Rent Freezes. Ban Big Landlords. Local Control.
February 25, 2019 9:44 AM Subscribe
“The overwhelming majority of units that Deutsche Wohnen owns today in Berlin used to be public housing, and were sold off by the state over the past few decades. As galloping rents make daily life increasingly difficult, many Berliners are starting to regret such a shift. Sure enough, Berlin Mayor Michael Müller promised last month to buy back 50,000 of Deutsche Wohnen’s units for the city, along lines not yet fully clarified. Renters’ associations want to extend this proposal to all landlords with more than 3,000 apartments in the city, a wish that led to their referendum plan.” Berlin Builds an Arsenal of Ideas to Stage a Housing Revolution - The proposals might seem radical—from banning huge corporate landlords to freezing rents for five years—but polls show the public is ready for something dramatic.
Berlin's real estate market is bizarre. At its peak Berlin had 4.5M residents; it has 3.5M today. It still hasn't recovered from the aftermath of World War 2 and the division of the city. So there's no significant housing shortage and its housing prices are much cheaper than most European capitals with wealthy economies.
But all the more desirable central neighborhoods are pretty full now. And there's precious little of the super-cheap apartments that until a few years ago were not hard to find. My friends who live there talk about 100+ people showing up for rentals in Kreuzberg.
Also this is common in Europe but not in Amerca: the structure of rental contracts raises the stakes quite a bit. If you rent an apartment there it's understood you can live there more or less permanently. Multi-year contracts are common and it's very difficult to remove a renter from their home, it takes at least a year.
posted by Nelson at 10:02 AM on February 25, 2019 [4 favorites]
But all the more desirable central neighborhoods are pretty full now. And there's precious little of the super-cheap apartments that until a few years ago were not hard to find. My friends who live there talk about 100+ people showing up for rentals in Kreuzberg.
Also this is common in Europe but not in Amerca: the structure of rental contracts raises the stakes quite a bit. If you rent an apartment there it's understood you can live there more or less permanently. Multi-year contracts are common and it's very difficult to remove a renter from their home, it takes at least a year.
posted by Nelson at 10:02 AM on February 25, 2019 [4 favorites]
Also this is common in Europe but not in Amerca: the structure of rental contracts raises the stakes quite a bit. If you rent an apartment there it's understood you can live there more or less permanently.
Man. I've lived in my apartment for 5 years and it feels like home to me, I'd happily live here indefinitely, but I know I can only rely on that being true for one-year increments. I wish we had that here. (But if we did, it would become even harder for people without perfect credit/high income/etc to rent at all... ugh)
posted by showbiz_liz at 10:18 AM on February 25, 2019 [6 favorites]
Man. I've lived in my apartment for 5 years and it feels like home to me, I'd happily live here indefinitely, but I know I can only rely on that being true for one-year increments. I wish we had that here. (But if we did, it would become even harder for people without perfect credit/high income/etc to rent at all... ugh)
posted by showbiz_liz at 10:18 AM on February 25, 2019 [6 favorites]
Literal rent seeking for a change!
What baffles me is how many people still manage to believe that private organizations are automatically more efficient than the government. People see a big budget for X in the government, and decide that the best possible thing would be to sell X to a private, for profit, corporation. The government gets a big up front cash infusion, and then X will be cared for by the magic of the market and it'll all be great! And the reality is like this.
I think part of the problem, in addition to the pernicious lie that government is inherently inefficient, is the fact that people don't seem to understand that from a consumer standpoint inefficiency and profit are identical.
If the theoretical cost to maintain and insure an apartment is $100, and the government is so horribly inefficient that it costs $110 to the person renting the place that's no so great. But if a rental agency owns the place, and they demand a 10% profit guess what? That place that's theoretically $100 to maintain is still going to cost $110 a month to the renter.
Inefficiency and profit are identical from a consumer standpoint in that they both increase the cost of the good or service above the theoretical minimum.
Anyone who proposes selling off government assets to private management firms is either a fool, an ideologue, or getting a kickback. We've seen the results of that particular game play out time and again: the price goes up, the quality goes down.
posted by sotonohito at 10:26 AM on February 25, 2019 [22 favorites]
What baffles me is how many people still manage to believe that private organizations are automatically more efficient than the government. People see a big budget for X in the government, and decide that the best possible thing would be to sell X to a private, for profit, corporation. The government gets a big up front cash infusion, and then X will be cared for by the magic of the market and it'll all be great! And the reality is like this.
I think part of the problem, in addition to the pernicious lie that government is inherently inefficient, is the fact that people don't seem to understand that from a consumer standpoint inefficiency and profit are identical.
If the theoretical cost to maintain and insure an apartment is $100, and the government is so horribly inefficient that it costs $110 to the person renting the place that's no so great. But if a rental agency owns the place, and they demand a 10% profit guess what? That place that's theoretically $100 to maintain is still going to cost $110 a month to the renter.
Inefficiency and profit are identical from a consumer standpoint in that they both increase the cost of the good or service above the theoretical minimum.
Anyone who proposes selling off government assets to private management firms is either a fool, an ideologue, or getting a kickback. We've seen the results of that particular game play out time and again: the price goes up, the quality goes down.
posted by sotonohito at 10:26 AM on February 25, 2019 [22 favorites]
What baffles me is how many people still manage to believe that private organizations are automatically more efficient than the government.
New York City Housing Authority woes provide grist for that mill.
posted by BWA at 11:04 AM on February 25, 2019 [1 favorite]
New York City Housing Authority woes provide grist for that mill.
posted by BWA at 11:04 AM on February 25, 2019 [1 favorite]
I think I see a problem with the statement "ban big landlords."
lemme see if I can fix it...
banbig landlords
there! much better!
posted by Reclusive Novelist Thomas Pynchon at 11:07 AM on February 25, 2019 [5 favorites]
lemme see if I can fix it...
ban
there! much better!
posted by Reclusive Novelist Thomas Pynchon at 11:07 AM on February 25, 2019 [5 favorites]
This is very encouraging report. I hope the idea spreads. Thanks for posting.
posted by booksarelame at 11:25 AM on February 25, 2019 [1 favorite]
posted by booksarelame at 11:25 AM on February 25, 2019 [1 favorite]
it's very difficult to remove a renter from their home, it takes at least a year.
It’s actually ten years - that is, if you buy a building and want to take over an apartment for yourself or a family member the tenant has the right to stay there for ten years before moving. You can offer to buy them out but they can say no thanks and that’s your tough luck.
And that might seem crazy but Berlin is not a rich city, a small slice of entrepreneurs are doing well and real estate speculation has been solid for the last decade, but the ‘average’ joe is not rolling in it, so the ‘cheap’ apartments are less about being cheap and more a reflection of the market, until investors got tangled up in it.
There have been strenuous efforts to keep the city from boiling over like NYC/London etc., and thank god theres a functioning democracy that is recognizing the value in representing the needs of its citizens first and foremost.
Of course, there are always scumbags.
(article is from “exberliner” an English language magazine for/about Berliners.)
posted by From Bklyn at 12:07 PM on February 25, 2019 [4 favorites]
It’s actually ten years - that is, if you buy a building and want to take over an apartment for yourself or a family member the tenant has the right to stay there for ten years before moving. You can offer to buy them out but they can say no thanks and that’s your tough luck.
And that might seem crazy but Berlin is not a rich city, a small slice of entrepreneurs are doing well and real estate speculation has been solid for the last decade, but the ‘average’ joe is not rolling in it, so the ‘cheap’ apartments are less about being cheap and more a reflection of the market, until investors got tangled up in it.
There have been strenuous efforts to keep the city from boiling over like NYC/London etc., and thank god theres a functioning democracy that is recognizing the value in representing the needs of its citizens first and foremost.
Of course, there are always scumbags.
(article is from “exberliner” an English language magazine for/about Berliners.)
posted by From Bklyn at 12:07 PM on February 25, 2019 [4 favorites]
I wish we had that here.
We do, in NYC, to the extent we can defend it, and we can have it elsewhere. Rent stabilization. I'm paying a bit more for my new apartment than I was for my old in part because the new one is rent-stabilized. Unless I'm in material breach of the lease, I'm entitled to renewal til I die.
New York City Housing Authority woes provide grist for that mill.
If you think privatization would solve that problem, you are unmoored from reality.
posted by praemunire at 1:27 PM on February 25, 2019 [2 favorites]
We do, in NYC, to the extent we can defend it, and we can have it elsewhere. Rent stabilization. I'm paying a bit more for my new apartment than I was for my old in part because the new one is rent-stabilized. Unless I'm in material breach of the lease, I'm entitled to renewal til I die.
New York City Housing Authority woes provide grist for that mill.
If you think privatization would solve that problem, you are unmoored from reality.
posted by praemunire at 1:27 PM on February 25, 2019 [2 favorites]
“Efficiency” doesn’t matter all that much in the housing sector, as landlords are merely price-takers.
When you are a renter, the market price of your leasehold tenancy is whatever the next bidder is willing to pay.
Given that we can’t manufacture or import land (or housing itself all that well) real estate will always be our shitshow sector, spawning frauds like the Trumps every minute of every day.
To fix housing there must simply be an oversupply of it available, like TVs at Target or cars at the automall.
But even that is no great fix, as everyone naturally wants to be the last one in into a neighborhood, militating against up zoning, and up zoning itself makes the raw land much more costly (this is partially why a 6000’ lot in Tokyo costs millions, you can put 20+ units on it...)
posted by Heywood Mogroot III at 8:08 PM on February 25, 2019 [2 favorites]
When you are a renter, the market price of your leasehold tenancy is whatever the next bidder is willing to pay.
Given that we can’t manufacture or import land (or housing itself all that well) real estate will always be our shitshow sector, spawning frauds like the Trumps every minute of every day.
To fix housing there must simply be an oversupply of it available, like TVs at Target or cars at the automall.
But even that is no great fix, as everyone naturally wants to be the last one in into a neighborhood, militating against up zoning, and up zoning itself makes the raw land much more costly (this is partially why a 6000’ lot in Tokyo costs millions, you can put 20+ units on it...)
posted by Heywood Mogroot III at 8:08 PM on February 25, 2019 [2 favorites]
is the fact that people don't seem to understand that from a consumer standpoint inefficiency and profit are identical
Yes! This! This was a eureka moment for me when I took Econ in college. If you believe in markets, then you know that they seek efficiency—profits are inefficient. Capitalism doesn’t want a free market — it wants profit.
posted by Big Al 8000 at 9:33 PM on February 25, 2019 [1 favorite]
Yes! This! This was a eureka moment for me when I took Econ in college. If you believe in markets, then you know that they seek efficiency—profits are inefficient. Capitalism doesn’t want a free market — it wants profit.
posted by Big Al 8000 at 9:33 PM on February 25, 2019 [1 favorite]
Heywood Mogroot III You also can't forget that a huge part of hte problem is people who view housing as an "investment" rather than, or at least in addition to, a place to live.
We see an especially harmful example of this in California. People bough housing, and since they wanted the price to go up so their "investment" would grow, they put NIMBY style anti-building laws in place which had the desired effect of driving up housing prices dramatically.
In theory property taxes would act a sort of brake on this, as property values go up homeowners would have to pay increasingly high taxes until they were willing to relax anti-building laws to permit more housing to be constructed.
Unfortunately since anti-tax sentiment is usually high they took advantage of California's ballot imitative program and got a law through that capped the taxable value of homes already owned. So the Boomers in LA own houses that have a sale value in the millions, but are only paying taxes on the home as if it were valued in the few hundred thousand. This benefit, you must understand, does not extend to whatever sucker buys the house at its incredibly inflated price. They'll be paying taxes on the price they paid for the house.
Result? If you aren't a millionaire or already owning a home, you have no chance at all of buying a house in LA or the other larger urban areas of Califrornia.
And, since apartments, condos, and so forth might relax the housing market a bit and lower the value of the "investment" those pre-existing homeowners have in their home, California cities have brutally tight restrictions on new housing construction, especially inside the city limits. Can't have someone build a big apartment building in an area that was previously all single family homes, that'd lower property values.
Which works in concert with the bias towards building more expensive housing that the new housing industry already has. No one wants to build inexpensive apartments because you can make more money building McMansions.
I have no idea what the fix is, except maybe government involvement in developing real estate for affordable city living and I'd be worried that the developers would find ways to exploit that and deliver nothing even if I wasn't also worried that the average city council type would take a hefty campaign contribution to look the other way.
Maybe actual, no shit, government owned housing. But yeesh trying to get that past the Republicans....
posted by sotonohito at 5:28 AM on February 26, 2019 [2 favorites]
We see an especially harmful example of this in California. People bough housing, and since they wanted the price to go up so their "investment" would grow, they put NIMBY style anti-building laws in place which had the desired effect of driving up housing prices dramatically.
In theory property taxes would act a sort of brake on this, as property values go up homeowners would have to pay increasingly high taxes until they were willing to relax anti-building laws to permit more housing to be constructed.
Unfortunately since anti-tax sentiment is usually high they took advantage of California's ballot imitative program and got a law through that capped the taxable value of homes already owned. So the Boomers in LA own houses that have a sale value in the millions, but are only paying taxes on the home as if it were valued in the few hundred thousand. This benefit, you must understand, does not extend to whatever sucker buys the house at its incredibly inflated price. They'll be paying taxes on the price they paid for the house.
Result? If you aren't a millionaire or already owning a home, you have no chance at all of buying a house in LA or the other larger urban areas of Califrornia.
And, since apartments, condos, and so forth might relax the housing market a bit and lower the value of the "investment" those pre-existing homeowners have in their home, California cities have brutally tight restrictions on new housing construction, especially inside the city limits. Can't have someone build a big apartment building in an area that was previously all single family homes, that'd lower property values.
Which works in concert with the bias towards building more expensive housing that the new housing industry already has. No one wants to build inexpensive apartments because you can make more money building McMansions.
I have no idea what the fix is, except maybe government involvement in developing real estate for affordable city living and I'd be worried that the developers would find ways to exploit that and deliver nothing even if I wasn't also worried that the average city council type would take a hefty campaign contribution to look the other way.
Maybe actual, no shit, government owned housing. But yeesh trying to get that past the Republicans....
posted by sotonohito at 5:28 AM on February 26, 2019 [2 favorites]
Capitalism doesn’t want a free market — it wants profit.
It might be more accurate to say that the actual exsitence of profits belies the notional existence of an efficient market.
posted by gauche at 7:05 AM on February 26, 2019 [3 favorites]
It might be more accurate to say that the actual exsitence of profits belies the notional existence of an efficient market.
posted by gauche at 7:05 AM on February 26, 2019 [3 favorites]
> We see an especially harmful example of this in California. People bough housing, and since they wanted the price to go up so their "investment" would grow, they put NIMBY style anti-building laws in place which had the desired effect of driving up housing prices dramatically.
no wait i thought they just wanted to protect the single-family character of their neighborhoods you're telling me there's some kind of profit motive to nimbyism
posted by Reclusive Novelist Thomas Pynchon at 12:49 PM on February 26, 2019 [1 favorite]
no wait i thought they just wanted to protect the single-family character of their neighborhoods you're telling me there's some kind of profit motive to nimbyism
posted by Reclusive Novelist Thomas Pynchon at 12:49 PM on February 26, 2019 [1 favorite]
How New Orleans Reduced Its Homeless Population By 90 Percent
posted by kliuless at 5:41 AM on February 28, 2019 [1 favorite]
posted by kliuless at 5:41 AM on February 28, 2019 [1 favorite]
It might be more accurate to say that the actual exsitence of profits belies the notional existence of an efficient market.
In economic terms, it is a question of perfect versus imperfect competition.
A good example of a market that should be perfect competition is cellular providers. The only things that matter are connectivity and bandwidth. All else being equal, if company B is cheaper than Company A, that is where the customers go, until Company A matches pricing. Cellular service is, at its core, a commodity product and therefore puts downward pressure on profits. Of course, if you want to eliminate profit declines, you convince the government to install an industry lawyer as FCC chair, they eliminate net neutrality rules and now you can parcel off access to the internet. Just one rule change and now you have laid the groundwork for imperfect competition and lucrative profits!
posted by Big Al 8000 at 6:27 AM on February 28, 2019
In economic terms, it is a question of perfect versus imperfect competition.
A good example of a market that should be perfect competition is cellular providers. The only things that matter are connectivity and bandwidth. All else being equal, if company B is cheaper than Company A, that is where the customers go, until Company A matches pricing. Cellular service is, at its core, a commodity product and therefore puts downward pressure on profits. Of course, if you want to eliminate profit declines, you convince the government to install an industry lawyer as FCC chair, they eliminate net neutrality rules and now you can parcel off access to the internet. Just one rule change and now you have laid the groundwork for imperfect competition and lucrative profits!
posted by Big Al 8000 at 6:27 AM on February 28, 2019
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posted by not_that_epiphanius at 9:49 AM on February 25, 2019 [3 favorites]