Rent gets raised by $500 because someone else would actually pay that much. Rent control is the ultimate "I got mine" - it rewards people who got in early while making it impossible for anyone else to have housing. The reason rent could go up that much is because supply is so artificially constrained.
Or naturally constrained, it doesn't have to be artificially constrained.
I am open-minded on rent control. I agree with your sentiment here, but it seems like the trade off for not having rent control then becomes as a society we have to be willing to accept people becoming homeless because of changes in rent prices like this.
In many cases, rent gets raised by $500 for the unit to be vacant so the landlord can claim to have $500 more in revenue per month (and get loans on that).
In some parts of the country - you have >50% of units in large population centers owned and/or operated by just a few companies.
Like KSA reducing oil supply by 10% to increase prices 5% - sometimes strange things make sense when you have a cartel.
In SF, I had many friends have their rent raised by 10% - move out - the unit sit vacant for 6 months, and then the price reduced back to what it was and still be vacant.
I wouldn't assume any time landlords are raising prices - it's because they had a bidding war on the unit and someone's paying more.
The shortage is more demand driven than people want to acknowledge and so we can’t even begin to solve the problem since it’s not accurately defined. It’s a demand issue, so the solution has become price increases. There will never be enough houses in Malibu to meet the world’s demand and have those houses also be affordable. If we let millions of new demanders into the market each year, prices have to rise because you can’t fit the worlds population in Malibu.
That’s more of a capitalist solution than a real solution. Instead of building additional housing we just move the access from millions via price increases.
We can resolve it by creating more supply, we already do by way of copious amounts of cheap plastic home goods that flood the purchasing landscape.
In plenty of countries, you can fight rent increases if you feel they're not justified.
As opposed to someone willing to sacrifice their health by working multiple jobs to live in a such a place.
Rent control works, the problem is we don’t build enough homes to resolve the “not enough” problem. The construction industry is working skeleton crews currently due to the 2008 recession where thousands lost their jobs and never came back.
Then you have the issue with exorbitant property values in metro-like cities which prevent nonprofits and local governments from sitting at the bargaining table. Building outside of the city has its own unique issues.
Arguing that rent control doesn’t work is pretty disingenuous.
Where the fuck is the priced out person supposed to go? They need to uproot their life because a wealthier person came along?
doesn't make it right! the free market is inherently unequal.
GP: "Government regulation is preventing the construction of more housing"
You: "So true. For example, we need more regulation that make housing a legally encumbered asset with uniquely constrained and inflexible financial properties"
What is your thought process here? Do you think this kind of thing will encourage the provision of more houses? Do you have a sense for how making housing an exceptionally financially risky asset will influence whether or not investors are interested in building more housing, and how they have to perform initial pricing to offset rent-fixing and regulatory risk?
That has been obscured and hidden from the public consciousness, but it's there (and it basically has to be, as if it's not, eventually you get insanity where nobody can afford to live in anything - some say we're close to this but it cannot continue, just like population simply cannot literally increasing forever or eventually the entire mass of the Earth would be made of people.)
Too many landlords have been buying long and selling short, and losing money doing so but it's hidden by (sometimes) apparent appreciation - that train is rapidly decelerating and will be at the station soon, as the low interest rates have dried on up.
The mortgage interest lack-of-deduction for most (because of the increase in the standard deduction) also affects things. What we likely should be doing is making it easier to build second homes and "dump" them on the market even for a bit of a profit, so as to increase supply.
If you don’t buy in to libertarian laissez-faire economics, which most people don’t, then this makes sense. (“Makes sense” is a much lower bar than “has the effect that we want it to have.”)
I wouldn't even complain if all houses halved in value, despite being a homeowner. That my home would be worth less is irrelevant, because I'm not selling it, and if I was, I'd have to buy a new house anyway. People who see houses as investment would hate it, of course.
I agree that you are accurately describing the economically illiterate thought process, just not that it's correct.
Price controls are one of those interesting things where there's a phase transition from near-universal support to near-zero support at a certain knowledge level.
My point here is that housing is not only a financial asset, and should be treated as more than just a financial asset. Or if you want to take an economic approach here, you need to come up with a utility function that more accurately reflects what we care about—we think that two people who have housing is a better situation than one person who has two houses and one person who has none.
More construction isn't the ebd goal, (except for developers and investors I guess), if anything, it's a means to an end. The end goal is affordable housing.
People have been complaining about not having the home they want in the location they want since the beginning of mankind.
Cities need the non-owning class to function, and cities function better when the non-owning class has some degree of stability-- letting landlords juice their tenants for as much as possible is counterproductive to this.
(Sadly, when you see "rent to own" on houses, they're almost always a scam preying on poor people. The trick is to get them to pay MORE than fair market rent for an "option" to buy that you know they'll never be able to execute on, or if they can, said execution is in your favor. If you care for more details, https://johntreed.com/products/sisgle is worth the price, as it details exactly WHEN an investor can make money buying these "lease options" and how they're usually unprofitable and almost scammy.)
It does naturally occur in some cases - long term tenant who is comfortable renting is offered the house "off market" when the landlord decides he's done and wants to retire from the hassle of property management and sometimes is even willing to take back a mortgage (a great way to convert a rental income stream to a financial interest scheme and remove the property maintenance factor).
However, the issue in congested areas is a matter of physics and people unwilling to relocate. Its not from renters simply fulfilling the pricing demand. I mean what exactly is the long term play in areas like this? Just keep stacking people on top of each other into infinity? Its obviously not realistic.
Rental increase caps are not something designed to make the overall housing prices more affordable. That’s just not the goal in the first place. The goal is to provide additional stability to renters. That additional stability will, of course, get priced in.
And not just too much regulation, but the wrong kind of regulation, and a lack of regulation in areas that need it.
Someone in the article was forced out of her home because her landlord suddenly raised her rent by $500. That shouldn't be legal. Corporations buying up homes in order to drive up prices shouldn't be allowed. Lots of things are allowed that shouldn't be.
And yes, restrictions on building the kind of houses that people really need are also a problem. It's not a case of too much or too little regulation, but the wrong kind.