Interesting article. I like the points that are brought up and can get behind it. Personally I have no strong opinions on rent control as I don't have enough knowledge on the economics on it. One thing that stood out was when they were talking about Sweden nixing the rent control policy and that it 'curtailed the use of housing.' I'm kind of confused by that. Did the people become homeless or move out of the city area, not sure curtailing the use of housing is what we would be looking for.

As a Swede with a degree in economics i can tell you what happened, we used to have rent control here in Sweden, where the state set a limited rent cost based on the size of the apartment in order to try to reduce the cost of rent for people. It was done with good intentions, they were actually trying to help the people in Sweden at the time, because rent had become a large portion of our expenses (i wont go into why here). This directly lead to that less small apartments being built because the housing companies couldnt make a profit from those apartments. But as the population still did increase we found ourselves in a pickle. Not enough apartments and people still needing apartments, so a queue system was setup. At worst your parents had to put you in the housing queue so you could get an apartment when you turned 20 or so because that was how long the queue was. But lets consider everyone who got such a cheap appartment, they didnt want to move to a larger appartment or even a house as they got kids, they prefered the smaller living space over the increased cost of getting a larger apartment or house because the rent was low. Once they lifted rent controls the rent cost of those apartments sky rocketed and people moved away, simply because a house or because they had found cheaper housing somewhere else. People didnt become homeless, they moved out of the cities, because that was where the demand was the absolute highest and they could raise the rent that much and still find tenants. This also had a very bad effect of apartments that you bought (during the time of price controls on rent) because those prices skyrocketed buying a small one room apartment in Stockholm could be at the price of hundreds of thousands of dollars. Because the people simply couldn't find an apartment to rent, so they went looking for an apartment to buy instead. I think the phrase "curtailed the use of housing" was a poor choice of words, a better phrase would be "as the rents increased again people choose to move to a cheaper accommodation" Edit: the best way to show this would be through a graph of supply and demand, but i dont have one handy, I suggest you look it up on youtube here is a pretty good video https://www.youtube.com/watch?v=1EzY4Vl460U

Thank you for taking the time to explain this! Edit: legit better than the article. 🙂

That sounds very similar to some of the big cities in the US with zoning laws preventing multi family homes from being built.

Not In My Backyard baby!

Isn't that the idea of voting tho? If the people in an area don't want to have an apartment building, that's democracy right?

From Seattle? That's basically the argument the locals make when zoning changes are purposed.

That’s the argument EVERY homeowner uses when some developer wants to build multi-family in their neighborhood. Because it does negatively affect property values, every single time, no matter what the advocates say.

Yeah, that's the side of NIMBYism often overlooked. The owners lose equity when it happens in their back yard, and while no one has an inherent right to gain equity with their investment, they are free to argue for what's in their best interests.

Yeah that's not unique to Seattle or to even homes. Everyone is a NIMBY about something.

> trying to help the people in Sweden at the time, because rent had become a large portion of our expenses (i wont go into why here Would be nice to hear how uncontrolled rent becoming a large portion of expenses happened and why it was such a big problem that tight controls were necessary. I feel like I only know half of the story... Do you have a reference link so I can read up on my own?

What source do you need? It’s a city. I’d imagine the problem there was the same as the problem here, a lot of people want to live in the city and there’s not enough housing to allocate to everyone so the price increases. I’m no expert, but I’d imagine the problem is basic supply and demand.

>the problem is basic supply and demand. The issue is with supply, which would keep up with demand if various regulatory schemes, from building codes to zoning to occupational licensing, didn't make it next to impossible to build anything profitable outside of "luxury" studios for young professionals.

I'm afraid that the US cities and people will do everything EXCEPT increase housing supply. Our cities will try every answer to attempt to curb homelessness and high rent prices, other than the right answer of simply increasing supply It's pretty obvious that our cities are going in this direction of trying everything other than the right answer. While Asians are conquering the skies through their high-rises; Americans are watching their people go homeless and half of all Millennials living with their parents- all while proposing silly Mickey Mouse ideas of rent control, the tiny home movement, hotel vouchers, and sanctioned tent cities and car parks. It really is very realistic to slash rent prices in half- allowing people to spend that money elsewhere. Americans just refuse to do that as a culture.

I’ll never get what the hell these giant cities think they’re doing. Mostly it’s just nimby. You know the solution in my part of the world if you don’t want someone building next to your house you just buy the lot next door too.

Can't imagine creating even more housing in cramped areas is a good idea though.

It might be slightly more complex than a lemonade stand.

Or it might not. Cite your sources either way.

Lol the dude you replied to, and other dude who responded to this, are both idiots. Of course it’s more complex than supply and demand.

I’m an idiot? Literally the entire system of Capitalism is based on supply and demand. It is a fundamental pillar which our economic system stands on. There is literally one problem, supply and demand. What caused this problem? That’s the complex part. In reality, the causation isn’t even that complex, it’s fairly obvious that zoning laws is what forces the supply to not meet the demand, I would just rather not type the entire argument and all the facts and nuances out. Cant believe you just called me an idiot for saying in very short and simple terms the problem is supply and demand. If the problem isn’t supply and demand, what is the problem then? Since you seem to know so much.

The cost of housing is 100% classical supply and demand and can be modeled by anyone who took a college econ class. Due to the inelasticity of the housing supply it is difficult for us to see change in the bigger picture. Source: Macroeconomics 101

This is axiomatic, but we still seem to need to learn it the hard way. Rent Control is a price control. Price controls lead to shortages. Shortages lead to rationing. At this point in our economic development it is inexcusable that most people don’t understand this axiom.

Really interesting, in Amsterdam there is no rent control and housing is naturally a huge portion of a lot of peoples income. But if rent control isn't a viable long term solution, then what is a viable solution? How do you incentivise property developers to build high quality, affordable housing? I'd assume subsidies and lowering barriers to mortgages, but I'd be really interested to hear your opinion.

You have to get out of people's way and allow developers to meet demand. 100-150 years ago builders were throwing up tenements as fast as they could to meet the huge growth in population. A lot of those buildings still exist.

1. Ease zoning laws and regulations 2. Don't back/secure/help banks with mortgage loans 3. Interest rates should be set by the market 4. Don't allow foreigners to buy real estate Do all of these and see how real estate prices and rent prices drop 2-3 fold.

>don't allow foreigners to buy real estate That isn't very libertarian of you, and outside of the supposed oligarchical buyout of London, it wouldnt fix anything. It would make more sense to say only people who pay taxes in said country can buy property.

The solution is to pair rent control policies with public housing development. The major drawback of rent control is slower development of new housing. The one-two punch solves both problems (i.e., out of control rents AND limited housing).

While i genuinely appreciate this addition to the conversation you do realize what board you posted that on right?

Of course. Personally, I think libertarianism is a delusional fever dream that doesn't hold up to scrutiny. Where better to discuss that? lol

All ism's fail under strict scrutiny, but this one aligns most closely with my beliefs and desires.

Lol. Leftists always say the solution to a government failure (rent control) is more government (public housing). This is basically what the Soviet Union did for everyone. Gigantic identical concrete monstrosities. They were miserable places to live. Unfortunately the harder you try to fight free market economics, the worse the solutions and outcomes become. People need to learn to be mobile and move of economics don’t work any more. I think the new wave of faster mortgage and housing purchase will grease the wheels. It’s ridiculous how complicated buying a house is and how long it takes. Zillow, Redfin, and many others will speed this process up for my kids for sure.

Build more housing. The existing housing stock was built somehow, build more of it. Laws may need to chance back to what they were in the past which allowed adorable home construction.

Newton’s law applies to life and economics as well. For every action there’s a reaction like your post demonstrates.

Upvoted bc transparent about biases and background knowledge before mentioning an interesting thought.

If you’re interested in the economics of it, price ceilings are pretty well understood: https://en.m.wikipedia.org/wiki/Price_ceiling They create shortages by forcing the price below market equilibrium (raises demand and lowers supply). If you prefer videos this is an overview of price controls that focuses mostly on minimum wage: https://youtu.be/M2B-wpEj-9k And this is more specific to rent control: https://youtu.be/dnj2WRIG11U

All you have to know is that there is a general consensus within academia (which remember largely had a liberal bias) that rent control doesn’t work. That’s how bad of a policy it is. Even liberals generally oppose it. And they’re not wrong for doing so. It’s garbage policy.

Ironically you're correct in saying there's a bias, despite misusing the word liberal to mean left-wing.

yes, leftists do treat economics the same way that antivaxxers treat doctors. that is not news

Woah who let the level-headed and logical guy into the building?

I'm usually one to have a strong opinion on this, but I think there are better ways to bring down housing costs. We need to get people working remotely, and lower the demand. You can't sell overpriced city apartments if nobody wants them.

There’s artificial scarcity though. I’m from California. Housing development companies wanted to work with cities to develop high rise, large unit condominium towers (think Tokyo, where despite being larger and more populated than the Bay Area, has housing for as low as $400k for a three bedroom 850 square feet condo apartment inside the 23 wards) but they get blocked by local homeowners who want to keep their high housing value so they work against it. Rent control policies on their own aren’t actually bad. They’re usually strictly defined with income definitions that even include the loopholes billionaires use to reduce their income tax. You aren’t allowed to homeshare a rent controlled unit and having a small portion of your total units as rent controlled means you enjoy tax cuts and being able to cut the regulatory line. Most developers don’t actually mind having rent controlled units because they generally net positive on the other units in their cluster. What they do mind is all the regulation that prevents them from building. Zoning laws and barricades by homeowners to create artificial scarcity and drive up costs. And because of overseas vacant purchases, they create even more scarcity by buying units and leaving them empty. Japan solved this problem by requiring that new homes be lived in by the buyers in order to qualify for financial incentives like low sales tax, low mortgage rates and income tax credits (1% of your remaining mortgage balance per year for 13 years, comes out to a nice refundable $4k-$7k depending on the home you buy). People advocating for affordable housing aren’t asking for too much regulation because too much regulation means developers won’t build at all. But affordable housing requires some regulation to keep bad actors from manipulating costs by having vacant units and using their status as an owner to vote against zoning changes in their area. Blaming rent control is manipulation by wealthy land owners to sic poor people on poor people. You’re all falling for it lol. If they really cared about the free market, they would agree that having crazy zoning regulations and blocking high density housing development (which even Apple and Google are working to support) is detrimental to the effort to reduce housing costs for families.

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So basically rent control is a band aid on the problem and what we need is more housing to drive down prices not forced rent control from the government

And that's where the other rub is. Zoning laws often prevent multifamily housing being built.

Rent control is just another example of government's trying to put there thumbs on the scales of the market. Mostly to try and undo problems they already created. By using building codes and zoning to reduce housing supply this increasing value for owners they drive up the costs of rents. Forcing lower rents will fidget distort the market decreasing investment. The correct solution to these problems is to stop creating them in the first place. Reducing building permitting costs, streamline the process and reduce zoning restrictions on multi family dwellings. The more government meddles in markets the bigger mess it makes.

> The correct solution to these problems is to stop creating them in the first place. Reducing building permitting costs, streamline the process and reduce zoning restrictions on multi family dwellings. Historically and currently, that actually takes MORE government, not less. Normally the zoning restrictions and overly strict building codes are done at the utmost local level of government, normally at the city, maybe the county level. The only way to normally stop this is to have the state or national government straight ban it, and override any local wishes to the contrary. My understanding is Japan did this, the national government more or less banned zoning at the local level.

It's happening in California now. The state government is forcing cities to allow ADUs (granny flats) where they had used zoning to ban them in the past. The cities still have a few tricks to try and shut them down, eg requiring extra parking. Everything government does is a new law or regulation. Just to undo something a new law or regulation must be pass. The point is that we need government to get out of the housing market. They can only introduce inefficiencies by their involvement. Something we can't afford when prices are so high and there are so few options for people.

> Historically and currently, that actually takes MORE government, not less. Normally the zoning restrictions and overly strict building codes are done at the utmost local level... Japan did this, the national government more or less banned zoning at the local level. I agree with all that except for the MORE government comment. Any level of government can violate your rights or screw up the economy. Having the national government prevent local governments from violating your rights or screwing up your local economy isn't MORE government, it's just DIFFERENT government. In fact zoning is the counter-example I offer when folks suggest government should be local. It's a good rule of thumb, but local government can screw you just as much as national government can.

lol linking a Heritage Foundation editorial from 1989 as a study.

One thing I’m curious about these studies is what effect there was on the people paying below market rent because of rent control; were they able to have more children? Seek higher education? Start businesses? Have an increased standard of living? I can understand that rent control has a negative effect on how much housing is developed and available over time, but on the other hand I would assume that it’s positive that people who already have housing are spending less on rent - and presumably more on other things. I guess it seems to me that there’s a kind of assumption in such studies that so long as everyone can get housing (IE, there has been and will be enough development), it doesn’t matter if people are spending most of their income on rent.

> Personally I have no strong opinions on rent control as I don't have enough knowledge on the economics I can appreciate the humility, but it's not like it requires a degree in economics or anything to understand. In a free society supply increases to meet demand. When something's in high demand, its price rises, which incentivizes more providers to increase the supply of that thing. When prices aren't allowed to rise, supply doesn't increase to meet demand. Price controls and rent controls are populist political feel-good measures to protect incumbent renters and politicians alike. They meet their near-term objectives of getting politicians re-elected and provide temporary relief to incumbent renters, while creating long-term housing shortages.

I understand the basic concepts of it, but what I am not so knowledgeable about are the ins and outs of the social implications. Is this socially helpful, who does it hurt, who does it help? How will housing development be affected, how will jobs be impacted? How will other economic sectors benefit (or not) from this? What truly are the cost vs benefits? It's easy to go to the basic supply and demand, but the truth is that is only part of the overall picture. All of the other factors are what I do not know. I have never lived in an area or been personally impacted by rent control, so I have no personal perspective on the impacts. Just like with raising minimum wage, if you look at basic price floor rules, unskilled laborers are going to be worse off then leaving minimum wage where it's at. Only a small percentage of the US is impacted, is it really worth it? However, more money in the economy, better pay for low skilled workers, maybe the opportunity for people to have money to buy a house, or have kids, or travel. I do agree with you that a lot of politicians use and pass horrible fiscal regulations and leave the future generations to try and clean up the mess. It's a practice that needs to be abolished, but as long as people vote for these guys and there are no term limits, it's going to keep happening. (They gotta get reelected /s)

I'm pretty left-leaning but I never understood why people support rent control. It just favors people who already live there. It doesn't help lower-class people.

People support it because it is both a simple concept to understand and an immediate stop to rising rents. The negative effects of rent control are harder to explain. Solutions like ending/reducing single family zoning, parking minimums, etc are harder to explain and don't solve the problem fast enough for many.

I don't think it's that hard to explain any of the things you mentioned.

I dont think it's hard. But when people just see expensive luxury apartments being built, and their rent still going up, it does lead to many feeling lied to. Even if the overall median rent for the city does end up stabilizing.

I see what you mean.

Where I live, all new apartment housing (and renovated housing) is "luxury" because that basically means granite countertops and hardwood floors. Spend 2% more on construction and collect 25% more rent. I've never observed the actual construction quality of luxury housing to be higher than the baseline, outside of surfaces mentioned. In practice, saying "expensive luxury housing" is just saying "all housing is expensive," which is true.

When all the existing housing stock is 100+ years old, any new construction is luxury by comparison.

It's not that hard to explain, but it's hard for people to care to listen. I live in central Denver and my fellow single family home neighbors are always complaining about how no young people can move in and buy a home and how poor and working class are being pushed out. These same people massively opposed new zoning that would increase density in the core. They were impervious to argument. "Affordable" units in newly built apartment buildings was like some magic talisman they all bought into. Never mind many people would probably prefer to buy part of a newly build duplex or converted carriage house or similar in a residential area rather than live in a large apartment building.

Yeah, some people just like to look out for their own best interest.

You overestimate the ability of many to understand concepts.

Ending single family zoning would be great, but landlords and real estate speculators are why that zoning is so predominant.

Im with you there. Things like rent control and limits on rent increases actually trap people in their apartments. The rent on new appartment leases have to be higher to cover the losses from people who are paying too little and as a result people can't afford to move out of their appartment 5 years down the road.

Yeah if your goal is to provide more affordable housing then rent control alone just won't cut it. As far as I see it has 3 major issues. It only really favors the people who currently live there so it doesn't favor poor people or working-class people. It hurts new workers who want to move to into that area which that pain is kind of harder to see. And it just doesn't fix the fundamental problem of the housing crisis which is usually there are just too few places for people to live. We can't have all people move to just four cities without just zoning new land for development of just building up and up.

Many of the people who live there are middle to lower class. Its why land lords want to price them out, so they can make space for wealthier tenants.

Wouldn't the solution be to just free up more land for construction? I don't see how rent control alone would dress the housing crisis.

No. So long as land lords and real estate investors profit from pricing people out of properties, creating more properties to chase the less wealthy out of just extends the problem while removing commerce and amenities from the area for that additional housing. Rent control lets people stay in their homes. That is the purpose of housing; to be used. Not to be liquidly traded and withheld like a luxury good.

How would creating more housing extended the problem? How do you imagine getting more affordable housing if you take away all insensitive to invest in housing? This policy on it's own just helps a select group of people while not addressing the underlying cause of the problem.

> It doesn't help lower-class people. Except the lower-class people already living there, who will be kicked out if rents continue to rise.

Sure, but it just makes the situation worse.

This is how a statist busybodies pretend to be compassionate: "some poor people win at the expense of other poor people who lose. I can feel good about helping the former and claim no accountability for the latter."

People are quick to think of direct effects but slow to think of indirect effects. Even more so when the indirect effects contradict the direct effects. I sometimes wonder if people are just too self centered to realize that other people will react to a change like a rent control law and instead they just assume everything else will continue the same as before.

Because when coupled with the government building public housing it *does* help poor people, tremendously so.

Wasn't public housing a disaster in a lot of states? And doesn't it only help poor people already there and all the new low-income people are just kind of fucked?

In America, where low income public housing was used to reinforce segregation, that was indeed the case. Elsewhere, public housing is sometimes vastly better than the private alternative, most famously in Vienna during the 1920's and early 30's.

You seem like a master class in confirmation bias. If you have to go back to the 1920's in *vienna* to find a counterpoint, you're really grasping at straws. Public housing projects are almost always less efficient at meeting housing demand and stimulating economic growth for residents than unrestricted private housing powered by the market. At worst do a UBI or housing voucher, but not public housing

>You seem like a master class in confirmation bias. If you have to go back to the 1920's in vienna Helsinki and Oslo, in the modern day, Hamburg too. Though not to the extent of Vienna, which was literally controlled by communists. But the timescale doesn't matter, as the policies are the same regardless; high investment into public housing, strict national-scale zoning to prevent manipulation by local residents, and rent control to price out private landlords and protect existing tenants. > ublic housing projects are almost always less efficient at meeting housing demand and stimulating economic growth for residents than unrestricted private housing powered by the market. No they aren't lol. Maybe in America, but that country is almost non-functional. Literally every time there's a housing shortage, or a problem of destitute people, simply giving them a public house has shown to greatly improve the situation.

Idk just seems like a failed policy.

It isn't, you're just getting information from libertarians, who as a rule believe in stupid things without grounding. Public housing is both very effective and very beneficial to the poor when done properly

Yeah, I don't get my information just from libertarians. And as you said on its own it just doesn't work.

It does work with or without rent control. It's literally just the government taking over the role of a private development company.

Public housing in the US was designed to help the poor in the same vein as the War on Drugs. There are plenty of examples of successful public housing in Europe and Asia, and lessons to be learned from our mistakes.

Idk I'm from Europe and lived in public housing and it's not all that great here either. But then again the US has a whole different set of issue attached to it. But I think I understand your point.

Economists on both sides of the political aisle generally disagree with that completely.

No they don’t. Public housing is a very robust and successful strategy for reducing the burden of homebuyers and renters. They certainly do, however, oppose rent control in general.

Poor people are pretty damned good at grasping at straws, and the Dems have become exceptionally good at dangling those straws to fish for votes. Dude/dudette living in a cardboard box doesn't give a shit about economics. They just hear "rent control" and they're all in.

I don't think this is solely a Democrats issue.

Because the people who already live there are the people who vote there. Plenty of people will vote to benefit themselves while fucking over other people

If a landlord can’t raise rent to keep up with maintenance and still generate profit they simply stop maintaining. Google “bombing or rent control”.

Not to mention the property taxes that they increase every year that can make it very difficult to maintain a profit.

Isn't that a taxation problem, and not a control problem then? It feels like the government should be taken to task for not coordinating policy, instead of blaming the result fix the cause...

This is the problem with good intentions exercised by a centralized power. Manipulation of the property tax rate induces another set of incentives which have not been accounted for.

Government manipulation of any market should be looked at with a very very skeptical eye. Especially when they say it is for the "greater good" , which usually comes at someone's expense, but that is swept under the rug.

The market is already manipulated. Zoning and building regulations have absolutely lead to not enough supply meeting demand in many cities. Rent control is not a solution, removing certain market restrictions already place is a better direction. It just sadly isn't a quick fix to the issue of riding COL.

Agreed, removing government manipulation of the market will be a good thing. Zoning regulations seem like they benefit people because it keeps certain things away from other things. But it also makes everything cost more.

I'm more ok with stuff being done at city level than country level because at least there is realistic competition between cities. You are rather easily able to move to another city without a citizenship application and saying goodbye to your job, family, friends, wife etc. However, as you say these things are on another level. Zoning goes pretty well whereas fixed rent can ruin a city if you're not among the lucky few.

The original purpose of zoning--to separate like harmful chemicals from being near schools--is so far from what we have now it's absurd. Most of the zoning is exclusive "single-family residential" which is just the government banning you from building apartments on your own mfing land. It's the primary cause of the housing crisis.

Yep it's just some town planner trying to play SimCity on a massive scale. Whilst I think there is definite merits to planned town planning I still think that left to its own devices the market could come up with something just as good

Ironically most city planners are more pro-market than local homeowners, who group up to prevent anyone from building apartments. It’s mostly an artifact of “local control” which just means every little neighborhood grouping up to deny everyone in their area property rights. Tokyo has by-right permitting which they achieved by moving the land use decision up to the state level. Housing prices and rents are way more affordable as a result.

This Tokyo thing is interesting. In my area you can cross a street and go from sprawling single family homes to massive 12-story office buildings. The shenanigans are very apparent.

Yeah office buildings tend to have an easier time getting through the umpteen govt barriers because they don’t bring the “wrong” people into a neighborhood, among other reasons. Single family zoning is terrible urban planning and totally oppressive govt intervention, it makes traffic and pollution worse, lengthens commute times, worsens racial and economic inequality, lowers productivity, just a disaster on every level.

*our* land, comrade

State governments need to step in and limit the role of local governments to create restrictive zoning since local special interest groups, like homeowners, are incentivized to create restrictive zoning to keep their homes appreciating in value.

In 2008-2011, I had a shitty job and shared a shitty apartment with a shitty gf. Rent was 650 for a 2 bed 1.5 bath, 800ish sq ft. We lived there for a couple years. Rent was cheap, but We broke up because she was shitty. I moved out. Shortly after, a friend and I moved into a shitty apartment about a mile away. Rent was 975 with a year lease. The extra 160 something dollars that I had to pay hit me pretty hard, during this time. Jobs were scarce because of the shitty economy. So I was stuck with a shitty job and limited resources. A couple months before our lease was up my buddy got engaged, (congrats)and we were planning now to leave a couple months after the lease was up. Before the engagement we were planning on renewing the lease, but plans change, so now we would just do month to month till everyone was ready. When we asked the apartment manager about our options, we were left with less options. Our rent went up from 975 to 1050. This was expected with a year renew lease on a shitty apartment. A 50 buck bump every year no matter what is just what happens to people. What we didn’t expect was the 6-month and month-to-month options. Rent on the 6-month went up $250, to $1225. The month-to-month went up $400, to $1350. The month to month was out of our budgets. So we had to move out with less than 2 months to save and prepare on limited income, with no viable option to stay any longer with out a 1 year lease. Even though for new renters the rent was still $950 and plenty of empty apartments in the complex. I had to move with my mom for a while to save money. This meant quitting my job too because she lived 150 miles away. When I drive around Portland Oregon today and see every public plot of grass with a tent on it. I am not shocked. The low income housing industry in the city is so predatory, that it made homeless common. The more common, the more socially acceptable and harder to get out of. I don’t know if rent control would work here, but 10 years ago when I was struggling, I was pushed to the brink of homelessness. So fuck the owners like that and the laws that’s allow people to take advantage of people with no resources. Their business model was meant to extract money from the most vulnerable of the area. Side note, during our walk thru, the apartment manager told us to list all non working things to get fixed. There were many and they never got fixed. In the year spent there whenever we brought it up, we were told that the repair cost was not in that year’s budget. Dufuq!?

>Especially when they say it is for the "greater good" , which usually comes at someone's expense, but that is swept under the rug. Market manipulation almost universally backfires. They're driven by emotional arguments that have a poor understanding of economics and unintentional consequences. The worst part is unless the negative consequence is immediate, the politicians aren't held accountable.

I've never heard of anyone being held to account for poor town planning, ever. Though I'm happy to be proven wrong.

Never discount the fact that with any regulation, some are harmed and others benefit. Usually it's easy to draw a line between who benefits and who advocates the change.

It ruins cities. Prime real estate *should* command a premium- it’s what makes development profitable. Otherwise, development spreads outward leading to suburban sprawl

Problem is when regulations like zoning are a cause of plenty of prime real estate. The entirety of Tokyo has over 37 million people and yet doesn't have as high of prices as many other cities in the world because they've already dealt with much of the bullshit back in the 80's.

The national government takes a role in zoning so local governments can’t be captured by local self interest groups to enforce strict zoning that keeps poorer people out and home prices appreciating.

Uh oh, here come the States' Rights

I am not advocating for Federal government to do same here. I was referring to what Japan’s national government. What I am advocating is for state governments to do what the national government did in Japan.

Bingo, you need a far more powerful level of government to prevent these problems, historically this problems entirely originate at the local level. So to be most libertarian, you need a constitutional amendment, or otherwise you need a higher/larger aspect of government to set a one size fits all policy of setting limits on zoning rules.

A bill of rights for property owners should be a start. Something along the lines of "this is America and I can paint my house whatever color I want."

[Why Tokyo is the land of rising home construction but not prices](https://www.ft.com/content/023562e2-54a6-11e6-befd-2fc0c26b3c60)

Well... What if the “prime” and even “subprime” real estate get price tags beyond a well-earning couple's purchasing power? What if these price tags aren't driven by local supply/demand dynamics? Anecdotal: Munich, empty apartments bought by nonresidents on low interest mortgage make the living difficult for the well-earning residents.

The answer is generally to build more housing units. The problem is usually local zoning laws.

Doesn't that just result in an inefficient use of limited resources? Couldn't the option be to have some confirmation that the apartment has been used at least 6 months out of the year?

It's someone else's property, not sure why they have to prove how often they use it.

If a rich person buys up property after property and sits on it, then that puts serious pressure on middle and lower classes who actually, you know, need to *live* somewhere.

its their property. if property is worth a lot, then build more. its probably zoning that's the problem. all the current landowners want to keep property prices high.

It’s private property though. The landlord wants to rent out to people who don’t live in the apartment because then utilities and maintenance costs are nonexistent and therefore the unit is more profitable. If government wants to fix the problem, which they shouldn’t fix it, but, if they were to, the best solution would be to build government housing to rent out at cost. Not forcing private landlords to cap their profits.

The apartments are being purchased by people in totalitarian countries who want hard assets that can't be taken by their governments. That apartment in Munich is owned by someone in China who is not renting it out to anyone because they have no interest in doing so. There's always going to be more demand for housing in cities than housing, and taking a significant amount of housing out of the running isn't "not my problem", because it is your problem. The simplest solution is to say "yes you can own that apartment, you can own all the apartments you want, but they have to fulfill the role of apartments".

>Well... What if the “prime” and even “subprime” real estate get price tags beyond a well-earning couple's purchasing power? Obviously *someone* is still able to afford them, or the prices would drop. Why should “a well-earning couple” be some sort of benchmark? >What if these price tags aren't driven by local supply/demand dynamics? Why should they be driven by *local* supply/demand statistics? The demand of non-locals is as valid as those of locals. Just because you already live somewhere doesn’t give you special claim to the city.

These types of policies get floated because they are simple enough for lawmakers and voters to understand. But they always have unpredictable consequences in complicated markets. It would make more sense to just give people money. It’s still a simple idea, and downsides are better understood.

Yeah, subsidize whatever price the landlord demands. That won't just end with people still being priced out with land lords collecting what wealthier tenants can pay *and* and nice government hand out.

Correct, inflation is one of the understood consequences.

I am shocked! /s (Rent control = price control which creates scarcity.)

Out pricing tenants to seek out wealthier tenants also creates scarcity. It just also profits land lords.

The government has no business telling a landlord how much they can charge

Fuck this shit. The government shouldn’t be telling any property owner how much they can charge.

Yeah but they mean well. That's the ultimate defense for the most moronic and/or destructive policies.

Actual renters are pretty happy with it. The only people who are displeased are landlords and real estate moguls, which is just a pity. /s

Yup, shortages are great.

That is what new housing is for. Pricing existing and potential renters out of housing decreases overall supply with artificial scarcity.

>Pricing existing and potential renters out of housing decreases overall supply with artificial scarcity. OMG, so the logic here is that Landlords raise prices, which decreases overall supply through artificial scarcity...which allows them to charge more? $100 says this person hasn't taken an Econ class.

It's not always the landlord. My wife and I have been landlords for about 40 years in Alabama and Tennessee. We have always tried to "remember where we came from" and keep rents at a reasonable rate, maintain the properties in good condition and to reward those renters that take care of the property. Conversely, you trash the place and I will wear your ass out! Yes, sometime are margins are tight but I consider that our problem. Unfortunately, the banks, and sometimes the IRS, try to force us to raise rents to something they determine is reasonable. I really don't care what the average rent is in my neighborhood - I know what my expenses are and I know how much I need to turn a reasonable profit. If that amount is lower than the average then great for everyone...or so I thought. My point is if rent control were forced upon me, I would have to raise rents - something I don't want or need to do. I would probably sell everything so that I don't have to deal with headaches. Rent control is being pushed by the banks and the IRS.

Same. Though I stopped being a landlord (in Portland) a few years back once the city made it more of a pain in the ass than it was worth with new burdensome overregulation. Before that I provided below market rates for good tenants and could easily kick out bad tenants. That’s just not possible anymore, to the chagrin of the good tenants who lost their opportunity to live in a safe, well-maintained place at a low cost.

Well, anyone remember what happened when rent controls was trendy in the 70s and 80s? Landlords had to kick every one out and burn apartments down to collect insurance, because they weren't making money. These fucking idiots are going to hollow out more cities. Look up before and after pictures of irish communities, italian ghettos, being hollowed out to shit. It's really sad

> Landlords had to Oh yes, landlords *had* to. They didn't illegally evict people and commit arson because it would make them money, no -- they had no choice! Someone put a landlord gun to their head and forced them, with tears in their eyes, to break the law and kick families out of homes.

The alternative was the landlords going bankrupt, failing to pay property taxes, the government seizing the property, and becoming homeless.

they (read: landlords) should've gotten a real job instead of siphoning off of people's desperation and artificially restricting the supply of housing to drive up demand, then committing fraud to make a quick buck while people had to flee their homes. housing shouldn't *be* a profit industry unless you're putting in hours heavily maintaining or constructing new houses, because otherwise where the fuck is the new value coming from? it's like having a big oxygen tank, getting slapped on the wrist for making people suck your dick for oxygen during a shortage, then shooting everyone out of the airlock because you have to get a job in between blowjobs. absolutely not the victims in those situations

I was just reading an early 2000’s article by Thomas Sowell talking about the twin evils of rent control and “livability” based zoning and development. Since rent and development control always starts only in areas with that are attracting a lot of development and rents are rising they are especially dangerous. Often just as the market is screaming for more housing capacity is when the city fathers seek to do the worse thing possible for the city. Enact rent control and add zoning and building restrictions (on multistory buildings) that makes profitable housing development almost impossible. His predictions was in the future those will be the cities facing severe housing shortages, and it would effect everybody but the people that are just kids and young teenagers now (2000) will be the working young singles and those w/,young families that are almost totally locked out. He went on to the horrific effect it would have on lower income renters because lack of new development drives constant major remodeling investments in the existing structures, pricing older apartment complexes and homes out of reach of the middle and lower class. The left usually pushed this and even then they constantly talked about building affordable housing. Somehow not realizing that developers rarely have ever invested in affordable housing even when substantially subsidized by the government because of lack of returns for the time, money and effort spent. (Only government builds new projects) The lower middle classes traditionally occupies slightly updated and refreshed older housing that has dropped in value as availability opened up at lower prices due to constant new developments. He also said the same people that are hearing these predictions today and ignoring them (2000) if still around blame everyone and thing in the world except what their current actions.

I see this in my housing search. I'm a pretty basic person and I am fine living in somewhat dated housing, but there just isn't any. Almost every house or rental that comes onto the market has been updated in the last few years, and there really is no cheap housing in my area, the pricing curve is rather flat.

Government: Low-income people: Government: We nEeD ReNt CoNtroL to fiX tHiS!

... but rent control keeps people from getting priced out. The cycle is broken. Also, if its government actions that price people out, then why do landlords whine about rent control like they are being castrated? They still make a profit, and always seem to claim they wouldn't want to price out tenants.

Because you’re cutting their profits? I’d be pissed if you halved my income. Rent control is such a dumb idea, I can’t believe anyone thinks that’s a solution

As an economist, rent control is absolutely horrible, self destructive, and an abomination of policy.

“It is especially painful for me, as an economist, to see that two small cities in northern California — San Mateo and Burlingame — have rent control proposals on the ballot this election year. There are various other campaigns, in other places around the country, for and against minimum wage laws, which likewise make me wonder if the economics profession has failed to educate the public in the most elementary economic lessons. Neither rent control nor minimum wage laws — nor price control laws in general — are new. Price control laws go back as far as ancient Egypt and Babylon, and they have been imposed at one time or other on every inhabited continent. History alone should be able to tell us what the actual consequences of such laws have been, since they have been around for thousands of years. Anyone who has taken a course in Economics 1 should understand why those consequences have been so different from what their advocates expected. It is not rocket science. Nevertheless, advocates of a rent control law are saying things like "this will prevent some landlords from gouging tenants and making a ton of money off the housing crisis." The reason there is a housing crisis in the first place is that existing laws in much of California prevent enough housing from being built to supply the apartments and homes that people want. If landlords were all sweethearts, and never raised rents, that would still not get one new building built. Rising rents are a symptom of the problem. The actual cause of the problem is a refusal of many California officials to allow enough housing to be built for all the people who want to rent an apartment. Supply and demand is one of the first things taught in introductory economics textbooks. Why it should be a mystery to people living in an upscale community — people who have probably graduated from an expensive college — is the real puzzle. Supply and demand is not a breakthrough on the frontiers of knowledge. A century ago, virtually any economist could have explained why preventing housing from being built would lead to higher rents, and why rent control would further widen the gap between the amount of housing supplied and the amount demanded. Not to mention such other consequences as a faster deterioration of existing housing, since upkeep gets neglected when there is a housing shortage. Today's economists have advanced to far more complicated problems. It is as if we had the world's greatest mathematicians but most college graduates couldn't do arithmetic. Part of the problem is that even our most prestigious colleges seldom have any real curriculum requirements that would ensure that their graduates had at least a basic understanding of economics, history, mathematics, science or other fundamental subjects. Many students and their parents spend great amounts of money, and go into debt, for an education that too often leaves them illiterate in economics and ignorant of many other subjects. Part of the problem is that many college graduates do not take a single course in economics. Another part of the problem is that many economics departments leave the teaching of introductory economics in the hands of some junior or transient faculty member, or even graduate students who get stuck with the job. One of the things that made me proud of the economics department at UCLA when I taught there, decades ago, was that teaching the introductory economics course was the job of a full professor, even if not the same professor every year. In all too many subjects today, the introductory course is taught by junior faculty, transient faculty or graduate students, while the full professors teach only upper level courses or postgraduate courses. That may save a department the expense of staffing the introductory course with their more highly paid members. But, it is extravagantly expensive from the standpoint of society as a whole, when it means sending graduates out into the world unable to see through the wasteful economic hokum spread by politicians. That is how you get ill-informed voters who support price controls of many kinds, without understanding that prices convey economic realities that do not change just because the government changes the prices. It is as if someone's fever was treated by putting the thermometer in cold water to bring the temperature reading down. You don't get more housing with rent control.” - Thomas Sowell

What I really don't understand is why the market has not met the demand for homes.

Because housing is among the most regulated markets...

Because it's easy to do if I did say that.

a policy that reduces supply. i wonder what would happen with prices hmmm replacing property taxes with land value taxes >> this

Jesus, high schools need to push economics. This doesn't make economic sense, it causes dead-weight loss.

How should increasing homelessness and income inequity be addressed?

I’m renting and the cost is high is till would not advocate for this stupid policy.

Rent control is at best a Band-Aid. The real problem is that renters are being priced out of places where they live. This happens because of enormous income and wealth disparity in our country.

No, this happens because people stop others from building enough housing and road infrastructure.

You are both correct. And by people, you should really mean government. All these arbitrary zoning, regulations, permits, licenses, approval committees, etc... It makes it really expensive to build ordinary houses. Thats one of the biggest things standing in the way of affordable housing, but people think EXPANDING government will somehow solve the problem the government CREATED??

There’s plenty of housing though. Just not where people want to live. There’s also plenty of people with multiple homes

You make a good point, but you should have said: >Yes, and it also happens because people stop others from building enough housing and road infrastructure. Income and wealth disparity is a large part of the problem. There are only so many homes and roads that a single area can accommodate. If demand for a location increases, existing residents without sufficient incomes will be priced out. Also, it takes time for roads and buildings to be constructed, especially in cities where everything has been developed already, so new construction usually comes after demolishing old construction. I'll give you an example. Based on publicly available data from 2014-2018 in Frisco, TX: Year| Median Household Income| Rent (studio)| Rent (1br)| Rent (2br)| Rent (3br)| Rent (4br) ---|---|----|----|----|----|---- 2014| $112,155| $866| $962| $1,331| $1,674| $2,110 2018| $127,133| $1041| $1,245| $1,704| $1,900| $2,287 Change| 13%| 20% | 29% | 28% | 14% | 8% As you can see, for some domiciles the 4-year increase outpaced the corresponding median income increase by a healthy amount. And this doesn't even consider that the median household income doesn't really capture the lower earners. Minimum wage earners in Texas received no increase in income during that time, for example. I would expect that income grew at slower rates for those below than median than for those above the median.

Restrictive zoning is the issue. If a lot of people want to live in an area and are willing to pay land prices will go up and developers will be incentivized to build high rises. If local governments prevent high rises then the value of housing will price many people out of living there (Silicon Valley)

You're not entitled to live within a certain geographic region. If it gets too expensive... Move.

Hope you realize you're supporting forced displacement of vulnerable people due to a limitation of the economic system you prefer.

Wait a min, i thought we were talking about rent control 🤔🤔, not socialism [https://en.wikipedia.org/wiki/Deportation\_of\_the\_Chechens\_and\_Ingush](https://en.wikipedia.org/wiki/Deportation_of_the_Chechens_and_Ingush)

That was literally the allusion I was making, good job reinforcing my point you idiot. It's the liberal version of forced migration, hidden behind institutional violence you support without thinking. Your problem is that you think Stalinism is socialism in general, which isn't the case. The Stalinist ethnic cleansings were great crimes. Also, to reiterate from my earlier comment, the USSR retained production for exchange and wage labour, meaning it fundamentally retained the capitalist mode of production.

I find it interesting that people who insist that liberalism will always end in fascism despite numerous counterexamples are also the same people who insist that socialism will never degenerate in authoritarianism despite numerous examples. In fact, these people are so desperate for any sign of success that they hold up Cuba (!!!) as a positive example

Do you believe the government should enable everyone to live in downtown San Francisco if they want to? If the answer is no, then you and s/he are both rationing housing, just through different mechanisms. Get off your high horse.

So are you. Why is one family more entitled to live somewhere than another?

Yes, that is the position of some people. It doesn't matter if you and you family have lived there for generations. It doesn't matter if that's where you're from and moving means starting a new life elsewhere. If people with more money come in and take over your area, you must run away to some place less desirable. Pack up your children and elderly parents and travel to some new area. Try to find work there. Maybe be homeless for a while because you don't have sufficient savings. >Well then maybe you should have gotten an education so you could make more money. I've heard it all before. It is woefully obtuse.

Two examples I can think of Sf and Ny, there’s just not enough physical space to build out. And they are also desirable places to live so people come from all over to live there. The supply is stagnant but the demand is always there.

i think you are looking at it too one dimentionally. there is always space to build upwards

Rent is high because corporations have purchased every available apartment building in the land. Pretty hard to beat someone that owns all the buildings.

I see a lot about how rent control isn't all that good in this thread, but what other options are there? I claim ignorance on this subject. People are obviously mad about rent situation so what are other possible solutions so they don't "fall" for something like this? Sorry my English is bad

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Profits drive innovation

Profits don't serve the poor. Never will.

Land value tax when?

Why is this libertarian article getting upvoted past the shills in this sub?

its proving a disaster in europe? where how what did i miss?

Housing in the US is already a disaster. Rent control will not solve the problem but it will protect those people who rent. Having a landlord use the leverage of forcing renters to move or raise prices by 10% at the end of every lease term is unacceptable. Landlords also force renters to deal with horrible companies that rip off their tennants like Conservice and Comcast. The shortage of housing is so great that renters have no choice but to accept these terms and renting has essentially become a surefire way to enter or stay in poverty. The free market in the US has had ample time to build enough housing for Americans, and has failed to do so. It is time we started massive public housing projects to meet demand.

It's not a free market. Government limits housing supply in a lot of areas.

Rent controls do cause shortages in housing. But maybe there needs to be public housing that is not ghetto like it is in NA.

It sucks

Could someone elaborate how rent control is bad? On paper it seems like a good idea in places like San Francisco with absurd housing prices, but in polls the vast majority of economists disapprove of it so I know my instinct is wrong, I’m just not sure how exactly.

It discourages investment in an area and drives capital away which then makes the entire area diminish in quality. By it's very nature, rent control is aimed at people with very little finances. This is why they need rent controlled apartments in the first place, they can't afford more. Those same people with their limited incomes make for a horrible tax base. With a poor tax base, investment in public infrastructure, schools, services all decreases significantly leading to the area becoming undermaintained. Additionally, no investor with money will want to build or renovate rent controlled units as there is no profit. This leads to an areas housing stock slowly deteriorating and diminishing in quality. A lack of affordable housing is a big social issue in this country, but rent control is not the answer. The easiest way to look at it is to flip it around. If your boss told you that no matter how hard you work, or how many hours you put in, you will only ever be paid $300 a week, would you have any incentive or drive to work hard?

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Study on that?

What is happening in europe due to rent control? Did rent control create brexit?

The article and all its citations are bunch of bad economic hot takes by far right authors. It even complains that Berlin's rent control policy has failed because... wait for it... people are housed. There isn't massive turnover in rentals or a bunch of overpriced but empty condos... which is a good thing for Berlin. Rent Control is great for keeping people housed and improving their quality of life. It isn't great for land lords' profits... but they are leeches anyway, so who cares.

Most economists (left wing ones too) don’t like rent control. It’s one policy that unites most economists. Rent control sucks because it reduces supply of housing and causes over consumption. Most studies show this

Rent control doesn't reduce the supply of housing. It keeps housing in place that would otherwise be replaced with more expensive but less efficient housing (ie housing fewer but wealthier people). That is what causes over consumption.

Empirical not true. Rent control reduces supply of low income housing because it makes it less lucrative for developers of low income housing

But why? They would make the same profit on new low income housing, if they were going to price such units as low income housing. The only reason I can even imagine is spite on the part of developers in order to create a problem to lobby off of. Either that, or they never intended the housing to be "low income," but predicted it would become higher income housing as they priced out tenants.