[HN Gopher] Rent control isn't working in Sweden
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Rent control isn't working in Sweden
Author : ZeljkoS
Score : 221 points
Date : 2021-08-26 13:13 UTC (9 hours ago)
(HTM) web link (www.bbc.com)
(TXT) w3m dump (www.bbc.com)
| igammarays wrote:
| I am appalled at how many comments in this thread appeal to the
| "laws of supply and demand" and economic theory as if a
| theoretical model could apply perfectly to something as complex
| as housing. The map is not the territory. The invisible hand of
| the market cannot do its work if it is prevented by the realities
| of building codes, high capital/safety/aesthetic costs of
| creating supply, the psychological costs of losing your home and
| irrational behaviours associated with it, the desirability of
| having less rich/poor segregation, and the fact that a
| neighbourhood community cannot form if people keep moving around.
| Stability in housing is a highly desirable goal even at the cost
| of efficiency of markets.
| ItsMonkk wrote:
| All of those things are just a symptom of the economic problem.
| Existing owners lobby for those things because those things
| make them rich. Every building not built leads to everyone in
| the neighborhood making another dollar. When being a NIMBY
| makes you money, everyone becomes a NIMBY.
|
| When you align incentives and setup a Land Value Tax, not
| having enough housing in an area raises taxes. Suddenly people
| come out of the woodwork becoming YIMBYs to get those people
| housing so that their taxes drop.
|
| If people still want aesthetic and other factors, they can have
| it. But it's going to cost them.
| kwertyoowiyop wrote:
| He pays $1260/month and is unhappy because he believes it should
| be half that?
| nivenkos wrote:
| I pay the same roughly.
|
| You have to understand that Swedish salaries are far, far lower
| than US salaries.
|
| Like a top-end senior engineer would get $100k here.
| DavidVoid wrote:
| I really don't think you can look at something like rent control
| in isolation and say "rent control good" or "rent control bad",
| because how well it works really depends on what other regulatory
| decisions you make.
|
| Something worth mentioning for example (which the article
| doesn't), is that between 2007 and 2014, around 26,000 rented
| apartments ( _hyresratter_ ) in Stockholm were sold by the
| municipality and turned into owned apartments ( _bostadsratter_
| ). The percentage of owned apartments in Stockholm went from
| being 44% in 2006 to 55% in 2013 [1].
|
| If you self-sabotage the existing rent control regulations by
| reducing the supply of rented apartments, then of course the
| waiting times will increase, which you can then use as an
| argument to try to abolish rent control.
|
| [1] https://www.svd.se/ett-paradigmskifte-pa-stockholms-
| bostadsm...
| beervirus wrote:
| > If you self-sabotage the existing rent control regulations by
| reducing the supply of rented apartments, then of course the
| waiting times will increase, which you can then use as an
| argument to try to abolish rent control.
|
| Rent control _always_ self-sabotages by reducing the incentive
| to build more and better housing.
| DavidVoid wrote:
| Which is why it shouldn't be done in isolation; you also need
| to have other regulations in place to increase the incentive
| to build more and better housing.
| beervirus wrote:
| Yes, the solution to bad regulations is more regulations.
| nivenkos wrote:
| I live in Sweden, rent control is practically non-existent for
| most people now. The trick is to buy a place as soon as you can,
| unfortunately property prices are also going up (20% YoY!) so
| that's tough too.
|
| In Sweden you can't usually privately rent out an apartment for
| more than 2 years, without returning to live in it for some time
| (or selling it). So this puts a lot of pressure on to buy a place
| to live in, as the rental market is a disaster of moving every
| year.
|
| Sweden needs to build far, far more flats and houses. Like 10x
| current levels at a minimum. The population has increased by 20%
| in the last 20 years.
| pbuzbee wrote:
| Why are property prices skyrocketing in seemingly every western
| country? Is this a chronic lack of supply? Inflation? Something
| else?
| nivenkos wrote:
| Housing becoming an investment rather than somewhere to live
| in.
|
| Why is Bitcoin so overvalued?
|
| Once it becomes a "store of value" the price just goes crazy.
| anchpop wrote:
| That shouldn't affect the price of rent though. Landlords
| are largely price takers and have no pricing power. But
| rents are also going up.
| rory wrote:
| Mostly societal accumulation of wealth and consistently low
| interest rates (which are low in part due to the high ratio
| of accumulated wealth to productive capacity).
| amai wrote:
| But do cities without rent control in general see sufficient
| supply in apartments? Somehow I start to believe that with or
| without rent control we see in many places a shortage in housing.
| So if the prices are not to blame, what is the real reason?
| yawaworht1978 wrote:
| --pydry 7 hours ago [-]
|
| >Only around 8% of Swedes live in households spending more than
| 40% of disposable income on housing, compared to 15% in the UK
| and almost 40% in Greece, according Eurostat data.
|
| Hold on, how can they say uk is 15percent, I had banker friends
| who escaped London because of the housing prices.
|
| Sure, Leeds and other regions are cheaper, but the economy is
| rather limited there.
|
| Source, used to live in London and other parts of the UK.
| ericyan wrote:
| Based on what I learnt from my economics class back in the day,
| rent control is never supposed to work. A ceiling on rents would
| reduce the supply and eventually the quality of housing available
| will also drop.
|
| Rent control is usually a vote-winner, but vast majority of
| economists would also agree that it is a bad policy.
| jollybean wrote:
| 'Rent Control' and 'State Housing' are completely different
| subjects.
|
| Quebec and Ontario have province-wide forms of rent control (i.e.
| max rent increases etc.) and it works well enough.
|
| 'State Housing' is for poor people only.
|
| State Allocated Housing for 'regular citizens' is probably a bad
| idea, you end up in a Soviet Style situation with valuable things
| allocated based on power or other infidelities, long waiting
| lists, lack of maintenance etc..
|
| Also, 'housing' doesn't mean everyone gets to live posh. If
| you're 27 and are not earning a whole lot, well, what can you
| expect really? You get a flat in possibly a not so nice building,
| that's it.
|
| I don't get why people would expect the state to provide for them
| in the 'poshest' part of Sweden. I wonder if we looked at prices
| in the more marginal areas, what those would be and if they are
| more affordable.
| Wolfenstein98k wrote:
| Price controls never work - they just change the currency you pay
| with from dollars to time, and housing quality.
|
| One of the few things Econ 101 is certain about is that price
| controls never work.
|
| This cannot be said too many times. Price controls never work.
|
| Not even if you really want them to.
|
| The most basic lessons in economics cannot be taught too clearly:
|
| https://en.wikipedia.org/wiki/Parable_of_the_broken_window
| humaniania wrote:
| I think that landlord control might be more effective. Make it
| extremely undesirable for a person to own multiple single family
| residences. Hoarding housing shouldn't be a viable business.
| someelephant wrote:
| Unfortunately that still doesn't increase the supply. If
| Sweden, like Canada, is experiencing higher population growth
| than housing growth, prices will continue increasing. There are
| simply not enough places to live.
| anchpop wrote:
| in what way is someone who owns multiple residences and renting
| them out hoarding them? Why would the number of houses people
| own affect rents at all?
| jdasdf wrote:
| Rent control works just fine in doing what its intended to do.
| It's just that what its intended to do isn't to provide housing
| at affordable prices, but to gain votes for those who implement
| rent control.
| mdorazio wrote:
| To save you from reading to answer the clickbait title:
| insufficient supply combined with people abusing the system to
| sublet for profit or gift rent controlled apartments to friends
| and family.
| ahoy wrote:
| so the same things that cause issues in NYC
| nivenkos wrote:
| It's not the same as NYC though. Most renters in Stockholm
| are renting second-hand or commercial and are not covered by
| rent control at all.
|
| It's more akin to the council housing crisis in the UK.
| NovemberWhiskey wrote:
| Right - "rent control not working because of predictable
| outcomes of rent control".
| ahoy wrote:
| alternatively, "Rent control not working because government
| allows it to be undermined."
| 988747 wrote:
| Rent control is not working because it cannot work - it
| is directly contradicting the laws of nature, such as
| supply and demand. Housing gets build in order to extract
| profit from it. If you disallow profit, you are
| disincentivizing new housing construction, and you create
| perverse incentives to work around rent control.
| occz wrote:
| >the laws of nature, such as supply and demand.
|
| This has got to be satire, right?
| 988747 wrote:
| It is actually not. Basic laws of economy are much like
| the laws of physics: they work the same whether you
| believe in them or not. Trying to circumvent them with
| legislation such as rent control leads to various second
| order effects. For rent control that means limited supply
| and worse quality of the available apartments. Also:
| people unwilling to move, occupying apartments much too
| big for them, just because they are rent-controlled.
| occz wrote:
| I know that the observable properties of economic systems
| happen regardless of belief. It's just seriously strange
| to equate them with 'laws of nature'. Next thing you know
| someone is going to call something like the law of
| demeter a law of nature. Just sort of absurd, really.
| TheOtherHobbes wrote:
| Strange how rents were manageable in the UK while there
| was a national not for profit council house building
| program.
|
| Perhaps there's a lesson to be learned from that.
| imtringued wrote:
| Land is expensive and nobody wants to tax it.
|
| More generally. Non reproducible assets/aka monopolies
| can extort more money out of people now that people have
| more money thanks to low interest rates. Notice how being
| rich doesn't make you rich because of abuse of monopoly
| power to do perfect price discrimination.
| imtringued wrote:
| There is no such thing as non undermined rent control.
|
| There are a thousand things to do with a property and the
| government decides, hey guys, stop that 1 thing out of
| thousands. Then people will do all the thousand other
| things. The government then acts surprised that its
| incomplete policy has failed.
|
| You can also just tax the land.
| mc32 wrote:
| How do you even monitor against fraud if even in
| communist countries this could happen? People will game
| it, if there is "profit" in it.
|
| The only way to avoid it is a very tyrannical East German
| system where people rat on each other to, we'll, gain
| something, maybe that coveted apartment...
| oytis wrote:
| How do you monitor that people are not working illegally?
| Or are not selling drugs?
|
| It's hard to make sure either of this never ever happens,
| but it is definitely possible to make sure it's not
| happening as much as to become a social problem.
| mc32 wrote:
| That's my point. It's not possible and you can only get
| close if you use tyrannical methods of surveillance and
| invasions of privacy.
| oytis wrote:
| Even in a democratic country if the only jobs people can
| find are sketchy illegal ones without social protection
| you can tell the government has failed at its job.
| YPPH wrote:
| It seems awfully hard to enforce all cases.
|
| If a subletter voluntarily enters into an agreement with
| a lessee to pay above the rent control amount, who is the
| victim?
|
| Is it not a victimless crime?
| ahoy wrote:
| The notion of "victimless crimes" has always been odd to
| me. The harm might be diffuse, or indirect, but I'm
| certainly hurt when illegal sublets drive up the cost of
| rent in my neighborhood.
|
| Even if the "agreement" was "voluntary" for the parties
| who entered it, it can still affect third parties.
| danuker wrote:
| > I'm certainly hurt when illegal sublets drive up the
| cost of rent in my neighborhood.
|
| Would you be less hurt when there is nothing available?
|
| All rent control does is favor "first-come-first-serve"
| instead of "who pays the most".
| danuker wrote:
| I suspect the subletter is breaking the law, due to
| charging more than is allowed.
|
| The victim is the person not able to rent on a first-
| come-first-serve basis instead of someone willing to pay
| more than is allowed.
| YPPH wrote:
| >The victim is the person not able to rent on a first-
| come-first-serve basis instead of someone willing to pay
| more than is allowed.
|
| That's indeed the only sensible thing I can think of. But
| it's a very odd thing to me (that a mutual, consensual
| agreement between two people is governed by the interests
| of third parties).
| TheOtherHobbes wrote:
| That's because there's a thing called the social
| contract, which makes it clear to anyone who can parse
| situations like a mature adult that all policy has wider
| social consequences, and short term gimme gimme can have
| disastrous long term results.
|
| And also because "consensual agreements" rarely are.
| Typically one party has more power than the other and can
| force terms.
|
| By definition, you only get truly consensual agreements
| when the balance of power is equal - which it very much
| isn't in rental markets with deliberately restricted
| stock.
| exhilaration wrote:
| Isn't the landlord the victim in this case? The extra
| money should be going to them, not the lessee that is
| likely violating their rental agreement.
| 988747 wrote:
| But the landlords are all greedy capitalists who do not
| deserve that money anyway /s
|
| For the group of aspiring startup founders HN community
| has a very high percentage of Marxists in it :)
| TheOtherHobbes wrote:
| Not all. But these kinds of stories aren't as rare as
| they should be.
|
| https://www.quora.com/What-is-your-worst-landlord-story
|
| Of course some tenants are terrible too, but those
| stories seem to be rarer.
| dijit wrote:
| Supply underpins most of the housing crisis'
|
| London is having a hard time because supply is less than
| demand.
|
| Stockholm, NYC, Paris for the same reason.
|
| It's really one of the largest things that seemingly every
| developed country is struggling with right now.
|
| I don't personally believe Stockholm is more affected than
| any other European capital except perhaps Berlin, which
| somehow seems to stay affordable (likely because of supply).
| Nav_Panel wrote:
| >It's really one of the largest things that seemingly every
| developed country is struggling with right now.
|
| Not Japan! Tokyo rents are surprisingly cheap relative to
| other major cities.
| ilammy wrote:
| The key here is considering housing a consumable with
| 20-year lifespan tops, as opposed to multigenerational
| investment vessel.
| kalleboo wrote:
| Yeah this is the big difference. A home in Japan is not
| an investment. You buy a home to live in, the mortgage is
| around the same or a bit cheaper than rent, but the
| property depreciates like a car, and while the land has
| value, the house you built on it has negative value
| (since the next tenant has to tear it down).
| jlokier wrote:
| > (since the next tenant has to tear it down).
|
| In Tokyo?
| nwj wrote:
| My understanding is that in Japan zoning restrictions are
| controlled at a federal rather than local level. I've
| read that this helps prevent local incumbents using the
| zoning system to exclude new construction.
|
| In other words, Japan lacks the regulatory environment
| (common in all these other countries) that depresses
| supply.
| merpnderp wrote:
| How is something as simple as basic supply and demand still a
| shocker to so many people? Rent control is just the government
| picking the winners and losers, with those who are corrupt,
| play dirty, and generally antisocial being the winners.
| TheOtherHobbes wrote:
| Which only happens in housing, and not in - say - defence
| contracting. Or banking.
| occz wrote:
| > How is something as simple as basic supply and demand still
| a shocker to so many people? Rent control is just the
| government picking the winners and losers, with those who are
| corrupt, play dirty, and generally antisocial being the
| winners.
|
| Because it's not just about supply and demand, and attempting
| to frame it as such is seriously reductionistic.
|
| Essentially you're at Why #1 here, and you have at least 4
| more Why's before you even begin to scratch the surface of
| the root cause
| imtringued wrote:
| The people who are against rent control want to solve
| problems before they begin. The ones who want rent control
| want to appear to solve problems after decades of
| mismanagement.
|
| Of course, abolishing rent control doesn't get rid of
| mismanagement but rent control is generally used to justify
| mismanagement.
| epistasis wrote:
| This would be a far more convincing comment if you could
| hint at these other directions, otherwise it's just
| extremely condescending.
|
| I'm a big supporter of rent control. But I also think the
| problem here is supply and demand. I've never met a supply-
| and-demand skeptic that would do anything except deny its
| applicability. They could ever explain why themselves or
| point to somebody else's explanation. And I've met a fair
| number of such folks.
|
| I'm left thinking that they just don't want to see new
| homes or new people. But if you have an explanation, I'm
| all ears.
| occz wrote:
| I was wary of trying to go down the rabbit hole of
| explaining more of the situation, as I don't feel that
| I'm enough of an expert in the subject. I was merely
| critical of the lack of nuance in the analysis ("it's
| just supply and demand").
|
| But let's give it a shot!
|
| There's no denying that there is a lack of supply in
| housing in some parts of Sweden, particularly in
| Stockholm, where there are very long queues to get a
| reasonably priced apartment to rent. There's no denying
| that rent controls are probably one contributing factor
| to why the supply is too low. But it's important to note
| that it's just one of many variables in this equation. So
| what other contributing factors are there?
|
| Well, for one, acquiring permits is pretty damn hard in
| Sweden. It's a long process with a lot of NIMBYism, not
| entirely unlike what I've understood is the case in San
| Francisco.
|
| There's also the issue of rental units being profitable
| on a far longer horizon, leading investors looking to
| make their money back quickly to look at the buyers
| market instead. Which leads us down the path of the very
| high prices in the buyers market. What's causing that?
| For one, very low interest rates in the housing loan
| market (about 1-2%), but also tax policy, giving lenders
| a tax deduction relative to their interests payments.
| Yes, you read that correctly - buying a home, ie being
| richer than average, comes with tax deductions.
|
| In Sweden, paying off your home loan for a long time
| wasn't even required - you just continually paid the
| interest, and perhaps lent even more money against your
| home when the value increased.
|
| There's also the fact that the public housing providers
| have more or less been dismantled in many cases, and sold
| off to what essentially amounts to slumlords, attempting
| to game the ever-living hell out of the rent control
| rules. The playbook is more or less:
|
| - Buy old public housing
|
| Then - Spend as little as possible on upkeep, be actively
| hostile to current tenants - When anything goes wrong
| inside the rental unit, refuse to do anything but a full-
| scale renovation
|
| And
|
| - When any tenant moves out, perform a full-scale
| renovation
|
| And finally
|
| - Legally raise the price, as the standard of the rental
| unit has increased, often increasing the price as much as
| 50%
|
| I don't pretend to know the answer to this complex issue,
| nor do I pretend to entirely understanf every part of it.
| Nor do I claim that rent control is the right answer or
| the wrong. But one thing is for sure - reductive
| arguments claiming that rent control is the root cause is
| wrong on the basis that it does not begin to understand
| the issue even slightly.
|
| Hopefully this begins to cover some of the nuance of the
| issue.
| merpnderp wrote:
| All you did was point out why there wasn't enough supply.
| We all know why big cities have a supply shortage and it
| is because regulations and existing property owners make
| it either impossible or too onerous to build more homes.
| What you did was just state the obvious take away from my
| statement in a long winded manner, while apparently under
| the misunderstanding that there's someone left who hasn't
| heard this all before.
| epistasis wrote:
| Huh, I didn't except to agree with you nearly 100% on
| this, but I do!
|
| These are all very legitimate concerns. But at the heart
| of all this is still the supply problem, the lack of
| housing.
|
| I also agree that blaming this on rent control is wrong.
| But the real problem is enacting rent control, then
| saying "that's enough, problem solved." Because at the
| core there is still the shortage problem, which makes al
| the other problems worse.
|
| Has rent control "worked"? Both yea and no. It has worked
| at what it is meant to do, which is great. But it hasn't
| solved housing, as too many proponents say it will.
| Similarly, more housing alone won't solve everything, but
| it makes all these other problems much easier.
| alistairSH wrote:
| Title is also, potentially, not actually supported by data...
|
| >Only around 8% of Swedes live in households spending more than
| 40% of disposable income on housing, compared to 15% in the UK
| and almost 40% in Greece, according Eurostat data.
|
| Something is keeping rent low in Sweden (relative to a few
| other European counties).
| nivenkos wrote:
| There are separate controls on being able to rent out flats
| for more than 2 years.
|
| So you can't really be an absentee landlord.
|
| The rent controls apply to first-hand contracts (kinda like
| council housing in the UK). Which is basically non-existent
| for working people now.
| melolife wrote:
| Rent control does keep rent low. What it creates is a supply
| problem, which could possibly explain the decades-long wait
| list for an apartment in Stockholm.
| nivenkos wrote:
| Those queues are for public first-hand contracts. You can
| always rent second-hand (for up to 2 years, from a private
| owner), private first-hand (more expensive queues from
| development firms), company rentals (in some cases, your
| company can be a guarantor, and you rent like a commercial
| entity with no time limit or deposit, etc. but usually
| higher rents), or you can buy a place.
|
| The issue is there aren't enough first-hand contracts, or
| enough properties in general. But the rent controls as
| discussed only apply to first-hand contracts, which are the
| minority.
| epistasis wrote:
| It potentially creates a supply problem, if certain
| assumptions are met.
|
| However those assumptions rarely hold in practice. In the
| US, to get a construction loan, you can't assume a big rise
| in rents in coming years. So the financial decision to
| build new housing is gated by an effective assumption of
| rent control by the financiers.
| bjoli wrote:
| There are other things at play. If the low prices were the
| only thing stopping new houses from popping up, the 5x
| price increase for buying apartments would have solved all
| the problems in Stockholm.
| bjourne wrote:
| It may also be interesting to note that rent control is
| supported by 75 to 80% of the population. For a policy that
| "isn't working" it is strangely popular.
| flavius29663 wrote:
| This reminds me of the grocery shopping in communist Romania.
| My family would spend so little on groceries every
| month...maybe 400 LEI out of 2 salaries of 2000, so under
| 10%. The catch is there was nothing on the shelves, if they
| would bring in bread you would have in instant queue for 2
| hours. Same for cabbages, carrots etc.
|
| If you just look at the expense you'll miss the fact that
| people don't get enough groceries, or apartments.
| ransom1538 wrote:
| "Something is keeping rent low in Sweden (relative to a few
| other European counties)."
|
| Weather.
| tbihl wrote:
| Typical populace, responding to incentives and trying to find
| ways to thrive.
| WalterBright wrote:
| Governments have been trying to repeal the law of supply & demand
| for 4000 years. It has never worked yet. It's not just capitalist
| countries were rent control fails, it fails in communist
| countries where people are assigned housing, and it fails on
| military bases where housing is assigned.
| refurb wrote:
| The alternative to rent control that doesn't distort the market
| as much is direct subsidy of rent by the local govt.
|
| Rents go up from $800 to $1600? Well, the local govt coughs up
| $600 to soften the blow.
|
| Now that seems egregious right? The govt enriching these rentier
| landlords? Well yeah.
|
| Why is it better? Because the govt will do anything to avoid such
| payments. I don't know, things like building more housing?
|
| It's a great arrangement! Make the pain focused on the people who
| can actually do something about it.
| aaggarwal wrote:
| Most housing discussions seems to avoid one of the main reason
| driving the prices up, their treatment as an investment vehicle.
|
| Residential housing should not be used as an investment vehicle.
| Period. Its primary purpose is to allow families to own and live
| in the house. Mandating that can eliminate the rich
| landlords/foreign investors buying houses just for investment,
| stabilize the demand and drive down the prices.
|
| One way to mandate that could be progressive property tax based
| on how many properties you already own with a max cap on number
| of allowed residential properties one can own. This might
| decrease incentive to build new housing for developers, but can
| be solved by temporary tax breaks for building new housing.
|
| Am I missing some second order effects?
| akamaka wrote:
| The second order effect is that without real estate investors,
| the market for rental accommodations will eventually disappear.
| Having no rental market would by default accomplish the goal of
| having everyone own their own home, but it would cause plenty
| of other social and economic pain.
| tryptophan wrote:
| >One way to mandate that could be progressive property tax
| based on how many properties you already own with a max cap on
| number of allowed residential properties one can own.
|
| This would do nothing. Investment ownership of housing is tiny.
| It is the homeowners who push for policy to reduce construction
| of housing and boost prices.
|
| Getting rid of zoning + Land value taxes are the answer.
| akouri wrote:
| Who will supply the capital to build housing in this world you
| propose?
| aaggarwal wrote:
| City and state governments can offer temporary tax breaks for
| building new housing in certain zones to attract capital.
| This is already done in a way when government is trying to
| attract capital for new industries via SEZs.
| jungturk wrote:
| Homeowners, coops, collectives, local government, or NGOs?
| ItsMonkk wrote:
| Yes.
|
| Anytime you create a new law, you should, like good code,
| remove all of the hard-coded values within it. Ideally all laws
| should be pointfree[0]. Having a max value of owners can easily
| be routed around(I don't own this house, this company, that I
| happen to own, owns this house!), or setting some tax breaks
| for developers are both nasty hacks that wouldn't make it
| through code review. The Land Value Tax would.
|
| [0]: https://wiki.haskell.org/Pointfree
| jungturk wrote:
| A high tax on the capital gains at sale could also work well
| here.
|
| I'm also curious whether decoupling housing from investing
| could be useful in stabilizing prices.
| aaggarwal wrote:
| One problem with high tax based on capital gains at sale is
| that it needs the sale to happen and you start running into
| issues where people never sell and houses will get inherited.
| This still doesn't tackle the problem head on.
| kazinator wrote:
| LOL, are those buildings in Sweden?
|
| Here is Richmond, BC, Canada:
|
| https://goo.gl/maps/TjvH4Js2n9h8Z6uZ7
| tommymachine wrote:
| "in Sweden"
| daleharvey wrote:
| This is a curiously timed article from the BBC, an outlet
| generally opposed to Scottish independence given the pro indy SNP
| and Scottish Greens are currently negotiating a coalition that
| would have them form a government. Rent control has been has been
| one of the core things negotiated for by the Greens
| (https://www.snp.org/nicola-sturgeon-announces-historic-
| snp-g...).
| HPsquared wrote:
| What a surprise, the forces of supply and demand can't be
| overridden by wishful thinking. Perhaps building more housing
| might make it easier to find a place to live.
| styren wrote:
| No, people in Stockholm (generally) are not interested in
| buying newly constructed housing. People want to move into
| already established neighborhoods and especially turn of the
| century style housing in central Stockholm, which exacerbates
| the issue. If "jUsT bUiLd mOrE" would solve all our problems we
| wouldn't have this mess.
| bjoli wrote:
| If the last 20 years has taught us anything it is that it is
| not that simple. The price increase of new built houses and
| apartments has been record breaking, yet we don't build more
| houses than we did 20 years ago
|
| And the houses that get built are lower quality.
| thinkharderdev wrote:
| We seem to have settled on the worst possible equilibrium in
| a lot places where housing prices are market rate but also we
| have a huge tangled thicket of regulatory processes which
| severely limit the amount of new housing we can build.
| nivenkos wrote:
| On the other hand, the separate controls stopping people from
| renting out private flats for more than 2 years has helped to
| stop absentee landlords, and helped to keep prices reasonable
| up until recent years.
|
| Property ownership should be restricted to resident citizens
| only, and rental to a government monopoly (like alcohol is
| here). We shouldn't pay 10x more just to serve as an investment
| vehicle for wealthy foreigners, AirBnB owners, etc.
| TheGigaChad wrote:
| COMUNIST! You should get a one way ticket helicopter ride.
| atatatat wrote:
| > resident citizens only
|
| What's your version of this definition?
| nivenkos wrote:
| Citizens of the country, who are also resident in the
| country.
|
| You can get citizenship in Sweden in 5 years for example,
| so it isn't so extreme.
| Hokusai wrote:
| 5 years + 3 years of queues + 1 year to a decision = 9
| years. Unless you marry a citizen, that speeds up the
| process.
| jacquesm wrote:
| Except of course that if you read the article you'll notice
| that the main reason it does not work is because people abuse
| the system. The forces of supply and demand _can_ be
| overridden, but then you have to enforce the rules and that is
| where things are derailing in this particular example. People
| subletting rent controlled apartments for profit or passing
| them on to relatives is the problem, not the rent control by
| itself.
| rory wrote:
| The only reason drug prohibition doesn't work is because
| people abuse the system by dealing illegal drugs.
| jacquesm wrote:
| Which has absolutely nothing to do with this subject.
| rory wrote:
| Although your tone is rude, I'll give you the benefit of
| the doubt.
|
| > _The forces of supply and demand can be overridden, but
| then you have to enforce the rules_
|
| Enforceability is a key factor in whether a law will
| work. "Proper" use of rent control, like narcotic use, is
| very difficult to enforce without extremely authoritarian
| measures.
| Plasmoid wrote:
| You can no more override supply and demand than you can
| override the CAP theorem. If you don't have sufficient supply
| then demand responds either with shortages or high prices.
|
| People are rationally responding to incentives that exist.
| It's hard to get a rent controlled apartment because there is
| more demand than supply. So people are incentivized to give
| them to family because otherwise it could take a decade to
| get them.
| jacquesm wrote:
| Of course you can: governments do this all the time.
| Tariffs, incentives, taxes, subsidies, laws.
|
| People in this case are responding to the need by renting
| out rent controlled apartments for a very large premium to
| people who under normal conditions may not be eligible to
| live there in the first place. Same thing here in NL, with
| in the larger cities a healthy dollop of AirBNB tossed in
| for some extra artificial shortage.
| 238475235243 wrote:
| Reminds me of the Pratchett / Discworld song "wouldn't it be
| nice, if everyone was nice?":
|
| https://www.lspace.org/fandom/songs/wouldnt-it-be-nice-if-ev...
|
| (sung to the tune of "It's a Small World")
|
| If we all were friendly
|
| I'm sure you would agree
|
| That the world would be a better place
|
| For you and for me
|
| And if everyone was kind
|
| I'm sure no-one would mind
|
| So let's all be nice
|
| Chorus:
|
| Wouldn't it be nice if everyone was nice?
|
| Wouldn't it be nice if everyone was nice?
|
| Wouldn't it be nice if everyone was nice?
|
| Let's all be nice.
|
| Being good to people
|
| Is lots of fun
|
| And it makes a difference
|
| To everyone
|
| And a smile is a frown
|
| When it's turned upside down
|
| So let's all be nice.
|
| Repeat chorus ad nauseam.
| teddyh wrote:
| (Warning: Tangential rant.)
|
| Yes, we should all be nice to everyone. Except to people who
| are not nice. Those are the outgroup. We, the nice people,
| are nice, because we are not those not-nice people. You
| should avoid those not-nice people. Do not associate with
| them. Shun them. Exclude them from your life. Block them.
| Refuse them service. Take all possible actions to make sure
| not-nice people are excluded and removed. Make sure all the
| nice people knows who the not-nice people are, so that all
| the nice people can avoid the not-nice people. Learn the
| signs of not-nice people. The subtle flags and secret
| signals, the words they use. Learn to never use those words,
| lest someone mistake you for a not-nice person. Call out
| loudly every time you see or hear someone use those words,
| for they must surely be a not-nice person! The not-nice
| people are always trying to sneak their way into your life,
| so you must be on constant lookout for all suspicious flags
| and signals. Call out loudly every time you discover a not-
| nice person, so that every nice person can be alerted, and
| take proper action.
|
| Remember, we must all do our part in being nice!
| alkonaut wrote:
| > by wishful thinking
|
| What is the wishful thinking in this case? I see it as a
| deliberate tradeoff: you accept a black market and massive
| queues, for the idea of people with any background or income
| living in the city. You could allocate by lottery or by queue
| time or by market rates. The last one balances supply and
| demand, but it doesn't allow a city that has non-rich people
| living in central locations.
|
| So the question is: do we want to balance supply and demand if
| the cost is a gentrified city core? And that's the tradeoff.
| mensetmanusman wrote:
| We need to build more cities from scratch.
| bjourne wrote:
| Utter garbage. Yes, Sweden has housing problems just like every
| other country in the Western world so that is no reason to
| conclude that rent control isn't working.
|
| What happened in Stockholm, where I live, and other cities was
| that apartments owned by the municipality were sold to the
| tenants. The reason for this sale was ideological; the liberal
| politicians in charge thought it was "bad" for the municipality
| to own apartments and want to "privatize" the the housing market.
| This resulted in the tenants getting to purchase their apartments
| cheaply and those apartments later rose massively in value so the
| former tenants made huge profits by reselling them.
|
| This naturally reduced the number of rental apartments and made
| the competition for them much stiffer. The people who couldn't
| afford to buy their own apartments had to compete with others in
| the same situation for the remaining rental apartments. Thus the
| rents for these apartments rose, but since they were rent
| controlled, they didn't rise as much as they "should have"
| (according to economists and landlords). Thus, a rental contract
| became an asset that could be resold for profit. This made it
| very hard to get hold of rental contracts since they are treated
| as assets that are always rising in value. If you have contract
| to an apartment in a nice neighborhood in Stockholm, you are
| never ever giving it up. If you don't live in the apartment you
| just rent it out second hand and you make a nice profit by
| gouging whoever is forced to rent it from you.
|
| So "Mr Stark" is complaining about his high second hand rent.
| What he doesn't understand is that that is the rent he would have
| had to pay if there was no rent control. The landlord would rent
| out apartments to the highest bidder and the highest bid, 11 000
| kr, happened to be his.
|
| The problem is that more people want to live in city centers than
| there is space in city centers. So either you let landlords
| charge whatever they want, which quite obviously will lead to
| only rich people affording to live in city centers (and poor
| people in bad neighborhoods), or you distribute apartments
| according to some kind of queuing system, which quite obviously
| will lead to long waiting times. You can't solve this problem
| perfectly for everyone. Some people will not get to live in the
| most desirable areas and some people will have to live in the
| undesirable areas.
| pydry wrote:
| >Only around 8% of Swedes live in households spending more than
| 40% of disposable income on housing, compared to 15% in the UK
| and almost 40% in Greece, according Eurostat data.
|
| I wonder what metric they use for "not working".
|
| It's not like a _lack_ of rent control is creating vast new
| supplies of housing here in London and as far as Im aware the
| _fastest_ period of homebuilding in NYC was in the 50-60s when
| rent control was at its strictest
| (https://cbcny.org/sites/default/files/media/image-caption/Ho...
| ).
| joefife wrote:
| The ONLY reason the BBC have published this article is because
| Scotland are proposing rent controls.
|
| The BBC have gone full union and need to knock any Scottish
| Government proposal.
|
| That is the only reason this article is published. Don't read
| too much into it.
| mc32 wrote:
| A realistic way to manage this demand issue has two options:
| build more units (can't go on forever), or stabilize the
| population. Else, you double bunk or triple bunk like in Soviet
| times. You can't magically solve a shortage via price controls.
| Retric wrote:
| Population doesn't grow that fast, you can build enough to
| keep ahead of the curve for a long time especially if you
| keep zoning in check. What nobody mentions is the real reason
| rents go up is an oversupply of jobs in the area vs housing.
| Keep the housing to office space ratio reasonable and rents
| never explode, except that shifts costs to business rather
| than individuals.
| luckylion wrote:
| > Population doesn't grow that fast
|
| You can't really look at country-wide population though.
| The population of e.g. Germany is pretty stable, but within
| Germany there's a lot of movement with people moving to the
| large cities. Rent is rising in those cities, while it's
| getting lower and lower the further you move from those
| cities.
| longlivedeath wrote:
| UK has lots of politically-allocated housing too, but its main
| problem is that it's not adding enough new stock because of the
| restrictive planning system.
| spankalee wrote:
| "politically-allocated housing"?
| longlivedeath wrote:
| as opposed to market-allocated
| hackerNoose wrote:
| I live in Sweden and I can attest that rent control is a
| disaster. Lofty political aspirations aside the simple truth is
| that the middle class does not want to live in the crime-ridden
| suburbs and will do anything to stay out of there. As that is
| the only place where you can rent they're forced into taking
| huge loans and buying something in the city, or they can try
| their luck on the unsurprisingly flourishing black market. The
| effect of this is that Sweden now has one of the highest
| private debt burdens in the world. As long as the prices keep
| going up the system keeps limping along, but if that would ever
| change there could be some interesting consequences.
| dont__panic wrote:
| Do you have any links or additional information about the
| "crime-ridden suburbs"? As an American, I was really
| surprised to hear that another country has the opposite issue
| we seem to have: crime-ridden cities (particularly since
| Covid-19 started wiping out businesses and foot traffic in
| many city centers). I'm really curious why Sweden has more
| crime in the suburbs, and would love to learn more!
| tacker2000 wrote:
| Sweden has a huge problem with violence in their suburbs:
| https://www.theguardian.com/world/2021/may/26/fatal-
| shooting...
|
| https://www.nytimes.com/2018/03/03/world/europe/sweden-
| crime...
| toxik wrote:
| Rent control is not the cause. These suburbs you correctly
| identify as undesirable would not become more palatable just
| because landlords were allowed to extract extortionate rents
| from an inherently limited supply resource.
|
| What you suggest would in fact probably lead to MORE
| segregation and MORE of the same issues.
|
| Wages don't magically rise because you abolish rent control,
| either. You would simply price out the less wealthy to
| live... in the shitty suburbs.
| [deleted]
| FooBarBizBazz wrote:
| > the fastest period of homebuilding in NYC was in the 50s when
| rent control was at its strictest.
|
| A lot of things happened in the 1950s. How am I supposed to
| untangle cause and effect? I'd more likely credit the return of
| American troops from the war, the baby boom, home loans as part
| of the GI Bill, and the economic power of a country still
| ramped up for wartime industrial output, but existing in a
| world in which every other industrial power had been reduced to
| rubble.
| gbronner wrote:
| New construction was exempt from rent controls. So people
| built aggressively. But later, all of that new construction
| got regulated again, and construction has never picked up to
| that extent, due to the 'recapture'
| Yoofie wrote:
| Is there a source for this?
| jcranmer wrote:
| Don't forget that during WW2, the availability of
| construction materials was heavily curtailed due to diversion
| to war production. A fair amount of that homebuilding would
| have been making up for the lack of homebuilding in WW2 and
| consequent housing shortages.
| theonlybutlet wrote:
| My first guess is period of time in the early 70's known as
| The Great Inflation. Primarily driven by the abolishing of
| the gold standard. Not sure what the gold mining to
| construction rate was prior to this point but thereafter they
| could print it faster than they could build and this type of
| inflation where there is little growth in actual output
| creates asset bubbles. Just like this latest episode of
| quantitative easing has led to housing price inflation around
| the world right now.
| ruddct wrote:
| The 50s-60s were a boom time compared to the following decades,
| but were nothing compared to the preceding decades. NYC's
| biggest building boom was the ~1900s-1930s, after which things
| fell off considerably.
|
| https://www.renthop.com/studies/nyc/building-age-and-rents-i...
| marcinzm wrote:
| >It's not like a lack of rent control is creating vast new
| supplies of housing here in London and as far as Im aware the
| fastest period of homebuilding in NYC was in the 50s when rent
| control was at its strictest.
|
| They started to _remove_ rent control in the early 50s due to a
| housing shortage. So by your argument removing rent control
| helps increase supply.
|
| http://www.tenant.net/Oversight/50yrRentReg/history.html
| nivenkos wrote:
| In Sweden it _only_ applies to first-hand contracts. So I
| don't think NY is a good comparison here.
|
| The main issue is that the government doesn't build enough.
| There are just nowhere near enough first-hand contracts, like
| not even the same order of magnitude.
|
| They've effectively abolished the system by just never
| building any, much like council housing in the UK.
| theonlybutlet wrote:
| Thinking this might have been the case... Good strategy
| amongst the more extreme neoliberals out there. Can see
| them doing it with the NHS too, play the long game,
| dismantle it piece by piece and then when everyone has
| forgotten what it once was like, the private solution
| becomes insatiable when compared to a disfunctional system
| that supposedly "never worked".
| rory wrote:
| Here's a more complete picture. Sweden is consistently among
| the least affordable across metrics:
| https://www.oecd.org/els/family/HC1-2-Housing-costs-over-inc...
|
| > _The median burden of rent payments for tenant households is
| highest in Finland, the Netherlands and Sweden (30%), Norway
| (29%), and Denmark and the United Kingdom (28%)_
|
| That said, it's not very different from its peers, so I doubt
| rent control is having a huge effect.
| ARandumGuy wrote:
| Yeah, that sounds like rent control doing it's one job:
| preventing existing tenants from being priced out of the places
| they already live. I don't think there's a single advocate for
| rent control that believe it will solve all housing problems.
| marcinzm wrote:
| >I don't think there's a single advocate for rent control
| that believe it will solve all housing problems.
|
| I mean, OP literally did that, erroneously implying that rent
| control increases supply by using a historically incorrect
| example from 50s NYC.
|
| This is why people get so annoyed with many proponents of
| rent control, they don't stop mid way as you do but keep
| going and implying it solves all housing problems.
| pydry wrote:
| >I mean, OP literally did that, erroneously implying that
| rent control increases supply
|
| False. OP (me) was implying that it didnt meaningfully
| _restrict_ supply.
|
| I suspect a longitudnal study would find the two variables
| to be tenuously related at best.
|
| >This is why people get so annoyed with many proponents of
| rent control
|
| Because they make wrong inferences?
| marcinzm wrote:
| >False. OP (me) was implying that it didnt meaningfully
| restrict supply.
|
| The OP said "fastest period of homebuilding" with fastest
| being in italics. I don't see how that can be read as
| anything except saying rent control increases supply.
| flavius29663 wrote:
| it does that for current tenants, but in a growing city the
| incentive to build is severely reduced. Also the incentive to
| buy is severely reduced, meaning all incoming tenants have a
| hard time getting places to live.
| howinteresting wrote:
| To the extent that the incentive to build is reduced, the
| problem is with the idea that incentives should determine
| the rate of building, and not with rent control.
|
| Providing housing security to existing residents through
| rent stabilization is a moral imperative. Homeowners such
| as myself have access to it through mortgages. Renters
| should have the same.
|
| Beyond that, of course we need to build a ton of new
| housing. That can either be done by the state directly, or
| by loosening zoning regulations, or by some other means.
| flavius29663 wrote:
| > of course we need to build a ton of new housing
|
| To build a ton of new housing, you need investors willing
| to do so. If you have a million dollars, would you invest
| to build in a rent control city, or in a city where you
| can raise the rent as you wish? Most people would choose
| option 2, thus creating shortages in rent control cities,
| which in turn make the housing more expensive than it
| would be if the rents would be free-market.
| Leherenn wrote:
| It is really the lack of investors that is causing the
| lack of supply? I was under the impression that it's
| mostly that building more is not allowed/very difficult
| (for various reasons), not that there is a lack of
| capital.
| toxik wrote:
| Correct, in Stockholm for example, it is absolutely not
| as simple as "investors turn away", far from it.
|
| In fact, they did build housing. Luxury housing that
| doesn't solve the problem at all. Student apartments that
| are so expensive to live in, you have to work a job while
| studying.
| KptMarchewa wrote:
| If you build luxury housing, then people moving there
| should free up some space. Of course that does not
| happen, and they hoard properties because of lack of real
| property taxes in most places. Some are using them to
| fuck over new buyers, like California.
| howinteresting wrote:
| As I said, then the solution is to lessen the importance
| of the incentive system and for the state to do so, for
| example.
|
| There are things in life we treat as core moral values
| even if they cause issues with incentives. For example,
| people should not go to prison for not paying their
| debts, even though it runs against incentives. Rent
| stabilization should be one of them as well. The rest of
| society should adjust.
| flavius29663 wrote:
| > people should not go to prison for not paying their
| debts
|
| Try to not pay your taxes and you end up in prison in all
| the countries I know about.
|
| Anyway, I feel like your argument works against you,
| actually. I think a core moral value is to allow anyone
| to move into the city if they wish so. With rent control,
| you limit the privilege to live in a city mostly to those
| born there. This is worse than the unfair advantage you
| have when raised in a wealthy family. At least anyone can
| study and make a good life later on, but rent control
| doesn't allow for much movement altogether. If you're
| born outside the city - bad luck.
| chrisseaton wrote:
| > It's not like a lack of rent control is creating vast new
| supplies of housing here in London
|
| They seem to be building as much housing in London as it's
| possible to do so - new blocks of flat flying up all the time.
| epistasis wrote:
| It's really hard to estimate the sufficiency of construction
| visually. What we notice is a change from the past trend.
|
| However what's needed is sometimes entirely disconnected from
| the past trend. Ask a lot of people in San Francisco, and
| they will say that there's been a huge amount of building of
| new apartments, even though they are nowhere close to
| matching the 2% growth rate of US population, much less the
| much higher growth rate that a thriving urban area needs to
| match the trend of people moving from rural areas to urban
| areas, or to match an increased preference for urban life
| over suburban life.
| zip1234 wrote:
| It's because we see construction in a concentrated area
| where it is allowed, but then there are VAST areas off
| limits to anything but building a bigger house.
| rguillebert wrote:
| There's also pretty big restrictions on how high you can
| build in most places, I looked up the zoning document for
| Tower Hamlets and the parts of the borough allowing tall
| buildings is extremely tiny.
| PragmaticPulp wrote:
| Rent control actually works great for the limited number of
| people who can get into rent-controlled housing. They love it!
| Unless you want to move to a different apartment, or have your
| friends move near you, or have any pressure on your landlord to
| improve the property, or...
|
| It's everyone else who suffers the most. Usually they have no
| choice but to move somewhere else or stay at home with parents,
| so you can't get an accurate picture by looking at aggregate
| household statistics. Unless you're deliberately trying to
| ignore everyone excluded by these policies.
|
| Rent control is one of those policies that sounds great as long
| as you ignore second-order effects and pretend the population
| and economy never change. In practice it just creates a
| different system of haves and have-nots while removing any
| chance for the market to compensate.
| ChicagoBoy11 wrote:
| The same can be said for minimum hourly employment
| requirements, too. It is interpreted as a guarantee to make
| $X, but in reality, it is literally a prohibition to make
| <$X. Most people I talk to take employment (at the aggregate
| and individual level) as constants when discussing this, but
| that's not how this works.
|
| For employment, for instance, much more useful analysis comes
| out of lifetime income analysis. We really ought not care how
| many people earn minimum wage... we ought to really care how
| their wage changes over time. Not even suggesting that there
| isn't merit to a minimum wage, but just that our discourse of
| it almost always omits the point you bring up about "everyone
| else who suffers." That's important to talk about.
| Spooky23 wrote:
| That's comparing apples to oranges.
|
| Minimum wages reduce some of the exploitation that low
| quality employers will always engage in. If you travel to a
| state that has the lowest minimum wage for waitresses, you
| won't find more waitstaff, lower prices or better quality.
| Just more misery. Any further erosion of worker rights in
| this gilded age is gross and unacceptable.
| sokoloff wrote:
| When I travel to places with lower minimum wages, I do
| tend to find lower prices.*
|
| Get yourself a breakfast omelette plate in San Francisco
| and the same order in Jackson, MS. I can pretty much
| guarantee that the plate in Jackson will be less,
| possibly 50% less.
|
| * I don't claim it's caused by the minimum wage
| difference, but it seems pretty strongly correlated.
| michaelmrose wrote:
| You are expected to tip generously as without your tip
| money your waitress wont be able to eat as she is only
| paid 3.93 an hour plus tips.
|
| In addition she is even more likely to make use of state
| services like food stamps and medicaid which in effect
| you and I help pay for even if we don't even live in that
| state let alone eat at that diner.
|
| I don't think its cheaper its just subsidized by
| everyone.
| Spooky23 wrote:
| San Francisco is like Disneyland for the nouveau riche.
| Rents, wages, everything is insane because workers have
| to get shipped in. Your breakfast plate in Manhattan,
| where poor people are still allowed is pretty cheap.
| kritiko wrote:
| As a New Yorker, I have been surprised when I travel that
| food isn't cheaper many places...
|
| For instance, I searched "Brunch" in Google Maps for
| Jackson and omelette plates are $10-16 at Google's top
| result[1].
|
| Labor costs certainly impact prices, but restaurant
| pricing isn't totally formulaic outside of maybe "market
| price" fish dishes. Kenji Lopez Alt has written about
| this[2]: Here's where one of the first
| intricacies in menu pricing arises: Menu prices have to
| make sense to the customer. Placing a $15 carrot entree
| and a $20 chicken dish next to a $40 mushroom dish and a
| $45 steak doesn't compute; the range is simply too big.
| Either the latter two dishes are far too expensive, or
| the first two are far too cheap. Which sceniaro seems
| true largely depends on the atmosphere of the restaurant
| and pricing at similar restaurants, but both cases can be
| disconcerting. Because of this, most
| successful restaurant owners fudge the numbers a bit.
| "You're willing to lose money on some things because
| they're important to keep on the menu," says Maws.
|
| [1]https://www.elviesrestaurant.com/day
| [2]https://www.seriouseats.com/menu-pricing-vegan-
| vegetarian-me...
| thaumasiotes wrote:
| > As a New Yorker, I have been surprised when I travel
| that food isn't cheaper many places...
|
| Some of that may be on you, choosing to eat the expensive
| food.
|
| My experience in Shanghai was that I could eat basically
| the same things I'd eat in America, and it would cost
| basically the same amount of money. Or I could eat local
| food for 5-10 times less than that.
|
| But you know, if I go to Lao Wai Jie ("foreigner
| street") in Shanghai to eat at the Mexican restaurant
| there, it's not exactly a secret that I may be willing to
| pay more for food than a normal Chinese person. And they
| price accordingly.
| colinmhayes wrote:
| I've noticed that Manhattan restaurant prices(other than
| pizza) are much higher than Chicago restaurant prices.
| Hard to find non-counter serve for less than $15 in
| manhattan. Chicago $10 is easy to find.
| jdminhbg wrote:
| Very true. Visit high minimum wage areas like San
| Francisco and Seattle, with no visible misery at all.
| HarryHirsch wrote:
| So... a lower minimum wage will solve the homeless
| problem? That does not compute.
| int_19h wrote:
| Not all developed countries have legally mandated minimum
| wages, even those that are often considered "socialist"
| in American parlance. Indeed, Sweden is one such example!
|
| (In practice, those places still have minimum wages -
| it's just that they're negotiated between employers and
| unions, and can vary across different industries and
| geographically where that makes sense.)
|
| The real problem with min wage is that it's effectively a
| regressive tax, because it raises the cost of the
| _cheapest_ produced goods /services - which, of course,
| tend to be disproportionally used by those who simply
| can't afford anything else. So you're taxing the poor to
| help the very poor! It is better compared to a free-for-
| all jungle, but it's much worse than e.g. UBI (funded by
| actual progressive taxes, on income, or better yet, on
| capital gains) without min wage.
| imtringued wrote:
| This is called work piling. The unit of work isn't whatever
| people want it to be, it's jobs, meaning entire human
| beings. During a recession it rarely makes sense to keep
| people employed at full capacity, maybe you only need each
| person at 50%. So the obvious solution is to just fire 50%
| of the workers.
|
| You now have a segment of the population with enough work
| and another with too little. Those with work are scared of
| losing the job. Those without are desperately trying to
| compete in the labor market to get a new job.
|
| https://youtu.be/EKd6WURBqOY
| Spooky23 wrote:
| Rent control is a nuanced thing, it's a great and valuable
| tool if it's combined with housing growth.
|
| As people in general are becoming poorer, we're shifting
| towards either more rentals or less safe/sound construction
| practices. Tenants need rights beyond market forces to avoid
| a revolving door of 1 year leases, etc. Stability in
| communities is important for both families and the community
| at large.
|
| That said, the unchecked development model where construction
| of actual homes is impossible, or where exclusionary
| construction is allowed (entire buildings of studio
| apartments, no family apartments, etc), you are correct, rent
| control just benefits incumbents.
| 8note wrote:
| That everyone else bit is not having enough rent control,
| isn't it?
|
| The situations where rent control don't apply still suck.
| More rent control would cover those, no?
| standardUser wrote:
| Rent control is easy to criticize if you use straw men. Not
| ever implementation of rent control is or needs to be so
| extreme as to cause these types of problems. There exists a
| level of rent control that can prevent families form being
| rapidly evicted from their communities via rent increases and
| does not dramatically distort the housing market. Just
| because many implementations are terrible doesn't negate the
| concept.
| DaiPlusPlus wrote:
| "Rent control" is like "Defund the police": you can have
| the most reasoned, well-thought-out, evidence-based policy
| proposal, but as soon as it gets a label that's accurate
| enough that advocates can't muster the mental energy to
| enter into a detailed technical discussion with every
| Internet comment poster that misunderstands what is
| proposed - but so-loaded with connotations and political
| innuendo that the ideological other-half of the country
| parrots the misrepresentations because thinking less of the
| opposition makes them feel good.
|
| So let's agree to avoid the buzzword.
|
| What's a more accurate - yet succinct - phrase to describe
| housing market controls that protect the least fortunate of
| us from being priced out of their homes and communities
| without disrupting the significant market forces which
| should - ideally - be promoting new housing construction?
|
| (Also, ban unsustainable zoning regs, enact an unimproved
| land value tax, and only allow greenbelts in areas with
| full mixed-use developments without building height
| restrictions)
| j1elo wrote:
| So the difference between _with_ and _without rent control_
| is just a matter of who gets excluded?
|
| With rent control, basically those who were there first get
| the housing, those who come later are out of luck.
|
| Without rent control, those who are more wealthy can afford
| the housing, those who are poorer are out of luck.
|
| If that was the only oversimplified way to see the effects of
| rent control, I'm sincerely not sure of what would sound
| better (or less worse) to me. I like when a city keeps its
| soul and doesn't slowly become a theme park for rich people
| (which is what I see in mine over the decades).
| luckylion wrote:
| > Without rent control, those who are more wealthy can
| afford the housing, those who are poorer are out of luck.
|
| I prefer that. It's not just about wealth, but also about
| how much you want to live there. I know people who earn
| about as much as me and spend > 30% of their net income on
| rent because they want to live in a trendy area. I don't
| need to live there, so I was able to choose differently and
| pay ~12% of my net income.
|
| Also: with wealth, there's at least _some_ correlation with
| merit. With a lottery, there 's none.
| mrkickling wrote:
| I feel a bit confused about what you mean with that it is
| not about wealth. If two people wants to live in a place
| as much and they both are ready to give 30% of their net
| income, the richer one would get the apartment in a
| system with no rent control, right? Your point only makes
| sense if everyone had the same net income.
|
| Secondly, why is the merit of high income more valuable
| than waiting in the line for longest time? None of them
| is a lottery in my opinion.
| imtringued wrote:
| >Secondly, why is the merit of high income more valuable
| than waiting in the line for longest time? None of them
| is a lottery in my opinion.
|
| People invest internationally. This gives a strong bias
| for money to chase large metropolis because of
| agglomeration effects. So now "everyone" has to move to
| the city to work for the investor money. There are people
| who just want to get their fair share of the money. If
| you let someone live there that can't find a job that
| gets him investor money then he basically displaced a
| productive worker bee and made the entire economy worse
| off. Social mobility takes a massive hit as a result.
|
| That worker bee could have earned enough to live in a
| newly constructed apartment. If he actually managed to
| get a rent controlled apartment then congratulation, you
| just subsidized one of the richer individuals.
|
| Think about it this way, you want vulnerable people to
| afford their apartments. Why are you subsidizing every
| single apartment instead of subsidizing people in need?
| In fact, the subsidy is greater the more expensive the
| apartment is. You're subsidizing the rich.
| luckylion wrote:
| I said it's not _just_ about wealth. Yes, if both a
| millionaire and an average salaried employee spend 30% of
| their income, the millionaire will always get the house.
| But they don 't compete for the same real estate.
| Instead, the average person competes with others grouped
| around the average, and 30% vs 15% of income is a
| significant difference. If you really, really want to
| live in the prime location, you can, you just have to
| spend more.
|
| > Secondly, why is the merit of high income more valuable
| than waiting in the line for longest time?
|
| Because it correlates with useful stuff being done for
| society. Not perfectly, of course, but somewhat. Waiting
| doesn't at all. And it's usually not about "waiting",
| it's often about being part of some group, having the
| luck of the draw, knowing someone in the office that
| assigns priorities, or "inheriting" the right to live in
| some (publicly owned) flat from your parents.
|
| What happens then? Person A lives in a very desirable
| place, person B does not, and person B has to subsidize
| A's flat.
| 908B64B197 wrote:
| > With rent control, basically those who were there first
| get the housing, those who come later are out of luck.
|
| And then they vote against any new construction "to keep
| the neighborhood's character intact" (remember in the 50's
| when certain groups of undesirables were excluded from
| certain neighborhoods?)
|
| > Without rent control, those who are more wealthy can
| afford the housing, those who are poorer are out of luck.
|
| That creates an incentive to build more.
| [deleted]
| pydry wrote:
| >It's everyone else who suffers. Usually they have no choice
| but to move somewhere else or stay at home with parents
|
| A lot like London without rent control then, but if rent
| control were implemented it would be the primary culprit for
| what's happening anyway?
|
| Color me skeptical.
|
| Seems to me it's the landlords that really "suffer". E.g. the
| SF landlords that paid a tenant hundreds of thousands to get
| them out ( https://apnews.com/article/lifestyle-business-san-
| francisco-... ). Rent control just decides whether the
| "spoils" of restricted supply go to landlords with the most
| capital or the renters who lived in the city the longest.
|
| Hacker news cries bitterly about nimbyism (especially in SF)
| that restricts development to keep up property values and
| rents. Whom do they think is most incentivized to do that?
| Redirect those spoils to leveraged landlords and find out.
| [deleted]
| paulddraper wrote:
| London's problem isn't "rent control." It's "construction
| control."
|
| London permitting just will not allow builders to construct
| enough housing.
|
| Perhaps for worthy reasons, or perhaps not, but regardless
| there's no question as to the source of London's housing
| shortage.
| Gimpei wrote:
| There is lots of research on this. Here's one heavily cited
| paper that finds what the previous poster was suggesting.
| Fine to disagree, but it would be nice to see some counter
| evidence.
|
| https://web.stanford.edu/~diamondr/DMQ.pdf
|
| In terms of London, there is also the problem of building
| restrictions. I don't think we're going to see tall
| residential towers popping up in say, Mayfair, anytime
| soon. I understand that this kind of change would
| completely transform the character of London. But the price
| of not wanting change is sky high rents.
| wahern wrote:
| I'm generally favorable to rent control (it's a socio-
| political tradeoff, like all public policies), but rent
| control on single-family homes or single units (as with
| renting in in-law), which is what that paper examines, is
| a horrible policy. The consequences for landlords are far
| more extreme than rent control on large, multi-unit
| buildings. This makes it's difficult infer to similar
| supply effects between rent control on single-family
| homes and on multi-unit buildings.
|
| Turnover in SF is actually quite robust. The vast
| majority of tenants don't stay in the same apartment for
| decades. This is especially true during boom periods.
| IOW, ebbs & flows in turnover actually tend to benefit
| landlords. But a small number do. The average turnover
| rate is ~20%, which means the average occupancy is 5
| years. For large buildings what matters is the average.
| The fewer the number of units (either in a building, or
| in your portfolio if you're a professional property
| manager), the riskier things become.
|
| The riskiest of all is a single-family home, whether you
| rent an in-law or the whole house. In the face of rent
| control you're not only risking being stuck with the same
| person indefinitely, paying an increasingly below market
| rent, but they're locking up what is probably your most
| important asset. It's a potential financial nightmare.
|
| As the building grows larger, the more the risk is spread
| and you can rely on the average occupancy terms.
| Moreover, the larger the building, the less likely one
| would want to tear it down to build something larger.
|
| Rent control policies should be accompanied by policies
| that promote densification. All forms of rent control
| will tend to reduce supply to some extent, but rent
| control also provides important social benefits. IMO,
| those lines cross, but I would never expect the benefits
| to be greater than the costs at the level of single-
| family homes.
| blitzar wrote:
| Not in Mayfair, but all around the fringes of the city
| they are.
|
| If you want a PS500,000 studio flat 30 minutes away from
| central london by tube there is a massive amount of
| supply. If however, you can afford said property, you
| probably dont want to jam your wife and 2 kids into it.
| philjohn wrote:
| And with high speed trains on the west coast mainline you
| can get a 5 bed detached with garden for around that -
| with Euston reachable in 45-50 minutes in places like
| Rugby.
| PragmaticPulp wrote:
| > A lot like London without rent control then, but if rent
| control were implemented it would be the primary culprit
| for what's happening anyway?
|
| I'm not sure what you're trying to suggest about
| hypothetical rent control in London, but it should be clear
| that London was geographically exhausted long ago and
| they've been debating architectural preservation and
| building height control ever since.
|
| You can't simply buy a property in London, knock it down,
| and build a 50-story skyscraper. Using it for your case
| study on rent control doesn't make any sense.
|
| > Seems to me it's the landlords that really "suffer".
|
| This is the fantasy: Stick it to those evil developers and
| landlords, amirite?
|
| The fallacy is assuming that you get the exact same
| apartment under rent control, but cheaper. You don't.
|
| The truth is that being a rent-controlled landlord is easy
| mode. You have very little competition, _by law_ , and the
| waiting list to get into your apartment can be years or
| decades long. As a result, you don't have to compete on
| anything. Who's going to turn your apartment down when it's
| their only shot at housing and no one's building new
| construction to compete at artificially depressed prices?
|
| Now you don't have to worry about installing good
| appliances or even nice carpet. The air condition doesn't
| work well? Too bad, as long as it meets regulations (if
| any) then that's good enough. Why would you if your tenants
| aren't choosing based on competition? The tenants suffer,
| too.
|
| And you're still ignoring all of the people locked out of
| the system by the ensuing decade-long wait lines, as is the
| case in this article.
| pydry wrote:
| >I'm not sure what you're trying to suggest about
| hypothetical rent control in London
|
| I'm stating that the extreme lack of supply ascribed to
| rent control _also_ exists in similar cities without rent
| control.
|
| So _maybe_ rent control 's effect on supply is vastly
| overblown as you can see by looking at the large amount
| of house-building in NYC _before_ 1974 in the graph
| above, which is when rent control laws started getting
| really watered down.
|
| >It should be clear that London was geographically
| exhausted long ago
|
| Thats kind of absurd. It only recently caught up to
| prewar population levels. Property prices skyrocketed way
| before that.
|
| >The truth is that being a rent-controlled landlord is
| easy mode.
|
| If they like it so much why do they try to trick/bully
| tenants into leaving or offer large sums of money to
| tenants to leave if that fails?
|
| >And you're still ignoring all of the people locked out
| of the system by the ensuing decade-long wait
|
| Give leveraged landlords market rent in restricted supply
| environments like SF and the FIRST thing they will try to
| do is to inhibit further development with NIMBYism that
| might bring down their rents and damage their investment.
|
| Detractors of rent control tend to feign support for new
| residents but theyre perfectly happy for them to be
| priced out alongside the long term residents of the city.
|
| More social housing fixes the underlying supply issue.
| Higher property taxes fixes the underlying supply issue.
| _Wanting to kill rent control before or instead of fixing
| these things means being concerned with profit, not
| people._
|
| Rent control is a band aid while that happens to keep
| long term (especially elderly/vulnerable) renters housed.
|
| And landlords _loathe_ it.
| zajio1am wrote:
| > More social housing fixes the underlying supply issue.
|
| How could social housing fix the issue? The underlying
| issue is too many obstructions to building new houses,
| which restrict supply. If commercially motivated
| developers cannot build enough houses due to bureaucracy
| and obstructions by NIMBY groups, then municipality would
| likely fail too.
| 6510 wrote:
| My house was build some 30 years ago by students who paid
| for their education. They added a new class every year. I
| have no idea what happened with the concept. They are now
| back to [the usual] building things next to the school
| then demolishing it.
|
| I imagine the collective mind could greatly benefit if
| everyone had to spend a few (education focused) months in
| construction (and/or say farming etc) Its not boring if
| its just a short period. In construction you can learn
| the basics of a discipline (and make yourself useful) in
| just a few days.
|
| But I agree it is the obstruction that prevents cheap
| housing. Its probably intentional (to some extend) simply
| to drive up prices.
| rguillebert wrote:
| > So maybe rent control's effect on supply is vastly
| overblown.
|
| Just because rent control negatively affects supply
| doesn't mean bad supply is only caused by rent control.
|
| I live in London too and I'm baffled by the lack of tall
| buildings in pretty central parts of the city. The real
| solution is more supply.
|
| > Rent control is a band aid while that happens to keep
| long term (especially elderly/vulnerable) renters housed.
|
| At the expense of people who don't currently live in
| London but could, such as immigrants or people from
| poorer parts of the country finding a good paying job
| here.
| iso1210 wrote:
| > I live in London too and I'm baffled by the lack of
| tall buildings in pretty central parts of the city. The
| real solution is more supply.
|
| I just spent 5 days in London and was shocked at how many
| tall buildings there were that weren't there 20 years
| ago, and indeed how many are being constructed - not just
| in the centre and docklands, but in battersea and
| vauxhall too
| rguillebert wrote:
| In 20 years, you would hope plenty of buildings were
| built, if you go to places like Whitechapel though, it's
| all 3-5 floor buildings.
| stuaxo wrote:
| Supply isn't an issue, there are plenty of empty flats
| already - that's market failure.
| maxthegeek1 wrote:
| London's vacancy rate is actually very low, even during
| covid when vacancy rates tended to rise.
| rguillebert wrote:
| Source on the "plenty" of empty flats in London? The
| number I found is 29,242 which is hardly something
| that'll get the prices down.
| IkmoIkmo wrote:
| Indeed, and vacancy numbers are to be expected. Go to any
| source for rental investments and you'll typically see
| vacancy rate assumptions of 4% to 8%, because tenants
| leave and placing a new tenant can take some time. If you
| plot that on a city home to 10 million people, it's
| entirely natural to find that a few hundred thousand
| homes are vacant at any point in time, typically only a
| few weeks or months. The 'long-term vacant' problem is
| relatively minor by comparison, and while that must
| certainly be addressed, it's not at all going to change
| the order of magnitude of the current housing issue.
| pydry wrote:
| >At the expense of people who don't currently live in
| London but could, such as immigrants or people from
| poorer parts of the country finding a good paying job
| here.
|
| Kicking grandma out of her rented apartment and on to the
| street isn't going to suddenly mean that Romanian
| cleaners won't be living 7 to a house in zone 5.
|
| This housing crisis was deliberately engineered in London
| as a result of the 1980s war between Thatcher and local
| government. Council housing was privatized as a result (&
| some of those gains were capitalized by existing
| residents through right-to-buy).
|
| Councils were starved of tax funding through the UK's
| comically low council tax rates. This meant that not only
| was owning property a _much_ better deal but also that
| councils lacked the funds to increase the supply of
| housing. Hence prices taking off like a rocket.
|
| _There 's_ your supply issue. Rent control would be a
| drop in the bucket compared to that.
| rguillebert wrote:
| > Kicking grandma out of her rented apartment
|
| If she's retired, she can move somewhere cheaper so
| someone who actually needs to live there for their job
| can move in.
|
| The rest of what you've written is completely
| unsubstantiated.
| 8note wrote:
| Why not have the job move to the person instead?
| around_here wrote:
| Ah yes, the classic "you're useless now grandma, the fuck
| on outta here" line. I bet you're a real gem in the
| family.
|
| A landlord is to housing what a scalper is to tickets (or
| for the nerds, graphics cards). Only one of them leaves
| you _fucking homeless_.
| rguillebert wrote:
| Ah yes, the classic "I got here first so it's mine
| forever".
| KittenInABox wrote:
| I'd rather a grandmother be housed than be homeless, even
| if it means her grandchild has to live in a further flat.
| rguillebert wrote:
| If you can afford to rent a flat in London, you can
| afford a flat anywhere, it's not about homelessness.
| secretsatan wrote:
| Not london, but i moved away from cambridge in the 2000s
| to switzerland of all places, which i thought was hugely
| expensive.
|
| Well, in cambridge, i got kicked out of 2 flats in6 years
| because they wanted to raise rents, each time, i had to
| move further out, get a smaller place and still had to
| pay more money each time, i wasn't getting pay rise in
| line with this and i think that's still the reality
| across much of the uk, house prices and rents are rising
| higher than wages.
|
| I also noted across this time that younger people
| apparently like staying in more and the selfish gits are
| spending less money on other things and somehow that's
| their failing.
|
| I didn't have my rent raised in ten years here, in fact,
| as interest rates went down, i would have been well
| within my rights to demand a decrease. Also, bars,
| restaurant and clubs seem much more vibrant here than
| when i was in the uk, as if younger people had a bit more
| disposable income that flows in the local economy
| 6510 wrote:
| I had the fun idea to tie minimum wage to real estate in
| the area. Take the national average rent for an apartment
| for a family of x people. If the regional average rent is
| 10% lower the minimum wage can be 10% lowered as well. If
| the average rent is 100% higher the minimum wage can be
| cranked up by 100%.
|
| It would create problems for poor companies that will
| have to make room for more effective entrepreneurs. At
| the same time it would create new opportunities in areas
| normally not considered.
| WalterBright wrote:
| > Stick it to those evil developers and landlords,
| amirite?
|
| Seattle so far has not imposed rent control, but they've
| done everything else they can to create benefits for
| renters at the expense of landlords.
|
| And so the smaller landlords exit the business, and the
| larger ones raise rent to cover these new "free" goodies.
|
| One of the freebies is the city will provide a free
| lawyer to any tenant with a dispute with the landlord,
| but the landlord gets to pay for his own lawyer.
| 8note wrote:
| The landlord would have been paying for their own lawyer
| regardless.
| stuaxo wrote:
| > it should be clear that London was geographically
| exhausted long ago
|
| It's clear that there are over 30,000 empty homes in
| London, while most flats built are way out of the range
| of ordinary families.
|
| Many people are locked out of the system now, we have
| "affordable housing" that you need to earning about PS80k
| to buy, the current system is utterly failing.
| Wolfenstein98k wrote:
| Why are there over 30k empty homes, if they command so
| much money from tenants?
|
| Who can afford to keep homes empty at such great expense,
| and for what purpose?
|
| Sounds like a step is missing...
| mmarq wrote:
| > Now you don't have to worry about installing good
| appliances or even nice carpet. The air condition doesn't
| work well? Too bad, as long as it meets regulations (if
| any) then that's good enough. Why would you if your
| tenants aren't choosing based on competition? The tenants
| suffer, too.
|
| I'm totally against rent control, but London's rogue
| landlords and its very low quality housing are world
| famous and people coming from all over the world spend
| the first 6 month adapting to crazy stuff like carpet,
| old carpet, 10 year old carpet, fucking carpet,
| windowless toilets, wooden walls, decaying electrical
| systems, holes in the walls, carpet (I can't get my head
| around the idea of having carpet in a flat), etc... and
| carpet (unless they are in the top 5% of the income
| distribution and can afford to pay 2-3KPS per month in
| rent). Air conditioning and half-decent insulation are
| for the top 1%.
|
| Said that, I don't think London's problem is lack of rent
| control, but rather it is lack of development of the rest
| of the country and the government artificially inflating
| the housing market.
| KptMarchewa wrote:
| You have forgotten carpeted stairs, and worst, carpeted
| bathrooms.
| davrosthedalek wrote:
| Carpeted kitchens.
| vagrantJin wrote:
| My skin crawled at the thought.
| nearbuy wrote:
| There are few mechanisms through which rent control can
| hurt.
|
| Rent control discourages building more units. The more you
| can make from rental, the more companies will invest in new
| construction projects.
|
| Rent control can decrease efficiency of living situations.
| You can imagine an old woman living alone in a 3 bedroom
| unit with rent control because it would be more expensive
| for her to move to a smaller unit. Or someone who gets a
| new job far from their current rent-controlled apartment
| but won't move out because the rent is so much cheaper.
| igammarays wrote:
| > Rent control discourages building more units. The more
| you can make from rental, the more companies will invest
| in new construction projects.
|
| Actually, I would think the opposite. If capital-laden
| landlords aren't getting increased returns from their
| existing holdings, they would be incentivized to create
| more supply by funding new developments.
| [deleted]
| nearbuy wrote:
| Rent control can mean many different things. Different
| rent control schemes are implemented in different cities.
| But generally, any rent control scheme that reduces
| rental prices across the board is going to reduce new
| construction. I think this is pretty uncontroversial
| among economists.
|
| I think your logic is flawed here.
|
| 1. There's no reason why making landlords earn less money
| would make them want to invest in real estate _more_. If
| you have $1 million to invest, you 'll try to choose the
| best investment available to you. It doesn't make a
| difference if your current property is doing well or
| badly.
|
| 2. If landlords make less money, they should have less
| capital.
|
| 3. Even assuming your premise was correct and landlords
| who make more money from their property want to invest in
| new properties less, it wouldn't matter. As long as
| building new units is a good investment, someone else
| would do it.
| ralusek wrote:
| Then you don't understand opportunity cost. If the ROI
| isn't there, they're not gonna invest in real estate at
| all.
| igammarays wrote:
| Rent control doesn't typically restrict the prices they
| can set on new housing, only on existing units. Therefore
| the ROI _is there to be had_ , just not in forcing people
| out of their homes.
| KptMarchewa wrote:
| You need to build higher, and the way to do it is to
| force people out of their small homes and build large
| ones.
| michaelmrose wrote:
| Actually nimby zoning is more so what prevents this in
| Seattle. Without such small groups of home owners could
| potentially drastically increase their profit on their
| homes by selling together to a developer building an
| apartment building.
| pydry wrote:
| >Rent control discourages building more units.
|
| Yet the strictest rent controls went hand in hand with
| the fastest homebuilding spree in 1950s NYC.
|
| It clearly didnt discourage _that_ much. Maybe it didnt
| discourage it at _all_?
|
| Or maybe it does a bit but is _eclipsed_ by the effect
| of, say, NIMBY landlords inhibiting development, hellbent
| on staying above water on their eyewatering SF mortgage.
|
| >Rent control can decrease efficiency of living
| situations. You can imagine an old woman living alone in
| a 3 bedroom unit with rent control because it would be
| more expensive for her to move to a smaller unit.
|
| I can imagine. She could get priced out of the city
| entirely I suppose.
|
| It seems to me that if the market rate is intent on
| 10x'ing her rent maybe it's the _market_ that should be
| forced to adjust first, not her.
|
| More home building. Higher property taxes. Rent control
| while the effects kick in.
| nearbuy wrote:
| > It seems to me that if the market rate is intent on
| 10x'ing her rent maybe it's the market that should be
| forced to adjust first, not her.
|
| Assuming a family of 4 would live there instead, she's
| effectively removing 3 people from the city. That can
| force other old women to move out of nearby homes that
| aren't rent controlled (since prices become higher than
| they'd be if more people could fit in existing housing),
| or it could prevent people from moving in. But either
| way, less people can live there. The policy isn't without
| harm.
|
| > I can imagine. She could get priced out of the city
| entirely I suppose.
|
| kind of an unlikely worst case. There's a gradient of
| prices as you move further from the city center, and this
| particular hypothetical woman is moving to a much smaller
| unit. I haven't heard of a city where the average market
| price unit was 10x the rent controlled price. It's
| probably 2x-3x at worst for an equivalent unit.
| Manuel_D wrote:
| Seattle (which is for forbidden by the state from
| implementing rent control) added 2-3x the housing units
| as San Francisco from 2010-2020 despite similar
| population growth in both cities. The impact of price
| controls on supply is a well studied phenomenon. Lower
| price for something -> less incentive to produce it.
| plorkyeran wrote:
| You're blaming rent control for SF not building housing
| even though SF rent control doesn't apply to new
| buildings built (and hasn't for 40 years)?
| fiter wrote:
| Because of the laws around new buildings, rent control
| advocates have an incentive to prevent old buildings from
| being redeveloped: if they are redeveloped then there
| will be fewer rent controlled units! This does regularly
| play out in the politics of development in the area[0].
|
| Then when rent controlled unit can be redeveloped,
| there's a desire to allocate various percentages to
| different income levels. This means that some units have
| less income for the same cost so it's hard to balance
| meaning fewer projects get off the ground.
|
| Now there's even further issues about development as a
| right vs requiring a use permit...
|
| So, there's a lot of contributors, but the political
| impact of the politics of rent control is significant.
|
| [0] https://www.berkeleyside.org/2021/07/28/uc-berkeley-
| settleme...
| Manuel_D wrote:
| 70% of housing units in SF are still rent controlled. The
| negative influence of price controls are still felt. Not
| to mention, repeated attempts to repeal Costa-Hawkins
| means the threat of rent control is still hanging over
| developers heads.
| Avshalom wrote:
| Units built after 1980 in SF units aren't subject to rent
| control. On a purely econ 101 level "old units are
| unprofitable/new units are profitable" should spur more
| new construction to minimize the effects of old units on
| your portfolio.
| fiter wrote:
| I agree with this, but the misunderstanding because no
| one is explicitly talking about how there is a desire to
| preserve rent controlled units. This means it's very hard
| for the econ 101 to play out.
| pydry wrote:
| If you look at the data above it shows home building
| peaking in the early 1960s in NYC. Rent control laws were
| strong until the 1970s. _That 's_ the point when
| homebuilding plunged and didn't perk up for decades.
|
| Weakening them in 1974 if anything seemed to _restrict_
| supply.
|
| SF has comically low density housing that is driven by
| homeowners lobbying to restrict development.
|
| The difference between SF and Seattle is probably
| property taxes (higher in Seattle). It discourages land
| from being hoarded and used unproductively.
| davrosthedalek wrote:
| How exactly do higher property taxes encourage more homes
| being built?
|
| Edit: I guess you mean taxes on land, not the houses. But
| even then, would this not encourage to build high-yield
| luxury condos instead of high-density cheap space?
| raffraffraff wrote:
| If rent control discourages building more units, then the
| market has failed and the government or local authorities
| should build "more units"
| marcus_holmes wrote:
| Berlin is rent-controlled (though probably not to the
| same extent as Stockholm), and covered in new apartment
| building sites.
|
| Though Berlin is going through interesting times with
| rent control at the moment.
| KingMachiavelli wrote:
| New development is occurring in Berlin because the rent
| control does not apply to new units and it's on purpose.
| (Although didn't the rent control policy get voided by
| some court?).
| marcus_holmes wrote:
| As I understand it, and I'm not sure I do, the "you can't
| increase rent by that much" law got knocked down, and the
| govt response was to buy a bunch of properties and offer
| them for rent at rent-controlled prices.
|
| Interesting times. It'll be fascinating to see this play
| out. Like a social experiment on rent control.
| colinmhayes wrote:
| And it's next to impossible to move to the rent
| controlled side of Berlin. The reality of rent control is
| it's a handout for the people who already live there at
| the expense of those that wish to move there.
| oolang wrote:
| I don't see how that is particularly legitimate argument
| against rent control as that is how the housing market
| works in general. The difference is that if you buy an
| apartment you also get appreciation.
| [deleted]
| collyw wrote:
| Interesting way of looking at it, but if you want to make a
| positive impact for the most people then supplying more
| housing would make a lot more sense than messing with
| prices.
| ProjectArcturis wrote:
| The point is, rental markets without rent control are also
| failing to provide affordable housing. It's a quandary with
| no obvious solutions.
| spankalee wrote:
| The obvious solution is to build more housing.
| twic wrote:
| Or to raise interest rates:
|
| https://www.bankofengland.co.uk/working-paper/2019/uk-
| house-...
| spankalee wrote:
| Zoning, not interest rates, is inhibiting residential
| building the most.
| imtringued wrote:
| Raising interest rates makes everything else more
| expensive.
|
| When people talk about how raising interest rates lowers
| the cost of housing what they really mean is that
| interest rates lower the value of income streams derived
| from monopolies and land is the biggest monopoly of them
| all. Monopolies basically can do perfect price
| discrimination, the more money you have, the more the
| monopolist can charge. Thus the obvious solution of
| giving people more money doesn't seem to work.
|
| Raising interest rates is basically the opposite. What if
| we take everyone's money away? If people have less money
| the monopolists will charge lower prices. This didn't
| really solve the monopoly problem. After all, the
| monopoly allows perfect price discrimination. If the
| monopoly power is strong enough to get 30% of your salary
| it will always get 30% of your salary no matter how high
| it is. What really happened is that you now have less
| money to buy non monopoly goods.
|
| Here are the practical implications: You can spend $1000
| per month on your mortgage at 5% interest or -5%
| interest. The -5% interest house is significantly more
| expensive but the monthly payment is still the same. You
| still lose $1000 no matter what you do.
| xyzzyz wrote:
| And how will raising interest rates make housing more
| affordable? If you have enough cash to buy a place
| outright, maybe, but normal people get mortgages. Raising
| interest rate will make monthly payments higher, which
| will exactly compensate the drop in house prices -- this
| is in fact how raising interest rates reduces asset
| price.
| KptMarchewa wrote:
| Increase in mortgage availability is directly linked to
| price increase.
| xyzzyz wrote:
| Yes, but the point is that price increase doesn't affect
| affordability if the lower interest rates compensate for
| it. Why does it matter for affordability that house
| prices went up 20%, when mortgage rates fell so that the
| monthly payments did not budge much?
| runako wrote:
| But this is not what happened. Median carrying costs for
| real estate have fallen, so that US housing affordability
| has increased (for buyers).
|
| The places where this is not true are all places that
| have seen significant population growth and have not
| permitted sufficient new construction. For example, in
| Jacksonville, FL, the median home costs $250k, which
| would leave a payment of ~29% of the median household
| income in Jacksonville using a 5% down payment. Similar
| math works in other cities where builders have been
| allowed to keep pace with population growth.
| 988747 wrote:
| I think this is about interest rate on savings side. Ten
| years ago in Poland you could get saving account paying
| 7% interests. 5 years ago you could get one that pays 3%.
| Right now interest rates are almost at 0, and saving
| accounts pay ridiculous 0.01% interests. Which has the
| effect of people taking money from the bank and buying
| apartments, as an investment.
| xyzzyz wrote:
| With high interest rates, you might get good return on
| savings account, but it will make the mortgage payments
| much higher. Most people prefer to get a mortgage and
| move in earlier in their lives, instead of saving for
| decade or two in order to buy house/apartment with cash
| in their mid 30s or even 40s.
| unholythree wrote:
| Not only that but if you're paying a mortgage you're not
| paying rent. Buying means your housing cost is now an
| investment (minus interest, tax, and upkeep) rather than
| just an expense. Now it could well be a terrible
| investment, but in theory you'll own something of value
| in the end in addition to the housing you had as you
| paid.
| ahepp wrote:
| I am assuming those rates aren't adjusted for inflation?
| Real rates have certainly decreased in the USA, but when
| we had high rates we tended to have high inflation as
| well.
| magila wrote:
| All of these places suffering from severe housing shortages
| have some government policy which can clearly be linked to
| it. Sweden has rent control, London has a labyrinth of
| building restrictions based on historical preservation
| among other things, etc.
|
| There's an obvious solution here, it's just not one most
| people living in these areas wants to hear.
| bildung wrote:
| _> All of these places suffering from severe housing
| shortages have some government policy which can clearly
| be linked to it._
|
| All these ill people have doctors around them, which also
| can clearly be linked. That in itself doesn't seem to be
| an argument.
|
| (Note I'm not taking positions here, I don't know enough
| about the topic)
| oolang wrote:
| Sweden had a functioning rent control system for many
| decades until relatively recent changes. Please feel free
| to elaborate how you can clearly link the current
| situation to rent control and not those changes.
| toomuchtodo wrote:
| There is no solution. There's only so much land, not
| everyone wants to be surrounded by skyscrapers. Some people
| will get to live where they want, some people won't. Supply
| and demand.
| marvin wrote:
| All half measures to <<fix>> the housing market are just
| variations around this theme. If there's political
| consensus against the only solution that fixes the root
| cause -- building much more -- then any other measure to
| alleviate the problem will be varying degrees of
| dysfunctional and ineffective.
|
| I'd be delighted to be proven wrong, but it seems
| unlikely.
| toomuchtodo wrote:
| What you call dysfunction I would call the market
| reaching equilibrium. The market is working efficiently
| if pricing signals cause housing seekers to look
| elsewhere due to limited supply or market clearing prices
| beyond their means.
|
| For example, not everyone can afford San Francisco, but
| there is a lot of buildable land besides SF in California
| (the Central Valley, for instance). Everyone should be
| housed, but it's likely it might not be their first
| choice.
| marvin wrote:
| My point is, the political leadership in most of these
| locations wring their hands and say "oh no, it's
| terrible, our janitors and nurses and families with
| little kids can't afford to live here, it's horrible" and
| then implement some sort of half-assed kludge that's only
| effective at giving naive folks the impression that they
| care.
|
| Rent control would be one such measure. Other examples
| are loans with better-than-market terms for certain
| privileged buyers, publicly-built houses sold at lower
| than market rates and so on. The market reaching
| equilibrium for everyone and the local government saying
| "sorry, but screw you" to buyers is at least honest, if a
| little heartless from the voters who live there.
|
| I suppose it's fair enough as long as other markets with
| decent job options are available elsewhere. If not, I
| would classify it as a failure of democracy if a
| significant portion of society has no better option than
| to pay most of their productive output towards rent. This
| probably varies a lot by location; San Francisco wouldn't
| be the first example I'd use. Maybe Oslo.
| [deleted]
| ChrisLTD wrote:
| I'd agree if San Francisco was full, but it's possible to
| build up and increase density so people can live close to
| their jobs.
|
| People per square mile: San Francisco: 17,246.4 Brooklyn:
| 35,369.1 Manhattan: 69,467.5
| toomuchtodo wrote:
| Those jobs can be remote, and it is cheaper to encourage
| employers economically to support remote work than to
| reshape entire geographies with housing.
|
| Speaking of Manhattan:
|
| https://www.nytimes.com/2021/07/01/nyregion/manhattan-
| vacant... (Office Vacancies Soar in New York, a Dire Sign
| for the City's Recovery; Nearly 19 percent of all office
| space in Manhattan has no tenants -- the highest on
| record -- as companies shed leases and embrace remote
| work.)
|
| https://www.bloomberg.com/news/articles/2020-12-05/even-
| befo... (Even Before Covid 2,600 People a Week Were
| Leaving New York City)
| evnc wrote:
| This makes sense in an economics-textbook kind of way;
| but systematically excluding low- and middle-income
| people from a given city would not turn out well in
| reality, I think.
|
| All cities need janitors, teachers, baristas, grocery
| clerks, garbage collectors, etc. in order to function,
| and those people have to live somewhere at least within a
| reasonable commuting distance to the city. You can't have
| all the garbage collectors move out to Bakersfield and
| have San Francisco _just_ be a citadel of software
| engineers, unless the software engineers haul their own
| garbage, or the garbage collectors in SF also get paid
| $100k+ per year.
| ahepp wrote:
| Doesn't that dilemma also have an econ 101 answer though?
|
| The teachers, janitors, baristas, etc will move to the
| location that gives them a better quality of life. If
| they decide that's not San Francisco, they can move to a
| better city. If SF wants them back, SF can sweeten the
| deal for them.
|
| I guess it's kinda sad that not everyone who wants to
| live in SF gets to, but I'm not sure how "closing the
| door" is any more fair.
| [deleted]
| [deleted]
| nwah1 wrote:
| Land value taxation and reduction of regulations which
| artificially limit supply are the obvious solutions.
|
| Taxing improvements to land makes it less likely that
| people will build or renovate, so all such taxes should be
| removed. Taxing land, however, disincentivizes landlords
| from holding land idle.
|
| Regulations are also important.
|
| If there is a mandatory minimum amount of parking that must
| be provided, then it becomes that much harder to build more
| units, even if you are near transit and most of your
| tenants don't need cars.
|
| If there are height restrictions, restrictions on mixed-use
| development, restrictions on the number of units allowed,
| and so on then these will likewise cap the amount of
| supply.
| Aerroon wrote:
| The problem is that the people who like rent control also
| dislike land value taxes. Land value taxes mean that if
| your neighborhood gets a successful shopping mall then
| the land value goes up and some people are priced out of
| the area.
|
| The reason people support things like rent control is
| "I've lived here my whole life but I can't afford rent
| anymore because it keeps going up."
| nwah1 wrote:
| I agree. Rent control vests certain residents who for
| whatever reason have chosen to remain tenants in the same
| place for a long time, at the expense of newcomers and
| overall economic productivity. But for people who hate
| change, it works as intended. Makes it hard for new
| people to move in, and makes building new things an
| unattractive proposition.
|
| However, with respect to affordability, a key complaint
| across the board, LVT does indeed help by reducing the
| amount of speculative holding and removing tax penalties
| for improvements. Under LVT residents will be able to
| afford better accommodations for less money. Particularly
| if other onerous policies are removed such as rent
| control, building restrictions, parking mandates, taxes
| on demolition, and the like.
| imtringued wrote:
| The half-assed solution is progressive taxation. Your
| first plot will be taxed very little. Every plot after
| that more and more.
|
| It's not perfect because it is basically a subsidy to
| owner occupants so it won't help suburbs become denser.
| However, it disconnects the impact of taxation on home
| owners and commercial developers/investors which means
| home owners will be more willing to tax developers. The
| one benefit is that large scale development will
| naturally consider denser housing because they want to
| optimize their tax burden.
| yojo wrote:
| My city (Portland) has incentives for developers to build
| affordable housing - adding affordable units to a project
| increases the allowed density of the development, allowing
| more total housing on the same lot, and presumably, more
| return for developers.
|
| Portland does still have high rents, so it's hard to point
| to this as a "success", but I think it's a good template
| for how you can encourage affordable units without putting
| the whole city under tight rent control.
| pydry wrote:
| Building social housing is an obvious solution.
|
| A media that is very "concerned" with housing shortages
| where rent control is concerned suddenly loses its concern
| and gets overly concerned with crime, delinquency, public
| debt, etc. when a solution that brings down property values
| is mooted.
|
| Raising property taxes will also help as it will act as a
| disincentive to use land unproductively or as a store of
| value.
| seoaeu wrote:
| Social housing (or other approaches to subsidized
| housing) are a necessary piece of the puzzle. However,
| they are also _extremely expensive_ : around my area the
| commonly cited number is $500,000/unit. It would take a
| very major political shift to finance enough housing to
| even cover the 1-2 million people/year US population
| growth rate (~$750B/year), let alone resolve the backlog.
|
| A more feasible option is to let private developers (who
| collectively have access to trillions in capital) to
| finance housing creation for rich/middle class people,
| and rely on government subsidies for low-income housing.
| michaelmrose wrote:
| It might be worth considering both whether under supply
| factors into that cost and size of unit. Developers may
| not reasonable choose to build small units that may be
| quite sufficient for people's needs while coming in
| cheaper than the stated figure.
| seoaeu wrote:
| The $500k figure is the cost the local housing agency
| spends building units sized based on actual need and with
| optimizing cost part of the focus. Private developers
| around here regularly create housing costing anywhere
| from $700k to $2 million per unit
| jfrunyon wrote:
| > or have any pressure on your landlord to improve the
| property
|
| Not sure what you think that has to do with rent control?
| recursive wrote:
| Without rent control, if your landlord doesn't improve the
| property, there's a credible threat that the tenant will
| move out.
|
| _With_ rent control, that threat will not be taken
| seriously.
| JumpCrisscross wrote:
| > _Rent control actually works great for the limited number
| of people who can get into rent-controlled housing_
|
| It's also great for local politicians. New York non-
| Presidential primaries are woe-fully under-attended. (Special
| elections, worse still.) Having a literal block of voters you
| can turn out is almost decisively advantageous.
|
| All this said, rent control doesn't explain most U.S. housing
| problems. The issue is planning, zoning and preservation
| being used to artificially constrain supply. Make approval a
| guaranteed 60-day process with no more than 30 days of
| extensions and a reasonable approval rate and low-cost
| housing becomes economical.
| Aunche wrote:
| It helps that Sweden has a significantly higher median gross
| income than either the UK or Greece.
| megamix wrote:
| Also common public property was sold during 90s and large amount
| of property requires now a mortgage. This has not helped the
| rental market. Instead now people are controlled by the banks
| instead. You lose your job, you lose your mortgage and life.
| Oppressive system.
| throwawayay02 wrote:
| When has it ever.
| mrkickling wrote:
| Number of apartments being built has increased by a multiple of
| five during the last 10 years (25 000 apartments per year now
| [1]). During this time, no rent control was removed. Newly built
| apartments already have (for most young swedes) a high rent
| (around 10k SEK / 1.15K USD for 50-60m2). If you can accept an
| apartment 45 min from Stockholms inner city it will be cheaper
| and easier to get, [2] is the housing queue filtered for newly
| built apartments.
|
| I fail to see why removing rent control would lead to anything
| else than higher rents. If the housing companies can take a
| higher rent they will do it, and sure, perhaps build more
| apartments for a while. But from their perspective, wouldn't it
| be stupid to build cheap apartments for young swedes outside of
| the city center when that 1. would lead to less housing shortage
| (less demand in relation to supply) and 2. give less profit than
| fancy apartments closer the the city center.
|
| In my opinion, the best way to solve the housing shortage is to
| build apartments, and if the apartments built by the private
| sector are too expensive for young people, the state has to
| either subsidize or build their own apartments.
|
| [1] https://www.scb.se/hitta-statistik/statistik-efter-
| amne/boen...
|
| [2]
| https://bostad.stockholm.se/Lista/?cookies=no&s=58.91071&n=5...
| [deleted]
| timwaagh wrote:
| Letting go of rent control would make some sense. It would push
| the less educated poor out of the most desirable locations and
| allow sophisticated city companies to hire well educated tech
| talent from all over the country. Although obviously it's not so
| good if you're a poor Stockholm renter. There are definite
| economic benefits to doing this though.
|
| However to enable a boom in private housing construction to fix
| the supply issue it also needs liberal land use regulation. Which
| is a measure so controversial nobody in Europe even considers it.
| Otherwise nothing can be built no matter the potential for
| profit. I personally wouldn't sell out Swedish egalitarianism for
| just a bunch of tech corporations. It would probably cause a lot
| of anger. So I wouldn't do one without the other.
| kiklion wrote:
| Isn't rent control, as a means of addressing housing
| affordability, one of the things that nearly every economist
| agrees doesn't work?
|
| If you want to use rent control as a means to ensure individuals
| of various levels of wealth intermingle... then there is a
| conversation to be had. But it completely fails to make housing
| more affordable overall.
| jlokier wrote:
| I think it's fair to say that right now, mainstream economists
| don't appear to have anything they agree does work either.
|
| It's useful to know something doesn't work like a proponent
| would hope, but I don't think it's all that helpful if
| everything else the economists propose as an alternative,
| including the status quo, doesn't work either.
|
| If the economists can't find a solution, perhaps it has to fall
| back to moral imperatives and which values to prioritise.
| Specifically, which is more important, letting people who have
| lived somewhere much of their lives stay there, or forcing them
| out into unfamiliar places with no connections so that new,
| wealthier people can take their place.
| kyleee wrote:
| It's hard to expect economists (or anyone really) to be able
| to fix what is essentially political gridlock and innefective
| governance.
|
| The answer is to build more to outpace demand but that's very
| difficult for so many reasons including zoning, factions
| opposed to growth, difficulty scaling supporting
| infrastructure and services, etc and we're left discussing
| bandaids to be applied on top of the crusty remains of
| hundreds of old bandaids covering up the festering wound, so
| to speak
| maxsilver wrote:
| > every economist agrees doesn't work?
|
| Yes, but "doesn't work" is a bit of a loaded term. Economists
| agree that rent control is not the most profitable way to price
| housing, but since the whole point of rent control is to
| _prevent_ aggressive profit-seeking in housing, economists
| "agreeing it doesn't work" is intentionally the goal.
|
| Rent controls job is not to make more housing (it has no
| control over that). Rent control's job is not to make housing
| cheaper (it has no control over that). Rent controls only job
| is to provide housing security for existing renters, and the
| vast majority of the time, it's successful at doing that.
|
| If you also want cheaper housing overall, your supposed to pair
| rent control with a matching set of changes for non-rent-
| protected residents (like say, pair it with new construction of
| additional public-owned public-operated housing).
| davrosthedalek wrote:
| The problem is that is HAS control over making more housing.
| And, indirectly, it HAS control over making housing cheaper.
| Because what it does it suppresses the supply of housing, it
| makes it more expensive for anyone not living in a rent-
| controlled apartment. Also, sooner or later, the quality of
| the apartment will match the rent.
| perpetualpatzer wrote:
| >Economists agree that rent control is not the most
| profitable way to price housing
|
| I don't think that that's what economists are talking about
| when they say rent controls "don't work". I think the
| consensus is more specifically that it is not an effective
| way to increase the total supply of affordable housing. For
| example, see this survey [0] of notable economists where 2%
| agreed that:
|
| >Local ordinances that limit rent increases for some rental
| housing units, such as in New York and San Francisco, have
| had a positive impact over the past three decades on the
| amount and quality of broadly affordable rental housing in
| cities that have used them.
|
| Reading through the economists' comments, the consensus seems
| to be: 1) helps incumbent renters by reducing pricing for
| them, 2) reduces total supply, 3) hurts non-rent-protected
| residents (mediated by 2).
|
| Possibly the answer is still "doesn't matter, achieved 1)",
| but I don't think it's fair to characterize it as a magical
| policy lever that only hurts profiteering landlords.
|
| [0] https://www.igmchicago.org/surveys/rent-control/
| colinmhayes wrote:
| 1) is the entire goal of rent control. Everything else is
| just excuses that the people that want (1) have made up.
| I'm not even sure they're wrong either. Kicking people out
| of their homes might maximize surplus, but it has huge
| negative effects on the utility of those that are forced to
| leave and those that are worried that they will, be forced
| to leave.
| jdasdf wrote:
| >Rent controls only job is to provide housing security for
| existing renters, and the vast majority of the time, it's
| successful at doing that.'
|
| At a cost to everyone else.
| maxsilver wrote:
| > At a cost to everyone else.
|
| It doesn't. There is no cost to anyone else, unless you
| believe all purchases of all products automatically hurt
| someone else (since every purchase you make technically
| reduces overall supply by the amount you purchased)
| antasvara wrote:
| The use of rent control isn't the issue. If a policy is
| in place, actually using the options it affords isn't the
| issue. It's the _policy itself_ that causes the cost to
| others.
|
| I don't think it's crazy to say that rent control helps
| those in it and hurts those that aren't in it. That's not
| the tenant's fault, but we can't pretend that rent
| control doesn't have an effect on the supply of rentable
| apartments.
| maxsilver wrote:
| > I don't think it's crazy to say that rent control helps
| those in it and hurts those that aren't in it.
|
| Hard disagree, it's crazy to claim that rent control
| hurts affordability. Rent control does not "hurt" anyone
| not in it. The _lack of humane regulation_ on housing is
| hurting those people, and rent control is just getting
| slandered in the cross fire. What most people interpret
| as "rent control causing" is in reality "the _lack_ of
| _enough_ rent control causing ".
|
| It's like looking at a car crash, and saying "see, seat
| belts didn't protect the non-wearers, those seat belts
| just selfishly protected only their own wearer, and even
| created more empty space for the non-belted to get extra
| physical damage. Seat belts hurt all those not belted,
| the _policy itself_ of offering seatbelts 'causes'
| damage to others."
| antasvara wrote:
| That's an unfair analogy. Rent control directly (or
| undirectly, depending on your views) _decreases the
| supply of rentable units._ Your seatbelt analogy implies
| that anybody, at any time, can obtain rent control. That
| 's simply not the case. I can't "get" a rent-controlled
| apartment as easily as I can put on a seatbelt, because
| the "seatbelt" of rent control isn't available to
| everyone in the city.
|
| A better analogy would be a city bus. If I take 10% of
| the seats and allow people to reserve them for personal
| use indefinitely, that makes the rest of the bus more
| crowded. The act of renting those seats out limits the
| supply of other seats, making the rest of the bus more
| crowded. It doesn't "cause" damage to the riders in the
| 90% of the bus, but pretending this policy hasn't made
| things more crowded would make no sense.
| maxsilver wrote:
| > Rent control directly (or undirectly, depending on your
| views) decreases the supply of rentable units
|
| But it doesn't. Rent control _never_ takes away _any_
| supply. Even if rent control were fully abolished, that
| same person would still need the same amount of housing
| (presumably even in the same unit). From a "supply"
| perspective, it's literally a 1 to 1 -- no change in unit
| counts, up or down, in any way.
|
| Rent control has no influence over "supply" (unless you
| are secretly hoping to force a lot of humans into
| homelessness or something). Rent control only determines
| how much a person is forced to pay to keep their own
| housing (housing already built, and that they already
| occupy) consistent.
|
| > Your seatbelt analogy implies that anybody, at any
| time, can obtain rent control.
|
| Correct, and that's absolutely true. Generally speaking,
| legislators could pass a law _today_ to give _everybody_
| and _anybody_ rent control (at either the municipal /
| county / state or federal level). It's literally just a
| pen stroke away.
|
| There was a time when seatbelts weren't law, and it was
| harder to obtain them. We recognized how unequal of a
| situation that would make things, and thus mandated
| through regulations via law that all cars have them.
| (Just as right now, it's really unequal for some people
| to have rent control, but others don't).
|
| Generally, every argument against Rent Control, is really
| an argument about how it sucks that they don't get rent
| control themselves. The problem is not rent control, the
| problem is a _lack_ of _enough_ rent control. If rent
| control was universal (applied to 100% of rental units)
| then most of the perceived problems with it would vanish
| overnight.
|
| > If I take 10% of the seats and allow people to reserve
| them for personal use indefinitely
|
| That's not an better analogy, it's a unfair one. Rent
| control does not give people the ability to reserve lots
| of housing units indefinitely, and rent control doesn't
| actually distribute or redistribute anything. It lets
| households pay for one (1) unit at real-world rates
| (which is exactly the same amount of housing they'd still
| need and use without any rent control, except that
| household would suddenly have to give a bunch of extra
| money away for literally no reason).
| antasvara wrote:
| >Rent control never takes away any supply.
|
| Why would I build a new apartment building if it was
| going to be rent-controlled? Why would I rent my units if
| they were going to be rent controlled? There's evidence
| that the availability of rentable spaces decreases in the
| presence of rent control. These policies have had an
| effect on supply.
|
| If I can't afford a down payment, and I also can't get
| rent control (because of the length of the waitlist),
| it's much more difficult for me to find an apartment to
| rent even though the number of buildings is still the
| same.
|
| >that same person would still need the same amount of
| housing (presumably even in the same unit).
|
| Rent control can actually cause people to stay in a
| larger or smaller apartment than they actually need. If I
| have to give up rent control to move, why would I do
| that? I'm incentivized to stay in an apartment regardless
| of whether or not it's the right size. I could have
| needed that two bedroom flat when I was raising a family,
| but now that my family has left I don't need the space.
| However, rent control means that it's actually
| comparatively cheaper for me to stay in a large space.
|
| >The problem is not rent control, the problem is a lack
| of enough rent control. If rent control was universal
| (applied to 100% of rental units) then most of the
| perceived problems with it would vanish overnight.
|
| Price controls reduce the incentive to produce rentable
| units. It's the reason that price controls tend to result
| in shortages; why would I produce a price-controlled unit
| if I can't make a profit on it? Why would I continue
| renting a unit if there's a chance it gets rent
| controlled? Most studies I've seen have indicated that
| when rent control is implemented, the number of rentable
| units decreases.
|
| I suppose the argument could be made that renting is
| itself a bad thing, and that converting all rentable
| apartments to units that can be purchased is a good
| thing. I could see that argument.
|
| > Rent control does not give people the ability to
| reserve lots of housing units indefinitely, and rent
| control doesn't actually distribute or redistribute
| anything.
|
| In practice, rent control functions much like my analogy.
| If I'm in a rent-controlled apartment, I'm unlikely to
| leave. Why would I, especially when my rent won't change
| significantly if I stay? I can't get a better deal
| elsewhere. It also means that the landlord is unlikely to
| want to rent that apartment again when I leave, because
| they're uninterested in getting rent-controlled.
| flavius29663 wrote:
| > Rent control's job is not to make housing cheaper (it has
| no control over that).
|
| But that is the problem: it makes housing so much more
| expensive. It definitely has a control over that.
| sumtechguy wrote:
| I like to use the book 'economics in one lesson' by Henry
| Hazlitt to show why. The book has some flaws, and missing about
| 30 years of new ways to do it, but it shows the secondary
| effects many policies have. The basic premise of the book is
| 'broken window'. Which is 'take something from someone else and
| it will cause economic velocity'. But in the end effect is you
| are still overall worse off then you were when you started.
|
| An easy example is take something simple like 'give food to the
| hungry who can not afford it'. Sounds nice. Easy to do. Does
| not really seem to hurt anything. But that can have a
| inflationary effect on food prices if done too much and too
| rapidly. Thus creating more 'hungry' people who can not buy
| food, as maybe their wages are not keeping up. Then causing
| more money to be injected in to 'fix the issue' again causing
| inflation. Creating a cycle that can only be broken by hurting
| a lot of people. That is just one side effect. There are
| several others. Rent control is similar.
|
| The trick is how do you 'fix' things without creating bad
| cycles? It is not as easy or handwavy as many make it.
| throwawaymanbot wrote:
| In fairness, there's a lot of things economists say does not
| work, if it conflicts with their chosen life outlook.
|
| But can it be said that an absence of rent controls works
| either? Look at the mess currently in cities all over the
| world. No Rent Control/Rent Control, makes no difference.
| Somethnig else is at play.
| nepeckman wrote:
| There's a fantastic video essay from an economist that breaks
| down the issues that are frequently hand waved by saying "X
| doesnt work, that's just basic economics"
| https://youtu.be/4epQSbu2gYQ
| rdedev wrote:
| https://youtu.be/4epQSbu2gYQ
|
| A deep dive into rent control by a left leaning economist.
| Start from 21 min mark.
| imtringued wrote:
| Sure, I'll go out of a limb and say that most serious economics
| do not think austerity works either.
|
| For example, the Greek government cut welfare benefits only for
| the government to lose the next election and the new government
| to reinstate welfare. This is the "cut the wasteful spending"
| type of austerity, meaning it's the least bad form of
| austerity. If you were to cut healthcare, infrastructure or
| core industries you could easily end up worse off than without
| austerity. Guess what the Greeks did? They sold their most
| important assets (ports and ships) to China.
|
| Really, the problem with debt is that the person holding onto
| the money that the debt created decided they want to wait it
| out and spend their money later. In essence, the problem is
| that the interest rate on the debt is too high. If that person
| were to spend all his money, the debt would be gone assuming
| effective taxation.
|
| Meanwhile the IMF will tell literally every country in trouble
| to do austerity to qualify for support.
| RandomNick wrote:
| It's basic economic principle: Price ceiilngs, like rent
| control, cause a shortage of supply. Price floors, cause
| surpluses in supply.
|
| Everything else is just nonsensical hand-waving people use in
| an attempt to justify why various schemes they favor are not
| working yet again.
| oolang wrote:
| No, what basic economics says it that a price ceiling causes
| a shortage of supply _if_ no other variables change. Which
| they do in general but especially in the housing market. That
| is the principle called "ceteris paribus".
|
| And that is in addition to having the right supply curve in
| the first place. The potential shortage of supply created by
| a price ceiling may very well be irrelevant when supply
| decreases from other factors.
| pasabagi wrote:
| It's obviously a bit more complex than that, though. Most
| countries in europe have some form of rent caps, and some
| have fairly low average rents, while others have high rents.
| The economic idea simply doesn't fit with reality that well.
| thehappypm wrote:
| This is so baffling but you're right, a price floor (that is,
| setting a minimum rent) would create a feeding frenzy for new
| housing units to come online, since they would backstop risk.
| Clearly terrible for tenants -- no deals to be had for anyone
| -- but might actually be better for society!
| imtringued wrote:
| The government would rent the apartments and then sublet
| them to tenants it wants to subsidize.
| fulafel wrote:
| Many basic economic principles work only in imaginary
| simplified scenarios.
| maxsilver wrote:
| > Price ceilings, like rent control, cause a shortage of
| supply
|
| They don't have to. We've had price ceilings in the US in
| many places for over 60+ years without ever experiencing a
| shortage. (In my hometown, for example, education is price-
| capped, electricity is price-capped, water + sewer are price-
| capped, natural gas is price-capped. No shortages since the
| 1950s).
|
| You just have to require reasonable regulations on the
| industry, and strictly enforce those regulations. Heavy
| Regulations + Price Ceilings is the magic combo for success,
| more or less.
| dntrkv wrote:
| Everything you listed works with price caps because they
| are effective monopolies. Usually a single entity in an
| area is responsible for providing that service and its
| profits are heavily regulated.
|
| Housing is completely different for many reasons,
| primarily:
|
| 1. Housing isn't provided by a single entity, it's a market
| that a majority of people will participate in. All of the
| things you listed are one-to-many, not many-to-many.
|
| 2. Difference in quality for different price points. You
| either have electricity or you don't. You either have
| natural gas or you don't. This is obviously not the case
| with housing where there are limitless price points and
| differences in quality. Unless you're suggesting that the
| government build all homes, this won't work.
|
| 3. You want the effects of the market to drive development
| and settlement. Manipulating the prices of NG has little
| consequence outside of providing a steady supply to the
| users. Manipulating the prices of housing won't allow
| development to fulfill market demands in price point,
| location, etc...
| flavius29663 wrote:
| Everything you mentioned "has" to work, day in and out. If
| gas or water would go out, the local government would be
| out with the first elections. So they have a very strong
| incentive to make it work with public subsidies.
|
| Whereas the politicians won't care that a large percentage
| of would-be new residents for their city can't get in and
| have to commute. In fact, it's a perverse incentive: the
| locals love the lower rent, and there is no one to vote out
| the politicians that like rent controls.
| [deleted]
| maxsilver wrote:
| > Everything you mentioned "has" to work, day in and out.
|
| Agreed, but this is true of housing as well. Housing "has
| to" work, or you end up with a huge commuting and
| homeless population (and the state of being homeless is
| effectively a crime in the US).
|
| > In fact, it's a perverse incentive: the locals love the
| lower rent, and there is no one to vote out the
| politicians that like rent controls.
|
| It's not perverse, it's a good incentive. Locals love
| lower rent from rent control, so the commuters who don't
| have it should be incentivized to also vote for rent
| control, and it's a great idea that should continue to
| spread. In a ideal world, every rental unit in the nation
| would be under a strict rent control (just like how
| power/water/sewer/natgas often is).
| davrosthedalek wrote:
| And like the people in musical chairs without a chair
| when the musics stops, if you don't have an apartment at
| that time, you are out of the game. No roof for you.
| seoaeu wrote:
| Why should newcomers to a city be forced to endure long
| commutes just because they happened to be born in a
| different part of the country? We have the capability to
| let everyone who wants to live in those areas do so. I
| see no reason that the privileged minority that already
| lives there should get to dictate that for everyone else
| in the region
|
| Not to mention, designing metro areas to require long
| commutes basically amounts to climate arson
| asdff wrote:
| it just doesn't make sense to allow rent increases past 5% in
| a world where wages remain nearly constant for the working
| class
| rguillebert wrote:
| That's not how the market sets prices.
| epistasis wrote:
| This applies with spherical cow-like assumptions for
| commodities.
|
| Housing and land require further analysis due to inelastic
| supply of land, and huge restrictions on construction, both
| for political and safety reasons.
|
| The biggest determinant of supply of housing is not the
| ability to charge more for it, but all the other challenges
| around building.
| thinkharderdev wrote:
| The supply of land is (mostly) fixed but the relationship
| between land and housing units is not. You can build row
| houses or multi-story apartment buildings instead of
| single-family homes, so the supply of land is almost never
| the binding constraint. What is a major constraint is
| various restrictions on building additional housing stock
| (and particularly building higher density housing stock)
| but that is a malleable constraint. Given that constraint
| maybe price controls on housing aren't so bad but still
| having an equilibrium where there is dramatically more
| demand for housing than supply is bad. Either you get sky-
| high prices or you get rationing through other means (you
| can only get a rent controlled apartment if you have
| connections or just get lucky).
| epistasis wrote:
| Yes, I agree on all this. But rent control is about price
| changes on existing houses, not on new construction, at
| least in the US.
|
| So it's not a "price control" as much as it is a control
| on rentierism, on existing rentiers taking unearned
| profits without working.
| imtringued wrote:
| That's an argument for (land) taxation, not direct
| control of prices.
|
| Here is an idea: Measure average rent per sqft. Put a 20%
| tax on rent above the average and use it to subsidize low
| income households. That way you tax wealthy tenants and
| subsidize poor tenants.
| Finnucane wrote:
| Or not. I mean, we used to have rent control in Boston and
| Cambridge, and when it was eliminated (by statewide
| referendum) rents just went up. And they went up in
| surrounding areas, as people went looking for cheaper rent
| elsewhere.
| qnsi wrote:
| what you are saying is not contradictory to the commentor
| you reply to.
|
| Rents go up, because price ceiling is removed. Idea is that
| in the future supply increases and you don't have to wear a
| suit when looking for a flat
| seoaeu wrote:
| A trend which surely had nothing to do with the
| tech/biotech boom in the area. When a region gains hundreds
| of thousands of new jobs and doesn't build housing to
| compensate, then rents are going to increase
| Finnucane wrote:
| There's actually been a fair bit of construction. In
| fact, a 2400 unit development is under construction here
| right now.
| seoaeu wrote:
| There have literally been _hundreds of thousands_ of new
| jobs created in the region in recent decades. Cambridge
| alone added nearly 50,000 new jobs since 1980!
|
| So yes 2400 units is a start, but we need dozens more
| like it before we start to even come close to solving the
| shortage.
| Finnucane wrote:
| >Cambridge alone added nearly 50,000 new jobs
|
| But not 50,000 new residents. Adding jobs doesn't
| necessarily mean more people, just more employed people.
| seoaeu wrote:
| Of course Cambridge didn't add significantly more people
| than it added housing units. People aren't going to move
| to the city for a job only to live in a tent down by the
| railroad tracks!
|
| Instead what happened is that new residents came to the
| city for high paying jobs and bid up the prices for local
| apartments. Basically a cruel game of musical chairs
| where low-income households were forced from their homes
| and into cheaper neighborhoods in the surrounding cities.
| (Those poor neighborhoods actually did grow in population
| faster than housing: people were forced to pack into
| overcrowded living conditions)
|
| If you're curious about the numbers, over the last 40
| years Cambridge added about one housing unit for every
| four new jobs
| tacker2000 wrote:
| The thing with boston/Cambridge is that in addition to
| "great" companies there are also several top notch
| universities there so the competition for apartments is
| even greater.
| colinmhayes wrote:
| Because people were previously unable to find units where
| they wanted, so they were forced to live further away. Now
| everyone can compete for the good location units so price
| goes up.
| zip1234 wrote:
| This is why supply is constrained in Boston and most
| places: http://www.bostonplans.org/zoning
| Hokusai wrote:
| > https://www.reddit.com/r/europe/comments/j19txa/average_age_...
|
| It has been working really well all these years.
|
| > But until recently, getting a well-maintained, rent-controlled
| apartment straight after school is something some Swedes have
| just taken "for granted", argues Liza, a 37-year-old tech worker,
| who didn't want to share her last name. She moved to London from
| Stockholm last year, and believes Swedes complaining about
| housing shortages would do well to put their struggles in a wider
| context.
|
| The content just contradicts the title.
| nobodyandproud wrote:
| Isn't this because London is used as a safe place to park dirty
| money?
|
| That is, the supply is artificially low because oligarchs, off-
| shore billionaires, and others buy up the supply?
|
| That is, London's failure isn't about free market pricing vs
| rent control; but about deficiencies in residence and ownership
| laws?
| l33tman wrote:
| This is just a bad article, you can always find a couple of
| people to interview who just HAVE to live in the most central
| area in the most popular city and then complain that it's
| difficult to get a cheap apartment.
|
| There were new stricter laws on black-market leases recently in
| Sweden, and if you pay too much for a normal lease, you can go to
| court and get a refund. My personal opinion is that the system
| works as well as you could expect (except for the most central
| parts of Stockholm maybe that the clickbait article seems to
| focus on).
| nivenkos wrote:
| It sucks that you're being downvoted because people don't
| understand the Swedish housing system and that the main rent
| controls only apply to first-hand contracts.
|
| Stockholm doesn't have the same setup as New York.
|
| That said, the 20% YoY increase in property prices is insane.
| tzfld wrote:
| Wondering why companies chose to locate where house prices are so
| high that their employees cannot afford to buy?
| kazinator wrote:
| Suppose that the government regulates the price of unobtainium.
| If a transaction occurs whereby 100 grams of unobtainium are
| exchanged between two parties, no more than a dollar shall be
| paid by the receiving party, by law.
|
| How does anyone rationally expect that to turn unobtainium into
| obtainium?
|
| I have 50 grams of unobtainium. 300 people want it. What to do?
| Lottery? One lucky winner who gets a great fifty cent deal, 299
| losers.
|
| No wait, screw that that; for 50 cents, it's not worth it. I'm
| not even putting that on the market unless they make that a law.
| jrochkind1 wrote:
| > Despite its complex challenges, Sweden is in a better position
| on housing than many other EU countries.
|
| Would be interesting to compare it to the USA too.
|
| The struggles people are having finding an affordable apartment
| in a desirable neighborhood in Sweden's biggest city's seems
| pretty familiar to struggles people go through in the USA. Which
| to the extent that's true means that Sweden's attempt to use very
| different political-economic mechanics to get out of that haven't
| worked as well as planned, but it doens't necessarily mean they
| are worse off. There might be different winners and losers and
| trade-offs between the different approaches, would be interesting
| to delve into it more than just "people still have a hard time
| finding affordable housing in Sweden's big cities", which at that
| general level seems a true statement almost everywhere.
| kaycebasques wrote:
| > In Sweden flat-sharing is uncommon, compared to other European
| cities
|
| Is this a legal limitation or a cultural tendency?
| teddyh wrote:
| Not specific to Sweden, but, to paraphrase myself1:
|
| A landlord will need a single legal person to be responsible
| for the paying of the rent, and own the lease. Most individuals
| will not have anything close to the sort of documented income
| or credit history to make any sensible landlord agree to the
| lease. "My friends will totally chip in to pay the rent!" is
| just not going to work.
|
| 1. https://news.ycombinator.com/item?id=6383809
| filleokus wrote:
| The housing situation in Stockholm (and many other parts of the
| country) is pretty bleak.
|
| Buying an apartment is expensive, and problematic even for well
| payed young people. In central Stockholm prices are around 1000
| USD / sq feet ([?]10000 EUR / sq meter), and you need a 15% down
| payment. For a 400 square feet single room apartment that's a
| down payment of a full years post-tax salary. If you manage to
| save 20% of it, then it'll take you five years.
|
| Until you can afford it, the best option is market-priced second
| hand contracts. Which work well enough, but are quite expensive
| and very insecure. The landlords often bought the apartments with
| the intention to live in them, so most contracts are semi-
| temporary.
|
| First hand rent-controlled contracts are extremely hard to get
| and basically not an option. The queues are decades long. There's
| often a 2-300% difference between second-hand (market) rates and
| first hand contracts, so once someone gets such a contract,
| they'll never move out.
|
| Of course the lower cost of rent-controlled apartments helps the
| inner-city be more diverse, allowing people with lower income
| living there. But there's also a large share of well-of people
| that have gotten their contracts via connections, or who have
| just been in the queue for a really long time.
|
| I really hope that the rent-controls are abolished in my
| lifetime, but there's a vocal large public option for them, so
| I'm not too sure...
| cloudfifty wrote:
| > I really hope that the rent-controls are abolished in my
| lifetime
|
| Well, of course you want that if you have a large salary and
| can pay the rents other people can't. Why not support
| government lead building of housing according to need instead
| of just throwing out the poor as a "solution"?
| vmception wrote:
| One thing to understand about Sweden is that mortgage rates are
| lower and mortgage terms are much longer, up to over 100 years.
|
| Sweden and a few other EU nations have their own Central Bank
| and can do distortions greater than the European Union Central
| Bank, while garnering even less publicity, let alone less local
| knowledge that these are strange actions.
| oolang wrote:
| You are absolutely right. This is by far the main reason.
| Even more so as in Sweden you usually have two mortgages. One
| personal which is used to purchase the property and one taken
| out by the co-op itself which you pay as part of the monthly
| fee. On top of that you are also personally liable for
| mortgage debt.
| cromat3 wrote:
| Only 5 years sounds too good to me. In Zagreb, average price
| per m2 is about 2000 eur, and average monthly salary (in
| Zagreb) is little bit more than 1000eur which ia about 12000
| eur per year. If you manage to save 20% you can get small 30m2
| apartment in 25 years but most people go with credit loans
| which makes full repayment even longer.
| filleokus wrote:
| 5 years to save up for the _15% down payment_ :-).
|
| Saving 20% of the post-tax salary will take you 30-something
| years to buy the apartment cash only.
| rkangel wrote:
| I don't understand why the solution here isn't "ban
| subletting".
|
| The problem (based in my massive experience of reading one
| article) seems to be that there are a lot of rent-controlled
| apartments, but they end users aren't getting the benefit of
| that low rent controlled price. Instead some private citizens
| are getting to collect free profit for subletting.
|
| If you make subletting a rent-controlled property illegal, then
| the people who are living in them are unaffected, and the
| people who aren't living in them will have to give up their
| rent-control contract freeing up the property for others.
| fallingknife wrote:
| But how do you enforce? Neither the tenant, who is getting
| below market rent, nor the landlord (obviously) have any
| incentive to report.
| rkangel wrote:
| A _potential_ tenant has some incentive. If there was a
| public record of which properties were rent controlled, as
| a tenant looking for property and I ran into one I thought
| was sublet, I could compare it with the list and report it.
| Basically it would become hard to advertise them because it
| would be easy to check. TBH, you could make it illegal to
| advertise property that was being sublet and put the onus
| on Zoopla /RightMove/whoever to do a quick API check for an
| address.
|
| You're right that if it was the cheapest way of getting
| property then tenants probably wouldn't report. But if the
| whole thing is making property more expensive then I
| definitely would.
|
| Recently on Reddit there were some screenshots of a ground-
| floor 'studio' flat that was entered through a window. It
| didn't have a door and was still quite expensive. That's
| illegal according to UK rules, and lots of people on Reddit
| happily reported it.
| kbelder wrote:
| I'm sure they did. Thanks, Reddit strangers! One less
| apartment available to rent, but at least several
| internet users have more smug satisfaction.
| rkangel wrote:
| The rules exist for a reason. The reason in this case is
| to prevent people dying in a fire. "But we're really
| short of flats in London" is not a good excuse for
| allowing landlords to risk the lives of their tenants to
| make a buck.
| kbelder wrote:
| Oh, I wouldn't have a problem with a tenant reporting the
| crimes of a slumlord. I just really hate Reddit crowds of
| do-gooders who brigade over a picture and a blurb.
| hedwall wrote:
| It already is illegal to make a profit by sub letting a rent
| controlled apartment in Sweden.
| imtringued wrote:
| Why is the problem that people are willing to market rate?
| int_19h wrote:
| Because they didn't get it for market rate.
| blitzar wrote:
| I am going to go out on a limb here and suggest that owner of
| rent controlled property 'lets' it to a connected party who
| then sublets it on for market rate. Bypassing the whole rent
| control.
|
| If they are going to have a rent control law, then allowing
| the person to sublet that on for a profit then you basically
| dont have rent control at all (except for the lucky / honest
| minority).
| dimitrios1 wrote:
| Keep going...
|
| You are almost there to why regulations, however well
| intentioned, rarely work to their expectations versus the
| alternatives :)
| blitzar wrote:
| Regulations do often work, and work well.
|
| What doesnt work is what passes for regulation or
| legislation these days, written by some moron, that
| politicians attach to whatever bill or budget that is
| certain to pass. They barely reach the threshold of 'well
| intentioned' and would more charitably be described as
| vitue signaling or just spin.
|
| You get to stand infront of the microphone and parrot off
| the 'This is a Win for the voters' but rarely has anyone
| read, understood or debated what is now a binding law or
| regulation, along with its unintended and at times
| intended consequences.
| [deleted]
| filleokus wrote:
| We basically have two main way of living in apartments. Rent-
| controlled first-hand contracts, and bought apartments.
|
| Rent-controlled apartments can be sublet legally with almost
| no markup. Bought apartments can be sublet legally to a
| market rate [0].
|
| I'm guessing that the guy in the article is in a sublet owned
| apartment.
|
| Regardless, sub-letting of rent-controlled apartments is very
| strictly controlled and is essentially "banned". But of
| course it's quite tricky/expensive to enforce.
|
| (My, in Sweden very unpopular, opinion is that subletting is
| the last thing that gives young people some kind of chance to
| mobility. Especially those whose's parents can't buy them an
| apartment. If all forms of subletting were banned, I would
| have had no chance to live in Stockholm).
| oolang wrote:
| I don't think that is an unpopular opinion. On the contrary
| it's been the going one for quite a while. Deregulating
| letting was said to be part the solution when it was
| introduced. Now it is said to be part of the problem to
| have even more deregulation. A more unpopular opinion is
| that we actually shouldn't try to improve the situation.
|
| The reality is that Stockholm geographically challenged.
| The major pieces of available land is the city airport and
| areas of parkland. The city airport has been given a lease
| until 2040. The areas of parkland is a national park.
|
| The housing market is one the most important markets in
| Sweden. Anything that significantly lowers the value of
| real estate will be political suicide. Meaning that in the
| current market there can't be any solution that actually
| delivers affordable housing.
|
| There is also little will from the voters to accept measure
| that would stabilize the market long terms like removing
| the mortgage interest deduction, introduce an actual real
| estate tax or regulating lending similar to other
| countries.
|
| All this means that it's very unlikely that there will ever
| be even a relatively affordable market in Stockholm. Which
| will end up being disastrous when the cost of rent is also
| among the biggest single cost in the knowledge economy. For
| companies you can argue that the increase in housing cost
| will be offset by the larger available workforce but you
| can't say the same for public services.
|
| Past or future deregulation isn't going to solve this. On
| the contrary it is what prevents a correction. The natural
| thing to do when something becomes too expensive is look
| for alternatives. In the housing market this means moving
| somewhere else. But as companies can attract those good or
| privileged enough to Stockholm anyways they don't have to
| move. So the average person doesn't have much of a choice
| but to move there themselves. Which in turn makes Stockholm
| even more attractive.
|
| The paradox is that most any improvement of the Stockholm
| housing market will there make the situation worse long
| term. So the solution has to be not to cater for this
| market but to improve the market somewhere else instead.
| Unfortunately this also unlikely.
| filleokus wrote:
| I agree with many of your points. Especially that the
| mortgage market is really messed up. But as you say, it's
| almost impossible to make changes that negatively
| influence the (upper) middle class.
|
| A pet "dictator for one day" idea of mine is to simply
| move the capital to something like Linkoping! Has an
| airport, enormous amounts of farm land that can just be
| built on etc, less than 2 hours away from Stockholm by
| train.
|
| Make Stockholm like NYC and Linkoping as DC. If all
| government headquarters (and related functions) were
| forced to move, it would certainly take hundreds of
| thousands of people with them (including family members
| etc).
|
| Brasilia but on Ostgotaslatten :-).
| oolang wrote:
| Many government functions have actually already or are in
| the process of moving.
|
| https://www.fastighetsvarlden.se/notiser/flera-
| myndigheter-t...
|
| You wouldn't have to move the government though just
| companies. This is a major part of creating the problem
| from the beginning. Because as you probably know many of
| the industrial companies where distributed to other
| locations like Linkoping, Trollhattan, Karlskrona and so
| forth. As those companies and the industry general has
| shifted to no longer need things like manufacturing
| facilities everyone ends up in Stockholm. It's a paradox
| that when you can work from anywhere it also means
| everyone can work from the same place.
|
| Of course if a larger company would move outside of
| Stockholm that places would soon face the same problem
| even quicker as it's smaller. But if it happened to many
| different places there might be a shoot. Unfortunately
| you would have the same issue that many people would have
| to undermine their immediate interest for it to happen.
| But at least it would be technically possible. Stockholm
| has probably gone so far that it is socially and
| technically impossible as the economic consequences of an
| effective solution might be unpredictable.
| amelius wrote:
| > Anything that significantly lowers the value of real
| estate will be political suicide.
|
| What percentage of the population owns the house they
| live in (or has a mortgage)?
| TheSpiceIsLife wrote:
| That's not how our modern democracies tend to work.
|
| Rather, voters choose between one option, thinly veiled
| as two chooses, set by monied interests and corralled by
| media barons.
| RandyRanderson wrote:
| Meanwhile in Vancouver:
|
| . 1120 CAD/sqft
|
| . median before tax household income (City of Vancouver) 72,585
| CAD
|
| . ~30pc tax -> ~51k after tax
|
| . 400 sqft _1120= 448k. 15% = 62k for a 15pc downpayment for a
| 400sqft condo.
|
| Summary: In Vancouver the median _household* would not be able
| to save 15% of a down payment for a 400 sqft "home" if they
| spent NOTHING for a year. We'll ignore the fact that housing
| appreciated for many years here at more than 10%/y.
|
| This is good for ppl like me b/c I own stuff and this situation
| forces ppl to work more for less money in jobs they hate. For
| folks starting out (incl new immigrants), it's terrible. The
| root cause is very high immigration. Sweden (and Canada) have
| very high rates which puts pressure on the low end of the job
| market and pushes up home prices.
|
| The US has a much lower rate (0.5%/y) than Canada (1.1%/y),
| which is likely one reason why homes are still somewhat
| affordable there.
| nivenkos wrote:
| Would abolishing them really help though?
|
| I also rent second-hand and it sucks, but I don't think things
| will improve just by abolishing the controls on first-hand
| contracts.
|
| We just need to build far, far, far more. Especially with so
| much immigration.
| throwaway6734 wrote:
| Rent control decreases the incentive to build
| nivenkos wrote:
| I'm not a property developer, so I don't know how many
| flats they are forced to rent out as first-hand contracts
| when building new blocks.
|
| You can definitely buy apartments from new blocks though,
| and then you're just paying the normal market price.
|
| Second-hand contracts and commercial rentals also aren't
| covered by the rent controls, but I imagine the property
| developers can't rent them like that directly (only by
| selling them).
| epistasis wrote:
| How does it do that? Are the builders typically the same as
| the owners in Sweden? If so, I could see that being true.
| But if housing builders are different than the eventual
| owners, the have different economic interests, and rent
| control shouldn't limit housing production.
| sokoloff wrote:
| Housing is produced because there are buyers are willing
| to pay an amount $X that makes it attractive to build.
|
| Anything that reduces that value $X likely has a negative
| influence on marginal housing construction.
| stonemetal12 wrote:
| Doesn't really matter who the owner is. If it costs 1
| million to build a new apartment complex, and rent
| control means it will only return 500K in a reasonable
| time frame it doesn't get built. If it returns 1.5
| million in a reasonable time frame it does. A builder
| isn't going to build it if no one will buy it, and no one
| will buy it if they lose money on the rent.
| epistasis wrote:
| Rent control doesn't apply to the price of new housing,
| at least for any the many many versions of rent control
| I've seen. Rent control only limits the increases on
| existing housing.
|
| The new building can charge whatever they want, they just
| can't depend on large increases in rent later on after
| their initial pricing. This same assumption, no huge rise
| in rents later, is also applied by financiers.
| filleokus wrote:
| In my opinion we need both. Just building more won't help me.
|
| If I'm going to live in Stockholm (or any other large city
| really), I want to live in the city center. I want to walk or
| bike to the office, and have all the restaurants near by etc.
| It's very unlikely that the housing stock in the central
| parts of town will ever increase substantially.
|
| I'm willing (and honestly lucky enough to be able) to pay the
| premium for living downtown, if market rates were imposed.
|
| (There's an argument to be made about how abolished rent
| controls can increase interest by companies to build rental
| properties and get municipalities to issue building permits.
| Also that a non-negligible share of attractive rent-
| controlled housing is under-utilised, e.g people who don't
| live in them full-time but keep the contract because it's
| nice to have every once in a while).
|
| But yes, we definitely need a lot more housing overall. Cheap
| and close/with good connections to places where people work.
| [deleted]
| nivenkos wrote:
| Fair enough.
|
| I just hope they never abolish the restrictions on second
| hand contracts. That has completely destroyed London,
| Barcelona, etc. - where your landlord might just be some
| investor in Zurich or New York.
|
| Also allowing for more remote work, so people can do more
| from smaller cities.
| jrochkind1 wrote:
| It's of course expensive to live in the city center in most
| large European (or American) cities, this is not particular
| to Sweden.
|
| > I'm willing (and honestly lucky enough to be able) to pay
| the premium for living downtown, if market rates were
| imposed.
|
| I think this basically points out the trade-off. Right now,
| difficulty living in the city center of Stockholm or a
| large city is somewhat more evenly distributed compared to
| typical European countries, it unusually effects even the
| rich. Under a more strictly market approach the difficulty
| would be eliminated for the rich and increased for others.
|
| Whether that's a net win depends who you are, of course.
|
| > It's very unlikely that the housing stock in the central
| parts of town will ever increase substantially.
|
| So one way or another there are more people who want to
| live there than there is housing. How is it allocated? It
| can be allocated by a waiting list, in which you might have
| to wait 9 years. It can be allocated based on the market,
| in which those with more ability to pay get to live there.
| It can be allocated based on some combination of "personal
| network/nepotism" and "graft", in which leaseholders of
| rent-controlled apartments rent them out at profit to them,
| or at no profit to their family and those they know.
|
| Based on the article, the current system of course is a
| combination of all of those. Adjusting the portion of each
| of them would benefit some people and disadvantage others,
| depending on how adjusted.
| filleokus wrote:
| There are some dynamic effects that might be dangerous to
| ignore. Like lobbying efforts for new construction might
| increase if there's money to made in construction of
| rental apartments, or more efficient use of square meters
| (smaller apartments/more used apartments).
|
| But overall, yes, I totally agree. It's an allocation
| problem of a finite resource, with different tradeoffs.
|
| My favourite idea, if we are going to keep the rent-
| controls, is to use a lottery.
| jrochkind1 wrote:
| What do you like better about a lottery vs the current
| "waiting list" system? (If we ignore the grey-area-legal
| sublets and market-rate-rentals that exist now and could
| exist or not in either system).
|
| They're both kind of "everyone is equal, you don't get a
| leg up becuase of how much money you have or other
| status, everyone gets a chance for this limited in-demand
| resource" approaches, at least on their faces... the same
| portion of everyone interested actually gets a house
| either way... I'm confusing myself trying to think
| through the practical experienced implications of a
| lottery (which you can keep entering every year) vs
| multi-year-long waiting list. I mean, I guess obviously
| the lottery stops privilging those who expressed their
| desire longest ago/first! I'm not sure if this is good or
| what. I guess it would give younger people, or people who
| don't plan out their whole life in advance, a better
| chance?
| filleokus wrote:
| (We've reached the default threading limit, so unsure if
| this will be visible...)
|
| 1: I don't believe there's a moral value attached to
| being in the waiting list. Everything else equal
| (completley ignoring personal situations, current
| housing, income etc), everyone waiting "deserves" an
| apartment the same amount.
|
| 2: My view is that there's actually an inverse
| relationship between "deservedness" (taking personal
| situation in to account) and amount of time waiting,
| especially on decade timescales. People who have been
| waiting for 20 years are older, have had more time to
| potentially save money, are arguably more likely to have
| a resonable housing situation. Basically they are "point
| wealthy", they weren't forced to spend their queuing
| points on a bad apartment after 8 years, they are still
| collecting more points waiting for the nicer ones. And
| the fact that they can do that, to some extent, indicate
| that they are in a better situation.
|
| (2b: It would eliminate the absurd situation when people
| live 30 years of their life in an expensive house,
| collecting queue points, and then sell the house and move
| into a rent controlled apartment.)
|
| 3: It would incentivise/allow a centralisation of the
| allocation system and increase mobility between cities.
|
| Right now each city have one or a few different queues.
| People are generally not signed up to all queues across
| the country, because of hassle and cost (each queue is
| like 0-20 USD / year). So if I wanted to move to say
| Gothenburg, I would start from zero and be years away
| from an apartment.
|
| Because of this, there is no interest from anyone to
| create a centralised queue. If everyone joined the
| central queue at birth, it would be meaningless!
|
| But with a lottery based system, a central queue would be
| no problem. I could just select the cities I'm interested
| in at the moment, and have the same chance as everyone
| else. I could take a "bad" apartment, because I'm still
| in the lottery and might win a better one to upgrade,
| 1053r wrote:
| Why isn't there more building? In most places that "need"
| rent control, it's because there are heavy restrictions on
| building. And rent control, all by itself, serves as a
| disincentive to build. Why should I invest in a new building
| when I can invest in something else that's less hassle, more
| liquid, etc.?
|
| Not to mention historical controls on building, rules about
| shading out other buildings, onerous permitting processes
| that take years, potential lawsuits, the annoyance of
| prostrating oneself before random bureaucrats begging for the
| ability to spend one's own money, etc. I think I'll just go
| YOLO into options futures instead, or throw my money in a
| global index fund.
|
| Each of these rules is well intentioned, or at least has a
| well intentioned sounding justification. (Often, the main
| force behind them is a monopolist who specializes in
| navigating them, and doesn't want to have to compete on an
| even footing in an open market.) Altogether, however, the
| rules make a sticky web that causes entrepreneurs to throw up
| their hands and go elsewhere.
|
| Rules about building is like dessert. A few desserts is a
| good idea. A meal constructed entirely of dessert is not so
| healthy, especially in the long run. Figure out how to make
| it easy to build, and people will build. And those folks need
| to be wooed, not with sweetheart deals out of the public
| purse, but with a clear, easy to navigate regulatory
| environment. If you make it easy to compete, there will be
| much competition.
|
| Overwhelmingly, though, there's no competition in these kinds
| of jurisdictions because powerful interests LIKE it that way.
| Think of those folks who spent EUR 10K on a square meter of
| condo. Are they going to be happy at your proposed regulatory
| reform that promises to quadruple the rate of building? Of
| course not! You are directly attacking their asset, that they
| strived and scrimped and worked for for years! Are they going
| to come out and say that? Only rarely. They are going to talk
| about the character of the neighborhood, or the historical
| significance of whatever, or the environmental impact of a
| skyscraper in the downtown, or make overtly racist comments
| about who might move into these new buildings, or anything
| that will rally people to their cause to STOP THAT BUILDING!
| jlokier wrote:
| Is there really much immigration to Stockholm?
|
| According to
| https://www.macrotrends.net/countries/SWE/sweden/net-
| migrati... net immigration to Sweden has been consistently
| dropping since ~2010, and at 0.3368% of the population per
| year, that doesn't sound like it would move the needle on
| housing.
| mrkickling wrote:
| I think there is an ideological difference. I saw in another of
| your comments that you only want to live in the city center of
| Stockholm, and that you could pay a high rent for that. This
| could lead to a city where all the rich live in the city center
| and all the poor live far out in the suburbs (probably past the
| subway line), and travel into the city center to work. This is
| in my opinion not a good society (even for the rich,
| considering that segregation is expensive for a welfare
| society). My ideological conviction is that a less segregated
| city is better, and that both rich and poor should live in the
| city center. Having both rentals (at different rent levels) and
| owned apartments mixed is a good way to make this happen. What
| is your idea of how housing should look like in Stockholm?
| filleokus wrote:
| I mean, ideally I don't want a Stockholm metro area that's
| (even more!) segregated compared to today's situation.
|
| If I could dream, my ideal Stockholm area would be one where
| I (and other's like me) would be interested in living outside
| of the city center. Where the whole Swedish model of Soviet-
| style housing blocks along the subways didn't really happen,
| and instead that the city grew organically outwards. More
| like Aspudden and less like Solna centrum. Imagine if
| Vasastaden style of housing extended outwards!
|
| But I also feel that the current system is very inefficient
| in alleviating the segregation. For starters, the most
| socially exposed people haven't been in Sweden long enough to
| even dream about a rent-controlled apartment (anywhere in
| Stockholm). Then we have all the people who have been
| standing in queues for decades, while living in a villa in
| Bromma, and now sells it to move into a large flat in the
| city center with a rent that is a third of "what it should
| be".
|
| Finally, my opinion is that nothing good comes out of
| pretending that attractive locations aren't more expensive.
| They are! If we want to give low-income people the chance to
| live in expensive areas, we should do that directly. Perhaps
| by subsidising their rent or have the government owned
| property companies save X% of apartments to people who are
| less well off.
|
| Pretending that market forces don't exist and forcing Swedes
| in their 20's to borrow hundreds of thousands from their
| parents, or moving every 12 months is not a good solution
| either.
| ecmascript wrote:
| Norway, Denmark and Finland all have no rent control and at
| least in two of the three the bad places is close to the city
| center.
|
| In Stockholm, it's completely the reverse. I think rent
| control and where poor people live has nothing in common.
| It's impossible to get an apartment in the Stockholm city
| centre if you want to rent it.
|
| Especially when the cities lets immigrants cut the queue.
| Most wealthy people can afford the super expensive apartments
| and the medium wealthy can buy contracts illegally.
|
| All you're doing with rent control is to give incentiment for
| people to hold on to their contracts no matter what, cheat
| the system or buy/sell contracts illegally. It is really
| widespread and landlords are making a lot of tax free money
| on it.
|
| Even worse is the situation if you buy apartments, you cannot
| rent it out to whomever you want or for how long you want
| since you don't really own it. You only own a smaller piece
| in the economic foundation that owns all apartments and give
| you the right to live in it. They can require you to not rent
| it out or limit the timing to a couple of months increasing
| the instability of the second hand contracts. Also, if the
| economic foundation makes bad decisions and gets a bad
| economy they can be forced to sell the entire apartment
| complex and you'll loose the apartment to a presumably shitty
| price.
|
| The only good way of owning your housing in Sweden is to
| actually own the entire property OR own one of the new types
| of "aganderatter" which are very few and far between.
| litek wrote:
| > Norway, Denmark and Finland all have no rent control
|
| Norway does not, not sure about Finland, but Denmark
| definitely has a form of rent control. There are ceilings
| on rent that will be determined by appeal to a local rental
| board. There are exceptions however, anything built from
| 1992 and onwards, as well as some different rules for units
| that have undergone major renovations.
| bjourne wrote:
| Finland has social housing and also has much larger housing
| subsidies than Sweden. When Finland abolished its rent
| control, rents in some places almost doubled. Seniors and
| others couldn't afford to pay the higher rents so they had
| to increase housing subsidies to them so that they wouldn't
| become homeless. That Finnish tax money directly becomes
| profits to landlords doesn't seem like a great situation to
| me.
| ecmascript wrote:
| I don't understand what the difference is, at least you
| can get an apartment in Finland. Prices in Helsinki (even
| if its a much smaller city) is a lot more reasonable and
| you have a lot more rights than you'll have in Sweden.
|
| If you think old people can get an apartment in Sweden,
| that is just laughable. Even in smaller cities the queues
| are like 10 years. You'll have to pay up
| toxik wrote:
| The difference is that landlords pocket the excess and
| whoever isn't subsidized gets fucked over.
| bjourne wrote:
| In Helsinki rents rose by 40% after rent control was
| abolished and in other parts of the country by 26%. The
| average rent per m^2 is 11.3 euro in Stockholm and 19.5
| euro in Helsinki. Furthermore, Finland spends three times
| as much on subsidizing poor tenants that can't pay their
| rent than what Sweden does. There is subsidized housing
| in Finland called Ara-housing, but the queuing time for
| those apartments is six to seven years. References here:
| https://www.etc.se/ekonomi/sa-blev-konsekvenserna-av-
| marknad...
| filleokus wrote:
| > The average rent per m^2 is 11.3 euro in Stockholm and
| 19.5 euro in Helsinki.
|
| With the difference being that 19.5 EUR would give me a
| square meter in Helsinki tomorrow. 11.3 EUR doesn't give
| me anything in Stockholm for the next decade. [?] 30 EUR
| give me a second hand semi-short term contract in
| Stockholm.
| ecmascript wrote:
| ETC is a leftist media organisation so that they would
| promote rent control is a given. I wouldn't trust what
| they have to say about the matter. Do you know why no one
| builds new renting apartments in Sweden? It is because
| you cannot make a profit on them. You can instead build
| BRFs and make a lot of money. So everyone is doing that.
| They maximize the loans of the new BRF so they have to
| spend as little as possible of their own money.
|
| Six to seven years is nothing compared to Sweden where
| you can have queues about 20-30 years easily for the big
| cities. My GF have 12 years in the queue and she can get
| a decent apartment in the outskirts of Stockholm but that
| is about it.
|
| There are special housing for elderly, which is a bit
| shorter in the queues but still very long.
| mrkickling wrote:
| > I think rent control and where poor people live has
| nothing in common.
|
| So you really think there is no connection between housing
| politics and segregation?
|
| > All you're doing with rent control is to give incentiment
| for people to hold on to their contracts no matter what,
| cheat the system or buy/sell contracts illegally
|
| Holding on to a contract is not necessarily a bad thing, if
| you enjoy living in your apartment and it is priced
| according to its size (giving incitament to switch to a
| smaller one if you don't need a big one anymore). Of course
| people try to cheat the system, but it is illegal ... and
| tenants paying illegally high rents can take the contract
| owner to court and get all excess rent back.
|
| > Even worse is the situation if you buy apartments, you
| cannot rent it out to whomever you want or for how long you
| want since you don't really own it.
|
| This has nothing to do with rent control and depends on
| which BRF you live in. Considering the lack of interest for
| aganderatter I'm not sure if so many people are with you on
| this opinion.
| ecmascript wrote:
| > So you really think there is no connection between
| housing politics and segregation?
|
| That is not what I said.
|
| > Of course people try to cheat the system, but it is
| illegal ... and tenants paying illegally high rents can
| take the contract owner to court and get all excess rent
| back.
|
| Yeah but that never happens. All parties involved have
| interest in making it stay in the shadows. They don't pay
| illegally high rents, they pay normal rents but buy the
| contract to live there in the first place. A LOT of
| people is doing that, because the queues are impossible.
|
| > This has nothing to do with rent control and depends on
| which BRF you live in. Considering the lack of interest
| for aganderatter I'm not sure if so many people are with
| you on this opinion.
|
| The biggest reason why there is a lack of interest is
| because of loans. Builders take out massive loans on
| every new BRF, as much as they can which makes the new
| BRF sensitive for economic shifts.
|
| Yes but basically all large BRFs have rules that say that
| you can only rent out your apartment for 6-12 months at a
| maximum time. They also need to vet the one your renting
| out to and can say no. If you have a bad relationship
| with the BRF, they can mess with you easily.
| nilpunning wrote:
| I agree that having a mix is good. Many times this occurs
| without intervention by having a mix of old and new (or
| renovated) buildings. An old city like Stockholm I imagine
| could have a large spectrum of buildings in various states of
| decay and thus prices. But on the other hand cities that are
| experiencing a rapid inflow of migration can quickly have
| their aged housing stock bought up and flipped. Many of these
| issues are exacerbated by restrictive planning and zoning
| regulations in city suburbs which prevent the higher density
| city life people desire to be replicated in new places.
| alkonaut wrote:
| As much as the title "doesn't work" is true, it's also just a
| choice between two things: either you have market rents in a city
| and you accept that only rich people live there. Or you have
| rents controlled and a black market, long queues etc - but you
| have some chance of not gentrifying the city entirely. Neither of
| these is attractive. Neither really "works".
|
| While there could be an effect on construction, the area where
| there is a lack of supply is central Stockholm, which is also of
| course an area where you can't possible build any significant
| number of new houses because there simply isn't any land.
|
| Market rents could be a very good idea in some smaller cities
| where there is a shortage of supply because rents are controlled
| at a too low level, but at the same time there is land available
| to build on. In central Stockholm, one could remove the queue
| over night if rents tripled - but it wouldn't create any supply
| and therefore not address the underlying problem.
| thinkharderdev wrote:
| There is a third option in which we have market rate prices and
| don't dramatically restrict the ability to add new housing.
|
| And I don't believe that is impossible to build more housing in
| Stockholm. It has a population density of 400 people/km^2. To
| put that in perspective, Chicago (in the US) has a population
| density of 4000 people/km^2. And Chicago (outside of a central
| business district which is very dense) is not some dystopian
| megalopolis. It is mostly neighborhoods of single-family homes
| and small apartment buildings. Seoul, SK has a population
| density four times higher than that at ~16000 people/km^2.
| Paris is even denser at 20000 people/km^2.
| alkonaut wrote:
| The 400 figure (or even 350) is for the "metro area", but
| while metro might sound like city, it's not. That's a huge
| area with large swaths of rural land. There are large
| municipalities with under 30ppl/sq km which lie _inside_ the
| metro area. This scenery is pretty typical: (try to
| streetview-walk to city hall...)
|
| https://www.google.com/maps/@59.8794892,18.8876507,3a,75y/da.
| ..
|
| The confusion is probably because the "greater Stockholm" and
| "Stockholm metro area" were defined to be synonymous.
|
| So greater stockholm isn't even a city + suburbia, it's
| downright rural for the most part (which is of course evident
| by the 400 number). Next to me is a 20sq km national park
| forest, for example.
|
| The density in Stockholm city proper is 4-5000 per square km
| which is pretty typical. It's simply surrounded by a massive
| area of very low density which is still called the metro
| area.
|
| Also what areas are included in such density measures?
| Buildable land or also including e.g. water? if you consider
| the amount of area consisting of water in central Stockholm,
| the density per land square km must be quite high if it's the
| overall density that is 4-5000/sq.km
|
| Dramatically increasing the density in the city itself would
| require building tall buildings in what is currently (most
| likely) green space in the city. That's not possible for the
| foreseeable future. There are a few highrises popping up on
| former industrial land in central locations, but it's not
| going to make a big difference.
|
| There is no problem building housing in the largely rural
| Stockholm metro area, but far from the city there isn't much
| demand either.
|
| I'm not saying there isn't a lack of construction - but the
| areas where there is both demand and space aren't as large as
| one might think just because the density overall is low.
| thinkharderdev wrote:
| My mistake, the 400 number is not correct as you point out.
| Still, even at 5km per km^2 it is one quarter the density
| of Seoul and one fifth the density of Paris. I've never
| personally been to Seoul but Paris still seems to have
| plenty of green spaces.
|
| I don't doubt for a second that building a lot more housing
| is not possible for the foreseeable future but like in most
| places that is a political problem and not some fundamental
| constraint. And rent controls don't "solve" the basic
| imbalance between people wanting to live in a place and
| there not being enough housing for all of them in any
| meaningful sense. You are still rationing one way or
| another. When there are fixed supply constraints then maybe
| that is a more just way to do it, but when the supply
| constraints are artificial then it just entrenches a bad
| equilibrium.
| fallingknife wrote:
| I guess I don't understand why having only rich people live in
| the most desirable areas "doesn't work." Nobody seems to think
| that it's an injustice that poor people don't get to have
| houses on the beach, so why is it a big deal that they have to
| live in the suburbs and rich people get downtown?
| alkonaut wrote:
| I don't necessarily think it's a "right" to live in
| attractive areas, but I do see the point of having all kinds
| of people in a city.
|
| My point was merely this: housing politics isn't simply
| solving an economics/allocation/optimization problem. It's
| also the sociological problem of creating a city.
| jlokier wrote:
| To set the scene, "poor" means middle class and below, but
| not quite rich enough, to be able to get a mortgage. Or
| facing any other obstables to a mortgage such as career
| stability or being self-employed.
|
| I think typically "poor" people move in when the prices are
| just about affordable in the area. There they settle, have
| families, have their friends, support network, schools, jobs,
| community, etc. It all seems very reasonable.
|
| And then the rents go up, and up, and up, and up... faster
| than income.
|
| So they are forced to move away to a new place where they
| don't know anybody and have no connections.
|
| They settle down in the new place. Children go to a new
| school. Community programs are scrapped in the old place and
| re-founded in the new place. Keep in touch with old friends
| by phone, but in-person friends have to be made anew. Do it
| all over again. Get really settled in. And then the rents in
| the new place go up, and up, and up, and up... faster than
| income again.
|
| So they are forced to move again.
|
| I think there's a fair moral argument for it being an
| injustice that "poor" people are not able to settle in any
| area except the most deprived areas where it's possible to
| project will stay deprived for decades to come.
|
| There's always a substantial chance that wherever they land,
| if it's a reasonable place that they can afford, conditions
| will change, and they will be gradually squeezed until they
| are priced out and forced to reset their lives again
| somewhere else.
|
| Being able to settle long-term in _some_ reasonable place is
| arguably a significant moral imperative in the design of
| society. This is one of many possible metrics for evaluating
| what "works" or "doesn't work".
|
| And almost everyone's income drops a lot when they become
| elderly. Stability of place is really important for the
| elderly. It's sad when they have to leave to a place where
| they have nobody.
| theonlybutlet wrote:
| Would the government banning subletting for a premium rate on
| leases going forward not be a good start? (where subtenancy
| leases signed from today onward be considered legally invalid).
| HashThis wrote:
| It didn't work in San Francisco either.
| xyzzy21 wrote:
| Almost like there are laws of reality (economics) that are
| stronger than human desires to force things against said laws!
|
| At the top are the laws of physics - nothing can beat them.
|
| But below those are economics and human nature.
|
| And only at the bottom are law, politics and whims/fiats of human
| imagination and wishful thinking, in that order. The final lowest
| level: the mad ravings of the individual in his/her own mind
| which are most powerless in the big picture and long term.
| anothernewdude wrote:
| Sounds like they need more Rent Control, not less.
| m00dy wrote:
| Stockholm has the worst. I needed to live and work there for a
| year. There is rent control, housing queues and black market.
| Everyone that I met had already been in the queue.So, it is
| definitely not for new comers. Black market roughly 40% of net
| income. So, Housing in there quite fucked up.
| alkonaut wrote:
| The "private market" does work, but regulations mean you
| typically can't renn a place you own out for more than a year.
| So you can easily get a contract tomorrow at market rate, and
| that's what a bartender or software developer will have to do
| if they move in. If you are a professional, rent should be
| fairly affordable. If you are a student, it's not affordable.
| The downside though is the uncertainty. You'll expect to have
| to move to a new place around every 12 months or so which is a
| chore, and obviously is out of the question if you have a
| family. 40% of net income doesn't seem disastrously high tbh.
| nivenkos wrote:
| A second-hand contract isn't necessary black market though.
|
| Black market is when they are sub-letting illegally so you
| literally can't register your address - and is mainly an issue
| for people who want very temporary rentals, or very low rents.
|
| But yeah, it is still a disaster.
| the-smug-one wrote:
| The state/municipality/region should build more rental
| apartments. If we can vote for rental control then we can vote to
| build more apartments too.
|
| How do you get an apartment in Stockholm as a young person? You
| ask your parents to take out a loan on their house to pay the
| downpayment, then you take a loan and buy an apartment. Luxurious
| and high standard apartments are built all the time in Stockholm!
| The new Barkarbystaden development in the northern municipality
| of Jarfalla will have added 18000 apartments by 2030, the current
| population is 80000.
|
| Sweden has no issue with building new places to live, as long as
| they're expensive and luxurious.
|
| Miljonprogrammet wasn't a failure.
| cloudfifty wrote:
| This is a laughably biased article from my Swedish point-of-view.
| Really embarrassing from something like the BBC.
|
| They established that this is caused by rent control by fails
| throughout the article to even mention that rent control was _of
| course_ accompanied by large scale involvement by the government
| in providing housing. That was however abolished in favour of
| market based construction.
|
| This of course has made the price of housing - those you actually
| take a mortgage for - to sky rocket and building of rental
| apartments to crash. That end result is not surprising.
|
| But this isn't that rent controls has failed per se, it's that
| the construction has moved to the marked with rent controls still
| in place. The best solution for the average Swede would be to
| have the government involved in building housing again, rather
| than to throw out the poor through market rents.
| josephcsible wrote:
| So basically, rent control caused the exact set of problems that
| every competent economist knows that price ceilings cause?
| mc32 wrote:
| It doesn't matter that it's proven to not do what it's supposed
| to achieve.
|
| There will always be a contingent that invents reasons why "this
| time" it will work. "We just haven't done it right". And they go
| on to fail once again.
| mathverse wrote:
| Build more units:
|
| That's impossible if not initiated by someone actually interested
| in providing more apartments.
|
| * urban planning and approval costs a lot * raw materials reached
| all time high * labor costs are very high even if we subcontract
| to Eastern Europe
|
| You cant wish building more units into existence the same way you
| cant implement rent control.
|
| Decentralization and not requiring people to work/live in areas
| with huge demand for housing is just the first step alleviate
| some of this pain.
| fallingknife wrote:
| > You cant wish building more units into existence
|
| You really can, though. Just remove building restrictions and
| new units will "magically" start appearing anywhere that market
| rent exceeds building costs.
| symmetricsaurus wrote:
| Not working compared to what?
|
| From the article:
|
| > Despite its complex challenges, Sweden is in a better position
| on housing than many other EU countries.
|
| > Only around 8% of Swedes live in households spending more than
| 40% of disposable income on housing, compared to 15% in the UK
| and almost 40% in Greece, according Eurostat data.
|
| > Swedes are also less likely to live with their parents than any
| other young Europeans.
|
| The situation is certainly not good in Sweden but there are no
| simple solutions. Otherwise it would be much better elsewhere.
| radu_floricica wrote:
| If you have a 9 year queue, it just doesn't work.
|
| Swedes may find other ways to cope that don't involve this
| particular mechanism.
| acd wrote:
| You can find an office to rent in Sweden within a week.
|
| An rental appartmeny which has social regulated prices takes
| years of queing to get.
|
| Getting an rental appartment in Sweden is a bit like getting a
| food item in a previoys socialist state. You have to queue due to
| price regulation.
|
| Price controls in an economy usually does not work that well.
| walkedaway wrote:
| "The biggest economic fallacy in housing is that affordable
| housing requires government intervention." - Thomas Sowell
|
| https://www.youtube.com/watch?v=dnj2WRIG11U
| api wrote:
| Rent control is basically California Proposition 13 for renters.
| It's a wealth transfer from new renters to existing renters and
| like prop 13 disincentivizes new construction.
| dantondwa wrote:
| Well, the lack of rent control in my country, Italy, isn't
| working either. It has become really, really hard to rent an
| apartment or even a room in Italian cities (Rome, Milan, Bologna,
| Turin, at least).
|
| The prices are high and there is a lot of demand. Moreover, the
| quality of the apartments is really, really low. Landlords ask
| for a _lot_ of guarantees and finding a room in an apartment can
| take even multiple turns of interviews.
|
| Of course, leaving nearby the city center is difficult and public
| transportation is lacking. It is really hell and I really wish
| rent control existed.
| markb139 wrote:
| It wasn't very different 25 years ago when I worked there. I
| remember going to a viewing for a "2nd hand" apartment. I arrived
| 5 mins early. Swedes take their shoes off upon entering a place,
| there were so many people viewing the flat that there was a queue
| of shoes outside. I turned around and went back to think again. I
| was close to giving up and coming back to London, when a "friend
| of a friend" had a place he was leaving was offered to me. I was
| very lucky
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