems like a good trade to me?
        deleted 4mo ago
        [deleted]
pksebben 4mo ago
"Assessing effects of rent control on wealth is hard, so we threw most of that out and just used housing prices. Also, we're fairly sure that our results are good because there was nothing special happening in St. Paul in 2021 that we could figure. See this scatterplot that looks like inflation, note that the statistics we put just below it also don't look interesting but we've tied them to how rent controls are at the same time socialist and also evil and capitalist. We are objective parties to this because we say we are, please ignore the TLD we're serving this on." You can almost hear yakitty sax playing in the background. I bet if you met the researchers you could honk their nose.
daft_pink 4mo ago
I feel the core issue isn’t wealth redistribution, it’s that rent controls create severe mismatches in supply and demand.
- deleted 4mo ago
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- slopinthebag 4mo ago
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RobLach 4mo ago
This seems like a lot of work looking at mostly housing prices during peak covid which is hardly a generalizable situation.
chasebank 4mo ago
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doctorpangloss 4mo ago
i see nobody read the paper. > Similarly, we need to consider any one-time confounding events in control cities. Most notably, Minneapolis would be a natural control for St. Paul. However, in addition to the ballot measure on rent control, Minneapolis’s ballot also included referenda on mayoral power and policing. These confounding events mean that if property values in St. Paul changed relative to Minneapolis, we could not attribute the change to rent control. their mistake is that they excluded Minneapolis for a bullshit reason here. you might as well do the analysis and then tell us. of course, they did, and found all the same effects as st. paul despite no rent control, so they chose not to talk about it.
- Grombobulous 4mo ago
  This makes me wonder if these cities are a good study subject in the first place. Is this a metro area with serious rental price pressure where rent stabilization is greatly altering the market conditions, or is housing so available to begin with that it’s more of a feel-good legislation that doesn’t shift prices around? It looks like from a quick search that over half of people in this metro area own their own home. I imagine that rent control in many Midwestern metros is effectively pointless. The rent is already being controlled by flat or declining populations, cheap land, and high homeownership rates.
  - dmurvihill 4mo ago
    I mean, it's no SF, but Minneapolis definitely has an affordability problem. Every major city does.
    - Grombobulous 4mo ago
      I disagree with your last sentence conceptually. It took me about 20 seconds to find a good condition 3 bedroom home in Cleveland, OH in a well-kept neighborhood for $150k. https://www.zillow.com/homedetails/4122-W-145th-St-Cleveland-OH-44135/33379723_zpid/ https://www.zillow.com/homedetails/4122-W-145th-St-Cleveland... A lot of the Midwest just doesn’t have housing pressure. Maybe Minneapolis does, maybe Columbus does, but a lot of the other cities do not.
varenc 4mo ago
Important context: This paper is from 2023. In 2025, St. Paul massively rolled back rent control restrictions. Their rent control used to have no exemptions, but now it's become very similar to SF rent control. Strict limit on how much rent can go up for current tenants, but can reset close to market rate when there's a 'just cause' vacancy. And all buildings built after X date are exempt entirely. (X=2004 in St. Paul, X=1979 in SF). Developers argued that any rent control at all limited their ability to finance housing projects. I think results of studies like this were hugely influential to the changes in rent control that followed.
- rtpg 4mo ago
  > but can reset close to market rate when there's a 'just cause' vacancy. Unfortunate policy, and generating weird incentives to get people to leave! In Queensland (not exactly perfectly managing the rental crisis but...) their policies include not being able to raise rent more than once every 12 months (leases tend to be 12 months). Importantly it's linked to the property, not the tenants. There's no actual cap in practice on how much you can raise it by ("reasonable" I believe is the nonfalsifiable term used) but it doesn't generate perverse incentives to kick people out
  - varenc 4mo ago
    That was the argument around the original 2021 rent control law! It had zero exemptions to avoid perverse incentivizes like that one. But it didn't last.
  - dghlsakjg 4mo ago
    BC, Canada has a similar "just cause" (they have a list of valid reasons to evict). Although they do allow unlimited rent raises between tenants. The key is that there is a very low cost resolution tribunal, and the penalties for evicting improperly are incredibly harsh (12 months rent to be paid to the tenant in cash).
elchief 4mo ago
well it's not a free market anyway, and supply has been severely constrained for decades, so I'm okay with not screwing renters
- DonsDiscountGas 4mo ago
  Wouldn't it make more sense to remove the supply constraint?
jhallenworld 4mo ago
When Boston ended rent control in the late 90s, all of the sudden the landlords invested in their goldmine buildings and generally improved the city. It sucks for those trying to rent or buy (including me, I paid 60% more for a house in 2002 than what it was worth in 1996), but the city has certainly had a renaissance. IMHO, the problem now is bad zoning. The rich car-centric suburbs are preventing denser housing- to their own financial detriment. A recent fight is that the state has forced them to allow higher density housing around commuter rail stops. Similar fights about rail trails, future abutters are afraid of change but they are valuable everywhere they exist- in that they are a desirable feature and raise your house's value. Another problem is that they overbuilt $100/sqft bio-lab space. These are sitting empty, and the owners refuse to lower the rent.. I don't understand how the owners remain solvent.
- hnav 4mo ago
  The funding for the types of infrastructure that is made less efficient by sprawl needs to come from property taxes. Those taxes should then be scaled appropriately to reflect the amount of extra spending on sprawly infrastructure.
- dmurvihill 4mo ago
  Sure, when you kick out all the poor people, the city definitely does look richer.
- cwnyth 4mo ago
  This is why you need a two prong approach: city-led redevelopment or redevelopment incentives on top of rent stabilization. Boston is not rapidly growing new housing relative to the number of people who are trying to live there. The median rent price per capita of the Boston metro is much, much higher than NY metro, nearly 4x in fact.[1] Boston should not be as expensive as New York, when the latter has rent stabilization (and even some old apartments still under rent control) and the former does not. > I don't understand how the owners remain solvent. I think that tells you everything you need to know about who's renting them out. [1]: https://constructioncoverage.com/research/cities-with-the-most-expensive-rents https://constructioncoverage.com/research/cities-with-the-mo...
hnav 4mo ago
One effect of rent-control that I have observed in San Francisco is that well-off people get into baller apartments with the intention of keeping them forever. Over time the rental rate gets inflated away to almost nothing, the person buys a mansion in suburbia, keeping their rent controlled penthouse as a pied-a-terre. In theory landlords would be looking to petition for eviction but that's usually not what happens.
- akoboldfrying 4mo ago
  > In theory landlords would be looking to petition for eviction but that's usually not what happens. Are landlords allowed to increase rents when the tenant changes? If so then yes, I would expect them to do so, so if they don't, there needs to be some other explanation. If they don't, then obviously they'll prefer to keep their long-term, pays-on-time, probably-not-wrecking-the-place existing tenant.
  - bloppe 4mo ago
    You can't just change your tenant. I know someone who bought a place and wanted to move in (which is normally a valid reason to evict) and they still had to get a lawyer and ultimately bribe the person (who actually lived in ny for most of the year) 10k to just leave. 1 story but the tenants have a lot of rights in sf
  - wahern 4mo ago
    Rents reset to market for new tenants. While it's true some well-off people hang onto apartments while living elsewhere, this is really rare. Turn over is usually quite high. Rent control mostly effects small multi-tenant buildings and especially in-laws, where 1 or 2 hangers-on can really mess with the economics. My mother lives in a 12 unit building in a very nice SF neighborhood. Only 2 people have been there longer than 10 years, and only 1 other longer than 5.[1] The building was recently sold for only $2 million. The low price is less because of rent control, more because of all the other regulations that make it very costly to renovate or rebuild, lowering the value of the property. That building could/should be replaced with something having twice the number of units, but it never will be. In theory it should be trivial to have a system where existing tenants could be relocated while preserving their rent, but that would only work if there were much more supply coming online creating more structural vacancies so people could be shuffled around efficiently. I think rent control is an acceptable policy in so far as it directly addresses people's need for a sense of security that simply can't be met by promises of low housing prices in the future. It does come with a cost, a kind of tax, but taxes can be justified. There are much more costly housing policies than rent control. However, those policies unfortunately tend to coexist with rent control (often preexist), so it's really just a mess. [1] Years ago there used to be 2 tenants who had moved to and lived in Marin, but kept their units because they worked in the city and didn't want to commute every weekday. One was a dentist. But they moved out years ago. The building had no dedicated parking, so that may have factored into their decisions to finally leave. Dealing with that kind of hassle probably worked well (or at least sounded better) when they were younger, less so once they established a life in Marin, even if they continued to commute into the city. And it's not like housing is cheaper elsewhere in the Bay Area, so the extra expense is difficult to justify even for well-off professionals.
SilverElfin 4mo ago
Why not just redistribute directly? If the concern is that some existing residents will no longer be able to afford things, give long time residents a subsidy voucher.
- akoboldfrying 4mo ago
  Because it goes directly into the pockets of the landlords? People can argue about whether that's what should happen, and there are nuances on both sides there, but that is undeniably what will happen.
  - Plasmoid 4mo ago
    We could like build more houses though
dmurvihill 4mo ago
[flagged]
- TurdF3rguson 4mo ago
  If you don't mind investors being unwilling to do new construction. It's a band-aid on a much bigger problem.
  - Nursie 4mo ago
    That depends on the market. I’m not familiar with St Paul Minnesota, but here in Perth, Western Australia this is raised as an argument every time someone proposes anything to do with rolling back investor tax breaks. That and “there will be no rentals!” The truth of the situation here is that there is more than enough demand for new housing anyway, directly financed by wannabe homeowners, that ‘investment’ goes 90% into existing stock, not new builds, and that investment properties actually create rental demand as investors crowd out would-be owner-occupiers from both existing houses and new-build opportunities. In Melbourne, where measures to reduce the attractiveness of investment have already happened, the price of housing has levelled off comparative to other capitals in Aus, and rental availability has actually gone up. The underlying problem is of course supply, but there appears to be a limit to how fast the building industry can actually build more stock, so with huge demand and limited supply, we don’t need to encourage as much speculation or landlordism in the market to get more built. All it does is add heat and pump prices.
    - Danox 4mo ago
      All of the capitalistic English speaking countries today are suffering, the same problem and it ain’t because of rent control, starter houses/homes are not being built for the most part and no affordable apartments are either it’s come down to you shall rent for the rest of your life, and live in a luxury apartment doubled up with roomies, or enjoy living in a car or van on the road. That modern day tenement apartment is now known as a luxury apartment with the amenities courtesy of an equity company.
adverbly 4mo ago
IMO nothing even comes close to beating a land value tax with a citizens dividend for fixing housing and wealth distribution challenges.
devolving-dev 4mo ago
People like to look at rent control from a purely economic lens, but the sociopolitical aspect must also be considered. A suboptimal economic outcome might actually be optimal when all factors are considered. Social harmony and a feeling of hope for underprivileged residents are hard to value, but we must admit that they do have value.
- AlexandrB 4mo ago
  That assumes rent controlled units actually benefit mostly the underprivileged. They don't. They create a strong incentive to keep a flat indefinitely. It's not unheard of for a person to continue renting a rent frozen apartment after they buy a house because the rent is so cheap - effectively it's a second home. There's also plenty of corruption. "Knowing a guy" is one of the best ways to get a rent controlled unit since the wait time can be years.
  - WalterBright 4mo ago
    > "Knowing a guy" is one of the best ways to get a rent controlled unit since the wait time can be years. That's how military housing works. There's an underground "economy" of favors.
    - ProllyInfamous 4mo ago
      Are these "favors" rank-blind (i.e. does its hushhush-nature more-equalize the men, just trying to secure places to live)? Obviously officers and enlisted have different housing, but might an E-6 kiss an E-5's ass only on account of wanting his soon-to-be-vacated housing? My background is non-military (with one each, officer & enlisted, brother).
      - WalterBright 4mo ago
        Rank does give one priority, but reciprocal favors still play a large role.
  - devolving-dev 4mo ago
ggm 4mo ago
Without injection of new housing stock by the state, by coops or other agencies than BTR capital investors, it's highly likely to be a weaponised outcome to prove rent controls don't work. If the construction strike by commercial investors is replaced by public housing then the better outcome can emerge.
- AlexandrB 4mo ago
  > If the construction strike by commercial investors is replaced by public housing Aren't you just describing "the projects"[1]? Is that a better outcome? [1] https://en.wikipedia.org/wiki/Subsidized_housing_in_the_United_States https://en.wikipedia.org/wiki/Subsidized_housing_in_the_Unit...
ryukoposting 4mo ago
Instead of repeating myself, here's the link: https://news.ycombinator.com/item?id=48524204 https://news.ycombinator.com/item?id=48524204 Don't use Twin Cities property values in the early 2020s to draw conclusions about anything related to policy or economics. What you're actually measuring is the after shock of race riots. Also, RHAWA is a landlord lobbying group.
jmyeet 4mo ago
From the abstract: > Over the nine months following the passage of rent control in St. Paul, Minnesota in 2021, average property values fell by 4.4% to 5.8%. Why is this bad? Pretty much every Western society has fallen into the trap of raising property prices as a politcal imperative. People who own 1 (maybe 2) homes believe it's good for them but it only benefits very wealthy people who hoard land. The real problem is that ever-increasing property prices destroys the fabric of society. It's a wealth transfer from the next generation to older and wealthier people that creates a drain on their entire lives. It's justified by people arguing the current young people will be able to do that to the generation after them. But this can't go on forever. Want to know why eating out is so expensive? Why third spaces have disappeared? Why basically everything has gotten expensive? it's housing prices. Commercial rent is an input into everything that you buy. Higher costs mean higher wages that need to be paid, which is also an input into everything you need to buy. And the only one who is winning out of all of this is the landlord. If the commercial rent is too low well then it'll get torn down or converted into residential real estate because that's more profitable. You know who realized this? Xi Jinping [1]: > Houses are for living, not for speculation So the Chinese property speculation bubble was quietly popped a decade ago and Chinese real estate has been in a severe and prolonged recession ever since as the market corrects. What's funny is media coverage points this out like it's a problem. It's not. It's intentional. And if you think that's a purely socialist/communist idea, tell that to Adam Smith [2]: > As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed and demand a rent even for its natural produce. He had this in common with Mao [3]. So if Marxists, Leninists, Maoists and capitalists all agree that landlords are parasitic, what are we doing? There's a British former wealth manager and economist named Henry Fudge who has done the math on how the housing market is a "rentier black hole" (as he describes it) on the UK economy and has hollowed out manufacturing as an inevitable consequence when returns on housing exceed all asset classes. It becomes a self-fulfilling prophecies and housing enjoys significant tax advantages and government protections. He calls it The Housing Theory of Everything [4]. Rent control is a bandaid. The solution here is for the government to become a significant provider of housing, as is the case in Vienna [5] and to stop treating housing as a speculative asset. Attacks on rent control are generally a thinly-veiled effort to increase landlord profits however. We're rapidly re-inventing feudalism here with 1 (and soon more to come I'm sure) trillionaire who will increasingly hoard all the land and assets, leaving the rest of us as impoverished tenant workers who own nothing. Most call this neofeudalism for this reason. [1]: https://en.wikipedia.org/wiki/Houses_are_for_living,_not_for_speculation https://en.wikipedia.org/wiki/Houses_are_for_living,_not_for... [2]: https://www.prosper.org.au/geoists-in-history/adam-smith-on-the-rentier/ https://www.prosper.org.au/geoists-in-history/adam-smith-on-... [3]: https://thirdworldtruth.medium.com/not-just-mao-but-adam-smith-also-hated-landlords-14dd6dcdafb0 https://thirdworldtruth.medium.com/not-just-mao-but-adam-smi... [4]: https://henryfudgeofficial.substack.com/p/the-housing-theory-of-everything https://henryfudgeofficial.substack.com/p/the-housing-theory... [5]: https://www.theguardian.com/lifeandstyle/2024/jan/10/the-social-housing-secret-how-vienna-became-the-worlds-most-livable-city https://www.theguardian.com/lifeandstyle/2024/jan/10/the-soc...
gacgacgac 4mo ago
Nine months of data during a pandemic and nationwide civil unrest during the first year of a new term of a new President. I guess I struggle to see how that's controlling enough variables over a long enough time span to be meaningful.
fyredge 4mo ago
Reading the comments here is an exercise of patience. Why are we so uncreative of solutions to high rent? Let's just do away with regular renting. Either provide the full service of a serviced apartment, or provide a rent-to-own scheme. In both cases, landlords have incentives to improve the condition of units for better price. In the former case, no equity is built, but you get a much better service, and in the latter case, renters can build equity. And if renters decided to back out halfway, they can sell the paid up equity back to the landlord, some other renter, or to banks who have the capacity to manage the numerous transactions that will happen.
tancop 4mo ago
what is the impact on housing cost as a percentage of income? the whole point of rent control is making it cheaper to live in the city and prevent people from going homeless. working class wealth going down is a negative side effect but its impossible to avoid when most of the countrys net worth is tied up in real estate, and its probably still worth it.

82 points by luu 4mo ago

deleted 4mo ago

[deleted]

> This paper studies the effects of rent control on the housing wealth of renters, landlords, and homeowners. Over the nine months following the passage of rent control in St. Paul, Minnesota in 2021, average property values fell by 4.4% to 5.8%. This seems like too short-term a study. The argument against artificially holding prices down is that people won't produce as much as they would otherwise and people won't be able to get the thing they would otherwise buy. So what we're predicting a rent control policy will do is cause a shortage of rental accommodation in the area. Now how that expresses itself in an accounting sense, who knows (probably the economists). Good question to study. But I doubt the impacts of rent control would appear in the market this quickly, it'd take years for the market signals to be measurable. Initially rent controls will probably be set near the previously ideal market price, I'd guess there are a lot of 12 month leases and housing construction projects probably don't reset that quickly either.

heylook 4mo ago
> But I doubt the impacts of rent control would appear in the market this quickly, it'd take years for the market signals to be measurable. Hard disagree. Rational investors have no problem whatsoever projecting the impact to future cash flows and adjusting the amount they're willing to pay now. That's like saying the stock market wouldn't respond quickly to changes in next year's tax law.
- tverbeure 4mo ago
  I think you're wildly overestimating the rationality of investors.
  - WalterBright 4mo ago
    If you're smarter than other investors, you can make a lot of money doing the opposite of what they do.
    - WalterBright 4mo ago
      The failures and dislocations and "unanticipated" side effects of rent control are always a consequence of the Law of Supply and Demand. You cannot repeal that law, though they try again and again and again.
    - stymaar 4mo ago
      In a beauty contest, being right alone against everyone else just makes you lose. Markets can remain irrational much longer than you can remain solvent.
  - jjav 4mo ago
    If other investors are irrational that's a wonderful arbitrage opportunity. But good arbitrage opportunities are rare and don't last very long, so maybe they are rational.
    - rcxdude 4mo ago
      That does depend on the underlying market. Often you can make money (especially as a small participant) only if you can predict when the other participants in the market will snap back to reality. This can be pretty difficult when the market is more detached from the underlying activity it's supposed to represent (and property markets are often not very transparent or fast-moving).
    - tverbeure 4mo ago
      You’re really asking for a Keynes comment here. :-) He flirted with bankruptcy multiple times.
- ameon 4mo ago
  both can be true if we separate short-term from a long-term effect. Panic or other emotional reactions are quick, that's for sure.
- avs733 4mo ago
  Except the housing market, especially the rental market, is still significantly driven by small rental property owners and is a significant source of generational wealth transfer. Starting with the assumption that all or even most investors / actors are rational is a continuing pox on both economic scholarship and societal thinking
  - joshribakoff 4mo ago
    It doesn’t require all or most investors to act rational. A small percentage of rational actors still moves prices.
    - dwallin 4mo ago
      Moving prices is not the same as moving the market, and famously the market might cause them to go insolvent faster then the market goes rational. Which would mean that they weren’t actually rational and this is all circular reasoning?
  - datadrivenangel 4mo ago
    actors are in aggregate rational and self interested, but emotions are important.
- roenxi 4mo ago
  In a highly liquid commodity market full of professional traders, I'd agree. But the housing market isn't that liquid over 9 months and there are a lot of small timers. It seems more likely there'd be some sort of initial wobble as sophisticated participants reposition, then a period of calm, then the actual impacts set in over a few years. It might not happen that way - someone does need to check - but at 9 months I wouldn't read much in to this study. The physical market would still be reorganising and it seems entirely possible that the eventual impacts are just different than what this study suggests. I'd want a period of more like 5 years to be confident that the data had given everyone in the market enough time to feel the impacts of artificially low rents and reposition appropriately.
  - heylook 3mo ago
    "It seems more likely..." "It might not happen that way..." "someone does need to check..." "seems entirely possible..." "I'd want more like 5 years to be confident..." Lot of different ways to say you don't know anything at all. This isn't a new market. This isn't the first time laws have changed in this way. This isn't the first time they've had this effect. We already know all of this. You're just waffling and enjoying the sound of your own voice.
- pushcx 4mo ago
  The stock market has liquidity, fungibility, low transaction costs, etc etc. https://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/ https://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terri...
- servo_sausage 4mo ago
  You probably won't see new commencement of building projects, but it probably doesn't mean ongoing projects would be scrapped... And these things have a lead time of years
  - Schiendelman 4mo ago
    You don't have to build for the market to change - the projection of future rents changes behavior in more efficiently operationalized landlords.
- AnthonyMouse 4mo ago
  > Rational investors have no problem whatsoever projecting the impact to future cash flows and adjusting the amount they're willing to pay now. That's not accounting for the time value of money. Suppose you have a rental unit and before rent control you were planning to rent it out. That now has far less attractive returns and it suddenly makes more sense to sell it as a condo to an occupant rather than keeping it to rent it out. Likewise, other prospective landlords no longer want to buy it at the previous market price (returns went down and they can invest in stocks or housing in some other city instead), so the short-term effect is to increase the number of property sellers and decrease the number of buyers. Short-term, property values going down is the expected thing. But construction going down is also the expected thing, for the same reason. If property values are lower then the number of viable construction projects is lower and less construction happens. The lack of construction then continues until rents, even after rent control, are high enough to justify more construction, i.e. are even higher than they were originally, because now to justify the same investment as before you need the current rent to be high enough to account for the inability to increase it later. And with less construction happening, that's the natural result in a growing area. More people have to bid on the same number of units, rents go up. So the short-term effect is lower real estate prices, the long-term effect is higher. Now you say, if we expect real estate costs to be higher later, why don't investors take advantage? Which is the "time value of money" issue. If you invest there now because the prices will be high later, what do you do with the property in the meantime? If you don't rent it out, paying $1 today to get $1 in ten or twenty years is dumb, so you only buy if the current price is at a discount. If you do rent it out, then you'd be stuck trying to sell a building with a rent-controlled tenant, which isn't worth as much as the same building as empty as you bought it which you could sell as condos or rent out at current rents instead of price controlled ones, and then you still need a discount. And so the current seller has to provide a discount even if the real estate costs will be higher in a few years.
  - linkregister 4mo ago
    This argument presupposes multiple levels of assumption. By the point where the assertion is made that construction costs would drop, the prediction's error bars equal the entire range. There's no reason to believe that construction companies would accept jobs at prices below the cost of materials and labor. Construction companies frequently let workers go rather than accept large negative cash flows.
vannevar 4mo ago
The plot on page 39 certainly looks like the St Paul market turned somewhere around July of 2020, over a year before the rent control, and the downward trend accelerated over the next couple of years. I'm skeptical of the authors' ability to tease out the contribution of rent control to a process that had already begun well before the alleged causal event.
- colechristensen 4mo ago
  It's terribly hard to isolate rent because of the supply/demand shock (in geographically dependent directions) that COVID had on the market. It made people move, a lot of people got a lot of free money and were out of work, among many other changes.
- ryukoposting 4mo ago
  I lived there at the time. The George Floyd riots were in late May/early June 2020. I went to the protests by the police station in the Powderhorn neighborhood, that's the police station that got burned down. I got the hell out before that, though. Most of the damage was concentrated in Minneapolis, a little south of the river. But what happens in Minneapolis affects St. Paul, and vice versa. St. Paul wasn't unscathed, either. Property values dipped as a result of the riots, and I'd go find more evidence of that if it wasn't just taken as a fact by the people who live there. There was also an arson on a construction site in downtown St. Paul later that summer that spooked a lot of folks too. There's also George Floyd Square, an ad-hoc memorial at the intersection where he was murdered. For reasons beyond me, this was a source of controversy for well over a year, and I know a lot of MN righties who took the city's willingness to leave the memorial there as "capitulating to crime" or something. In short, don't use Twin Cities property values in the early 2020s to make generalizations about economics or policy. It took years for those scars to heal. Things didn't really go back to normal until 2023 at the absolute earliest, and some things haven't ever gone back to the way they were.
  - MAustriaGA 4mo ago
    [flagged]
WalterBright 4mo ago
The key to understanding the effects of rent control is understanding the Law of Supply and Demand. Artificially holding down rents will result in housing shortages. The lower the rent controlled price, the worse the shortage. If the rent goes too low, the building owner will stop doing maintenance. Eventually, the building gets abandoned.
- uoaei 4mo ago
  Supply and demand is and always has been a useful first-order approximation. Reality is a lot more complicated. Dear reader, never believe anyone who says a serious societal problem is "just" anything. Especially on the internet when they use merely a pesudonym to assert their authority. Especially when the person behind the pseudonym is a one-time washed-out author desperately clinging to their housing stock in Atherton.
  - WalterBright 4mo ago
    [flagged]
    - uoaei 4mo ago
      No, it's not a law in the same way as physical laws. Most of the failures in economics of the past 50 years can be mostly directly attributed to a fatal overcommitment to the belief that these attributed relations are incontrivertible. What really exists, closest to the limit we will call "hard science" or "physics", is the microcosmic focus on individuals interacting in a market. Everything else -- supply and demand as a theory definitely included -- is a statistical extrapolation from micro-scale interactions. Hence the label of "dismal science". It's dismal because every hardline assumption is inevitably contravened by real life physics.
      - danaris 4mo ago
        No, no, see, of course it's a law! Now, I'll explain it to you: First, assume a spherical economy in a frictionless vacuum... (/s)
rcxdude 4mo ago
I think this argument depends on what exactly is constraining supply: if prices are at a level where there is still a profit to be made building new housing, it will be built anyhow. If developers and landlords truly are capturing an outsize fraction of the value in building and renting new property, then it might redistribute that value without affecting supply. But in that case the supply is being constrained by something else and it might be better overall to focus on relieving that constraint instead (property development and rental is an area with lots of room for creative accounting, and it seems to vary a lot who is making money and how, I would love to see some detailed breakdown on this).
xtiansimon 4mo ago
> “…average property values fell by 4.4% to 5.8%” I’m not clever enough to follow these arguments, but I’m struck by the idea of home prices going down in the face of so much demand. And I think it’s a miracle to have discovered such a lever.
inigyou 4mo ago
easy work around for that btw: don't control new construction (unless it replaced controlled old construction. no demolishing and rebuilding just to avoid control)
port11 4mo ago
I propose the Invisible Hand… ahm, Grenade: it is likely impossible that a thread about rent control can exist without it being quickly dismissed because of the Free Market. Housing policy debate is not allowed nuance, as unregulated capitalism is the ultimate goal of Humanity.

vlovich123 4mo ago

> Over the nine months following the passage of rent control in St. Paul, Minnesota in 2021, average property values fell by 4.4% to 5.8% This to me is the big one. So in addition to rents being more affordable (even if wealthier renters capture most of the gains) limiting the rental market profits also makes houses more affordable to buy? The paper is trying to argue this is bad, but I’m not seeing it. It’s almost like “rent-seeking behavior” is a negative pejorative of an actor’s actions that negatively influence the market.

hollerith 4mo ago
It's worrying because it reduces the incentive to build more housing.
- dreambuffer 4mo ago
  How do you quantify "incentive"? Is a landlord really looking at 5% lower property value and deciding it's not worth investing? Is this even true in aggregate?
  - SpicyLemonZest 4mo ago
    Yes. Since the source paper was written, St. Paul has realized that this is the case and rolled back rent control on new construction to hopefully solve the problem. (https://minnesotareformer.com/2025/05/08/st-paul-walks-back-rent-control/ https://minnesotareformer.com/2025/05/08/st-paul-walks-back-...)
    - dreambuffer 4mo ago
      So they're losing out on a few dozen new units, but it is made up for by renters across the board having to pay less rent and thus having more money to put into the economy? Seems like a good trade to me?
      - deleted 4mo ago
        [deleted]

pksebben 4mo ago

"Assessing effects of rent control on wealth is hard, so we threw most of that out and just used housing prices. Also, we're fairly sure that our results are good because there was nothing special happening in St. Paul in 2021 that we could figure. See this scatterplot that looks like inflation, note that the statistics we put just below it also don't look interesting but we've tied them to how rent controls are at the same time socialist and also evil and capitalist. We are objective parties to this because we say we are, please ignore the TLD we're serving this on." You can almost hear yakitty sax playing in the background. I bet if you met the researchers you could honk their nose.

daft_pink 4mo ago

I feel the core issue isn’t wealth redistribution, it’s that rent controls create severe mismatches in supply and demand.

deleted 4mo ago
[deleted]
slopinthebag 4mo ago
[dead]

RobLach 4mo ago

This seems like a lot of work looking at mostly housing prices during peak covid which is hardly a generalizable situation.

chasebank 4mo ago

[dead]

doctorpangloss 4mo ago

i see nobody read the paper. > Similarly, we need to consider any one-time confounding events in control cities. Most notably, Minneapolis would be a natural control for St. Paul. However, in addition to the ballot measure on rent control, Minneapolis’s ballot also included referenda on mayoral power and policing. These confounding events mean that if property values in St. Paul changed relative to Minneapolis, we could not attribute the change to rent control. their mistake is that they excluded Minneapolis for a bullshit reason here. you might as well do the analysis and then tell us. of course, they did, and found all the same effects as st. paul despite no rent control, so they chose not to talk about it.

Grombobulous 4mo ago
This makes me wonder if these cities are a good study subject in the first place. Is this a metro area with serious rental price pressure where rent stabilization is greatly altering the market conditions, or is housing so available to begin with that it’s more of a feel-good legislation that doesn’t shift prices around? It looks like from a quick search that over half of people in this metro area own their own home. I imagine that rent control in many Midwestern metros is effectively pointless. The rent is already being controlled by flat or declining populations, cheap land, and high homeownership rates.
- dmurvihill 4mo ago
  I mean, it's no SF, but Minneapolis definitely has an affordability problem. Every major city does.
  - Grombobulous 4mo ago
    I disagree with your last sentence conceptually. It took me about 20 seconds to find a good condition 3 bedroom home in Cleveland, OH in a well-kept neighborhood for $150k. https://www.zillow.com/homedetails/4122-W-145th-St-Cleveland-OH-44135/33379723_zpid/ https://www.zillow.com/homedetails/4122-W-145th-St-Cleveland... A lot of the Midwest just doesn’t have housing pressure. Maybe Minneapolis does, maybe Columbus does, but a lot of the other cities do not.

varenc 4mo ago

Important context: This paper is from 2023. In 2025, St. Paul massively rolled back rent control restrictions. Their rent control used to have no exemptions, but now it's become very similar to SF rent control. Strict limit on how much rent can go up for current tenants, but can reset close to market rate when there's a 'just cause' vacancy. And all buildings built after X date are exempt entirely. (X=2004 in St. Paul, X=1979 in SF). Developers argued that any rent control at all limited their ability to finance housing projects. I think results of studies like this were hugely influential to the changes in rent control that followed.

rtpg 4mo ago
> but can reset close to market rate when there's a 'just cause' vacancy. Unfortunate policy, and generating weird incentives to get people to leave! In Queensland (not exactly perfectly managing the rental crisis but...) their policies include not being able to raise rent more than once every 12 months (leases tend to be 12 months). Importantly it's linked to the property, not the tenants. There's no actual cap in practice on how much you can raise it by ("reasonable" I believe is the nonfalsifiable term used) but it doesn't generate perverse incentives to kick people out
- varenc 4mo ago
  That was the argument around the original 2021 rent control law! It had zero exemptions to avoid perverse incentivizes like that one. But it didn't last.
- dghlsakjg 4mo ago
  BC, Canada has a similar "just cause" (they have a list of valid reasons to evict). Although they do allow unlimited rent raises between tenants. The key is that there is a very low cost resolution tribunal, and the penalties for evicting improperly are incredibly harsh (12 months rent to be paid to the tenant in cash).

elchief 4mo ago

well it's not a free market anyway, and supply has been severely constrained for decades, so I'm okay with not screwing renters

DonsDiscountGas 4mo ago
Wouldn't it make more sense to remove the supply constraint?

jhallenworld 4mo ago

When Boston ended rent control in the late 90s, all of the sudden the landlords invested in their goldmine buildings and generally improved the city. It sucks for those trying to rent or buy (including me, I paid 60% more for a house in 2002 than what it was worth in 1996), but the city has certainly had a renaissance. IMHO, the problem now is bad zoning. The rich car-centric suburbs are preventing denser housing- to their own financial detriment. A recent fight is that the state has forced them to allow higher density housing around commuter rail stops. Similar fights about rail trails, future abutters are afraid of change but they are valuable everywhere they exist- in that they are a desirable feature and raise your house's value. Another problem is that they overbuilt $100/sqft bio-lab space. These are sitting empty, and the owners refuse to lower the rent.. I don't understand how the owners remain solvent.

hnav 4mo ago
The funding for the types of infrastructure that is made less efficient by sprawl needs to come from property taxes. Those taxes should then be scaled appropriately to reflect the amount of extra spending on sprawly infrastructure.
dmurvihill 4mo ago
Sure, when you kick out all the poor people, the city definitely does look richer.
cwnyth 4mo ago
This is why you need a two prong approach: city-led redevelopment or redevelopment incentives on top of rent stabilization. Boston is not rapidly growing new housing relative to the number of people who are trying to live there. The median rent price per capita of the Boston metro is much, much higher than NY metro, nearly 4x in fact.[1] Boston should not be as expensive as New York, when the latter has rent stabilization (and even some old apartments still under rent control) and the former does not. > I don't understand how the owners remain solvent. I think that tells you everything you need to know about who's renting them out. [1]: https://constructioncoverage.com/research/cities-with-the-most-expensive-rents https://constructioncoverage.com/research/cities-with-the-mo...

hnav 4mo ago

One effect of rent-control that I have observed in San Francisco is that well-off people get into baller apartments with the intention of keeping them forever. Over time the rental rate gets inflated away to almost nothing, the person buys a mansion in suburbia, keeping their rent controlled penthouse as a pied-a-terre. In theory landlords would be looking to petition for eviction but that's usually not what happens.

akoboldfrying 4mo ago
> In theory landlords would be looking to petition for eviction but that's usually not what happens. Are landlords allowed to increase rents when the tenant changes? If so then yes, I would expect them to do so, so if they don't, there needs to be some other explanation. If they don't, then obviously they'll prefer to keep their long-term, pays-on-time, probably-not-wrecking-the-place existing tenant.
- bloppe 4mo ago
  You can't just change your tenant. I know someone who bought a place and wanted to move in (which is normally a valid reason to evict) and they still had to get a lawyer and ultimately bribe the person (who actually lived in ny for most of the year) 10k to just leave. 1 story but the tenants have a lot of rights in sf
- wahern 4mo ago
  Rents reset to market for new tenants. While it's true some well-off people hang onto apartments while living elsewhere, this is really rare. Turn over is usually quite high. Rent control mostly effects small multi-tenant buildings and especially in-laws, where 1 or 2 hangers-on can really mess with the economics. My mother lives in a 12 unit building in a very nice SF neighborhood. Only 2 people have been there longer than 10 years, and only 1 other longer than 5.[1] The building was recently sold for only $2 million. The low price is less because of rent control, more because of all the other regulations that make it very costly to renovate or rebuild, lowering the value of the property. That building could/should be replaced with something having twice the number of units, but it never will be. In theory it should be trivial to have a system where existing tenants could be relocated while preserving their rent, but that would only work if there were much more supply coming online creating more structural vacancies so people could be shuffled around efficiently. I think rent control is an acceptable policy in so far as it directly addresses people's need for a sense of security that simply can't be met by promises of low housing prices in the future. It does come with a cost, a kind of tax, but taxes can be justified. There are much more costly housing policies than rent control. However, those policies unfortunately tend to coexist with rent control (often preexist), so it's really just a mess. [1] Years ago there used to be 2 tenants who had moved to and lived in Marin, but kept their units because they worked in the city and didn't want to commute every weekday. One was a dentist. But they moved out years ago. The building had no dedicated parking, so that may have factored into their decisions to finally leave. Dealing with that kind of hassle probably worked well (or at least sounded better) when they were younger, less so once they established a life in Marin, even if they continued to commute into the city. And it's not like housing is cheaper elsewhere in the Bay Area, so the extra expense is difficult to justify even for well-off professionals.

SilverElfin 4mo ago

Why not just redistribute directly? If the concern is that some existing residents will no longer be able to afford things, give long time residents a subsidy voucher.

akoboldfrying 4mo ago
Because it goes directly into the pockets of the landlords? People can argue about whether that's what should happen, and there are nuances on both sides there, but that is undeniably what will happen.
- Plasmoid 4mo ago
  We could like build more houses though

dmurvihill 4mo ago

[flagged]

TurdF3rguson 4mo ago
If you don't mind investors being unwilling to do new construction. It's a band-aid on a much bigger problem.
- Nursie 4mo ago
  That depends on the market. I’m not familiar with St Paul Minnesota, but here in Perth, Western Australia this is raised as an argument every time someone proposes anything to do with rolling back investor tax breaks. That and “there will be no rentals!” The truth of the situation here is that there is more than enough demand for new housing anyway, directly financed by wannabe homeowners, that ‘investment’ goes 90% into existing stock, not new builds, and that investment properties actually create rental demand as investors crowd out would-be owner-occupiers from both existing houses and new-build opportunities. In Melbourne, where measures to reduce the attractiveness of investment have already happened, the price of housing has levelled off comparative to other capitals in Aus, and rental availability has actually gone up. The underlying problem is of course supply, but there appears to be a limit to how fast the building industry can actually build more stock, so with huge demand and limited supply, we don’t need to encourage as much speculation or landlordism in the market to get more built. All it does is add heat and pump prices.
  - Danox 4mo ago
    All of the capitalistic English speaking countries today are suffering, the same problem and it ain’t because of rent control, starter houses/homes are not being built for the most part and no affordable apartments are either it’s come down to you shall rent for the rest of your life, and live in a luxury apartment doubled up with roomies, or enjoy living in a car or van on the road. That modern day tenement apartment is now known as a luxury apartment with the amenities courtesy of an equity company.

adverbly 4mo ago

IMO nothing even comes close to beating a land value tax with a citizens dividend for fixing housing and wealth distribution challenges.

devolving-dev 4mo ago

People like to look at rent control from a purely economic lens, but the sociopolitical aspect must also be considered. A suboptimal economic outcome might actually be optimal when all factors are considered. Social harmony and a feeling of hope for underprivileged residents are hard to value, but we must admit that they do have value.

AlexandrB 4mo ago
That assumes rent controlled units actually benefit mostly the underprivileged. They don't. They create a strong incentive to keep a flat indefinitely. It's not unheard of for a person to continue renting a rent frozen apartment after they buy a house because the rent is so cheap - effectively it's a second home. There's also plenty of corruption. "Knowing a guy" is one of the best ways to get a rent controlled unit since the wait time can be years.
- WalterBright 4mo ago
  > "Knowing a guy" is one of the best ways to get a rent controlled unit since the wait time can be years. That's how military housing works. There's an underground "economy" of favors.
  - ProllyInfamous 4mo ago
    Are these "favors" rank-blind (i.e. does its hushhush-nature more-equalize the men, just trying to secure places to live)? Obviously officers and enlisted have different housing, but might an E-6 kiss an E-5's ass only on account of wanting his soon-to-be-vacated housing? My background is non-military (with one each, officer & enlisted, brother).
    - WalterBright 4mo ago
      Rank does give one priority, but reciprocal favors still play a large role.
- devolving-dev 4mo ago

ggm 4mo ago

Without injection of new housing stock by the state, by coops or other agencies than BTR capital investors, it's highly likely to be a weaponised outcome to prove rent controls don't work. If the construction strike by commercial investors is replaced by public housing then the better outcome can emerge.

AlexandrB 4mo ago
> If the construction strike by commercial investors is replaced by public housing Aren't you just describing "the projects"[1]? Is that a better outcome? [1] https://en.wikipedia.org/wiki/Subsidized_housing_in_the_United_States https://en.wikipedia.org/wiki/Subsidized_housing_in_the_Unit...

ryukoposting 4mo ago

Instead of repeating myself, here's the link: https://news.ycombinator.com/item?id=48524204 https://news.ycombinator.com/item?id=48524204 Don't use Twin Cities property values in the early 2020s to draw conclusions about anything related to policy or economics. What you're actually measuring is the after shock of race riots. Also, RHAWA is a landlord lobbying group.

jmyeet 4mo ago

From the abstract: > Over the nine months following the passage of rent control in St. Paul, Minnesota in 2021, average property values fell by 4.4% to 5.8%. Why is this bad? Pretty much every Western society has fallen into the trap of raising property prices as a politcal imperative. People who own 1 (maybe 2) homes believe it's good for them but it only benefits very wealthy people who hoard land. The real problem is that ever-increasing property prices destroys the fabric of society. It's a wealth transfer from the next generation to older and wealthier people that creates a drain on their entire lives. It's justified by people arguing the current young people will be able to do that to the generation after them. But this can't go on forever. Want to know why eating out is so expensive? Why third spaces have disappeared? Why basically everything has gotten expensive? it's housing prices. Commercial rent is an input into everything that you buy. Higher costs mean higher wages that need to be paid, which is also an input into everything you need to buy. And the only one who is winning out of all of this is the landlord. If the commercial rent is too low well then it'll get torn down or converted into residential real estate because that's more profitable. You know who realized this? Xi Jinping [1]: > Houses are for living, not for speculation So the Chinese property speculation bubble was quietly popped a decade ago and Chinese real estate has been in a severe and prolonged recession ever since as the market corrects. What's funny is media coverage points this out like it's a problem. It's not. It's intentional. And if you think that's a purely socialist/communist idea, tell that to Adam Smith [2]: > As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed and demand a rent even for its natural produce. He had this in common with Mao [3]. So if Marxists, Leninists, Maoists and capitalists all agree that landlords are parasitic, what are we doing? There's a British former wealth manager and economist named Henry Fudge who has done the math on how the housing market is a "rentier black hole" (as he describes it) on the UK economy and has hollowed out manufacturing as an inevitable consequence when returns on housing exceed all asset classes. It becomes a self-fulfilling prophecies and housing enjoys significant tax advantages and government protections. He calls it The Housing Theory of Everything [4]. Rent control is a bandaid. The solution here is for the government to become a significant provider of housing, as is the case in Vienna [5] and to stop treating housing as a speculative asset. Attacks on rent control are generally a thinly-veiled effort to increase landlord profits however. We're rapidly re-inventing feudalism here with 1 (and soon more to come I'm sure) trillionaire who will increasingly hoard all the land and assets, leaving the rest of us as impoverished tenant workers who own nothing. Most call this neofeudalism for this reason. [1]: https://en.wikipedia.org/wiki/Houses_are_for_living,_not_for_speculation https://en.wikipedia.org/wiki/Houses_are_for_living,_not_for... [2]: https://www.prosper.org.au/geoists-in-history/adam-smith-on-the-rentier/ https://www.prosper.org.au/geoists-in-history/adam-smith-on-... [3]: https://thirdworldtruth.medium.com/not-just-mao-but-adam-smith-also-hated-landlords-14dd6dcdafb0 https://thirdworldtruth.medium.com/not-just-mao-but-adam-smi... [4]: https://henryfudgeofficial.substack.com/p/the-housing-theory-of-everything https://henryfudgeofficial.substack.com/p/the-housing-theory... [5]: https://www.theguardian.com/lifeandstyle/2024/jan/10/the-social-housing-secret-how-vienna-became-the-worlds-most-livable-city https://www.theguardian.com/lifeandstyle/2024/jan/10/the-soc...

gacgacgac 4mo ago

Nine months of data during a pandemic and nationwide civil unrest during the first year of a new term of a new President. I guess I struggle to see how that's controlling enough variables over a long enough time span to be meaningful.

fyredge 4mo ago

Reading the comments here is an exercise of patience. Why are we so uncreative of solutions to high rent? Let's just do away with regular renting. Either provide the full service of a serviced apartment, or provide a rent-to-own scheme. In both cases, landlords have incentives to improve the condition of units for better price. In the former case, no equity is built, but you get a much better service, and in the latter case, renters can build equity. And if renters decided to back out halfway, they can sell the paid up equity back to the landlord, some other renter, or to banks who have the capacity to manage the numerous transactions that will happen.

tancop 4mo ago

what is the impact on housing cost as a percentage of income? the whole point of rent control is making it cheaper to live in the city and prevent people from going homeless. working class wealth going down is a negative side effect but its impossible to avoid when most of the countrys net worth is tied up in real estate, and its probably still worth it.