3 ms·

Did you read the article? Absent rent control, the article plausibly claims equilibrium rent would be higher than the rent controlled rent but lower than the ma

by glenra 12y ago

Did you read the article? Absent rent control, the article plausibly claims equilibrium rent would be higher than the rent controlled rent but lower than the market rent, because "market" rent reflects the rent only on a very small share of the available housing. But the situation is actually better than that because if we could convincingly get rid of rent control there would be a lot of new entry into the market, making the good less scarce. Under tight rent control, landlords have an incentive to take apartments off the market and convert them into condos or luxury homes. Remove rent control and some of those apartments will come back, which grows the supply and drives down price. Under a true market where landlords can recoup development costs we should expect see an increase in both the supply and quality of available apartments compared to the current day.

sgift 12y ago
The articles scenario assumes that the supply is elastic (and only bound by rent controls), while the demand is static, which is not even remotely plausible (e.g. see http://en.wikipedia.org/wiki/Urbanization http://en.wikipedia.org/wiki/Urbanization - almost everyone wants to live in a city) What would really happen is a massive influx of demand, because many people rich people (rich in this context: "Have the means to buy high-priced properties") who do not want an apartment today (because there are none which meet their 'standards', partly thanks to rent controls), would start to move in. This would lead to a situation where a) all new supply would be concretated in high-priced estate, which would still be bought up by the increased demand, while b) the bottom (i.e. todays rent controlled apartments, going with the assumption these are not well maintained and therefore 'cheap') would just go up in price, because there still wouldn't be any new options for the inhabitants of those properties. Result: Higher prices for the current occupants of apartments, a new crop of high-priced apartments bought up by rich people, no better supply of "main street" living room.

by glenra 12y ago

sgift 12y ago

The articles scenario assumes that the supply is elastic (and only bound by rent controls), while the demand is static, which is not even remotely plausible (e.g. see http://en.wikipedia.org/wiki/Urbanization http://en.wikipedia.org/wiki/Urbanization - almost everyone wants to live in a city) What would really happen is a massive influx of demand, because many people rich people (rich in this context: "Have the means to buy high-priced properties") who do not want an apartment today (because there are none which meet their 'standards', partly thanks to rent controls), would start to move in. This would lead to a situation where a) all new supply would be concretated in high-priced estate, which would still be bought up by the increased demand, while b) the bottom (i.e. todays rent controlled apartments, going with the assumption these are not well maintained and therefore 'cheap') would just go up in price, because there still wouldn't be any new options for the inhabitants of those properties. Result: Higher prices for the current occupants of apartments, a new crop of high-priced apartments bought up by rich people, no better supply of "main street" living room.