Comment by stego-tech

If house prices and rent being this much higher than they were in, say, 2000, relative to wages, wasn’t enough to trigger an enormous housing construction boom, I don’t think further-increasing rent or house prices are likely to do much good. Something about that “signal” is already badly malfunctioning.

This is the economist theoretical consensus justification though in real life tbh I dunno if I've noticed any real difference when looking at housing development patterns across Canada where there are many jurisdictions with rent control, many without, and many with some sort of blend (ie. no rent control on new builds).

If there is some incentive toward development in non-rent control jurisdictions I suspect it's strongly dominated by other factors.

(ie. Montreal probably has the most restrictive rent control in Canada but it's also seeing the strongest apartment development growth)

I used to agree with this, but nowadays it seems that the factors constricting housing supply are in many places related to zoning and regulation, not the ability for developers to make a profit, so rent control might have much less downside than economists have conventionally assumed.

EDIT: I am seeing a nephew comment that says rent control could make NIMBY politics even worse because it makes renters' interests more like homeowners'. Hadn't thought of that.

I find that rent control is a good idea in theory, but leads to a lot of deadweight loss. As a former renter, what I really wanted was a predictable cap on rent increases. For folks who are long-term renters, without controls and predictability, their only option would be to move every few years, which is incredibly disruptive.

From my understanding, European countries tend to have restrictions on what lease renewals can look like and with declining home ownership (and ownership being priced out for many), I think we should look at European models for real solutions to our housing crisis.

RealPage is gaming rents against tenants. It’s artificial rent inflation by algorithms. I agree on rent control. But unless realpage is controlled and regulated rent control is the only option.

> Rent control is not a great solution long term since it reduces the incentive to build more housing which is the only real fix.

In California (and SF in particular) rent control applies to housing older than 15 years and owned by corporate entities.

How does rent control applied as it is in California disincentivize building? I would think that building would be incentivized by rent control because newer housing stock would be exempt from rent control.

So you may mean well but a comment repeating the (debatable) negative impacts of rent control really comes off as silly in a thread about the realpage cartel (price fixing is worse than rent control in every way) and hopes of home ownership (demand for primary i.e. non-investment homes is unaffected or increased by rent control).

Rental income should not be the primary reason for housing to be built in the first place, so I don't buy that argument. The primary reason to build housing should be demand for home ownership. The volume of housing that ends up on the rental market should only be a small fraction of the total volume.

Instead of rent control, I propose a forced buy-out model: if the current tenant can manage to buy the home they're currently living in, the landlord is not allowed to refuse the sale. And banks are not allowed to deny such a mortgage if the monthly installments amount to less than the current rent.

Populist rent control is an excellent motivator to get counter-parties to the table to discuss productive alternatives in a market where no outside pressure currently exists.

There is no silver bullet solution. Rent control can be a big part of that solution, but what’s ultimately needed are a combination of policies that disincentivize the hoarding of housing as an asset class, promote home ownership itself for stability and community rather than fiscal nest egg, mandate denser housing in areas served by mass transit, tax land properly by removing caps on yearly increases, protect renters from unnecessary evictions (lack of renewals, no-fault evictions, etc), removing zoning laws on residential and commercial space (essentially reducing zoning laws to industrial vs non-industrial) to speed up approvals for construction, and get the government more active in meeting the needs of its populace through public housing programs (like Singapore does).

It’s highly complex and nuanced. I’ve long since stopped entertaining smug clapbacks from armchair economists who aren’t involved in the boots-on-the-ground issues at hand, and you shouldn’t parrot them around for them.

Why do you say rent control reduces the incentive to build more housing?

To me it seems the opposite: Rent control means supply goes down, so available building & land prices go up. These prices going up means an opportunity for builders who are good businessmen because they are going to make a margin on their investment, the bigger the investment the bigger upside.

Another intuition is with rent control it's hard to extract new value from an old building, so that also incentivizes tearing it down and squeezing more units into the land.

In SF, rent control exists on all buildings built before 1979. It appears to me that people who prioritize new builds pay a huge premium for them. I think this particular rule also incentivizes tearing pre 1979 structures down, vs the no rent control newer buildings can continue to have growth in the value extracted from them.

The cost of building housing is generally labor + materials + land, of which the first 2 are generally don't have runaway costs as they are not an investment category.

Land is something the government can help with if they choose to do so.

The rent is tied to the price of the apt, and since housing has become and investment category, has increased exponentially.

By controlling rent, you control real estate prices as well, as investors will find it a less attractive asset.

In a free market economy, the cost of things should be controlled by a market equilibrium, so building shouldn't cost more to buy than it is profitable to build tem.

But supply is often restricted by artificial means, meaning prices go up, that's where rent control comes in.

Two wrongs don't make a right, but saying not having rent control while clamping down on construction isn't true to the spirit of the free market.

In SF rent control only applies to buildings that are like 40-50+ years old. Yet people still complain as if it stops new housing. If you combine this with the idea that rent control raises prices for everyone else, you'd think people would be knocking down the doors to build: artificially high rents for decades.

And for some hard data, here's a meta-study on the subject: https://www.sciencedirect.com/science/article/pii/S105113772...

> [A]ccording to the studies examined here, as a rule, rent control leads to higher rents for uncontrolled dwellings. The imposition of rent ceilings amplifies the shortage of housing. Therefore, the waiting queues become longer and would-be tenants must spend more time looking for a dwelling. If they are impatient or have no place to stay (e.g., in the houses of their friends or relatives) while looking for their own dwelling, they turn to the segment that is not subject to regulations. The demand for unregulated housing increases and so do the rents.

You're making quite a few assumptions

People say this but places in a housing crisis under rent control are still generally built out to the limits of zoned capacity, indicating rent control is not the limiting factor but instead zoning.

The talking point of "Rent control = bad" has always been disingenuous because it's parroted most often by the people who will be hurt from it the most (landlords). Home supply is already artificially constrained, regardless of rent control. Mostly because wealthy landlords form cartels to prevent new housing in major metro areas.

Rent control is just one tool that can be used to regulate housing, and it works in conjunction with other tools (e.g. rent control exceptions for new construction).

The U.S. already has an excessively de-regulated housing market, and it clearly has not worked for most people. Anyone that says regulation is bad here is almost certainly protecting their self interests.

Personally, I believe that housing security should be a right, and it’s just not possible to have that when your rent can spike arbitrarily in the future for reasons outside your control. Young people with no local connections and limited belongings might be able to move every few years, but it’s downright traumatic for older people. Based on my lived experience, I will always vote for rent control while simultaneously pushing for more housing. The economic arguments against it are almost irrelevant.

> Rent control is not a great solution long term since it reduces the incentive to build more

It is exceptionally rare for new construction to be subject to rent control laws, unless they utilize special tax breaks or government subsidies. It does nothing more than slightly inconvenience the investor class, who usually aren't thinking past 15-20 years anyway, when rent control laws might theoretically impact their investment.

[dead]

We’re already not building housing.

The benefit of rent control would be turning up the pain on the PE people and driving them out of the market.

If the price without collusion is $X and the monopoly pricing behavior raises it to $(X+1), you can cap it at $X without causing any problems.

Vancouver has rent control and rents are going down.

Though I think the likely dynamic that you're seeing here is rent growth of new build apartments is stalling and reversing, and on renewal with new tenants rents are being revised downward as there is more competition.

https://www.ctvnews.ca/vancouver/article/rent-prices-falling...

I expect that amongst apartments with long term tenants rents are still creeping upward. But that's fine. The point of rent control is to smooth out volatility. Rents can still go up, but the goal is to avoid sudden 150% increases etc.

>RealPage

This monopolistic pricing is a massive part of the issue. Hopefully the case the DOJ brought against them is progressing well. They've essentially created a cartel of landlords trying to squeeze you for every single penny.

As opposed to now, where they charge the maximum they can get away with, while also colluding with each other to raise prices? Yes.

As opposed to the status quo where rents never ever go down and landlords charge the literal maximum?

I said this elsewhere, but I would anecdotally agree as a landlord.

Everyone is paying for the costs to evict a non-paying tenant in jurisdictions where it can take 12+ months to regain control of a unit.

More friction = more costs, and more regulation = more friction.

I'm not advocating for gutting renter's rights either, but it's not a coincidence that the places with the highest rents also have the most protections for renters.

RealPage just settled with the feds, and that settlement only includes data collection to determine if its collusion in the future

So I would say anyone in the present is out of luck here

You are mistaking your own opinion for a generalized truth.

If you're currently renting, and expect to keep renting for a long time, state-wide control does seem in your interests?

It might ultimately depress new construction and certainly isn't good for landlords, but makes sense to me a renter would want rent control.

You work in tech and are somehow convinced working on a blockchain app is a good thing? We should make employees pass a basic economics test!