Housing Can’t Be Both Affordable and a Good Investment (2018)

Re:Housing Can’t Be Both Affordable and a Good Investment (2... by lmm on Thursday May 02, 2019 @02:38AM (#19805324)

> So what might happen if California enacted statewide rent control? Capping yearly rent increases at inflation + 3%?

No-one would move, ever. People wouldn't be able to change jobs even for much higher salaries or better conditions. Children would live with their parents forever. Many people would live precariously in illegal sublets with inadequate fire exits etc. Developers would stop building. Landlords would stop doing maintenance and let their buildings rot. Everyone would be miserable.

> Many low income renters are paying 50% or more of their income on rent, that's not sustainable for the wider economy that relies on low skill labor to function, and the solution is not to have people commute 4h every day to clean an office, teach a class, or fight a fire.

Rent control creates longer commutes. To the extent that the economy actually relies on low skill labour, it can pay the actual cost of having that labour where it needs it. In fact by having rent control you artificially depress wages and encourage companies to employ humans in bad jobs rather than finding ways to make things better.

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Re:Housing Can’t Be Both Affordable and a Good Investment (2... by kmonsen on Thursday May 02, 2019 @09:19AM (#19807569)

That is not how rent-control works in some places. For example here in Zurich Switzerland you cannot raise rents more than x% even when changing tenants, which means that moving is fine as all places are rent controlled together.

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Re:Housing Can’t Be Both Affordable and a Good Investment (2... by njepa on Thursday May 02, 2019 @09:50AM (#19807873)

It is essentially never how it works. Why would you actively regulate something so people can't move? It is when you abandon rent control that the systems become incompatible and people can't move.

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Re:Housing Can’t Be Both Affordable and a Good Investment (2... by i_am_proteus on Thursday May 02, 2019 @10:31AM (#19808274)

It's not "so people can't move," inflexibility is a side effect of rent control. The "I can't move because I'm locked into a rent-stabilized lease" phenomenon is real, painfully so in NYC.

It's also a problem that's essentially invisible to anyone who bought into the market at a good price, or is wealthy enough to pay market-rate rents. But for the rest of us, it hurts.

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Re:Housing Can’t Be Both Affordable and a Good Investment (2... by njepa on Thursday May 02, 2019 @11:06AM (#19808641)

As far as I can tell that is exactly because they abandoned rent stabilization making that market incompatible as it now only applies to certain units and triggers rent increases when you move.

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Re:Housing Can’t Be Both Affordable and a Good Investment (2... by geezerjay on Thursday May 02, 2019 @03:53AM (#19805698)

> No-one would move, ever.

I feel like this post should feature at the top of any discussion on housing.

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Re:Housing Can’t Be Both Affordable and a Good Investment (2... by pcwalton on Thursday May 02, 2019 @11:02AM (#19808598)

Inflation + 3% isn't that bad, though you're right that it's too low. There's a bill in committee right now to enact statewide CPI + 5% rent control, and the landlord lobby is not too upset, because inflation + 5% is really quite a large year-over-year amount. I think I read that inflation + 5% has basically never happened in California's history: times in which housing prices were rapidly rising were also times in which CPI was rising, so the allowable increase would have been high.

The really problematic rent control is in San Francisco, where rent increases are capped at 60% of CPI (well below inflation). This results in massive giveaways to the rich that grow every year.

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Re:Housing Can’t Be Both Affordable and a Good Investment (2... by benj111 on Thursday May 02, 2019 @04:13AM (#19805786)

Surely the devil us in the detail?

inflation + 3% is an investment that I'd make.

I don't think you could just set the cap and say job done, there's enough money there to ensure everyone benefits though.

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Re:Housing Can’t Be Both Affordable and a Good Investment (2... by lexs on Thursday May 02, 2019 @04:11AM (#19805775)

> No-one would move, ever. People wouldn't be able to change jobs even for much higher salaries or better conditions. Children would live with their parents forever. Many people would live precariously in illegal sublets with inadequate fire exits etc.

Why?

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Re:Housing Can’t Be Both Affordable and a Good Investment (2... by lmm on Thursday May 02, 2019 @04:28AM (#19805856)

Because anyone who's been living in the same place for a while is paying well below-market (by design, otherwise there'd be no point in the rent control). Actually it's worse than that: the market rate rises much faster because landlords have less upside so there's little reason to build, and existing buildings can make more money as offices rather than residential. And when there's a huge gap between what a new tenant would have to pay and what the current tenant pays, that creates a huge incentive to do illegal sublets, and if your sublet is already illegal then why bother spending money complying with fire regulations or any other safety regulations?

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Re:Housing Can’t Be Both Affordable and a Good Investment (2... by djd20 on Thursday May 02, 2019 @04:53AM (#19805965)

This depends how you implement rent control. The UAE market has rent controls - the landlord is only allowed to adjust rents within a % and if the rental index of the area is more than 10-15% higher than what you are currently paying. They are also building plenty of new housing to help keep rents stable. This second part is key - and needs to be there for this to work. Your comments assume a rental market that is not increasing in supply.

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Re:Housing Can’t Be Both Affordable and a Good Investment (2... by lmm on Thursday May 02, 2019 @04:58AM (#19805989)

I'm assuming a rental market that isn't increasing in supply because that's the case that rent control is designed to address. If you're building enough supply to keep market-level rents low then rent control becomes irrelevant.

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Re:Housing Can’t Be Both Affordable and a Good Investment (2... by Beldin on Thursday May 02, 2019 @09:21AM (#19807587)

Wait: the regulation would not apply to new rentals? Yeah, that creates obvious problems.

If the policy were to apply to all leases, new as well as existing ones, would the problem be somewhat mitigated?

(That's basically how things work here for student housing. Far from perfect, but more sane than housing in the Valley)

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