[b1r6]

Rent control is bad economics. The simple progression:

1. Local political culture limits natural housing supply growth.

2. Increasing percentages of people can't afford rent due to housing supply not meeting demand.

3. Rent control is enacted for political wins.

4. Property values fall due to decreased utility in ownership.

5. New housing creation falls due to new lack of incentive.

6. End-stage dysfunction; negative feedback loop established.

6A. Lack of inflation-tracking minimum wage exacerbates.

[sampo]

Here is also Paul Krugman in The New York Times 19 years ago:

The analysis of rent control is among the best-understood issues in all of economics, and -- among economists, anyway -- one of the least controversial. In 1992 a poll of the American Economic Association found 93 percent of its members agreeing that ''a ceiling on rents reduces the quality and quantity of housing.'' Almost every freshman-level textbook contains a case study on rent control, using its known adverse side effects to illustrate the principles of supply and demand. Sky-high rents on uncontrolled apartments, because desperate renters have nowhere to go -- and the absence of new apartment construction, despite those high rents, because landlords fear that controls will be extended? Predictable.

...

None of this says that ending rent control is an easy decision. Still, surely it is worth knowing that the pathologies of San Francisco's housing market are right out of the textbook, that they are exactly what supply-and-demand analysis predicts.

But people literally don't want to know. A few months ago, when a San Francisco official proposed a study of the city's housing crisis, there was a firestorm of opposition from tenant-advocacy groups. They argued that even to study the situation was a step on the road to ending rent control -- and they may well have been right, because studying the issue might lead to a recognition of the obvious.

https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent...

[ebog]

It's interesting because the argument these NIMBYs use against studying rent control is the exact same as the one gun rights activists and the NRA used against allowing the CDC to study the effects of gun ownership rates.

These privileged "progressives" need to be put in their place politically.

[dredmorbius]

Sorry, could you clarify that?

[sampo]

Opposing a study of the city's housing crisis is a really shitty thing to do.

[jandrese]

This seems to assume that rent controls are the only thing preventing new home construction (because of the uncertainty of being able to sell units without being hit by rent control), but supply can be restricted in many ways. The most common of which is simply running out of room thanks to natural boundaries (rivers, oceans, lakes) and local policies against building high density housing.

So rent control tends to show up in areas where rents are growing significantly faster than inflation already, meaning the rent control is at best a band-aid over the existing problem. And then the problem gets worse and economists blame rent controls.

[mindcandy]

Additionally, people in rent controlled units are strongly incentivized to stay put, keeping the unit off the market. Knowing this, landlords must estimate the future market and price that in to new rates or they risk being even more below market rate after that new renter has been there for a few years. This is a feedback loop between landlords. Therefore, even if median rent paid in the city is reasonable, all available units are priced sky high.

This leads to people being stuck forever wherever they managed to land on their first try. Got a new job offer across town that pays better? Ready to upgrade from your straight outta school studio apt? Too bad. Moving out of your established rent control would cost you so much you’d be moving for an effective loss. Just stay immobile and keep that unit off market for decades.

[asdff]

I see this argument a lot about how bad it is to be stuck and I really can't wrap my head around how its presented. Laid bare its "you've been underpaying so long you won't be able to afford overpaying."

If the landlord suddenly demands double the rent and you don't have rent control, and everywhere else in town demands double the rent, you are homeless. If you have rent control, your landlord cannot double your rent, but it still goes up at a fixed % a year, and you aren't gonna go homeless.

Housing prices have rose faster than wages can keep up, either you offer some limits at how much you can gouge from a tenant or you accept the consequences of low income workers forced to live far from their low wage job (increased vehicle usage due to being far from convenient transit, more congestion on the roads, more pollution in the city), as there's just not enough jobs in these far flung areas.

The great irony is that all of these debates and issues and perilous environmental and economic situations could all be avoided if we simply built dense supply to match demand. This is the U.S., we do nothing better than create heaps of supply to exceed demand. Distal suburbs hastily constructed in wildfire lands aren't the answer; you have to build housing where you've built the jobs. That means building UP so people don't have to travel for hours and hours sideways to find something they can live in with their wages.

[phil248]

"Knowing this, landlords must estimate the future market and price..."

No. Just because a landlord is saddled with low rent units does not mean they can charge more for vacant units. They can only charge what the market will allow. They can't magically find renters willing to pay 50% above market just because they have some units being rented for 50% below market.

[VHRanger]

Correct. The most credible study on the matter (Diamond et Al. 2018) makes it clear rent control over the decades evolves to hurt the disadvantaged the most.

[k__]

What's the alternative?

[b1r6]

To aggressively build housing. But this requires local politics to cordially ignore the calls to keep the status-quo. In many places, it isn't possible. :/

[crdoconnor]

Raising LVT proxies (e.g. property tax) would make the NIMBYs quieten.

Untaxed land -> higher property values -> NIMBYs start getting agitated about proposed housing developments taking chunks out of their home equity by increasing supply

[mises]

I like the approach Houston has taken: no zoning. Many say it won't work, but it does. HOAs pop up in some places if they really don't want commercial.

[throwawaysea]

OK, but isn't the existence of zoning basically the same as the existence of HOAs, in that people have chosen to enact these policies locally, much as HOAs enact hyper-local policies? You seem to be OK with HOAs but not zoning laws, so my question is why are zoning laws bad when it is the choice of their residents (through representative democracy) that they enact policies that preserve their area's character and quality of life?

[mises]

Basically, HOAs are smaller scale. Also, there's a big difference between a bureaucratic gov't doing it and a bunch of residents doing it. Here's the thing about zoning: the people on whom it is enacted probably have a part of one vote in the city council. The decisions are mostly made by the rest of the city. This is especially true in a city as large as Houston.

It's the classic problem of tyranny of the majority, which is best solved through hyper-locality (i.e. HOAs).

[throwawaysea]

I disagree with the framing of this as 'tyranny of the majority'. The size of the group of people which is allowed to enact policies is entirely arbitrary, and I don't see a principled reason as to why HOAs would be OK but cities would not. I feel those who are OK with HOAs but against city-level policy-making that constrains growth are likely just drawing the line in a way that matches their own interests or ideologies.

I also don't understand why you are framing government as inherently bureaucratic as part of this argument. If that's the case and it justifies not having policy-making left to public governments, why not apply the same logic wholesale and say that we don't need city- or state-level governments at all?

[mises]

> city-level policy-making

How would you propose to do this? Houston is an incredibly large and diverse city, and different places have different needs. It's much easier for people from the actual place to come to a resolution than bureaucrats in a council chamber, many of whom have essentially zero specific knowledge of the area or problem at hand.

> why not apply the same logic wholesale

I think we should. The more sovereignty we can reserve to individuals, the better. That which must be given up should be given first to as hyper-local an organization as possible, growing in scope/scale only as needed.

> why not... say that we don't need city- or state-level governments at all?

Because obviously some things (like, say, some city issues) can't be handled well by a government smaller than a city. This doesn't mean that everything needs to go to them. You're deliberately misunderstanding my arguments to try to discredit them.

[sixo]

The implication of that framing is to somehow overcome: "Local political culture limits natural housing supply growth"

via - ignoring NIMBYs or at least reducing their influence, rezoning for density, deregulating to allow smaller/denser/cheaper constructions...

[jseliger]

https://news.ycombinator.com/item?id=16704501

[aglavine]

The alternative is:

Make towns growth into cities. A lot of heartland available. A lot of people wants to own their house. Good Mortgages. Good construction credits. Industries can have tax benefits to be there.

[dredmorbius]

Land value tax.

[legitster]

Zoning enough housing to meet demand.

[Nasrudith]

There is technically a second option - better transit to handle it but it is usually a worse one and like landfills they have to be built somewhere. And of course the most efficient, scaleable, and clean transit benefit from higher density housing. And of course people resist that as well. The problem with rent isn't that we don't have a cure but that people don't want to take their medicine.

[lern_too_spel]

Rent subsidies. https://www.harris.senate.gov/news/press-releases/amid-risin...

[dredmorbius]

By the same logic as how LVT decreases rents, subsidies are simply a net economic transfer to landlords.

They might be a reasonable very short-term emergency measure for a few, but long-term, this exacerbates the problem.

[lern_too_spel]

Wrong. Long term, subsidies encourage building more housing. Rent control has the opposite effect. On top of that, subsidies can be directed to bring the most benefit to the city (teachers, for example), while rent control benefits whoever happens to be renting at the time it is instituted. There are better long term options, but the political reasons for rent control are because the short term problems can't be ignored, so they aren't actual alternatives to rent control.

[dredmorbius]

Subsidies encourage more housing as much as any other demand-increase does, which is to say, not at all, where supply is effectively constrained. Existing actors in the landlord, real estate, and finance markets all benefit from constrained supply and price inflation.

See: https://web.archive.org/web/20190115035057/https://plus.goog...

You've got to break that logjam, and LVT is one of the most effective ways to do that.

Remember: they're not making any more land. You can build out (sprawl, congestion) or up (density). Low land taxes or high improvements taxes both discourage density and encourage sprawl. You cannot change land-use by adjusting demand parameters, long-term and large-scale, only supply and holding costs.

Land value tax.

[lern_too_spel]

Land value tax requires a constitutional amendment in California. Once again, with feeling: it does not solve short term problems and is therefore not an alternative to rent control.

Also, you've ignored that renters are still encouraged to increase housing supply with rental subsidies. If they have enough votes to enact rent control, they have enough votes to increase housing supply for the long term solution.

[sisu2019]

Do nothing and let the market sort it out. It's time to try some actual laissez fair now that intervention has failed, as was predicted by most economists.

Minimal zoning, minimal taxes, minimal codes. Just boil it down to the raw essentials and give a legal guarantee that every building permit application will be processed in 6 weeks and furthermore legally guarantee that for new buildings all of these new rules are immutable or 10 to 20 years.

[zjaffee]

Rent control tacked to region wide inflation levels is still good policy even if it's bad economics. People should have an inherent right to place, if they didn't the immigration and native rights debates around the world would be non-existent.

Rent control also has the positive effect that if renters put in effort to improve the economic value of their community and neighborhood, that they wouldn't be displaced in the process. I'd also point out that rent control doesn't always have to happen as a result of low supply, nor does rent control necessarily reduce housing construction should zoning be relaxed in the process (in the era with the highest levels of rent control in Manhattan, was also the era of the highest amount of construction).

[rsync]

"People should have an inherent right to place ..."

If that is the case, wouldn't we all just choose Aspen (or La Jolla or Zurich, depending on tastes) ?

It's not obvious to me how recognizing an inherent right to live in any place would be operable ...

[zjaffee]

This isn't about choosing where to live, and as a matter of fact Zurich does have very strong tenant protections and rent controls. This is about if you've lived somewhere 20 years, and the neighborhood changes, where you were a part of improving the conditions of the neighborhood, you should have the right to remain in your home at a price you can afford.

We as a society should incentivize people improving their neighborhoods, as right now we're doing the exact opposite in areas with large numbers of renters.

[lr4444lr]

If people have an "inherent right to place" that extends to the actual address, what's the incentive to private residency land ownership?

[zjaffee]

I probably wasn't clear on this, but I'm referring more towards the broader neighborhood a person lives in. At least currently, rent control and land ownership is the only clear way to prevent outsiders from coming in and disrupting the community.

[jschwartzi]

Just what kind of outsiders are you so worried about?

[zjaffee]

The kind that come in, buy up property and evict every tenant living in said building, followed by raising prices such that no one who lived in the area previously could afford it.

This isn't about outsiders who move to a neighborhood with the goal of having a place to live, this is about investors walking into a neighborhood and viewing it as a financial opportunity.

[lr4444lr]

So you DO mean right to place by address, when pressed about it. That's a pretty nativist impulse.

[leetcrew]

why of all things should people have the right to live in a dwelling they dont even own for a fixed price in perpetuity? prop 13 is pretty awful but at least it makes slightly more sense than rent control.

[zjaffee]

I never said it should have to be at a fixed price, and you could ask the same question for why does a person own property that they don't live in.

Landlordism and rent seeking is an inherently immoral thing that we allow to exist in our society, and we need land value taxes alongside reasonable rent controls (like the ones Oregon just passed) to stop these behaviors.