4 ms·

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]
    - mgh95 4mo ago
      Because then the units fall into disrepair (because they no longer make sense to maintain) leading to less supply leading to lower availability of units leading to higher cost of housing. See what happened in NYC regarding the consolidation of housing units.
      - deleted 4mo ago
        [deleted]
- PaulHoule 4mo ago
  It is a major paradigm in economics that if you change this by X% it will change something else by Y% and to estimate that ratio. It may be that people don’t really think that way: economic growth seems to be continuous and exponential in character whereas economic dislocations are discontinuous in character. I think of how I was absolutely shocked when a Big Mac meal was $10 during the pandemic (I think it cost about $2.50 the first time I bought it) and didn’t think I was going to buy 4% less of it but rather I skipped the fries.
  - cindyllm 4mo ago
    [dead]
- hollerith 4mo ago
  Well, there's 2 ways to become a landlord: to buy a house or to build a house. I was focused only on the second way. The cost of the wood and the labor needed to build the house is unaffected by the rent control, so if cost remains the same, but the reward (or "revenue") from building the house decrease from $100K to $95K, then fewer houses will get built.
  - dreambuffer 4mo ago
    Yeah, sure, but only like, 10-100 fewer housing units per 100k people.
  - Nursie 4mo ago
    IFF there isn’t already excess demand for building in the market, and house-building is itself ‘liquid’, something that’s not necessarily true. When supply is constrained by the availability of builders and materials, then some landlords dropping out won’t make a lot of difference there.
theendisney 4mo ago
You can also accomplish lower prices by building more. People dont want that so one could argue it is good to make them pay for what they want.
vlovich123 4mo ago
Generally reduced construction results in higher real estate prices not lower prices. Proof: look at the well studied example of California.

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]
  - mgh95 4mo ago
    Because then the units fall into disrepair (because they no longer make sense to maintain) leading to less supply leading to lower availability of units leading to higher cost of housing. See what happened in NYC regarding the consolidation of housing units.
    - deleted 4mo ago
      [deleted]
PaulHoule 4mo ago
It is a major paradigm in economics that if you change this by X% it will change something else by Y% and to estimate that ratio. It may be that people don’t really think that way: economic growth seems to be continuous and exponential in character whereas economic dislocations are discontinuous in character. I think of how I was absolutely shocked when a Big Mac meal was $10 during the pandemic (I think it cost about $2.50 the first time I bought it) and didn’t think I was going to buy 4% less of it but rather I skipped the fries.
- cindyllm 4mo ago
  [dead]
hollerith 4mo ago
Well, there's 2 ways to become a landlord: to buy a house or to build a house. I was focused only on the second way. The cost of the wood and the labor needed to build the house is unaffected by the rent control, so if cost remains the same, but the reward (or "revenue") from building the house decrease from $100K to $95K, then fewer houses will get built.
- dreambuffer 4mo ago
  Yeah, sure, but only like, 10-100 fewer housing units per 100k people.
- Nursie 4mo ago
  IFF there isn’t already excess demand for building in the market, and house-building is itself ‘liquid’, something that’s not necessarily true. When supply is constrained by the availability of builders and materials, then some landlords dropping out won’t make a lot of difference there.

theendisney 4mo ago

You can also accomplish lower prices by building more. People dont want that so one could argue it is good to make them pay for what they want.

vlovich123 4mo ago

Generally reduced construction results in higher real estate prices not lower prices. Proof: look at the well studied example of California.