[HN Gopher] Rent controls have split housing in Berlin into two ...
___________________________________________________________________
Rent controls have split housing in Berlin into two distinct
markets
Author : vanburen
Score : 159 points
Date : 2021-03-02 14:07 UTC (8 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| fallingfrog wrote:
| If you're going to argue that supply will only go up if you allow
| price to rise infinitely, you're getting it backwards- the
| increase in supply is supposed to make the price go _back down_ ,
| that's the whole idea. There is supposed to be a balance that
| develops that holds the price down to an affordable level.
|
| Why does this never happen? Well, there are many areas of the
| United States where real estate prices are skyrocketing even
| though all the houses are vacant- because real estate is being
| used as a vehicle for speculation. And the same thing is
| happening in almost every city in the western world. It's likely
| the same thing is happening in Berlin. The demand is not coming
| _from_ renters so allowing the price to go up does not _help_
| renters, it's all just a tidal wave of free money from central
| banks looking for somewhere to go.
|
| Also the author of the article is an Ayn Rand free-market-as-
| magic-bullet ideologue with an axe to grind. He makes no pretense
| of trying to write a balanced analysis. He even appears to be
| framing things like rents and real estate prices falling as pure
| _negatives_ when both those things are purely positive from the
| point of view of anyone but a real estate owner.
| mtoner23 wrote:
| The demand is coming from renters though. People are moving to
| Berlin. They need to build more houses or prices will go.
| Markets dont solve everything but they do here. Just ask tokyo
| how they got out of their housing crisis. Build More.
| fallingfrog wrote:
| The population of Germany is declining, (Berlin population
| has been stagnant since 1950), wages aren't rising but
| housing prices are going up everywhere. And the same story is
| repeating in multiple countries all over the world. So
| clearly, must be supply and demand and not just a speculative
| bubble, right?
|
| Berlin population 1950: 3,338,000
|
| Berlin population 2021: 3,567,000
|
| Germany birth rate: 9.5
|
| Germany death rate: 11.5
| bhelkey wrote:
| > The population of Germany is declining,
|
| Germany's population is increasing over time. In fact, 2020
| was an all time high [1].
|
| > Berlin population has been stagnant since 1950
|
| Between 1980 and 2020, Berlin's population increased by
| half a million people [2]. In addition, it's population has
| increased every year since 2004 with an average of ~0.3%
| yearly increase.
|
| [1] https://www.worldometers.info/world-population/germany-
| popul...
|
| [2]
| https://www.macrotrends.net/cities/204296/berlin/population
|
| edit: formatting
| bhelkey wrote:
| I think you have the articles argument twisted.
|
| > If you're going to argue that supply will only go up if you
| allow price to rise infinitely, you're getting it backwards-
| the increase in supply is supposed to make the price go back
| down, that's the whole idea. There is supposed to be a balance
| that develops that holds the price down to an affordable level.
|
| The article argues that the people who construct apartment
| buildings operate on incentives. Their incentives are the
| revenue generated by the apartment over, say, 30 years and the
| cost of constructing the apartment (in materials, regulations,
| time, ...).
|
| Decreasing the expected rents and/or increasing cost of
| construction should result in less new apartments (supply
| increase is slow or nonresistant).
|
| Conversely, increasing the expected rents and/or decreasing
| cost of construction should result in more new apartments
| (supply increases quickly).
|
| The article does not suggest: >supply will only go up if you
| allow price to rise infinitely
|
| but instead: >> The right answer to that shortage would be to
| increase supply -- for instance, by cutting red tape in zoning
| and construction.
| fallingfrog wrote:
| Right, that works in theory, but in the real world it's not
| happening. Once supply is increased, the price should go back
| to a lower equilibrium, right? So why isn't that happening
| _anywhere in the world_? Because it's a real estate bubble
| and speculators are buying _because_ the price is high. Real
| estate prices drive rents not the other way around. They
| don't care if the buildings are half vacant as long as they
| can sell them later for an even higher price. Demand by
| renters is irrelevant.
| bhelkey wrote:
| > Right, that works in theory, but in the real world it's
| not happening.
|
| This is a fair reasonable and response to the article. In
| essence you are arguing: the housing market can act
| irrationally and is seemingly disconnected from the
| underlying asset. Furthermore, people get hurt by these
| spikes in prices.
|
| The reason I responded to your original comment was not to
| pick apart who is right but because you seemed to be
| attacking a point that the article didn't make.
| [deleted]
| el_nahual wrote:
| An issue that many commenters here are missing is that the
| problem with rent control will manifest more sharply in the
| future.
|
| Sure, the impact today seems _relatively_ equitable: a windfall
| for people that rent today coupled with a small drop in supply.
|
| But fast forward 10 or 20 years and the situation looks far
| worse: everyone who got a windfall today is _still_ living in the
| same apartment, whereas anyone trying to enter the rental market
| is utterly SOL. The people that are really getting screwed are 10
| years old today: when they try to move out of Mom and Dad 's they
| will enter a market with vastly reduced supply since nobody has
| any incentive to move.
|
| This is why if you're 19 you can't afford to live in Manhattan:
| you're either old (and lucky) or rich.
| Xylakant wrote:
| A counterexample is Vienna, which utilizes a well balanced
| system of rent-control and social housing to have incredibly
| low rents and still a stable supply of flats. One tweak they
| apply is that rent-control does not apply to new developments,
| so creating new flats is more lucrative than turning old
| buildings into luxury developments. The city also acts as a
| competitor, driving prices down by offering cheap flats. There
| are definitively problems with rent-control if applied bluntly,
| but the it's a tool that can be useful.
|
| [1] https://www.immobilienwirtschaft.tu-
| berlin.de/fileadmin/fg28...
| DetroitThrow wrote:
| Very interesting approach, it's almost as if developers get a
| "patent" on creating useful housing stock.
| 908B64B197 wrote:
| The beauty of it is it doesn't matter to the bureaucrats: since
| the 19 years old can't live in the city he also can't vote in
| the municipal elections!
|
| It also has bad impact on the type of buildings that get built.
| If you have to build some rent-controlled housing as part of
| your development project, and some jurisdictions will force
| developers to do that, it pushes you to build the rest of your
| building to be as upscale as possible to attract higher paying
| customers (better margins).
|
| And it also removes the incentives of ever upgrading the rent-
| controlled buildings more than the minimal legal maintenance.
| Because any dollar is better spent on the upscale offerings.
| thesuitonym wrote:
| I don't know how it is in Germany, but in the US, rent
| controlled buildings can only have the rent increased if the
| landlord upgrades the building, so it actually _incentivizes_
| them to do upgrades, as that 's the only way they can
| increase rent.
| Kalium wrote:
| In the US, rent control is regulated by states and enacted
| by cities. Each state and city is free to do so
| differently. As such, it can and does vary quite
| significantly place to place. This means it's impossible to
| offer an informed comment about rent control in the US.
| edbob wrote:
| That adds _even more_ upward pressure on housing prices.
| That 's pretty much the last thing my generation needs.
| bdowling wrote:
| In California the way this works is that a landlord takes a
| rental property off the market for 5 years, kicking out all
| of the existing tenants and leaving the property vacant,
| then remodels the building and rents the new luxury units
| to new tenants at market rate. The process is called
| "Ellissing", after the Ellis Act that allows it.
|
| When a property is full of rent-controlled tenants paying
| far below market rate, it has a low value to most real
| estate investors. With the Ellis Act, however, the value of
| the property can actually go up as rents go out of sync
| with the market because it becomes an attractive investment
| to investors who would Ellis it.
| rsj_hn wrote:
| The Ellis act allows you to convert the unit to a live in
| residence, and it can no longer be used as a rental. Thus
| it is not attractive to investors who are developing
| rental stock, it is attracted to investors who are
| developing homes for owner-occupants.
| rsj_hn wrote:
| It does not, in fact incentivize upgrades. Because the
| landlords wait until the tenant moves out, then they can
| raise the rent to the (high) market rate and that is when
| they make improvements. Rent control is widely acknowledged
| to lead to a lower quality housing stock as maintenance and
| upgrades are deferred.
|
| The provision for some capital offset for improvements is
| not, in practice, sufficient justification for making the
| improvements as the offset is only partial, and you want to
| encourage the long term tenant to move out so you are not
| going to provide upgrades to the unit.
| e40 wrote:
| I experienced exactly this in the early 1980's. In Berkeley,
| CA. Apartments were scarce because of rent control. I had a
| coworker that lived in his apartment from late 70's until late
| 90's. He paid less than $300/mo. It was great for him. He saved
| a ton of money and bought a house in Berkeley in the late 90's.
| But, as a student I had to live in Oakland and was never able
| to find an apartment. Every time I went to look at one there
| were another 99 people there. It was so frustrating.
| latchkey wrote:
| Around 1994/5 I wanted to move to Berkeley. I had a very hard
| time finding a place. I looked at so many attics turned into
| bedrooms and other crappy places. Eventually, I found an
| ideal (relatively) place and there was a good 50+ people
| looking at the same apartment during a showing...
|
| I walked up to the landlord (who was a lawyer in his day job)
| and said... "I know you can't pick favorites, but I have a
| good salary and I'm not a student." ... he ended up making
| his top picks write an essay on why we wanted the apartment.
| I got the place and stayed there for 10 years.
|
| Interestingly, during the last few years I was there, rent
| control ended and the landlord really wanted me out because
| he knew that he could make 2-3x more. He turned into a
| slumlord and refused to make any improvements and the ones he
| made were all half assed. The storage locker in the carport
| under the building got broken into as well.
|
| Eventually, I left for SF and sublet the place to some
| friends illegally because they needed an inexpensive place.
| He eventually found out about that and I had to let the place
| go.
|
| I guess my point is that I've seen first hand rent control
| and no rent control go through both phases. I really don't
| think there is a good solution. Someone always gets the short
| end of the stick.
| slavik81 wrote:
| If there was no rent control, why didn't he just raise the
| price up to market value when your lease came up for
| renewal?
|
| I live in a city without rent control, and your experience
| is entirely foreign to me. Heck, my current landlord has
| offered to pay for things that I don't think are even
| really his responsibility. He's just happy to have good
| tenants paying market rate.
|
| Switching tenants will probably cost a few thousand dollars
| in lost rent, and it won't earn him any more income, so he
| treats us well.
| latchkey wrote:
| "grandfather clause"
|
| The removal of rent control only applied to new tenants.
| He was limited to a city controlled yearly mandated
| increase, the entire time I was there. He also couldn't
| kick me out unless he moved into the apartment himself
| for some period of time.
|
| He also had to put my deposit into an interest bearing
| account and was required to pay me that interest. The
| rental increase and payment was a ritual I went through
| yearly with him and he always delayed giving me the
| interest as long as he could by law.
|
| 2-3x+ more rent is enough reason for a landlord to want
| to push someone out in a competitive market like
| Berkeley. There is always a stream of new tenants because
| it is a college town and limited rental housing is
| available.
| chipsa wrote:
| Frequently, even on places that don't have "rent
| control", there's still limits on how fast landlords can
| jack up the price on a tenant in the place, but that
| doesn't apply to new tenants. So if you can only raise
| the rent by $100/mo once a year, but the market rent for
| the place is $1000/mo higher than current, you've got 10
| years before you actually reach market rate.
| klodolph wrote:
| I don't know CA, but in NYC, rent controlled apartments
| can only become market rate apartments in a specific,
| legally prescribed way. Even if you are in a market rate
| apartment, the landlord is only allowed to raise your
| rent by a certain percentage each year; this percentage
| is higher for market rate and lower for rent-controlled,
| and there is also a third category called "rent
| stabilized" which is between market rate and rent
| controlled.
|
| (Just as note about rent control in NYC--rent controlled
| apartments account for something like 1% of total
| apartments. The number is slowly going down, it was about
| 3% twenty years ago.)
| 908B64B197 wrote:
| > He saved a ton of money and bought a house in Berkeley in
| the late 90's.
|
| That gave him a durable advantage and helped him acquire
| assets that would further gain in value. Not to mention, as a
| renter and home owner, he was able to vote against new
| developments for years, further increasing scarcity and the
| value of his house.
|
| And then bureaucrats complain about inequalities?
| Krasnol wrote:
| The only difference to the situation right now that people are
| able to stay where they are. They wouldn't otherwise.
| tehjoker wrote:
| I think you're missing a larger point: why should people be
| forced to move? There's no natural law that says people should
| be ceaselessly pushed around by market forces.
| [deleted]
| asdff wrote:
| If people could move en masse out of cramped expensive rent
| controlled housing in manhattan, they would. Moving requires
| upfront capital that a lot of people don't have. Banning rent
| control doesn't move these working people into more space in
| some suburb on the outskirts of town, it moves them into a tent
| under an overpass.
| Robotbeat wrote:
| Right. Rent control has created a situation where people are
| stuck in cramped apartments and no one has incentive to fix
| the problem. And there aren't any easy outs. Just have to
| relentlessly attack the housing supply crunch until rent
| control isn't needed.
| vkou wrote:
| Kicking people out of their homes doesn't solve the supply
| problem, because it doesn't _create_ new housing. It just
| shuffles around who lives in existing houses.
|
| If you have a housing problem, and you want to solve it, you
| need to do two things.
|
| 1. Not kick people out of housing that they have. (Because it
| is incredibly disruptive to people's lives.)
|
| 2. Build new housing, until demand is met.
|
| Rent control accomplishes #1, proper city planning accomplishes
| #2. If you're not doing #2, complaining about #1 isn't going to
| solve the problem.
|
| If you _are_ doing #2, then #1 isn 't a problem.
| kmeisthax wrote:
| You can't do #2 without doing #1 - most in-demand land is
| already occupied and unused land is typically not worth
| developing (or doing so would cause environmental harm).
|
| In an all-owner-occupant suburb, this isn't so much of a
| problem: you're literally paying people lots of money to
| accept the disruption of having to move. However, in almost
| every other kind of housing arrangement, ownership over the
| building is separate from occupancy, and it's not the
| occupant's choice to make regarding increasing the housing
| supply. This is the left-NIMBY trap: any action to increase
| housing units _necessarily_ displaces the most marginalized
| parts of society. If your pro-development policy doesn 't
| include a plan to house people who are being displaced
| without increasing their expenses, then you're likely to make
| people start protesting the new buildings that _need_ to be
| built in order to accommodate demand and actually cap rent
| growth.
|
| Other than that, yes. Make housing printer go brrr.
| zamfi wrote:
| This is one of the most reasoned explanations of the key
| problem where development meets rent control that I've ever
| read. If you turned it into a longer piece that explored
| the monetary and non-monetary incentives on all sides I
| would send it to everyone thinking about this issue. If I
| can help please let me know.
| jdxcode wrote:
| The major flaw in your argument is that you can't do #2 with
| rent control in the picture. From the economist[0]:
|
| > Rent controls are a textbook example of a well-intentioned
| policy that does not work. They deter the supply of good-
| quality rental housing. With rents capped, building new homes
| becomes less profitable. Even maintaining existing properties
| is discouraged because landlords see no return for their
| investment. Renters stay put in crumbling properties because
| controls often reset when tenants change. Who occupies
| housing ends up bearing little relation to who can make best
| use of it (ie, workers well-suited to local job
| opportunities). The mismatch reduces economy-wide
| productivity. The longer a tenant stays put, the bigger the
| disparity between the market rent and his payments,
| sharpening the incentive not to move.
|
| [0] https://www.economist.com/leaders/2019/09/19/rent-
| control-wi...
| dragonwriter wrote:
| > Rent controls are a textbook example of a well-
| intentioned policy that does not work. They deter the
| supply of good-quality rental housing. With rents capped,
| building new homes becomes less profitable.
|
| Rent control tends to be adopted with the fairly explicit
| goal of prioritizing affordability for existing tenants in
| their current residences over either encouraging
| maintenance/updates or improving housing supply for people
| who aren't current tenants, so I don't think it's at all a
| policy that _doesn 't work_.
|
| A policy whose purposes are at odds with other, arguably
| more important, policy goals, sure, and possibly even with
| other more important, if less inmediate, interests _of
| current tenants_.
|
| But saying it "doesn't work" bases on it not encouraging
| things it is not meant to encourage is...not really useful.
| edbob wrote:
| Your technical analysis is correct as usual, but I agree
| with sologoub's comment[0], "That's not success, that's
| picking winners and losers."
|
| [0] https://news.ycombinator.com/item?id=26316547
| vkou wrote:
| Markets pick winners and losers all the time. It's just
| that winners in market housing situations are always the
| people with the most money.
|
| It's difficult to make an argument that it's a more
| virtuous way to select winners, compared to 'the winners
| are the people who were here first'. Both are
| fundamentally unfair. Life, in general, isn't fair.
| swiley wrote:
| Germany is one of the counties that tries to avoid getting
| themselves into situations where a violent revolution is
| the best path forward for most young people. I'm sure
| they'll figure this one out.
| jariel wrote:
| No, this is not the reasoning that helps your argument at
| all.
|
| It's false to claim you need to kick people out of homes in
| order to have new developments. Though the notion of 'lack
| of investment in capped rentals' may be true, that has
| nothing to do with new housing.
|
| The entirety of Ontario and Quebec (and I'm going to bet
| most of the rest of Canada) has a form of rent control, in
| that at least there are caps on the amount of rental
| increase.
| throwaway12903 wrote:
| I don't think it's about housing supply. People want to live
| in the city and in desirable suburbs. These suburbs have
| existing tenants who could not afford the market rate of rent
| today. Gentrification basically.
|
| The question is how much should existing tenants be entitled
| to their apartments just because they lived there for a long
| time, balanced against the impact on investment in new real-
| estate because of lack of incentives due to earning caps.
| anoncake wrote:
| Giving people "incentive to move" - aka forcing them out of
| their homes - doesn't increase supply. Unless they're "moving"
| onto the streets in which case you did free up a flat.
| justapassenger wrote:
| > aka forcing them out of their homes
|
| They aren't theirs. They're renters.
| omginternets wrote:
| It might not be their _apartment_ (or house or whatever),
| but it damn-sure is their _home_.
|
| First-world jurisdictions (including all 50 US states)
| universally recognize that eviction is a big deal, and that
| it is _not_ equivalent to forfeiting any old rented
| property. Accordingly, landlords cannot do whatever they
| please just because they own four walls, a floor and a
| roof.
|
| Of all the things you could nit-pick, I can't even begin to
| understand why you would choose this. Your point is not
| only pedantic and cringe-inducing, it also betrays
| callousness beyond that of even _American_ courts. This is
| truly an accomplishment. Bravo.
| justapassenger wrote:
| Woah, slow down. I'm not arguing that eviction isn't a
| big deal, or that renters have no rights.
|
| By renting you're in a (heavily regulated) business
| relationship with an owner, and they own the property.
| Growing overly attached to something that you don't own,
| and calling it yours is risky. I know that tons of people
| don't have luxury of owning their places, but that's how
| our capitalism world works - ownership is king.
| Fargren wrote:
| "Your home" means the place where you live. It's not the
| same as "your house", which is a building that you own.
| Evicting a renter is kicking someone out of their home.
| justapassenger wrote:
| "Your" here is like with a chain - as strong as a weakest
| link in the chain. Creating your home in someone else's
| property doesn't really make it yours overall.
| asdff wrote:
| You don't really own your house either. Stop paying your
| mortgage, stop paying taxes, watch you eventually end up
| the same as someone who stops paying their rent, just
| through a slightly different bureaucratic process.
| Sometimes you might not have the liberty to freely modify
| your home, much like a lease.
| justapassenger wrote:
| Yeah, totally. But you have very different risk profile
| in terms of likelihood of you being kicked out - your
| expenses are much more predictable than with renting.
| Capitalism approach heavily prefers owning vs renting.
| jdxcode wrote:
| "I'd like to move out of my rent-controlled apartment in SF
| because my job is in Mountain View, but I don't want to walk
| away from this rate."
| callmeal wrote:
| You would be able to if apartments in Mountain View were
| also rent-controlled.
| ink_13 wrote:
| Indeed, every apartment in Mountain View is rent
| controlled by municipal ordinance. But it only applies to
| increases on existing tenancies; when someone moves out,
| the landlord can charge whatever they want to the new
| tenants.
| jamesliudotcc wrote:
| Huh? Give one example of a working transfer of the rent
| controlled apartment from one jurisdiction to another.
|
| Even if there was rent control both places, you'd have to
| find a rent controlled apartment in the new place. And in
| reality, you can't, because nobody is willing to leave
| their rent controlled apartments in the next place
| either.
| anoncake wrote:
| We're talking about Berlin.
| pertymcpert wrote:
| It's just a temporary short term fix. Like opioid pain
| killers, over time the downsides massively outweigh any
| benefits.
| floren wrote:
| "I'd like to move out of my rent-controlled apartment in
| Spandau because my job is in Eberswalde, but I don't want
| to walk away from this rate."
| vkou wrote:
| For every one person in that situation, there are nine
| who can't move out of their rent-controlled apartment,
| not because they don't _want_ to walk away from their
| rate, but because they _can 't_ afford to.
|
| Well-off-techies who somehow stumbled into both getting a
| grandfathered rent controlled rate, and a job in the next
| city over might be a majority of posters on HN[1], but
| are a tiny minority of the population. You probably
| shouldn't be basing overall public policy around them.
|
| [1] I personally think it's unlikely.
| edbob wrote:
| > For every one person in that situation, there are nine
| who can't
|
| I'd be interested to know the actual numbers, but I doubt
| they happen to be 90%.
| nitrogen wrote:
| When there's more movement in a market, it's easier for
| supply to increase and prices to stabilize.
| anothernewdude wrote:
| They'd be SOL anyway. Honestly there is no downside here,
| because this happens anyway.
| fock wrote:
| totally agree: here's no rent control but a friend could see
| trickle-down economics at work from his office with half the
| condos (10years old building) across the yard being "under
| renovation" so that owners can just squeeze supply to
| artifically increase prices without being fined for this
| antisocial behavior...
| JPKab wrote:
| There is plenty of scientific denialism on the right.
|
| Along with anti nuclear, the belief that rent control is a
| remotely good idea is an example of scientific denialism on the
| left. There are some decent arguments to be made against
| nuclear but rent control has always always caused more harm
| than good everywhere it's been tried.
| dragonwriter wrote:
| > Along with anti nuclear, the belief that rent control is a
| remotely good idea is an example of scientific denialism on
| the left.
|
| No, because "good idea" isn't an objective claim within the
| domain of science , it's a subjective value claim outside of
| the domain of science.
|
| Now, it's possible that in some cases this belief could be
| supported by belief in an objective claim that is itself an
| example of science denialism, but it could just be that
| people who believe that rent control is an good idea have
| different values than you do.
| vitno wrote:
| calling this "scientific denialism" seems like a huge stretch
| to me. It's not a science, it's housing policy.
| koolba wrote:
| It's a policy that is intended, or at least marketed, to
| lower the price of housing in the interests of the general
| public. The science denial aspect is refusing to look at
| _every single instance_ of these policies leading to
| negative outcomes, some sooner than others.
| nullserver wrote:
| Parents city decided to rent control all the mobile home
| parks. They changed there mind after thousands of people
| received eviction notices.
|
| Owners would rather let the land sit empty then deal with the
| nightmare it would create.
| blablabla123 wrote:
| Either a cheap apartment is hard to find and afterwards it's
| even harder to move somewhere else.
|
| The alternative - as in other cities - is that it's still hard
| to find an apartment that has a normal price. Of course this
| also attracts scammers.
|
| The apartment situation in dense areas is bad, no matter if
| it's Berlin or not. At least the local government is working on
| a solution to not end up like Manhattan, both price- and
| concrete-wise. If they find a sustainable solution, then this
| would be a game-changer and other cities might adopt that.
| cbmuser wrote:
| That's correct and can be observed in Stockholm, for example:
|
| > https://www.bbc.com/worklife/article/20160517-this-is-one-
| ci...
| throwaway85858 wrote:
| not just in 10 or 20 years, more like in 9 months!
|
| The supreme court will probably rule that the Mietendeckel is
| unconstitutional in November, which will lead to a nasty
| situation for many renters with old contracts. If the tenants
| are lucky the landlord will just ask for the money "saved" to
| be paid back, but the unlucky ones will be evicted, as being in
| arrears of more than one month is grounds for termination
| regardless if you pay it back the the debt or not.
| distances wrote:
| The tenants are not in arrears. In the common case rents were
| lowered officially by landlords, with a footnote that the
| difference is due in full if the law is striked down.
| throwaway85858 wrote:
| Nope!
|
| The rental amount agreed in the contract is to be owed by
| the tenant, this is not changed by the MietenWoG.
|
| https://ikb-law.blog/2020/11/19/resume-zum-mietendeckel/
| distances wrote:
| And as stated in the third paragraph of your link, it's
| not grounds for termination if the landlord has agreed
| that part of the rent is suspended until the matter has
| gone through courts.
| Tenoke wrote:
| I have to say - I'm very jealous of my few friends who
| somehow managed to get a new place in the last few months.
| Their new contracts are already at the lowered prices so they
| don't have to fear the backrent like I do (and my reduction
| is quite big as I was paying way above the average for the
| area due to having a hard time finding anything in the first
| place).
| germanier wrote:
| It's extremely unlikely that the court will strike down the
| law in a way that this situation arises. It's not like
| everybody starts to pretend that a law has never existed if
| it's ruled unconstitutional. Usually arrangements will be
| made for those that relied on it. Especially in a case like
| this, where another basic right is affected.
|
| (It's two months btw)
| throwaway85858 wrote:
| perhaps, but if MietenWoG is struck down that leaves only
| the BGB.
|
| yes you're right, two months not one.
| germanier wrote:
| As I said, "strike down" usually doesn't mean "transport
| everyone into a parallel universe where the law has never
| existed but all people still have acted the same and deal
| with the fallout no matter how unjust". Rulings are
| usually much more nuanced than that (and constitutionally
| required to be that).
| syats wrote:
| Let us recall that that inflation in Germany is close to 0. Thus,
| saying that policy X is responsible for a price hike is
| hilarious. There is no reason to raise the prices of unregulated
| apartments (second plot), except the greed of those owning the
| units.
|
| Another way to read this article is "this rent control is bad
| because we real-state speculators are now focusing our greed on a
| smaller number of people, instead of focusing it on everyone
| else".
|
| That being said, it is not clear from the plots that the overall
| amount of money that is being spent, city-wide, on housing has
| increased or decreased. I would argue this is the only valid
| metric to asses how effective this particular policy is.
| AnimalMuppet wrote:
| > Let us recall that that inflation in Germany is close to 0.
|
| OK.
|
| > Thus, saying that policy X is responsible for a price hike is
| hilarious.
|
| Not so fast. If inflation is close to 0, and policy X is
| introduced, and then price hikes show up in a category subject
| to policy X, why is it hilarious to say that policy X is
| responsible? Why is it not reasonable to at least suspect X?
| jdminhbg wrote:
| > Let us recall that that inflation in Germany is close to 0.
| Thus, saying that policy X is responsible for a price hike is
| hilarious. There is no reason to raise the prices of
| unregulated apartments (second plot), except the greed of those
| owning the units.
|
| This is a "not even wrong" attempt to connect inflation with
| supply and demand.
| drpgq wrote:
| Yes why build an apartment in Berlin if they will just inevitably
| move the date for rent controlled buildings forward eventually.
| yokaze wrote:
| I don't know... maybe because you need an apartment for
| yourself, and you now can afford to actually buy the lot
| because you do not have to compete with investors expecting a
| dividend of 20% on their investment?
| rsj_hn wrote:
| Do you really think that suppressing professional home
| builders to make room for homesteaders building their own
| homes by hand is a good idea for Berlin?
|
| Why not get rid of greedy farmers so people can grow potatoes
| in their backyard? Why this longing to re-implement the
| failed policies of East Germany? Is it nostalgia for police
| states and shortages?
| yokaze wrote:
| > Do you really think that suppressing professional home
| builders to make room for homesteaders building their own
| homes by hand is a good idea for Berlin?
|
| No, and it isn't what I am suggesting. The point is that
| just that it becomes uninteresting for investors, it isn't
| for people actually living there. That doesn't exclude the
| professional execution of housing projects. I seriously
| doubt that people can build their home with their own hands
| and comply with German regulations. Especially in cities.
|
| Housing developers might expect a lower margin, and if the
| margin is too low for such a business, people can take on
| the risk themselves and contract professionals to execute a
| joined housing development. People are already doing that.
| rsj_hn wrote:
| Well if homes are not built by homesteaders then they
| will be built by for profit companies that are funded by
| investors.
|
| If your goal is to have more of something then you tax it
| less and impose fewer costs on it. If your goal is to
| create less of something, then you tax it more and impose
| more costs on it. People understand this with cigarette
| taxes and carbon taxes but suddenly when it comes to
| apartments the signs are reversed? No, getting the sign
| right is important. If you want more homes, then reduce
| the costs of building homes -- or in your parlance, make
| it "more interesting" for investors.
| aphextron wrote:
| >In a food shortage, for example, regulating the price of bread
| only trades one expression of scarcity (high prices) for another
| (empty shelves).
|
| Well sure. But the total amount of people who have _some_ bread
| is now greater, versus a select few wealthy people getting all
| the bread they want, as the wretched masses stare longingly. You
| can either increase total happiness, or concentrate it to the
| powerful. It 's pretty clear by the tone of this article which
| side the writer lands on.
| jkingsbery wrote:
| In practice, this almost never happens. There isn't a fixed
| supply of bread. When the price of bread goes up, the following
| all happen:
|
| - Bakers will bake more bread - People from an area with
| cheaper bread will travel farther to sell bread where it's more
| expensive - Individuals will decide to bake bread for
| themselves - Companies that don't bake bread but that have the
| capability of baking bread (either directly, or with minor
| changes) will start baking bread.
|
| All these activities happen in proportion to the price
| increase, increasing volume and putting pressure on prices to
| go back down. And this article describes the data showing that
| this happens.
| AdrianB1 wrote:
| Except when you have a bad crop season on an entire
| continent. No grain - no bread, so bakers will NOT bake more
| bread.
| Shivetya wrote:
| The bread example is apt if considered in the context of the
| apartment issue. What was driving up the price of housing was
| that they were not creating new housing at a pace to keep up
| with demand.
|
| So using the focus you had on bread, so you lower the price of
| bread so more people can afford it. However you don't increase
| the bakers ability to create bread and they still only have the
| same amount of bread as before. Well for the most part you have
| only swapped who has the bread and the number without is
| basically the same as before. You have done nothing but reduce
| the profit of the bread maker, at most.
|
| The right answer is to increase availability to where those who
| have the desire to have bread are satisfied and bread remains
| around that needs someone to buy it.
|
| Almost all housing shortages are government created if not
| 100%. Either through direct changes to laws and regulation or
| through providing the means for other groups to contest the
| construction of new properties in the courts because enough
| loop holes exist to stop any new housing.
| 0x1DEADCA0 wrote:
| Once the evil rich pigs have lots of bread, more than even they
| can eat, do they then not start using it to purchase labor from
| the starving poor?
| cambalache wrote:
| No, they use it to buy lands, resources, mercenaries to get
| more land and to keep the status quo. I suppose if you are a
| mercenary you will be fine (as long as your head is not split
| in 2)
| codeflo wrote:
| I guess that's an accurate analysis of the economic
| situation in Europe AD 1100, a time period famous for its
| laissez-faire capitalism.
| [deleted]
| tyree731 wrote:
| Not necessarily and, historically, not true at sufficient
| scale.
| 0x1DEADCA0 wrote:
| So all of the software engineers out there being paid for
| their labor by companies flush with cash are... not, being
| paid? in your mind?
| tyree731 wrote:
| Software Engineers are being paid for labor, as are the
| "starving poor" from the original analogy. However, the
| wealthiest citizens of the world have been amassing
| wealth at a comical rate for the past few decades, while
| the poorest citizens have not, suggesting that "Once the
| evil rich pigs have lots of bread, more than even they
| can eat", they in the aggregate do not start using it to
| purchase labor from the starving poor, they tend to hoard
| it.
| weakfish wrote:
| And what of the Amazon warehouse workers?
| creddit wrote:
| Unclear on how claimed price controls would ensure equitable
| distribution of bread. Why is the price of bread being capped
| making it so that more people get bread? If I'm rich and the
| price of bread is artificially low, maybe I'll just buy up even
| more bread and now fewer people get bread.
| kuschku wrote:
| Because you can define the cap so e.g. it only applies for
| one apartment per person, so you can't use it to get multiple
| ones cheap.
| creddit wrote:
| Oh so you mean you would want rationing too. How is that
| related to rent control then?
| varjag wrote:
| One apartment per person or per family? If per family, is
| it still per person if the couple is not legally married?
| If they _are_ married, but divorce, get an apartment each
| and then re-marry, are they supposed to give up the
| properties?
|
| What if my nephew from another town moves in to live, it
| becomes tight... are they eligible too?
|
| There are plenty of places in the world where real estate
| was/is rationed or distributed, and they all end up having
| very similar social distortions.
| bluGill wrote:
| >If they are married, but divorce, get an apartment each
| and then re-marry
|
| Or more likely divorce to get the apartment, but continue
| to live as if married except for purposes of that extra
| apartment. It isn't unheard of for couples to not legally
| marry today because of the tax difference even though for
| all social purposes they act as married. That is despite
| some social pressure to marry.
| leetcrew wrote:
| you can still use it to get a 2BR or 3BR when you only need
| a studio.
| mc32 wrote:
| If it's capped too low then bakers and baxters go out of the
| baking business and into something more economically
| sustainable.
| xvedejas wrote:
| In the short term, I'm in agreement without caveat, but in the
| long term letting the prices rise supports industrial growth.
| The wealthy buying all the bread they want funds the expansion
| of the farming industry, allows them to invest in more
| intensive farming practices, and even better encourages price
| discrimination, whereby the wealthy actually get the same
| amount of bread as everyone else but pay extra for the
| "artisan" varieties. Getting the rich to pay more for
| essentially the same thing is itself an equalizer.
|
| It's not hard to draw the comparison with housing. Let the rich
| buy the "luxury" apartments on the top floor (just an example),
| helping fund the building of large buildings which don't get
| built without cost-benefit and risk analyses squarely in the
| black.
| kuschku wrote:
| The issue is, there's only a limited supply (Berlin can't
| grow forever), and as result there's already many apartments
| left empty today to artificially increase the prices of
| apartments, as they're treated as investments in a bubble,
| with the intention to profit from increasing value, not from
| rent.
|
| Not regulating the price was tried for 30 years, and led to
| many families unable to afford housing, or spending 80%+ of
| post-tax income on housing.
| xvedejas wrote:
| Berlin is a small city on the global scale. It doesn't need
| to grow forever, it needs to grow to meet its local demand,
| which is apparently larger than the existing housing stock.
| ben_w wrote:
| It's the biggest city in the EU, now that London isn't.
| mamon wrote:
| Which still makes it only 97th biggest city in the world:
| https://www.worldometers.info/population/largest-cities-
| in-t...
| codeflo wrote:
| > Berlin can't grow forever
|
| That's not self-evident to me. Why not?
| ben_w wrote:
| Germany is a federal system, Berlin is one of the
| (city-)states within it.
|
| https://en.m.wikipedia.org/wiki/States_of_Germany
| germanier wrote:
| It's not like this is a hard border. It's completely
| feasible to live outside its limits. Sure, that's not
| technically Berlin but for all purposes regarding the
| housing market it is.
| ben_w wrote:
| Not _quite_. If I understand right (as a recent-ish
| migrant to Germany, I expect to have half an
| understanding at best), different states have laws and
| slightly different taxes. Not as much so as American
| states, but perhaps more like Newark vs. NYC than
| Cupertino vs. Sunnyvale.
| germanier wrote:
| The difference in taxes is zero or negligible for almost
| all persons (income tax, VAT, etc. is exactly the same -
| dog tax probably is the highest difference). Corporations
| pay less taxes outside city limits.
|
| The most relevant law I can think of is that if you live
| outside the city limits you might not be able to send
| your kids to a school in Berlin.
| bluGill wrote:
| Okay, but suppose I got a job in Berlin - why would I
| have to live in Berlin proper as opposed to some place
| out side of Berlin? What is stopping me from getting a
| place just outside of the Berlin limits?
| ben_w wrote:
| Stopping? Nothing, though public transport prices go up
| and travel times take longer. How much depends how far
| out, of course.
| codeflo wrote:
| When talking about city growth, population dynamics and
| long timescales, do you really believe those
| administrative boundaries matter in any practical sense?
| leetcrew wrote:
| okay, so it can't grow out. looking at pictures of the
| city, it certainly looks like it has room to grow up.
| ben_w wrote:
| Up is expensive, from what I hear.
| bluGill wrote:
| Paris is one of the densest city in the world (overall,
| there are denser areas) despite having a cap at 6 floors
| on building height. (I might be off by a floor or so) At
| that height the cheapest building technologies* still
| apply and up is not that expensive.
|
| Now going up to 200 floors is very expensive. However on
| a per unit area it is only a few times what the cheapest
| building style* is. So it does require more expensive
| rent, but not that much more expensive, and as rent gets
| expensive you expect apartment sizes to fall to balance
| some of it out.
|
| * cheapest that can meet reasonable building codes. I'm
| ignoring the uninsulated, fire-prone shacks you see in
| poor countries which are cheaper by far.
| ben_w wrote:
| On that basis, I'd be interested to see more grand
| buildings like those on Frankfurter Tor. While the
| insides of Soviet era buildings are the targets of German
| jokes [0], the outsides are grand, and they are more than
| 6 levels high.
|
| [0] IIRC "if you come home to find your wife has changed
| her hair and redecorated, you went into the wrong
| apartment", according to the DDR museum. I'm sure it lost
| something in the translation.
| sokoloff wrote:
| _Rationing_ bread would increase the number of people who have
| _some_ bread.
|
| _Regulating the price_ to a point well below the free market
| supply /demand driven price causes a decrease in the amount of
| bread supplied to the market (and probably increase
| hoarding/decrease the breadth of distribution).
|
| Think back to toilet paper shortages last spring. Rationing was
| arguably the best move (and was what local markets around me
| did).
| codeflo wrote:
| I agree, although the toilet paper situation was a bit
| different IMO because the shortage wasn't in the supply chain
| -- it was absolutely clear that inventories would restock
| sooner or later. In that situation, higher prices wouldn't
| have incentivized more production.
|
| Still, supermarkets could have temporarily raised prices 10x
| and still sold their inventory. Why didn't more of them do
| it? Presumably, they made the rational calculation that the
| bad reputation they'd get from such a move would outweigh any
| short-term profits.
| sokoloff wrote:
| If the shortage of consumer form-factor toilet paper wasn't
| in the supply chain, where was it?
| AdrianB1 wrote:
| A toilet paper factory has a long planning cycle and
| supply contracts, so it cannot react very fast to large
| changes in demand. The machinery also costs a lot, so
| they cannot increase the capacity for every spike in
| demand that will usually disappear in a few weeks. The
| weakest chain is the Wall Street pressure on these
| companies to "improve cash flow or else" that lead to
| reducing the stocks (product and raw materials alike) to
| minimum, so any surge is even harder to compensate. I
| worked in this area for some years, this is how it's
| done.
| codeflo wrote:
| I don't like "gotcha" style discussions, but I admit I
| could have worded that more precisely.
|
| What I meant is: There was no reduction in overall toilet
| paper production, and people didn't suddenly start to
| shit more. The shortage was mostly a
| distribution/packaging issue in the form of "not
| available in packaging X at location Y". Markets tend to
| solve that kind of problem incredibly quickly.
| djoldman wrote:
| There were some interesting theories floating around
| about how everyone was home so the residential TP market
| demand jumped but the commercial demand fell.
| sokoloff wrote:
| I wasn't trying to "getcha", but I do think this
| genuinely is a supply chain issue.
|
| Consumer form factor toilet paper is still being rationed
| for me right now (in Cambridge, MA-max 1). That's a year
| after the start of this.
| codeflo wrote:
| Very interesting, I guess my experience here in Germany
| was very different. No toilet paper anywhere for 2-3
| weeks last March/April, and then suddenly supermarkets
| drowned in it.
|
| Do you know if these are really meaningful shortages, or
| if businesses have just kept the signs up to make people
| feel taken care of?
| sokoloff wrote:
| I don't know for sure, but even with the max-1 purchase
| limit, the toilet paper section of the aisle is somewhat
| lightly stocked on some of my visits. (Of course, if
| you've told me for a year that TP is in short supply, you
| can bet that I have a lot of it on hand in the basement,
| so it's hard to get a clean read. "If there's space in
| the cart and TP on the shelf, why not pick one up? It's
| $10, never spoils, and never goes out of style.")
| davidw wrote:
| I think this is part of the nuance: we've gotten ourselves
| into such a bind with housing in so many places that it
| feels like we need the short term, crisis relief that rent
| control provides. For some people, it absolutely means not
| being kicked out into the streets. Go tell that mom and her
| kids about 'the market'. Yet at the same time, markets,
| supply and demand are real, and we need to bring them back
| into balance by at the very least not artificially
| constraining housing supply in so many places.
|
| It's a tricky problem.
| aaronax wrote:
| So if you wanted to apply the rationing strategy to
| housing, would high taxes on unoccupied be a way of doing
| that? I think I have heard of cities (Vancouver?)
| implementing such taxes.
| kmeisthax wrote:
| That would be akin to banning people from hoarding toilet
| paper. Not a bad idea, but the reason why hoarding
| affects prices is because there's already scarcity to
| begin with. Unoccupied units are not driving up the cost
| of housing, increased demand is.
| huitzitziltzin wrote:
| > it feels like we need the short term, crisis relief
| that rent control provides.
|
| These programs have a remarkable way of being sticky over
| time. For example, New York's current rent stabilization
| program has its origins in a World War 2 era program
| which never died (first a federal program, then taken
| over by the state).
|
| Solution: Build more and build it higher. If you are
| looking for a different kind of short-time-horizon
| solution for the mom and her kids who are in a precarious
| situation due to housing costs, give them cash
| assistance! But in the long run give them more options
| and lower prices. There is no reason we cannot do both.
| nicoburns wrote:
| > Yet at the same time, markets, supply and demand are
| real, and we need to bring them back into balance by at
| the very least not artificially constraining housing
| supply in so many places.
|
| Or we could just go ahead and find local governments to
| directly build houses like we used to (at least here in
| the UK). If you know what the desired result is then why
| not enact it directly rather than incentivising it.
| Markets are most useful when you _don 't_ what you (we)
| want.
| Kalium wrote:
| The political complication is that it's very easy for
| people to be convinced that the short-term answer is the
| only one that will ever be needed. Addressing long-term
| problems often involves painful choices that people would
| rather not face.
| davidw wrote:
| That's part of it. The "losers" with rent control are
| newcomers who may have a harder time finding housing, and
| some landlords. They're kind of anonymous. But turn up to
| a public hearing on building some new housing, and the
| people there to yell about it are your neighbors,
| ordinary people who "got theirs".
| Kalium wrote:
| Yup, that's the core of it. The future has no
| constituency. The past has.
| dnadler wrote:
| I'm not sure on the specific timing but price gouging
| during an emergency is illegal, so there's one other reason
| why they didn't do it.
| nonsince wrote:
| Rental properties are inherently rationed by the fact that
| there is no reason to rent more than one flat in the same
| city.
| leetcrew wrote:
| I don't think this is a very useful way of looking at it.
| it's uncommon, but not unheard of, for people to rent more
| than one apartment in the same city. especially if it's a
| large city, someone with a lot of money might find it
| attractive to rent a small studio by the office and a
| larger space in a nice residential area. if rent were
| really cheap, I might lease a second unit in my building
| for out-of-town visitors. it would probably be more
| practical to just rent a 2BR instead, but in some sense
| this is the same thing. renting two 600 sqft apartments
| takes roughly as much living space off the market as
| renting one 1200 sq ft apartment. if rent were way cheaper,
| you would probably see developers start building much
| larger units and people renting them. indeed, this is often
| what you see when you compare housing stock in the city vs.
| the surrounding suburbs.
| nerfhammer wrote:
| I know at least 4 people who lucked out on a rent control
| unit and have essentially moved away but don't want to give
| it up, and so keep it as a second residence. Or in other
| cases, rent it out to someone else at market rates.
| arebop wrote:
| 15% of the units in my building are subleased by tenants
| who may well lease additional rent-controlled flats in the
| same city.
| sokoloff wrote:
| That part is true, but the decision to take roommates vs
| not affects the demand on rental properties. The decision
| to rent a 2 or 3 BR instead of a 1 BR as a single person
| working from home affects the demand as well.
|
| In a rent-control environment, people have incentive to
| _hoard_ their rent-controlled apartment as well, especially
| if rents reset on turnover. If I have a rent-controlled
| apartment that 's well below its replacement cost to me,
| I'm going to be more inclined to keep it when I initially
| move in with a significant other. If that relationship
| fails, I can move back. If it were a market rate apartment,
| I'd have much less to almost no incentive to do that.
| ericd wrote:
| Yep, I know at least one family that's pretty well off
| that held onto their rent controlled place for years
| after no longer living in it, and then essentially passed
| it down to their kids. They basically own that apartment
| for less than it'd cost to maintain if they actually
| owned it, in terms of HOA/property tax, since the rent is
| stuck where it was like 30 years ago.
|
| And when I was looking for a place, I came across a
| couple people playing landlord and trying to sublet out
| their rent controlled place for more than they were
| paying the landlord.
|
| It's pretty broken, at least in NYC.
| bluGill wrote:
| Maybe for you, in your current life situation, but that
| isn't for everyone. You might want a large apartment to
| live in, and a small room near the "party/bar zone" where
| you can sleep off your night. Similar to the above you
| might want a large place for the family, and a small place
| near work so you can get to the next shift. The above are
| somewhat common reasons people already take two apartments
| in the same city.
|
| And there are also people who would be interested in an
| apartment in a different city. A favorite vacation
| destination. Near the in-laws so you can visit and yet get
| away. A short term job. The foreigner in an unstable
| country who wants every possible reason for customs to let
| him in if things get bad enough to flee. Hotels fill some
| of that, but if the price was right an apartment where you
| can leave spare things instead of packing starts to look
| nice.
|
| Mostly it isn't economical, and I don't see that changing.
| However in the imagined world where it was very cheap you
| might be interested in a second flat just across town. It
| would change your lifestyle to use it.
| WalterBright wrote:
| Rationing does nothing to increase the supply, and
| distributes the existing supply to people who don't need it.
| Rationing assumes everyone has exactly the same need, which
| is nonsense and leads to gross inefficiencies. Rationing
| inevitably leads to hoarding and a black market.
| bluGill wrote:
| > Rationing does nothing to increase the supply,
|
| Maybe, maybe not. Depends on how you handle prices (or
| subsidies) along with the rationing.
|
| >distributes the existing supply to people who don't need
| it.
|
| A bit, but in the case of housing and food you can safely
| assume people all need it in about the same amounts. You
| will be wrong, but close enough. The black market might
| even by your friend in correcting some of your mistakes.
|
| > Rationing assumes everyone has exactly the same need,
| which is nonsense and leads to gross inefficiencies.
|
| yes and no. You don't have to assume the same needs. You
| can figure out rules. Families need more space - which can
| be used to encourage/discourage having kids depending on
| your goals. Overall it leads to inefficiencies I agree.
|
| > Rationing inevitably leads to hoarding and a black
| market.
|
| True or not based on how much trust there is in the ration
| plan. If people agree with the reasons and means there will
| be a lot less than if people disagree, or find they can't
| get even the minimum. WWII rationing in the US mostly
| worked from what I understand - people were proud to not
| use their entire ration of sugar, but there was overall
| enough food (including gardens) so it wasn't hard. That is
| probably the exception (and even then there was a black
| market!), but it does make the point.
| WalterBright wrote:
| > WWII rationing in the US mostly worked from what I
| understand
|
| It suffered from all the faults I mentioned. The black
| market in gas was extensive, and even included drive by
| shootings. In public, people proudly supported rationing,
| in private, they sold their extra gas to people who
| needed it at black market prices. Yes, the government did
| try in their blundering manner to give different rations
| based on need, but it inevitably grossly mismatched
| supply with demand.
|
| I've talked to people who lived through it, and there was
| certainly two economies going on - the ration one, and
| the black market one. For example, one lived on a farm
| that wasn't doing much, but got a big gas allocation
| because "farm". They made a mint selling it under the
| table.
|
| > You can figure out rules.
|
| Yeah, like the byzantine vaccine rules, along with the
| confusion and fights over it. Politicians moved
| themselves to the front of the line, naturally. Just like
| in WW2, politicians got all the gas they wanted.
| ChuckMcM wrote:
| I think this is something that is often overlooked in
| progressive circles. Markets treat high prices as signal to
| increase supply. When supplies cannot be increased you get
| market inequities.
|
| Rationing for goods like bread, paper, milk, gasoline, etc.
| Can be a stand-in while the problem that is preventing the
| market from responding by increasing supply is fixed.
| kmeisthax wrote:
| The problem is that _usually_ supply isn 't the problem,
| it's demand. For example, America's main problem with
| agricultural products is finding enough people to buy and
| eat them. That's why the government spends lots of money on
| agricultural supports. Hell, even welfare programs, as
| inadequate as they are, help stabilize prices by basically
| injecting a minimum amount of demand into the system. So,
| usually, supply shocks are temporary and resolvable without
| needing to resort to price gouging. The producers _know_
| that prices of a particular commodity aren 't going to
| collapse if they invest money in switching over to produce
| it. Instead of getting a 10x jump in the price of, say,
| bread; it gets a little hard to find at first and then goes
| up 5%.
|
| Housing is almost completely the opposite; supply of the
| underlying land is fixed and most cities cap density. We
| can, of course, uncap density; but that still requires we
| basically displace everyone living in the city _eventually_
| to make way for larger buildings that can house more
| people. The thing that _really_ grinds my gears is that the
| solutions to housing scarcity effectively amount to
| building a wall around a city and making foreigners pay for
| it - and they 're often championed by exactly the same
| kinds of people who otherwise are rightly opposed to
| immigration formalities.
| neilparikh wrote:
| > we basically displace everyone living in the city
| eventually to make way for larger buildings that can
| house more people
|
| In theory, this is true. In practicality, at least in
| America there's enough land with very little density,
| that a new building could be constructed while displacing
| basically no one (because the previous occupant of the
| land is already willing to move, it's just that the new
| seller isn't allowed to build anything).
|
| Eventually, yes, we'll get to point where displacement is
| an issue, but right now it's not worth worrying about.
| Building dense really is a "free lunch" so to speak.
|
| I probably agree with you overall, I just bring this up
| because a lot of NIMBY arguments use displacement as the
| boogeyman, and I'd rather not give them more support.
|
| > The thing that really grinds my gears is that the
| solutions to housing scarcity effectively amount to
| building a wall around a city and making foreigners pay
| for it - and they're often championed by exactly the same
| kinds of people who otherwise are rightly opposed to
| immigration formalities.
|
| Many of the arguments even go beyond that and sound like
| anti-immigration arguments: I've heard a lot of people
| say that techies/yuppies in SF should go back to the
| cities they came from.
| Mediterraneo10 wrote:
| > Regulating the price to a point well below the free market
| supply/demand driven price causes a decrease in the amount of
| bread supplied to the market.
|
| In some countries like Egypt, bread (or another basic staple)
| is heavily subsidized below the free market price, but that
| doesn't seem to meaningfully impact the market's supply: any
| consumer able to pay that artificially low price can still
| eat all the bread he or she wants.
| HDMI_Cable wrote:
| Well it seems more that the supply is sufficiently high to
| prevent a shortage from the demand (I guess we can thank
| modern farming techniques).
| sokoloff wrote:
| I agree that subsidies perturb the free market, but in this
| case to the side of increasing supply. (You can model it as
| the supply curve being shifted downward by the amount of
| the government subsidy.)
| nickff wrote:
| Subsidies are different from price ceilings; subsidies
| often spur over-production along with over-consumption
| (think HFCS), whereas price ceilings discourage production
| and encourage hoarding (arguably a form of over-
| consumption). Price ceilings also foster a domestic black
| market, whereas subsidies foster an export black market.
| [deleted]
| [deleted]
| rsj_hn wrote:
| Yes, this cogent analysis describes why communist nations are
| known for food security whereas those capitalist nations are
| known for starvation.
| lornemalvo wrote:
| When I look at the list of famines in the last centuries, it
| does not look like capitalism provides any kind of food
| security.
| rsj_hn wrote:
| Then you should read the list of famines rather than just
| looking at the page, because after the invention of
| fertilizer which brought an end to mass starvation (and was
| another product of capitalism), the biggest famines in the
| history of the world have been from communist nations,
| whereas the main problem in capitalist nations is obesity.
| Even the homeless here suffer more from obesity than from
| hunger.
| WalterBright wrote:
| Regulating the price leads inevitably to either gluts or
| shortages.
| roenxi wrote:
| But at what point does someone try to solve the shortage by
| baking more bread? If the price rises, more people will open
| bakeries.
|
| Economics answers 2 questions:
|
| 1) Who gets what today?
|
| 2) What should people prepare for tomorrow?
|
| Regulating an excessive focus on (1) will get bad results on
| (2) because it makes it less sensible to be come a baker.
|
| I'm not writing software because I believe there is a
| philosophical shortage of software. I do it because there are
| decent odds that I'll be overpaid relative to the work I put
| need to put in. Those odds are resulting in a lot of software
| being written.
| Kalium wrote:
| > You can either increase total happiness, or concentrate it to
| the powerful.
|
| The nasty, invisible catch with price caps is that this outcome
| you've described is an idealized one. It's possible to get
| _neither_ as you make whatever you 're trying to regulate
| functionally unavailable to anyone.
|
| How much bread do you think bakers will produce if a loaf costs
| $1.20 to make, but politics dictates they cannot sell for above
| $1 each? In such a scenario nobody gets any bread except what
| the bakers make for themselves.
|
| It's also possible to try to increase total happiness and
| actually just wind up concentrating it to the powerful. This is
| what rent control has done in San Francisco. It's dangerously
| easy to confuse _goal_ and _outcome_ in policy-making.
| fragmede wrote:
| This is related to Goodhart's Law, which is "When a measure
| becomes a target, it ceases to be a good measure." It's a
| large area of study to figure out how to get the outcome you
| actually want, while measuring something close, because good
| metrics can be hard to come by.
| codeflo wrote:
| If anything, the article is too optimistic, because supply
| isn't constant. We're rehashing Eco 101 here, price controls
| decrease supply, in housing just with a longer delay.
| Tragically, that delay may be longer than an election cycle,
| which explains the political motivation to implement such
| policies.
| ipnon wrote:
| American and European urbanites need to become comfortable with
| Chinese and Japanese style mega cities or their urban areas will
| always be unaffordable. Chinese and Japanese cities are
| affordable for everyone because they build! They build as much as
| they need to in order to fit everyone into the city. We don't do
| that here so cities are for rich people.
| jimnotgym wrote:
| I found this article to be rather unbalanced, like the free
| market always knows best. For example, cutting red tape may
| increase housing supply, but red tape is not the only thing
| holding back building. I used to commute through miles of ex
| industrial wasteland, zoned for housing that was not being built
| on, because it was being landbanked because tax rules in the UK
| help large land owners store weath that way. So it seems to me
| that a right wing policy is damaging the market, the community
| and the economy. Perhaps the article would be more balanced if it
| acknowledged that better policy from both wings is needed?
| raverbashing wrote:
| Two important details about the rent control law:
|
| - it doesn't apply to newer/new buildings
|
| - it still hasn't been through the higher courts so it still can
| be overruled (and the tenants will owe the past rent
| retroactively)
| throwaway12903 wrote:
| I moved to Berlin with partner in late 2019. We were looking for
| 3 rooms for < 1800 in East (Pberg/Xberg/Friedrichshain).
|
| After long, tiring search of 20+ places with 100+ people at each,
| through a friend of friend we got a place for 1400 because we
| were the only ones that looked at it. Then rent control happens
| and now we pay 1000.
|
| And we would have paid 2000+...
|
| ---
|
| If you find something you like, it doesn't matter because there
| would be 20 other people applying. Landlords want to rent for a
| long time, so they prefer Germans over foreigners/expats, and
| people with long-term stable jobs (government, teachers, etc.)
| instead of startup people, so we were at the back of the queue.
|
| When we found a place we liked, we would have been prepared to
| pay way more than the asking rent, and put down multiple years of
| rent in advance just to get it - like happens in NYC for example.
| But no landlord/agent is interested in this in Berlin. I guess
| this is an example how well-paid tech ppl are driving rents up.
| Even though "well-paid tech" in Berlin is not that much.
|
| Only at rent levels of 2200+ do you start to find places you
| really like in good areas, but there are lots of places
| advertised at ~1500 that were even more ideal but unattainable
| due to demand, which is frustrating.
|
| I really don't know how anyone can get an apartment in Berlin now
| after rent-control.
|
| When we move out, we will most certainly find a friend to hand
| over to.
|
| ---
|
| Re: Rent control
|
| Before it was impossible to find a place, now it must be insane.
| For existing tenants though, it's like an unexpected yearly bonus
| - but for us, completely unnecessary. It's like a middle-class
| handout.
| colinmhayes wrote:
| Do you not think this was the entire point of the policy? Rent
| control doesn't exist to lower rent for everyone, it exists to
| reward the long term residents who voted for it at the expense
| of newcomers. Berliners essentially voted themselves a handout.
| throwaway12903 wrote:
| Gentrification is real though. And a lot of Berlin's culture
| is built by people who don't earn that much.
|
| I'd be interested to know for how many people it actually
| helps at the margins and how many its just a handout for.
|
| But yeh - I can imagine a lot of middle-class folks saw its
| as virtue signalling and free money at the same time.
| fallingfrog wrote:
| Let me get this straight: the population of Berlin has been
| stagnant since 1950, wages aren't rising, but the reason real
| estate prices are rising is because of demand from renters?
|
| Sorry folks, the correct answer is: it's a real estate bubble.
| And deregulation is not going to help with that.
|
| We all lived through 2008, didn't we? We've seen this before. It
| shouldn't be a big mystery. Speculation drives real estate
| prices, real estate prices drive rents. Government intervention
| is necessary to break the cycle.
| Barrin92 wrote:
| I don't actually see the disaster at all. Prices are staying low
| for millions of people already living in the city. Yes it's a
| pain for people who move but it might very well be a worthwhile
| trade-off.
|
| However the real long term point is made at the end of the
| article.
|
| > _" The biggest question is whether this episode of left-wing
| populism has damaged confidence in Berlin's real-estate market
| permanently. If investors fear that local property rights will be
| put at risk in every election, they might stop building houses in
| the city at all."_
|
| This isn't a disaster, this is what _needs to happen_. Drive down
| the property market, reclaim the housing stock, turn it into
| mixed income public housing, which is exactly what Vienna did
| when the Social Democrats took control of the city in the early
| 20th century. Today most of Vienna 's housing is public housing,
| and it is considered one of the most livable cities on the
| planet. Driving the landlords and real estate companies out of
| the city is only a disaster for the professional rentier class.
| The only problem Berlin has right now is that it hasn't gone far
| enough.
| compiler-guy wrote:
| If there are 100 houses in Berlin, and 101 households want to
| live there, no amount of reclaiming the housing stock is going
| to create space for that additional household.
|
| Berlin's population has been growing by leaps and bounds. The
| only way for everyone to have enough housing is to create
| enough housing for everyone to live there, or to make it
| sufficiently unattractive to live in that people leave.
| mrcartmenez wrote:
| I'm amazed that the writer can spin this as bad. Low housing-
| costs are both fantastic for residents and fantastic for the
| economy due to increased disposable income. Only a Rentier
| Capitalist would want the opposite.
| kamyarg wrote:
| I have mixed feelings about this policy as a berliner.
|
| But the article is definitely skewed towards the landowners and
| huge renting companies.
|
| Some facts for you:
|
| Rate of home ownership among Berliners, Londoners, Parisans:
|
| - Berlin: 17.5%
|
| - London: 52%
|
| - Paris: ~60%
|
| The main problems is huge home-renting corporations. The article
| refers to a separate discussion about breaking up huge companies
| that own more than 3,000 apartments. As far as I know this
| criteria meets only a couple of huge companies such as Deutsche
| Wohnen that over the past couple of years have artificially
| created a sense of scarcity and caused the rent to increase
| without a proportionally increase to wages(Not only blue collar
| but also High Tech wages)
|
| It is very ironic that companies such as Deutsche Wohnen were
| able to grab so many apartments when Berlin wall fell with dirt
| cheap prices. You can argue rushed privatisation caused this
| problem and something needs to be done if Berlin wants to avoid
| becoming SF.
|
| - https://guthmann.estate/en/market-report/berlin/
|
| - https://www.trustforlondon.org.uk/data/housing-tenure-
| over-t....
|
| - https://tradingeconomics.com/france/home-ownership-
| rate#:~:t....
|
| - https://www.dw.com/en/berlin-social-democrats-reject-expropr...
| bogomipz wrote:
| Regarding the rate of home ownership among Berliners. I
| remember reading that Germans in general are more likely to to
| rent than own their housing. Is that not true?
|
| >"It is very ironic that companies such as Deutsche Wohnen were
| able to grab so many apartments when Berlin wall fell with dirt
| cheap prices. You can argue rushed privatisation caused this
| problem and something needs to be done if Berlin wants to avoid
| becoming SF."
|
| Interesting. Is Deutsche Wohnen origins the old East Berlin
| then?
| detaro wrote:
| > _Interesting. Is Deutsche Wohnen origins the old East
| Berlin then?_
|
| Not really, no. It was founded in 1998 and initially had no
| Berlin holdings at all. It then bought various entities with
| housing stock in Berlin, which also have complex histories -
| e.g. one example was founded as a city-owned company in the
| 1920s, lost its East German properties obviously but
| continued to operate in West Berlin, after reunification got
| the eastern bits back, and then was privatized in the 90s.
| But of course East German state ownership plays a role in how
| the situation overall came together.
| ChuckNorris89 wrote:
| _> I remember reading that Germans in general are more likely
| to to rent than own their housing. Is that not true?_
|
| The majority rent not because of a lifestyle choice but
| because they can't afford to buy anything so renting is their
| only choice. What else are they gonna do, be homeless? All
| mid-upper class German families I met owned their properties.
| sudosysgen wrote:
| Seems to me it is working as intended. Now the only thing
| remaining is to build a lot of public housing to increase supply
| at affordable prices.
| orloffm wrote:
| Which means a comeback of Soviet-style blocks. Given that red-
| green-red coalition is basically a comeback of DDR socialist
| party, this feels like DDR strikes back in Berlin.
| sudosysgen wrote:
| Why would it have to be Soviet blocks?
|
| There were actually two types of Soviet blocks in general
| terms. The first type was based on community and had a lot of
| greenery, a lot of community shops in walking distance, and
| those are actually worth quite a lot of money nowadays.
|
| The rest were those that were built in order to rapidly
| provide housing to workers as industrial capacity was being
| massively built up.
|
| In any case, in my city, the most iconic and beautiful
| housing structure was public housing, so if done right it can
| be beautiful and amazing to live in.
|
| Otherwise, the private housing market is always there as
| competition.
|
| If there's anyone I'd trust to get it right, it would be the
| Berlin lefties. Hopefully they are successful and set a good
| example for others to follow.
| La1n wrote:
| Better soviet-style blocks than no housing.
| inglor_cz wrote:
| I grew up in a city with a lot of Soviet-style blocks
| (Ostrava).
|
| Construction quality of said block living was notoriously
| shoddy. State of the buildings only improved when most of
| the units were sold into private hands (usually that of the
| tenants, no megacorps). After that, the tenants-turned-
| owners started investing into repairs and reconstructions.
| briffle wrote:
| In Oregon, they passed a statewide rent control. They pointed out
| repeatedly at how rent had gone up 30% over five years.
|
| The solution, is that now landlords can only increase rent 7%
| (plus inflation) per year. This year, its something like 9%.
|
| Apparently, someone forgot to figure out what >7% per year for 5
| years is..... Its 40%, before the inflation numbers are added in.
| jetrink wrote:
| Potential math illiteracy aside, is this such a terrible
| policy? This seems to me like a nice compromise that provides
| some stability to the renter while still allowing the landlord
| to raise the rent substantially over several years.
|
| Downsides that come to mind (but that don't seem too serious):
|
| * It incentivizes landlords to keep empty apartments on the
| market longer before lowering rents to the true market price.
|
| * It might encourage landlords to regularly raise prices more
| than they otherwise would, lest they forego the limited
| opportunity.
|
| I'm normally much more free-market oriented, but I ask with the
| understanding of how much work and expense is involved in
| suddenly needing to find a new apartment. Just patching the
| holes in the drywall can take a full day. Then there's credit
| check fees, truck rental fees, pet fees, admin fees, move-in
| fees, new couch because the old one doesn't fit in the new
| living room fees...
| iav wrote:
| Those policies often work through gradual tightening, rather
| than a sudden change. So it might start with a 7% + CPI cap,
| then a few years later they'll change it to 5%, then remove the
| CPI, and so on. Sometimes the cap is allowed to be changed by a
| simple committee vote or determined by a "Rent Board," which is
| easier than passing a new law. That way the initial law can get
| passed without too much opposition.
| vmception wrote:
| More likely, someone did figure it out and convinced the
| legislature and public because they know they will react with
| emotion instead of math
|
| In my experience, people don't have experience outside of their
| local bubble, so you can easily recycle policies from another
| city or slightly tweak them
|
| Thats what they really mean by land of opportunity
| gscott wrote:
| When something is baked into the law like that landlords will
| raise the rent. Renting in San Diego my last two places never
| had a rent increase (I lived in each for about 4 years per).
| droopyEyelids wrote:
| I don't quite understand how you're framing this.
|
| Oregon figured out a level of increase that would be too
| disruptive for its appetite, and had the legislature cap the
| rate to below that level.
|
| On average over the past five years, that cap would not have
| been reached, though it may have been reached in any one of
| those years.
|
| Is this a self own or mistake of some kind? Are you inferring
| that landlords will now raise rents more than they would have
| in the uncapped situation?
| WalterBright wrote:
| If rent increases are capped at 7% per year, landlords will
| have an incentive to increase it at the max, because that
| gives them more flexibility the next year.
|
| For example, let's say the free market would raise rents 5%
| this year, and 8% next year. A cap of 7% means the rent will
| rise 7% this year, as the landlord won't want to have caps
| permanently reduce future rents.
| ahepp wrote:
| They already had an incentive to increase it at the max,
| because it's more money in their pocket.
|
| For this to be true, they would have to either (1) under
| present conditions, not be raising the rent to maximize
| profit or (2) under the scenario, raise the rent past
| maximum profit
|
| Neither of those seem likely to me.
| WalterBright wrote:
| > They already had an incentive to increase it at the
| max, because it's more money in their pocket.
|
| They'll set it based on supply & demand. But caps
| increase the business risk to the landlord, and therefore
| increases the price as risk always translates to an
| increased price.
| AlexandrB wrote:
| This is a weird argument. Would this still happen if rent
| increases were capped at 10%/year, what about 50%/year? At
| some point no one is going to rent at the rates you're
| asking and you're going to have to stop.
| cammikebrown wrote:
| I've lived in the same apartment for five years in
| Portland. The rent has never been raised.
| pessimizer wrote:
| They're implying that the problem of rents going up 30% in 5
| years was not solved by limiting rent increases to 7% a year.
| wfhpw wrote:
| I think the parent's point is that since price increases are
| capped, landlords cannot increase beyond a certain point in a
| single bumper year. To compensate, they may increase rents
| beyond what they would otherwise to be able to maintain a
| similar average increase. Citation is needed, of course.
| medium_burrito wrote:
| No, what grandparent is saying is state politicians and most
| Americans in general are unable to do simple math. Compound
| interest? Forget about it!
| Wohlf wrote:
| I don't mind this as 7% per year seems like a reasonable safety
| measure to me. The issue is they need to make it much easier,
| cheaper, and faster to build more housing along with it.
| Portland is probably particularly bad about this, as I see
| plenty of new apartments and rowhouses going up in Hillsboro
| and Beaverton. Still, these units aren't what I'd consider
| affordable.
|
| I think we need to seriously reconsider the effect some
| building requirements and property taxes have on housing
| prices. It may not be ideal but very small apartments with
| shared commons and no parking for a few hundred dollars a month
| would be better than living in an RV or on the streets. This is
| a pretty common setup in Japan, not to mention college and
| military dorms. This isn't even that different from having
| roommates.
| Schiendelman wrote:
| For the most part, our high housing prices are purely a
| matter of supply and demand. If you own a piece of land, and
| you want to build housing, you're not allowed to build as
| much as you want. NEARLY EVERY building proposed builds to
| the maximum currently allowed on that land.
|
| The market wants to supply more housing. We don't let it,
| based on laws that originally were created to keep black
| people out of neighborhoods. Those laws continue to be very
| effective at that goal.
| edbob wrote:
| > The market wants to supply more housing. We don't let it,
| based on laws that originally were created to keep black
| people out of neighborhoods. Those laws continue to be very
| effective at that goal.
|
| Why does this continue to be such a problem in deep blue
| areas?
| renewiltord wrote:
| Go on, mate. I think we both know why that's the case.
| Poor people and rich people make poor neighbours for each
| other. Maybe you can afford the house, but you can't
| afford the car, the motorcycle, the road bike that costs
| more than your annual daycare.
|
| That is a pleasant breeding ground for justification for
| crime.
|
| So there's the anti-poor angle that rich deep-blue
| neighbourhoods take and that ends up being racially
| discriminatory because of the underlying demographics.
| edbob wrote:
| > So there's the anti-poor angle that rich deep-blue
| neighbourhoods take and that ends up being racially
| discriminatory because of the underlying demographics.
|
| That makes sense, but that just raises the question of
| why racial demographics are so regressive in those areas.
|
| I genuinely asked because I don't know much about the
| inner workings of progressive coastal areas. It seems
| like if nearly all of the politicians and most of the
| population are committed to very progressive racial
| policies, you would expect to see... I don't know what
| exactly, but not this. I'd like to understand why things
| went so wrong.
|
| Are there any US cities that are good examples wrt to
| racial demographics? Something that we could learn from?
| renewiltord wrote:
| They are committed to these policies in the abstract but
| any time there are winners and losers for a policy, the
| losers will fight harder than anything.
|
| Second and third order effects are also hard to control
| through publicly popular policy.
|
| And I am not aware of any significantly sized US areas
| that don't have race-discrepancies in educational
| attainment. American society has very strong positive
| feedback loops and I think the strong economies of the
| coastal paradises amplify that. Take any uneven
| distribution of wealth and it will get worse in that
| environment.
| naebother wrote:
| Agreed, rent control newer buildings too.
| billpg wrote:
| Did a landlord write this?
| z3rgl1ng wrote:
| Seriously, what absolute dreck. Completely bad faith.
| kingkawn wrote:
| Bloomberg op-eds on economic redistribution issues are like
| asking oil companies to comment on environmental protections
| chx wrote:
| Thanks, I was searching comments whether anyone had klaxons
| going off in their head reading this drivel:
|
| > If populism on the political right corrupts democracies,
| populism on the left ruins economies.
|
| Might as well stamp "this article is written by a conservative
| fanatic, proceed with caution". Looking at the author his short
| bio says worked for Handelsblatt -- I peeked at wikipedia, why
| am I not at all surprised to find they printed a fake vaccine
| story recently?
| Darmody wrote:
| They are pushing for something similar in Spain. And there's some
| disagreement in the coalition government because the far-left
| wants the controls to be more aggressive.
| [deleted]
| standardUser wrote:
| The goal of rent control - or more accurately rent stabilization
| - should be to smooth out fluctuations in rent over time, not to
| create a class of housing stuck below market in perpetuity. Most
| of what people object to about rent control isn't the attempt to
| stop families form suffering wild rent increases that can
| destabilize entire neighborhoods/workforces, but rather to smooth
| out those increases to give families a proper chance to adapt or
| move.
| kall wrote:
| A different policy (Mietpreisbremse -> rent price brake) with
| this explicit goal is in place in "high-pressure" rental
| markets all over Germany. It means price cannot be more than
| 10% over the local average.
|
| Berlin specifically wanted something more.
| sparsely wrote:
| I expected to agree with that article, but honestly the tradeoff
| seems reasonable. Given just the data presented there, is it
| actually worse if rent controlled apartments are hard to get if
| lots of people are also paying much less rent? I'd really want to
| see some data about lots of people wanting to move to or within
| Berlin who are not able to due to lack of supply. That data may
| well exist but isn't presented here.
| robertlagrant wrote:
| Think about how much money a landlord has to invest with in
| keeping a property attractive to renters. What's the point?
| cassepipe wrote:
| Time to sell for a reasonable price then.
| axihack wrote:
| Exactly, what is the point?
| Mediterraneo10 wrote:
| > I'd really want to see some data about lots of people wanting
| to move to ... Berlin who are not able to due to lack of
| supply.
|
| Even if there were those lots of people unable to move, would
| that actually be a problem in various cases? Unlike many other
| European countries, where the countryside has emptied out and
| brain-drained as its young people move to the big city, Germany
| has managed to keep many of its small towns viable places to
| live and work.
| fallingknife wrote:
| Is it worse if now there is a special class of people who
| happened to be in the right buildings at the right time when
| this law passed who will now forever get discounted rent,
| leaving everybody else to pay full price?
| sudosysgen wrote:
| You mean, exactly like people who have enough money to buy
| instead of rent as real estate values keep climbing?
|
| In Berlin, people that already have social relations and
| support structures are the one that get discounted rent,
| which is what we want! This is better than if wealthy people
| get to pay less for housing. It's not as if the alternative
| made it cheaper.
| crote wrote:
| Exactly, it should be extended to all rental units.
|
| An important part of the regulation is that the landlord
| cannot raise the rent when a new tenant moves in - the rent
| is locked for the unit, not the tenant. This prevents
| situations like New York, where you are essentially unable to
| move.
| ggreer wrote:
| > An important part of the regulation is that the landlord
| cannot raise the rent when a new tenant moves in - the rent
| is locked for the unit, not the tenant. This prevents
| situations like New York, where you are essentially unable
| to move.
|
| Mumbai did this and it was a disaster: https://marginalrevo
| lution.com/marginalrevolution/2017/04/tw...
| PeterisP wrote:
| The consequence of that, as claimed in the article, is that
| when the old tenant leaves, it often ceases to be a rental
| property - it's not offered for rent but put on sale for
| someone who'll live there as an owner. Already there are
| half as many spaces available for rent as it was a few
| years ago, and the number is still shrinking. If this goes
| on, most of the rental stock will get converted to non-
| rental and you'll be able to move only if you can get
| sufficient credit to buy the dwelling.
| rbranson wrote:
| This sounds a lot like land ownership.
| DamnYuppie wrote:
| Well in most of US you can pay off the land but you still
| have property taxes which can go up. Also the tax basis can
| be adjusted based on the market value of similar properties
| in your area.
| rbranson wrote:
| Not in California.
| BurningFrog wrote:
| It turns renters into a kind of owners, yes.
| foolinaround wrote:
| a kind, that enjoys the upsides, but can run away when
| there are downsides without any consequences?
| La1n wrote:
| >enjoys the upsides, but can run away when there are
| downsides without any consequences?
|
| Isn't that why landlords argue they should make profit,
| because they carry the risk?
| sudosysgen wrote:
| Which downsides can they run away from? They pay for
| maintenance, property taxes, and so on. And still pay a
| premium over that.
| compiler-guy wrote:
| They don't pay for these things if their rent is fixed.
| sudosysgen wrote:
| The vast majority of rent controlled cities have rent
| control boards where landlords can request and increase
| in rent in case of exceptional circumstances. In those
| cases, the landlord must show that the rent is not enough
| to cover maintenance, and the increase is granted.
|
| In general though, maintenance on average only costs
| ~150-300$ a month, so it's not necessary.
| tjansen wrote:
| It remains to be seen whether they are just paying less rent,
| or there are other disadvantages. Beside the obvious
| maintenance issue (will landlords invest more than legally
| mandated?), a german-specific issue is that it is quite common
| in Germany that renters who want to end their lease search for
| their own successors. The reason is that apartments often come
| without kitchens, low-end apartments even without flooring. The
| renter needs to take care of that, and if you end your lease,
| your investment is lost. Unless you find a successor who is
| willing to pay for it, which is quite easy if you live in a
| desired, low-rent apartment. Where I live (outside Berlin),
| people pay several thousand euros "for kitchen and floors" to
| the previous tenant to get a city-owned, low-rent apartment.
| Often they pay more than the kitchen and floors are actually
| worth, even though legally they are not even required to pay
| for this. But it's the price to be chosen as successor among
| many applicants. Landlords usually play along, as it's less
| work for them and this process will ensure that they get only
| the most affluent renters. I expect that renters in Berlin will
| be willing to pay even more to get one of the regulated
| apartments, as they are even cheaper.
| steviedotboston wrote:
| You also need to look at how many formerly rent controlled
| apartments have been sold and taken off the market. The charts
| don't really show that, but the articles suggests that is
| happening
| sudosysgen wrote:
| If they are finding homeowners which are not renting them, is
| that not a good thing?
| csunbird wrote:
| But, people are not buying it, companies are. Most known
| offenders are Akelius and Deutsche Wohnen, who just buy
| those apartments for cheap, wait until the renters leave
| (or make them leave), then renovate the apartment and rent
| for 4 times the price. The rich is getting richer, while
| people are being screwed.
| candiodari wrote:
| The purpose of this regulation is to provide cheap rent for
| the poor. Not to enable "the rich" to acquire new real
| estate which they then proceed to not rent out at all ...
| Increasing the number of homeless.
|
| Now of course this legislation "prevented that", by
| refusing owners do this while tenants are in the
| apartments. Except the net result seems to be when tenants
| do leave, the apartments are taken out of the housing
| market altogether, exacerbating the already pretty critical
| problems.
|
| And in the German press you will find accounts of pressure
| tactics (such as schemes to force tenants into default,
| "using" things like a divorce to kick people out (man
| signed contract, woman stays in apartment, gets kicked out
| when man refuses to pay but woman is not allowed to sign
| contract in her own name), creating critical maintenance
| problems ...) to create that situation.
|
| So no, that is a very, very bad thing.
| sudosysgen wrote:
| Apartments aren't kept out of the housing market,
| actually. If they are, then the Vancouver solution is
| very effective - a 1% tax on the value of the property if
| not occupied.
|
| The key thing here is supply and demand. If there is no
| profit to be made in renting out the property, then there
| is little reason to buy them up, in actuality. The
| exception is large companies that buy up a large amount
| of properties to manipulate the markets, but this has
| already been thinked of.
|
| The main result of this if the unoccupied tax is used
| when necessary is a fall in the value of properties. This
| is a good thing for everyone that doesn't own a property
| that is unoccupied. This is what is wanted.
| ska wrote:
| > If they are, then the Vancouver solution is very
| effective
|
| Whatever is going on in Vancouver, it isn't effective (at
| controlling rent prices)
| alacombe wrote:
| > If they are, then the Vancouver solution is very
| effective
|
| Because rent could be considered affordable in Vancouver
| ? In which Canada do you live ?
| foolinaround wrote:
| > the apartments are taken out of the housing market
| altogether
|
| are the apartments just kept locked up?
| DetroitThrow wrote:
| Not that I know Berlin's situation, but hypothetically
| they could be converted into Airbnbs which end up
| competing with local hotels instead of rentals.
|
| I know rental stock immediately opened up in Dublin when
| the pandemic started, for example, before such a large
| increase would have arisen from renters leaving the city
| for suburbs.
| Proven wrote:
| Government busybodies make things worse for everyone.
|
| What else is new.
| yorwba wrote:
| I think this article is getting the interpretation of the facts
| all wrong.
|
| They point to the predictable drop in supply in the regulated
| market as if it was a bad thing, but they ignore where that
| supply is coming from. Those are not newly-built apartments,
| because the price controls don't apply for new construction.
|
| When an old apartment becomes available, it's because the
| previous occupant moved out, e.g. because they could no longer
| make rent. So making rents more affordable leads to fewer people
| having to move for financial reasons, which I think is a good
| thing.
|
| Disclaimer: I live in a regulated apartment and don't intend to
| move, so it's probably not surprising that I like this policy.
| awillen wrote:
| It also leads to fewer people being able to move. Have a kid
| and your one bedroom apartment is too small, but don't have
| enough cash to buy a bigger place? Unfortunately, you're going
| to have to move out of Berlin, because two- and three-bedrooms
| are being sold when their tenants move out, so there's no
| supply available for you to move into.
|
| You're definitely one of the people this type of policy helps,
| but you're benefitting at the direct expense of less affluent
| people who want to move into bigger apartments and who want to
| move into your city from outside of it.
|
| That's fine if it's what they intend with these policies, but
| they're almost always championed as helping poorer people, when
| that's too overbroad to be accurate, because they actually only
| help poorer people who are currently renters and don't need to
| move (and bear in mind they also help rich people who are
| currently renters and don't seem to move, which hardly seems to
| be the goal).
| yorwba wrote:
| > you're benefitting at the direct expense of less affluent
| people who want to move into bigger apartments
|
| Aren't you forgetting about the even less affluent people who
| wouldn't be able to afford a bigger apartment even at the
| same price per area as their current apartment and who'd be
| priced out of the market (a.k.a. forced to move out) by
| rising rents?
|
| > and who want to move into your city from outside of it
|
| I think not being able to move to your city of choice is less
| bad than being forced to leave it. The only way someone can
| move to Berlin without pushing others out is if the supply
| increases, which the rising prices for new apartments
| certainly incentivize. So the policy endures that the
| additional construction required to accommodate newcomers is
| paid for by them, rather than by all citizens.
| awillen wrote:
| "Aren't you forgetting about the even less affluent people
| who wouldn't be able to afford a bigger apartment even at
| the same price per area as their current apartment and
| who'd be priced out of the market (a.k.a. forced to move
| out) by rising rents?"
|
| What? No... the whole point is the answer is supply, not
| rent control. Supply keeps prices down, rent control pushes
| prices up (for those units that hit the market, which are
| the only ones that matter in this case). Having a lot of
| supply on the market is what those people need, and rent
| control is what drives them out.
|
| "I think not being able to move to your city of choice is
| less bad than being forced to leave it."
|
| Okay, that's a fair preference, but the problem is it's
| never what anyone says they're trying to achieve when they
| enact rent control. The reasoning is always to help people
| who aren't well off financially, not to keep outsiders out
| of your city. If xenophobia is the goal, then by all means
| rent control away.
| sudosysgen wrote:
| The proposed rent control in Berlin is sticky, in that the
| rentier cannot increase rent between renters beyond a certain
| amount.
|
| The most likely scenario is that they will find a place to
| move into in a year or so, which will fit their family
| planning.
|
| Otherwise, if they have enough for a modest downpayment as
| the collapse of the renting market leads to increased supply
| in bought housing, they can also buy a condo.
|
| If even that doesn't happen, they can also go into public
| housing.
|
| I live in a rent controlled city. The scenario you are
| describing doesn't happen. When I was a kid, we moved 7
| times. All we had to do was look for housing a few months in
| advance, and move as our lease was up.
| awillen wrote:
| I've also lived in rent controlled cities (like SF), and my
| experience runs counter to yours. Your experience is an
| anecdote, not data.
|
| I get the impression you didn't actually read the article.
| It points out very clearly that when apartments go vacant
| in Berlin, they're being sold, not re-rented. If that's
| what happens when a renter leaves, then there's no stock
| for new renters to move into.
|
| And just throwing in public housing as though it's a
| magical solution is wildly unrealistic, especially when
| you're dealing with large numbers of people.
|
| I'm sure you live somewhere nice, but it's not reflective
| of the world.
| sudosysgen wrote:
| If the apartments are being sold, then they must find
| buyers. If there is no way to rent them, then it's not
| profitable to hold on to them, and their value decreases.
| At that point, people can simply buy apartments, and
| everyone is happy.
|
| My experience is typical and backed by data. In my city,
| roughly 25% of the renting population moves every year.
| ThrustVectoring wrote:
| The thing I'm curious about is the impact of rent controls on
| traffic and commute times. This is a big deadweight loss of
| rent control, I think - people will often move because where
| they work changed, so if person A gets a job in person B's
| neighborhood and vice versa, the efficient outcome is for them
| to swap apartments rather than have opposite commutes. Rent
| control effectively locks people into their current apartment,
| which means some combination of longer commutes and taking
| worse jobs in lieu of an excessive commute that cannot be
| ameliorated by moving.
| ahoy wrote:
| This is an opinion piece in bloomberg, a pro-business, pro-
| wealthy publication. Is there any surprise that they dislike rent
| controls?
| robertlagrant wrote:
| This is true. Same logic goes for anti-vaxxers and doctors. Of
| COURSE doctors recommend going to doctors. They WOULD say that.
| anoncake wrote:
| What do all businesspeople have in common? They are trying to
| make money - and that's all they have in common. So we can
| expect a pro-business publication to advocate for policies
| that funnel wealth to businesses, without much regard for
| anything else.
|
| In contrast, the one thing all doctors have in common is that
| they try to keep people healthy. So we can expect the medical
| community to advocate for policies that accomplish that. Of
| course there are doctors who could potentially have a
| conflict of interest between getting more business and doing
| their job correctly. But then we can still expect both
| factors to play a role, i.e. very few doctors would focus
| purely on getting business. And many doctors don't even have
| that conflict, e.g. employed ones whose job is secure.
|
| If vaccines harmed people's health while benefitting doctors'
| bottom lines, we'd see a split between employed or ethical
| doctors vs unethical self-employed ones. It's inconceivable
| that there's a consensus among doctors for a policy they
| believe is harmful.
|
| Anyway, I doubt vaccines even do increase demand for doctors.
| Administering them is cheap (~5 minutes of a nurse's time),
| treating the diseases they prevent is not.
| [deleted]
| ahoy wrote:
| The difference is, of course, doctors provide healthcare
| services and landlords provide middleman-who-makes-housing-
| more-expensive services.
| pfraze wrote:
| Those aren't really analogous. Doctors aren't pro-vaccine
| because it's good for their business interests. They're pro-
| vaccine because their community agrees that they work and are
| produced safely. In the case being discussed, the argument is
| the anti-rent-control folks are letting business interests
| drive their argument.
| zapnuk wrote:
| The graphs seem misleading or at least raises additional
| questions.
|
| Yes, compared to the next 13 largest cities there seems to be a
| difference. However, the difference in graphs existed even before
| the policy proposal+enactment. The margin is also relatively
| small and only for a small timespan.
|
| There should also be comparison to more comparable big cities
| like Munich, Cologne, Hamburg, or Frankfurt. Other cities are
| substantially smaller or have no (or even negative) population
| growth. Of cause the rent in those cities grows differently
| compared to Berlin. Thereby shifting the average.
| robertlagrant wrote:
| > In a food shortage, for example, regulating the price of bread
| only trades one expression of scarcity (high prices) for another
| (empty shelves).
|
| This is the key statement to refute if you want to argue for rent
| control.
| tom_mellior wrote:
| "Proof by analogy is fraud." -- Bjarne Stroustrup
|
| Even if you don't fully agree with this quote, claiming that
| _only_ arguments by analogy can ever be valid arguments for
| rent control is... surprising.
| crote wrote:
| If the bread price explodes, poor people will starve and the
| rest of the population ends up paying a boatload of money to
| the lucky few bakers. If the bread price remains stationary,
| people will starve randomly.
|
| People are going to starve either way, why not skip the whole
| "make the bakers filthy rich" part?
| alacombe wrote:
| That's petty resentment right here found in both communist
| ethics and catholicism... "if I can't get filthy rich, nobody
| shall be".
|
| If the bakers gets filthy rich, kudos on them !
| krcz wrote:
| When the price explodes, bakers may hire more people and bake
| bread during night and day, increasing the supply.
| sudosysgen wrote:
| Yes, they do this even if the price only goes up 3-4x, it's
| not needed for the price to increase thousandfold.
|
| Also, this doesn't really apply to housing.
| krcz wrote:
| I fully agree, thousandfold price increases would suggest
| that processes that control prices in free market system
| had become unstable. In such cases I'd agree with state
| intervention. Fortunately it doesn't happen that often.
|
| > Also, this doesn't really apply to housing. Correct,
| it's more complex there and some of the reasons are
| mentioned in the article.
| La1n wrote:
| And Berlin needed rent control exactly because this didn't
| happen.
| lasagnaphil wrote:
| Okay, I'll try.
|
| Given the unmeasurable social costs of people starving and
| dying when there isn't enough food (you can say similarily for
| people not having houses and freezing to death when there's a
| blizzard, but also read the sidenote at the end), the
| capitalists involved in selling and distributing food should
| not be compensated equally in monetary terms (by selling at
| higher prices) when there is a shortage of food, since they are
| the ones at fault of not having reserve resources and prepare
| their production line from various disasters such as storms and
| droughts. Even people from the ancient times built and used
| granaries to store food for years and opened it up to their
| fellow villagers when storms/droughts happen (even without any
| profit motives, there wasn't even a notion of "profit" at all!)
| Capitalists in the current era should prepare far better than
| them, as our knowledge of biology, climate, and logistics are
| much more sophisticated than before; a shortage of food should
| be outright unimaginable given the advanced technology we have.
| Once there are empty food shelves, the disaster's already
| happened (at least in the short term you can't materialize food
| anymore by doing smart "economics"), and really at that dire
| point capitalists don't deserve the right to receive profit in
| the same way as normal times.
|
| If the moral argument for this doesn't convince you - then
| there is a much more convincable political argument (of
| "dialectical materialism"), which basically goes as: once basic
| things like food and shelter aren't a given, and then
| capitalists gouge prices up creating an even bigger moral
| catastrophe among the poor, enough people would be fucking mad
| at them and band together wreck shit up, and some people would
| eventually have their heads cut off (as happened in many points
| in society, for example the French revolution). It's only that
| the current structures of power (the state & capital) are much
| more powerful than the past that this is more unlikely to
| happen, but if I were really in power I wouldn't dare try to
| steer closer to this event, as bloodshed doesn't really feel
| that good to participate. And that's the most uncontroversial
| center-wing take I can create.
|
| Sidenote: I think your analogy of bread isn't really comparable
| to the housing problem though, since housing acts less of an
| ideal commodity than food in economic terms. Housing is far
| more troublesome if you approach it in a free-market lense,
| since it's far easier to create a natural monopoly on land than
| anything else, and thus it is hard for free markets to create a
| "fair" price that matches with the actual use-value. That's why
| even some libertarians in support of free markets also think
| economic rent from land is unfair business practice and should
| be controlled by heavy taxes (such as the economic ideology of
| Georgism: https://en.wikipedia.org/wiki/Georgism)
| gruez wrote:
| I read your entire comment and despite being three paragraphs
| long I can't see how it addresses gp's point, which is that
| the scarcity is still there whether you institute price
| controls, and instituting price controls only changes the
| symptoms.
| A12-B wrote:
| Housing is not scarce though, some people (companies) own
| 14 houses whilst others have non. It's not a problem rent
| control can solve, but it's also not a scarcity problem.
| AlexandrB wrote:
| This is a silly simplification that posits that sticking the
| word "market" on something means that it will behave the same
| way and is beholden to the same forces. The bread "market" and
| the housing "market" are not comparable in this way. I think a
| lot more nuance is required for convincing case against (or
| for) rent control.
| dahart wrote:
| Why? That argument doesn't address the fact that many cities
| have an absolute limit on supply in the form of space, and no
| amount of construction that starts today will bring prices down
| today.
|
| Here are some arguments to refute if you want to oppose rent
| control, particularly the first one (copied and pasted directly
| from investopedia):
|
| "Rental prices in many U.S. cities are rising far faster than
| wages for moderate-income jobs. [edit: note here that most of
| the US has banned rent control, and this is happening
| regardless]
|
| "Rent control enables moderate-income families and elderly
| people on fixed incomes to live decently and without fear of a
| personally catastrophic rent hike.
|
| "Neighborhoods are safer and more stable with a base of long-
| term residents in rent-controlled apartments."
| huitzitziltzin wrote:
| > [edit: note here that most of the US has banned rent
| control, and this is happening regardless]
|
| Where do you get that idea? It is false. New York? San
| Francisco? California has statewide rent control as of
| January 1 of last year. Many of the places where people want
| to move still do have rent control. Rent control is not a
| live issue in, e.g., Tulsa, OK or Amarillo, TX, whether it is
| legal or not.
|
| > "Neighborhoods are safer and more stable with a base of
| long-term residents in rent-controlled apartments."
|
| If you have good evidence for this claim, I would like to see
| it. Moreover: "safer" and "more stable" relative to what? I
| guess your claim would be "safer and more stable than the
| counterfactual w/out rent control and with more housing." If
| you have good empirical evidence for that claim, I would
| _love_ to see it.
| inglor_cz wrote:
| Berlin has a lot of empty space, including various
| brownfields that would look better if they were built over.
|
| German construction industry used to be chronically
| overbooked, though. IDK how does the situation look now.
|
| German bureaucracy probably does not help. When it comes to
| red tape, Germany is one of the most onerous countries to do
| anything new.
| bradleybuda wrote:
| Berlin has 4,227 inhabitants/km2, Hong Kong (widely
| considered to be a very livable city, and also one with hard
| geographic constraints on expansion) has 6,300. So we have
| existence proof that Berlin, if it chose to, could support an
| increase in housing of 50% or so, which would certainly drive
| rents way down.
|
| Edit: Not sure why I looked so far away, Paris is at 21,000.
| Like virtually every housing story, this is an example of the
| people who live in a place deciding they don't want anyone
| else to live there, and putting up economic walls that only
| the rich can surmount.
| ChuckNorris89 wrote:
| _> Hong Kong widely considered to be a very livable city_
|
| By whom? Ricchie McRich?
|
| Every working class Hong Konger I talked to (even highly
| skilled ones) said living there is cramped and brutally
| expensive and would like to emigrate.
| tom_mellior wrote:
| > Berlin has 4,227 inhabitants/km2 [...] Paris is at
| 21,000.
|
| These numbers aren't comparable: The municipality of Paris
| is just the small urban core of a much larger metropolitan
| region. Berlin has about 3.7 million inhabitants on 890
| square kilometers, Paris 2.2 million on 105 square
| kilometers.
|
| A fairer comparison is with the Petite Couronne consisting
| of Paris + the innermost ring of its neighbors
| (https://en.wikipedia.org/wiki/%C3%8Ele-de-
| France#Petite_Cour...), which has 6.7 million people on 760
| square kilometers. Still denser than Berlin! But the ratio
| is far less extreme than you made it look. For an
| alternative approach, take Berlin's densest districts:
| Friedrichshain-Kreuzberg, Mitte, and Neukolln add up to
| about 100 square kilometers (like Paris) and a bit over a
| million people. So about 2x less dense than Paris rather
| than 5x.
| La1n wrote:
| I think you would first need to show that bread and housing
| follow the same rules if you want to say that analogy applies
| to rent control
| ghostwriter wrote:
| "You know, Quasimodo predicted all this"
| ridaj wrote:
| > The right answer to that shortage would be to increase supply
| -- for instance, by cutting red tape in zoning and construction
|
| Hmm but didn't they indeed provide incentives for increasing
| supply, by exempting new construction from rent regulation? In
| fact the later argument saying that prices started going up in
| the unregulated market would support the notion that the policy
| is indeed providing a powerful incentive to new buildings. Sure,
| the article also laments that there still isn't enough supply,
| but can one argue that giving more rent money to owners of old
| properties would help fix this?
|
| How did new construction change in Berlin? What about
| homelessness? I don't know but find it shady that the numbers
| aren't shown.
| fabiofzero wrote:
| It's Bloomberg so of course anything helping the poor is a
| "disaster".
| caseyross wrote:
| I get that it's Bloomberg's duty to root for the landlords, but
| to me the data in the article shows a very clear win for renters.
|
| If I'm reading the graphs right, price controls in Berlin have
| slashed rent price growth by nearly 60% for almost all of the
| city's apartment stock.
|
| Meanwhile, rent for the remainder, those apartments built since
| 2014, is only growing 10% faster than the baseline.
|
| So if we're gonna do the math: [lots of apartments * -60%
| inflation], against [fewer apartments * +10% inflation], equals a
| presumed windfall for renters, versus the alternative history
| where this rent control policy doesn't get enacted.
| el_nahual wrote:
| The issue is that _supply fell_ , so while there was a windfall
| for _existing_ renters, anyone trying to join the renter class
| (by moving into the city, growing up and moving out of their
| parent 's place, etc) is unable to find an apartment.
|
| If you project this trend forward 10 or 20 years, you end up
| with a situation where most affordable rentals are being used
| by an aging population and the young have nowhere to live.
|
| This also explains why these policies become entrenched:
| before, the world was divided into rich vs poor; now it's
| divided into (rich + old and poor) vs young and poor.
| dmfdmf wrote:
| If only there was a science that could have predicted this.
| cpufry wrote:
| the dismal science
| BurningFrog wrote:
| Trivia: The term "dismal science" was coined when economists
| argued for abolishing slavery:
|
| > _Carlyle attacked Mill, not for supporting Malthus's
| predictions about the dire consequences of population growth,
| but for supporting the emancipation of slaves. It was this
| fact-that economics assumed that people were basically all
| the same, and thus all entitled to liberty-that led Carlyle
| to label economics "the dismal science."_
|
| https://www.econlib.org/archives/2015/07/the_origins_of_1.ht.
| ..
| dmfdmf wrote:
| It is only dismal if you think money should grow on trees
| which seems to be the premise behind FED policy today.
|
| Is physics "dismal" because we can't have free energy or
| perpetual motion machines (that can do work)?
| [deleted]
| jariel wrote:
| In Ontario and Quebec the entire economies are rent controlled to
| some extent - rents can only rise by a certain amount. It seems
| to work.
|
| Also, with Berlin, perhaps it's an issue of splitting the areas
| that's bad, and also perhaps the excessive nature of the
| controls.
|
| Finally, this may be related to an issue of low interest rates.
|
| Low interest rates give much leverage to landed/owners so rents
| to up even if all other economic issues don't change.
|
| Meaning that there is a kind of 'hidden inflation' which simply
| favours one class (owners) over the other.
|
| Here are the Ontario regs [1]
|
| [1] https://www.ontario.ca/page/residential-rent-increases
| csomar wrote:
| > If the judges nix the legislation, lots of tenants in the
| formerly regulated sector could get hit by huge and even
| retroactive increases in their rents.
|
| Am I reading this correctly? So, these tenants might find
| themselves in thousands (maybe dozen of thousands) of euros of
| debt to their landlord. And I assume they'll be required to pay
| it up overnight? In this case, the politicians really screwed
| these "poor" people in the most unimaginable way.
| fxtentacle wrote:
| "limiting profits is bad" says the worlds biggest pro-capital
| megaphone while referencing a company that usually does paid pro-
| business questionnaires.
|
| "As expected, rents in Berlin's regulated market plummeted in
| relative terms." and "Newly built apartments have therefore
| become even more unaffordable for most people." They are not
| directly lying, but I'd count this as dishonesty by omission.
| Newly built apartments in Berlin's city center were already
| impossible to finance for most people before the regulation
| started. So their complaint is like saying "most people cannot
| afford a home in Pacific Heights" which is true, but irrelevant
| to the regulation.
|
| "There was also an acceleration of apartments going up for sale,
| as landlords tried to cash out of their now less profitable
| investments." You know, for the families trying to live there,
| that is amazing news!
|
| "the landlord tends to sell the unit rather than re-let it"
| Wasn't that the goal of the regulation, to increase home
| ownership by those living there?
|
| "The biggest question is whether this episode of left-wing
| populism has damaged confidence in Berlin's real-estate market
| permanently. If investors fear that local property rights will be
| put at risk in every election, they might stop building houses in
| the city at all." Oh wow. I'd wager that 99% of those living in
| Berlin won't mind if international investment corporations build
| their overly shiny and overpriced apartments somewhere else.
|
| And lastly, this article appears to not mention one critical
| thing about Berlin at all, which is "Wohnungsbaugenossenschaft".
| Regular families joining a non-profit to construct apartment
| buildings for their own use together. One of the goals of this
| regulation was to boost that, and scaring away for-profit
| investors might just be the way to make space for non-profit
| investments.
|
| I don't blame Bloomberg and Ifo Institute for delivering what
| their customer base wants to read. But it would be foolish to
| treat this as objective reporting.
| fallingknife wrote:
| "Communism is bad" says everybody I have ever met who lived in
| a communist country.
| cassepipe wrote:
| Disclaimer : I am not supporting any kind of police state
| with state controlled production
|
| Everybody you met had probably left because of so called
| "socialism", so you have quite a bias in your data. Have you
| heard of "Ostalagia"? There is still a not so small
| "communist" party in Russia by the way.
| fxtentacle wrote:
| I agree, I phrased that badly. I've now edited it to
| "limiting profits is bad".
| radiospiel wrote:
| Whether or not this succeeds or is a disaster a) depends on what
| wants the outcome to be like, and b) when this is settled in
| court. As of now house owners (and remember: we talk mostly
| investment companies, not individual persons) are encouraged to
| speculate that the court overrules rent controls and (somewhat
| illegally) hold back appartments from the market. Once this is
| settled one way or the other these flats will be available on the
| market again, and if rent control survives, at somewhat
| acceptables prices.
|
| Remember that rents did increase ~300% or so over the last 15
| years, but income maybe only 10 or 20%.
| neonate wrote:
| https://archive.is/l3i2w
| beerbajay wrote:
| > as demand from new arrivals far outstripped supply
|
| This is mischaracterizing what is going on. There is rampant
| speculation by multinationals buying up old housing stock and
| attempting to do the New York City model of hyperluxury
| renovations at the expense of existing residents.
| plumeria wrote:
| Would be interesting to see a longer term analysis for Copenhagen
| where rent-controlled buildings exist since longer ago.
| timdaub wrote:
| I live in Berlin. I've found a regulated appartment for rent last
| year.
|
| The author clearly exposes his sentiment in their choice of
| words. There's lots of buzzwords thrown around and not much
| reporting from here. Was the author even in Berlin before
| writing?
|
| Anyways, in Berlin it will now get even "worse" as an initiative
| is now starting to collect signatures to disown "Deutsche Wohnen"
| of hundrets of thousands of flats they own.
|
| I can see that the market is "bad" from that article. My
| experience with renting a flat was different:
|
| The law allowed me to reduce my rent to a price I indeed find
| reasonable. It's roughly 100EUR less. I'm happy with that. And in
| case our supreme court overthrows the Berlin ruling, I've gotten
| read and saved the "shadow rent".
| febeling wrote:
| The situation in Berlin before the policy change was that the
| city government had made it very hard to build apartments at all.
| Each time a project it developed, the developer is blackmailed
| into supporting various unrelated policies, being it parking
| space related, maximum stories, etc., and sometimes capriciously
| denied permission to build. This is how my green-leaning,
| government-trusting architect friends describe the situation.
|
| This happened all the while time Berlin changed from being viewed
| as a forgotten backyard in Germany with few companies and high
| unemployment to the capital city of the dominant and richest
| country in Europe. Especially the great financial crisis
| accelerated this change of perception.
|
| Consequently, many people moved to Berlin. For many years 100k
| people per year moved into a city of 4m. Stated in terms of
| economics, supply of apartments was very steady, and demand
| jumped up.
|
| The sound response of a market is to signal that through price
| hikes. That should encourage investment in residential building.
| When this is being suppressed nothing can even get better. Only
| longtime renters are favored. People with already cheap and large
| apartments benefit. Losers are those young couples expecting a
| baby.
|
| A solution that could potentially work would be to accept
| temporary pains from high prices, remove regulatory obstacles
| from new construction and let the industry find a new balance.
| Maybe accelerate the process by governmental subsidies, if you
| like that sort of policy.
|
| But the current policy can't work in theory, it doesn't work in
| practice. And it only benefits old established interests who are
| privileged already.
| csunbird wrote:
| I moved to Berlin two years ago and the finding a house was
| incredibly exhausting. As the article mentions, there are two
| categories, rent capped apartments and non rent capped
| apartments.
|
| For the first category, there are 2000+ applicants per day per
| apartment, making it impossible to actually have a chance to
| get the apartment. The odds getting that apartment as a
| foreigner that do not speak German is non existent, you
| actually have better odds on playing lottery and winning it,
| then buying a new apartment.
|
| The second category is the overpriced apartments, the
| "landlords" (mostly the same three evil companies) are asking
| stupid amounts of rent for small apartments (1100 - 1200 cold
| rent for 50sqm ??). Those apartments are not accessible to 90%
| of the population. They are very happy to rent to the
| foreigners, since they can extract money from them, plus they
| do not know the local laws, so they can push newbies around.
|
| Currently there are two categories of people living in the
| Berlin as well: The new comers, who are screwed and the old
| renters who rented for cheap, who landlords can not get rid of.
|
| The first category are mostly expats, who are being screwed by
| landlords who do not want to rent to foreigners (especially if
| you are not from Europa), so they are pushed to new, non-rent
| capped apartments, making their lives even harder.
|
| The second category is people rented huge apartments for 300
| Euro per month 10 years ago, with 2% increases per year, who
| are not going to move soon.
|
| Berlin wants to be the startup capital and an expat center, but
| it is not going to happen if they allow systematic exclusion*
| and abuse of expats that are trying to settle in the city.
|
| I can go and rant for days but I think this post is already
| long enough.
|
| * I did not want to use "racism" word here but it really feels
| like it is.
| bogomipz wrote:
| >"The second category is the overpriced apartments, the
| "landlords" (mostly the same three evil companies) are asking
| stupid amounts of rent for small apartments (1100 - 1200 cold
| rent for 50sqm ??)."
|
| Which companies are these?
|
| >"The first category are mostly expats, who are being screwed
| by landlords who do not want to rent to foreigners
| (especially if you are not from Europa),"
|
| Unless I'm reading this incorrectly doesn't this contradict
| your earlier statment that they want to rent to expats "since
| they can extract money from them, plus they do not know the
| local laws, so they can push newbies around."?
|
| I'm curious How did you ultimately end up finding a place?
| csunbird wrote:
| My first apartment was a limited lease for 6 months (like
| AirBnB but a private company), which I could terminate
| within a month if I could find another place. I could not,
| had to extend it to 2 years (the landlord said it will not
| be possible to extend beyond 2 years). After the 1.5 years
| of search, I was able to get not so affordable but
| acceptable place.
|
| 1.5 years to find an apartment, that is not cheap but
| bordering the acceptable rent. Nobody should suffer this in
| their lifetimes.
|
| I am not going to name the companies and get sued. Stuff
| like that are serious in Germany.
| throwaway12903 wrote:
| > 1.5 years to find an apartment, that is not cheap but
| bordering the acceptable
|
| Curious - how far outside of the center of Berlin did
| your search extend, and what was your parameters for an
| acceptable place/rent?
| csunbird wrote:
| First question: I looked mostly in the center, nothing
| more than 7 kms away from my workplace. I needed
| somewhere that I can commute by bike, since the traffic
| and the fight for parking spaces are too exhausting.
| S-Bahn is too overcrowded.
|
| For your second question, double of the rent cap, two
| rooms (or maybe 1.5), don't care if the building is old
| or new. Partly furnished is preferred but I do not mind
| unfurnished.
|
| Please post with your main account if you are going to
| ask more personal questions.
| dna_polymerase wrote:
| > Which companies are these?
|
| Pretty sure they are talking about Vonovia [0], Degewo [1],
| Deutsche Wohnen [2].
|
| [0]: https://www.vonovia.de/en [1]: https://www.degewo.de/
| [2]: https://www.deutsche-wohnen.com/en/
| throwaway12903 wrote:
| > it is not going to happen if they allow systematic
| exclusion* and abuse of expats that are trying to settle in
| the city.
|
| I don't think its deliberate exclusion/racism as you say.
|
| When we looked we always found that there were other people
| more deserving than us. Like a pregnant couple with baby
| always needs more room more than us. If you are German, speak
| German, and are going to live here a long time, it makes more
| sense for landlord. If you don't earn a tech salary you will
| struggle to find anything within the city, so you are
| probably more deserving.
|
| The tech foreigners usually can pay more, they just see
| cheaper rents that they can't get because of rent control and
| feel hard done-by.
|
| If Berlin was your city, Germany your country, would you
| prioritize apartments for the wealthy tech people over the
| teachers for example?
| csunbird wrote:
| All that matters should be how likely the person is able to
| pay the rent and not damage/burn down the apartment/disturb
| the neighbors.
|
| > would you prioritize apartments for the wealthy tech
| people over the teachers
|
| I am not German so I am not sure how to answer that. Logic
| says someone that earns extremely well, has unlimited
| working contract and is educated very well is a very good
| candidate, just as a public worker. But, for some reason,
| the applications that I have sent in German, even though
| the company representative (or very rarely the owner) is
| able to speak English, got 10 times more responses. Go
| figure.
| alacombe wrote:
| > The situation in Berlin before the policy change was that the
| city government had made it very hard to build apartments at
| all.
|
| _Government 's view of the economy could be summed up in a few
| short phrases: If it moves, tax it. If it keeps moving,
| regulate it. And if it stops moving, subsidize it. _
| cassepipe wrote:
| The alternative proposed by the article is basically : let it
| unregulated, the market will provide. Which is how it was before.
| Was the problem solved? No. Maybe it is not the right solution
| but I doubt very much the author is concerned by the problem. The
| article says only some places have their rent capped so the rents
| of the uncapped ones are skyrocketing. I am not convinced it is a
| solution cause I don't claim to be competent in the matter but
| how about all rents be capped? This is a solution the article
| does not even bother to discuss. So it's just yet another piece
| telling you that things are how they are (that is to your
| disadvantage) and nothing should be done about it. The article
| put right wing populism and left wing populism on a equal footing
| but as far as I can see one tries to give access to a decent life
| and public services, the other leaves to fend for yourself while
| blaming any minority group for it.
| cousin_it wrote:
| > _The alternative proposed by the article is basically : let
| it unregulated, the market will provide. Which is how it was
| before. Was the problem solved? No._
|
| Sigh. Here's what the article actually says:
|
| > _The right answer to that shortage would be to increase
| supply -- for instance, by cutting red tape in zoning and
| construction._
|
| That's an alternative reform proposal, not going back to how
| things were before. I think it would work better than rent
| control, because increasing supply is better than haggling over
| fixed supply.
|
| Edit: another possible solution is a land value tax. It's non-
| distortionary (doesn't lead landlords to reduce or increase
| supply) and prevents a lot of rent increase.
| cassepipe wrote:
| So increase offer by deregulating even more? Zoning and urban
| policies actually have a purpose : A nice city to live in And
| I am ready to bet that red tape has been cut again and again
| everywhere without solving the problem. Sorry for
| misrepresenting the article reform proposal but it did not
| strike me as a very innovative solution. More like more of
| the same.
| cousin_it wrote:
| Shrug. If two million people want to live in a city which
| has room only for a million, something has to give. Rent
| control doesn't increase housing. You must either increase
| housing somehow, or leave a million people unhappy.
|
| If you don't mind the other million, and only care about
| people already living in the city, you can make it honest
| by introducing a city-wide Tenant Permit issued only to
| current tenants. Rents stabilize due to fixed demand,
| people aren't tied to one apartment, and landlords are
| incentivized to offer better service. It has all the
| benefits of your plan and none of the drawbacks, right?
| crote wrote:
| "Price changes in the regulated market dropped relative to those
| in the 13 other cities. That's because real estate loses value if
| its future cash flows to landlords are capped. There was also an
| acceleration of apartments going up for sale, as landlords tried
| to cash out of their now less profitable investments." & "And
| whenever somebody does move out -- when moving to another city,
| for example -- the landlord tends to sell the unit rather than
| re-let it."
|
| Sounds like it is a massive success? Those units don't magically
| disappear, they are bought - by homeowners. It seems like the
| landlords were artificially driving up the housing market while
| not adding any value.
|
| The only problem here is that they limited it to pre-2014
| apartments. Maybe they should just extend it to all apartments
| instead.
| sologoub wrote:
| > The caps represent a windfall to one group of tenants: those,
| whether rich or poor, who are already ensconced in regulated
| apartments. Simultaneously, they hurt all other groups --
| especially young people and those coming from other cities --
| by all but shutting them out of the market.
|
| That's not success, that's picking winners and losers. Same as
| with SF Bay Area, Santa Monica (in LA) and any other place with
| rent control - being in place early makes you a winner. Finding
| a vacant rent stabilized place is like winning a lottery.
| Problem is what do you do with young people that should be
| moving out, or moving to the city for school?
|
| Only real answer to housing is to build more of it. Else, you
| force people to move, pay more and/or cram ever more bodies
| into the same space. The latter is also what makes poor much
| more vulnerable, and not just in the pandemic.
| AlexandrB wrote:
| > being in place early makes you a winner
|
| Isn't this just the housing market in general? Why should
| renters not benefit from the same dynamics that owners do?
| neilparikh wrote:
| The solution is make it so that no one benefits from this
| dynamic (via a land tax), rather than just expanding the
| group that gets the benefits (which will never expand to
| include everyone, since land is scarce).
| sib wrote:
| And then, of course, California decided to pass
| Proposition 13 [1] which made sure that owners who got in
| early also "win" vs more recent buyers.
|
| There are owners of identical homes on the same block in
| San Francisco who pay 10x what their neighbors pay due
| only to when they bought (and the resultant purchase
| prices).
|
| This is unlike saner places in the country which reassess
| property values regularly.
|
| [1] https://en.wikipedia.org/wiki/1978_California_Proposi
| tion_13
| smnrchrds wrote:
| I think that quote refers to American style of rent control
| that is tied to the tenant, as opposed to the German style
| that is tied to the building.
| ben_w wrote:
| Unfortunately, Berlin-style appears to mean "moving is
| almost impossible because 50 other people also want to view
| the same flat as you at the same time you're looking at it,
| and you literally can't outbid them".
|
| That was my experience, anyway. I eventually found a house
| share to get started, and after I arrived a hooked up with
| someone who happened to already have a place big enough for
| me to move into.
|
| If I move within the city again, it will have to be by
| buying a place.
| walshemj wrote:
| Which in a lot of cases will be brought by speculators see
| London sf and Vancouver
| wendyshu wrote:
| Maybe read an economics textbook before opining on economics?
| dang wrote:
| Hey, can you please omit personal swipes from your HN
| comments? We're trying for something quite different here:
| https://news.ycombinator.com/newsguidelines.html.
|
| If you know more than others, that's great. If you're going
| to post about it, please share some of what you know so the
| rest of us can learn. Just putting the other person down
| doesn't help, and poisons the atmosphere.
|
| https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor.
| ..
| cbmuser wrote:
| The problem is that's virtually impossible to find new in
| apartments these days.
|
| This law only benefits tenants who already have an apartment in
| Berlin, anyone else is completely out of luck.
|
| Source: I live in Berlin.
| Tenoke wrote:
| Of everyone I know, the very few who looked for and somehow
| got a new flat right now benefit even more as they don't need
| to fear any backrent - their rent is lower from the start.
|
| In my case, yes I benefit from the lowered rent but it's even
| harder to move if I want to (which I would if it was easier),
| I might owe a pretty big amount if the law is overturned, my
| flat is now getting sold and the other tenants are writing on
| the walls and threatening 'war' over the sale (even though
| realistically nobody here can be kicked out for 10-11 years
| after the sale).
| bdowling wrote:
| > Those units don't magically disappear, they are bought - by
| homeowners.
|
| I think you're assuming that the units are bought by owner-
| occupants and not other investors who have higher risk
| tolerance or who are betting that the law won't survive review
| by higher courts.
| awillen wrote:
| So you're driving out renters, who are typically less affluent,
| in favor of the wealthy.
|
| Whether or not you call that success or failure depends on what
| you're trying to achieve, but usually these sorts of actions
| are trying to create housing affordability. Taking most of the
| supply off the market for new renters (by selling to people who
| can afford to buy and by incentivizing those who were already
| renting to stay for as long as possible) definitely does not
| create an affordable situation for those who need it.
|
| Without creating more supply, you end up with one of two
| problems for folks at the bottom. Either you don't regulate
| housing, and their prices go up too much for many to afford, or
| you do something like this and you keep the existing stock
| affordable but guarantee that there won't be nearly enough
| stock for all the people (at the bottom of the economic ladder,
| at least) who want it.
|
| In this case, you're not helping poorer folks as a class,
| you're only helping the specific set of poorer folks who were
| already renters (and who don't need to move into a bigger
| place, since they can't leave their current rentals). If you
| want to move to Berlin and you're not rich, you're SOL.
|
| That certainly doesn't seem to be the intended effect, so based
| on that I don't think it's fair to call it a massive success.
| La1n wrote:
| >So you're driving out renters, who are typically less
| affluent, in favor of the wealthy.
|
| But the landlords who owned (often own many) them were also
| wealthy. So you are replacing landlords with people who
| actually live there.
| gruez wrote:
| >So you are replacing landlords with people who actually
| live there.
|
| ...who are now saddled with decades of mortgage payments,
| and have a high percentage of their net worth being tied up
| in a not very well diversified asset class.
| walshemj wrote:
| But you are buying an asset instead of just paying rent.
| gruez wrote:
| That's the point. People are _forced_ concentrating their
| wealth into a single asset.
| bluGill wrote:
| Which can be good or bad.
|
| If land prices are increasing faster than inflation it is
| bad unless they can get out before the bubble pops.
| Obviously if they bought too high that is a bad
| investment. Lets ignore this and assume a sane market
| where values mostly are similar to inflation.
|
| While property increases with inflation are not nearly as
| good an investment as investments that do better than
| inflation, it isn't as bad as it sounds. The whole point
| of buying property in this case is a place to live. So in
| 30 years you no longer have a rent payment at all, and in
| between your rent never goes up. This payment situation
| needs to be factored in to the calculation since you will
| be living someplace no matter what. (unless you would
| normally live in a cardboard box) As a result people who
| invest in property to live in need to invest a much
| smaller portion of their total portfolio into something
| else. And since this is a place to live it doesn't matter
| how well it performs overall since you are not selling
| (at least not until you go to a nursing home which you
| can/should insure for).
|
| Let me point out that rent doesn't increase when you own
| property. So if you invest just the difference between
| market rent and your rent over the years you will have
| more money to invest. Now that money doesn't have as long
| to grow (since it isn't front loaded as much), but owning
| is still a good part of a long term portfolio.
|
| Note that the above makes some assumptions that may not
| be true, or that could be true but you don't want to for
| lifestyle reasons. That is perfectly fine - there is no
| one size fits all. Every situation is different, you need
| to make your own decisions as best you can. The first
| assumption above is you live there for the rest of your
| life (some amount of trading is allowed, but be careful
| as each trade is costly), the second is you pay off the
| dwelling.
| [deleted]
| ycombinatorrio wrote:
| I learned a new word SOL (S*t outta luck)
| delecti wrote:
| Or its more appropriate alternative, "sore outta luck".
|
| Edit: Not to criticize the profanity version, I prefer it,
| just offering an alternative that doesn't need to be
| censored.
| sudosysgen wrote:
| This is not how it works. Without the possibility to rent out
| or consolidate homeownership, the inflationary pressure on
| home prices collapses.
|
| You create an insane level amount of supply for homeownership
| on this market. An absolutely insane level.
|
| Indeed, the vast majority of increase in housing prices is
| because rents are so high that 7% YoY returns are possible.
| Without these returns, then there is no way to justify
| inflation in housing prices for simple homeowners.
|
| If somehow millions of people do buy houses in Berlin, then
| you build public housing to undercut the price of housing.
|
| The idea that your scenario will happen is not really rooted
| in fact. To me, it seems like a way to rationalize the
| principle that rent control must always fail - whereas in the
| real world it doesn't, see Vienna.
|
| Homeownership in Berlin is very low, at 17% or so. The
| absolute majority of the housing market is based on renting
| out units. Before saturation of homeownership happens, a gulf
| remains.
| awillen wrote:
| "You create an insane level amount of supply for
| homeownership on this market. An absolutely insane level."
|
| You're completely ignoring the fact that homeownership,
| even if prices aren't incredibly high, requires a large
| down payment that many people don't have, which is why they
| rent. Those people still can't afford to buy and are pushed
| out, and they're the ones you're supposed to be helping.
|
| "If somehow millions of people do buy houses in Berlin,
| then you build public housing to undercut the price of
| housing."
|
| This is where your argument totally loses steam. You can't
| just handwave and say you'll build public housing... that
| is an incredibly expensive and politically difficult thing
| to do. When your theoretical solution to the problem is
| something that is very much not guaranteed (or even
| likely), and you pretend it'll just be no problem at all,
| you're ignoring reality and not presenting a useful
| solution.
| sudosysgen wrote:
| Public housing is neither incredibly expensive nor
| politically difficult as long as you have a competent
| government and laws that don't artificially make it more
| expensive (see: US).
|
| The economics are very simple. The price of housing if
| it's not profitable to rent and even less profitable to
| hold will drop until occupancy is high. Those that can't
| put down a down payment will rent, the others will buy.
| If not, the price will just continue to go down.
|
| This argument isn't theoretical. It's an actual process
| that has been done and works.
| criticaljudge wrote:
| You assume prices were merely driven by greedy landlords.
| That is of course untrue. Prices were driven up by the
| popularity of the city, with people seeking a place to rent
| outbidding each other and bidding prices up.
|
| That demand will not simply go away, but newcomers will
| have to buy instead to rent. Or, there will be a huge black
| market. I've read an article about Stockholm were that
| seems to be what has happened.
|
| A big irony is that the left who created the law has hurt
| some of their staunchest supporters, who did subsist by
| subletting their flats, which they had rented at old, low
| prices. That income is now also going away - it is not just
| "greedy rich speculators", but also transgender artists
| getting by on minimum income from subletting their flats
| whom they have hurt.
|
| It is of course possible to lower prices by making the city
| less attractive. Socialism has succeeded in doing that
| already once, that is why Berlin was so cheap in the 90ies.
| gruez wrote:
| >This is not how it works. Without the possibility to rent
| out or consolidate homeownership, the inflationary pressure
| on home prices collapses.
|
| No, as we seen in north america that's not really true.
| Homes can go up on speculation alone.
|
| >You create an insane level amount of supply for
| homeownership on this market. An absolutely insane level.
|
| Is homeownership a necessary component of this? Creating a
| insane level of supply for apartment rental achieves the
| same thing. If there are more units then there are renters,
| prices have to fall to meet demand.
| sudosysgen wrote:
| I'm not speculating at all. The article has the data to
| back the facts : house prices went down in Berlin.
|
| Yes, homes can go up on speculation alone, but this is a
| bubble that will pop. In North America, rising rents act
| as a backstop that prevent the bubble from popping,
| because of guaranteed rental incomes that protect you.
|
| It's not possible to create an insane level of supply for
| appartment rentals. There's two reasons for this.
| Firstly, there's the obvious limit to how much you can
| build within a reasonable commute time with reasonable
| infrastructure at a good quality of life. Secondly,
| studies have shown that 10% increases in supply lead to
| 1% decreases in price, more or less. Coupled with 4% rent
| increases over inflation every year, it's just not
| feasible to rely on additional supply.
|
| In the real world, free markets lead to rent increasing
| right up until the level where too many people are in
| poverty due to high rent. That's because the natural
| increase in rent is simply too high to be counterbalanced
| by supply.
|
| That's why from the worst planned cities to the very
| densest like Hong Kong, housing stays more or less as
| expensive as it can be without people moving out due to
| poverty.
|
| The only solution is to make real estate a barely
| profitable or depreciating asset. This is done here by
| aggressive rent control. As renting stops being so
| affordable, apartments are sold, homeownership increases,
| and renting becomes something you do to prevent
| depreciation, not to make profit.
|
| Crucially though, here, building more apartments stays
| profitable, because they can go to homeowners or to
| people who buy housing as a stable asset (and then rent
| it out). Coupled with public housing, you can get the
| best possible trade-off.
| ProfessorLayton wrote:
| >Secondly, studies have shown that 10% increases in
| supply lead to 1% decreases in price, more or less.
|
| Source?
|
| This also hand waves the fact that a 1% decrease is still
| great in the face of say, a 4% _increase_ , totaling a 5%
| spread -- even more if factoring in inflation.
|
| Sounds like increasing supply is still one of the best
| ways to keep prices in check.
| sudosysgen wrote:
| I don't have the time to dig up the study, but it already
| factored in inflation.
|
| Even with a 5% spread, to hold off real rent increases
| for ten years, you'd need to increase housing by 116%.
| Which is completely unrealistic. This rent control policy
| had the same effect as reversing 12 years of rent
| increases, which would require you to multiply supply by
| 2.5 over those twelve years.
|
| Needless to say, this is not possible.
|
| Increasing supply is assuredly important and necessary
| for keeping prices in check. But it will have a much
| smaller impact than rent control. The main purpose it
| will serve is to make sure mobility is still good.
| ProfessorLayton wrote:
| The affordability crisis many cities are facing are not
| caused by the fact that rent increases exist, it's that
| they're increasing _faster than wage increases_.
|
| One does not need to hold off rent increases for an
| arbitrary amount of time, they just have to stay inline
| with wages to remain affordable. With that in mind, it is
| certainly not impossible to build enough to keep up with
| job/wage growth.
|
| I agree that no single policy can fix everything, but the
| current status quo of pitting the haves (rent control)
| vs. have-nots (newcomers/movers) is not working.
| selimthegrim wrote:
| You could try the Japanese solution of treating houses
| like cars, with strict inspections and tearing
| down/rebuilding essentially buying a new one every 10-20
| years. (Obviously they can't export the used houses so
| it's not a complete analogy)
| gruez wrote:
| > I'm not speculating at all. The article has the data to
| back the facts : house prices went down in Berlin.
|
| but supply has dropped as well. Freezing food prices
| would also drop food prices, but won't stop bread lines.
|
| >Yes, homes can go up on speculation alone, but this is a
| bubble that will pop. In North America, rising rents act
| as a backstop that prevent the bubble from popping,
| because of guaranteed rental incomes that protect you.
|
| Not exactly. Price-to-rent ratios are above 30 in major
| north american cities, reaching as high as 50 in SF.
| While future cashflows might provide some backstop in
| terms of your investment, that's really not much of a
| consolation when you can be doubling your money roughly
| every 20 years with stocks.
|
| >In the real world, free markets lead to rent increasing
| right up until the level where too many people are in
| poverty due to high rent. That's because the natural
| increase in rent is simply too high to be counterbalanced
| by supply.
|
| >The only solution is to make real estate a barely
| profitable or depreciating asset. This is done here by
| aggressive rent control. As renting stops being so
| affordable, apartments are sold, homeownership increases,
| and renting becomes something you do to prevent
| depreciation, not to make profit.
|
| I'm not sure how rent control fixes this. If you have 1M
| families but only 100,000 plots of land, they're going
| bid up the price until enough people can't afford it.
| This dynamic is in play regardless of whether there are
| landlords or not.
| sudosysgen wrote:
| Nowhere does it say that supply has dropped. If renting
| is less profitable, then supply of houses to be sold will
| actually go up.
|
| The ability to rent is not the primary driver of
| speculation. But it drastically lowers downside risk,
| which gives less incentive for anyone to pop the bubble.
|
| >I'm not sure how rent control fixes this. If you have 1M
| families but only 100,000 plots of land, they're going
| bid up the price until enough people can't afford it.
| This dynamic is in play regardless of whether there are
| landlords or not.
|
| Well, empirically, it does fix it, doesn't it?
| joshuaissac wrote:
| > when you can be doubling your money roughly every 20
| years with stocks.
|
| With housing, a poorly-capitalised speculator can get a
| mortgage to buy property, and pay it off using rental
| income, with a deposit of maybe 15-20% of the value of
| the property. This lets them capture the price increase
| on a multiple of their deposit.
|
| It is much harder to do something similar with the stock
| market and loans. Amount loaned would be lower and
| interest rates higher.
| bluGill wrote:
| > It's not possible to create an insane level of supply
| for appartment rentals
|
| This is technically true, but not for the reasons you
| list, and it isn't the case here.
|
| You can always build up. 150 floor buildings are not
| possible - if rent goes high enough they are worth
| building. Nobody is going to build that if they don't
| expect a return on investment though.
|
| It isn't a problem in reality because jobs face the same
| pressures. eventually some company will decide rent in
| those dense neighborhoods (sometimes cities as well) are
| too high, and move. That moves some housing demand with
| it.
|
| Secondly, studies have shown that 10% increases in supply
| lead to 1% decreases in price, more or less. Coupled with
| 4% rent increases over inflation every year, it's just
| not feasible to rely on additional supply.
|
| That doesn't follow. To build more supply the question
| how much it costs to build vs how much you can rent for.
| A a landlord the total profit in rent for the city isn't
| my concern it is my marginal profit that matters. Even if
| we double the supply of apartments in the city, my
| building 100 more isn't going to make much a difference
| in that, but I get a larger share of that 10% decrease in
| price and so my profit is still higher building 100
| apartments than zero.
|
| I don't know what is going on in Berlin (I can guess). I
| know in San Francisco the city has for many years refused
| to allow building at anywhere close to demand. Thus more
| people want to live in the city than actually can get an
| apartment there. Plenty of builders are willing to build
| more supply, but they are not allowed to under reasonable
| terms so they don't. (as a result of this there is a lack
| of experienced people in construction and so even if SF
| allowed unlimited building in practice there would only
| be a gradual uptick in building over 10 years while the
| industry gets experienced people back)
| sudosysgen wrote:
| You are assuming that the only reason anyone would build
| is to rent things out. This ridiculous. A great many
| constructions are for people that own their houses. That
| alone solves the conundrum.
| 762236 wrote:
| Based on what I've seen elsewhere in Germany, Berlin will
| start seeing lots of empty apartments now that it is too
| much of a gamble whether you'll earn profit renting
| (since Germany's laws protect the renter more than the
| landlord, which you can combat with a portfolio of
| properties that earn a certain level of rent to cover the
| non-paying tenant that you can't evict), and because
| there isn't much of a good reason to sell (maybe in a few
| years things improve, or maybe the apartment is useful
| for family, or one's own future retirement home).
| tom_mellior wrote:
| > If there are more units then there are renters, prices
| have to fall to meet demand.
|
| Not if it's so cheap to keep empty apartments around that
| you would rather _not_ make money now, in the hope that
| you will be able to make more money in the future.
|
| It's not exactly the same, but around here there is a
| huge oversupply of spaces for shops/restaurants. Owners
| prefer to keep them empty rather than have someone give
| them money.
|
| EDIT: Well, maybe it's not actually oversupply. There
| might actually be a lot of demand, but not at the
| excessive prices landlords demand.
| arrrg wrote:
| There is still legal uncertainty. The German
| Constitutional Court hasn't settled this matter yet. I
| would assume that that's causing most uncertainty and
| people waiting. A temporary effect until legal certainty
| exists.
| gruez wrote:
| >Not if it's so cheap to keep empty apartments around
| that you would rather not make money now, in the hope
| that you will be able to make more money in the future.
|
| Ironically rent control laws that cause this. Accepting a
| lower rent now would mean locking in a lower monthly rate
| for the future, whereas if you left it empty you can hope
| that the rental market will recover and charge high rents
| in the future.
| sudosysgen wrote:
| You do what Vancouver does, and impose a 1% per month
| vacancy tax.
|
| That being said, I live in a rent controlled city, and
| occupancy rates are upwards of 90%, so that doesn't check
| out.
| mjevans wrote:
| This is exactly the BS that happens with houses in
| foreclosure / bank owned. The solution should be to raise
| taxes on units that are not presently being used or
| actively being refurbished / litigated / etc.
| tom_mellior wrote:
| Commercial spaces aren't rent controlled here, and many
| of them are empty. Many apartments are rent controlled,
| and I've never heard of them being empty for any
| appreciable amount of time.
| gruez wrote:
| >Commercial spaces aren't rent controlled here, and many
| of them are empty
|
| AFAIK that's not due to government regulations, but due
| to how banks handle valuations. Leaving a property empty
| doesn't affect the valuation, but accepting a lower rent
| does. This has effects on the landlords, such as making
| it harder for them to get new loans, or triggering
| covenants on existing loans.
| brmgb wrote:
| If only the state could heavily tax empty apartments and
| cap resell price to counter that. But wait, it actually
| can.
|
| Pushing renters and speculators out of the housing
| markets in favor of people who actually want to settle in
| the city is probably the best you can do as a
| municipality.
___________________________________________________________________
(page generated 2021-03-02 23:01 UTC)