Comment by WalterBright
19 hours ago
The key to understanding the effects of rent control is understanding the Law of Supply and Demand.
Artificially holding down rents will result in housing shortages. The lower the rent controlled price, the worse the shortage.
If the rent goes too low, the building owner will stop doing maintenance. Eventually, the building gets abandoned.
Then again we have high rates of abandoned or unused housing as investment properties that sit idle even with uncapped markets… might as well cap the market if the effect is the same but people pay less rent
If you look closer, it's still Supply & Demand ruling.
Housing is unused when the revenue from rents is less than the cost of taking care of the renter. Renting out a place can have high costs, like having a bad renter.
BTW, rentals can also remain unrented because if the landlord rents it at the current rental rate, rent control laws may force him to maintain that low rent for the long term.
Hence, it is less risky to just leave it vacant.
Rent control has all kinds of self-defeating consequences.
On the flip side section 8 acts as a price floor.
No easy solutions here. I do think if rent exceeds half your earnings as a minimum wage worker that’s a failure of the social contract.
Want people to have kids, make it possible to raise them on a working class wage.
Rationally , since it’s impossible to raise a family on what most people make , people aren’t making people anymore. Not at replacement rates anyway.
Laughable the one thing that all the English speaking capitalistic countries share today is that most of its citizens most of whom don’t have rent control by the way are headed for a lifetime of being a renter all their life.
They are also headed towards paying more than 50% of whatever income they make to rent that’s the United States, Canada, Great Britain, Australia, New Zealand, and Ireland.
I can’t speak for the other countries, but in United States, the so-called luxury apartment is in fashion, and there is nothing luxury about them, except for the amount of money you will be charged to live there.
The shortage of affordable housing has nothing to do with rent control because over most of the country there is no real rent control effective rent control.
America is the land of luxury apartments currently popping up everywhere. What is also ironic is the fact that there are very few states that have anything like Prop 13 in California, which took a ballot initiative passed by the electorate and was not passed by the legislator’s who supposedly represent the people in short, there will be nothing forthcoming for the majority of people across the country. It’s sink or swim for most you are on your own in poverty.
> The shortage of affordable housing has nothing to do with rent control
Oh, it absolutely does. The abandonment of rent properties in NYC is ample evidence.
The point of the comment you're responding to is that shortage of affordable housing is ubiquitous, and you can't blame rent control on that in most places (which don't have rent control in the first place).
I don't think rent control is the most efficient solution to the problem, but believing it's a greater problem than the status quo is delusional. The status quo suck, and it mostly sucks because over the past 30 years housing policies in the West have been driven by the belief that markets dynamics are a good way to manage housing.
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Supply and demand is and always has been a useful first-order approximation. Reality is a lot more complicated.
Dear reader, never believe anyone who says a serious societal problem is "just" anything. Especially on the internet when they use merely a pesudonym to assert their authority.
Especially when the person behind the pseudonym is a one-time washed-out author desperately clinging to their housing stock in Atherton.
> Reality is a lot more complicated.
It's still the Law of Supply and Demand. Just like F=ma always applies, even if the results are complicated.
No, it's not a law in the same way as physical laws. Most of the failures in economics of the past 50 years can be mostly directly attributed to a fatal overcommitment to the belief that these attributed relations are incontrivertible.
What really exists, closest to the limit we will call "hard science" or "physics", is the microcosmic focus on individuals interacting in a market. Everything else -- supply and demand as a theory definitely included -- is a statistical extrapolation from micro-scale interactions. Hence the label of "dismal science". It's dismal because every hardline assumption is inevitably contravened by real life physics.
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Yep. Rent control benefits the people who are already there, but punishes everyone else.
It will increase the price for new comers, lower the quality of buildings due lack of maintenance funding, and decrease new construction.
Rental control is NIMBY for renters who are already there.
> Rent control benefits the people who are already there
Not always. It can trap the person in the apartment, such as constraining where they can work.
It can't trap the person in the apartment because they can leave at anytime.
"Trap" here means the deal is so good that they don't ever want to leave.
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There is a good paper about the effects:
https://www.sciencedirect.com/science/article/pii/S105113772...
Basically if you're in a "rent controlled" unit, you benefit, but live in a dumpster, because the owner don't have the reason to invest in the place.
But the supply of new units is down & all other renters are paying higher rates, because there is no incentive to build new units. NIMBY-ism has the same effect.