The Case for Rent Control
August 6, 2019 7:31 AM Subscribe
(SL The Urbanist) explains how rent control is more nuanced than earlier analysis suggests, though it's not a panacea on its own. An excerpt : "Economic analysis often focused on market distortion and did not placed a value on the sociological benefits of housing stability – things like being able to keep kids in the same school or maintaining social support networks. A recent paper by Columbia professor Stijn Van Nieuwerburgh measured those ancillary benefits within New York City’s rent-controlled housing stock and found dramatically different results."
Also...sometimes I just want to bang my head on the floor.
The idea that rent control "forces" market rents up only works to the point that rent control means it's impossible to meet expenses on the building otherwise. Which is basically never the case (NYC studies the profitability of rent-stabilized units every year; they are ALWAYS PROFITABLE). Beyond that point, I do not get who these innocents are who think, "Well, the guy's getting $1500 for his rent-controlled units and $3000 for his market-rate units. If we abolish rent control, surely he will bring the market-rate unit rents down, or at least slow the rate of future rent increases, to reflect the raises he can make on the rent-controlled ones." No, he's going to try to charge $3000 for all of them. It's like there's this bizarre intuition in people's minds that capitalists only want to make "enough" profit, and then they'll be satisfied. This may be the case for the occasional individual, but on the whole landlords (and the financing system they're embedded in) will take exactly as much as they can extract from you. Who believes anything else? Why do they believe it? Can they give me their SSNs and mother's maiden names so I can arrange a special deal with a fugitive Nigerian princess?
posted by praemunire at 8:32 AM on August 6, 2019 [35 favorites]
The idea that rent control "forces" market rents up only works to the point that rent control means it's impossible to meet expenses on the building otherwise. Which is basically never the case (NYC studies the profitability of rent-stabilized units every year; they are ALWAYS PROFITABLE). Beyond that point, I do not get who these innocents are who think, "Well, the guy's getting $1500 for his rent-controlled units and $3000 for his market-rate units. If we abolish rent control, surely he will bring the market-rate unit rents down, or at least slow the rate of future rent increases, to reflect the raises he can make on the rent-controlled ones." No, he's going to try to charge $3000 for all of them. It's like there's this bizarre intuition in people's minds that capitalists only want to make "enough" profit, and then they'll be satisfied. This may be the case for the occasional individual, but on the whole landlords (and the financing system they're embedded in) will take exactly as much as they can extract from you. Who believes anything else? Why do they believe it? Can they give me their SSNs and mother's maiden names so I can arrange a special deal with a fugitive Nigerian princess?
posted by praemunire at 8:32 AM on August 6, 2019 [35 favorites]
It's one of those telling paradoxes of US politics that while all the discussion surrounding renting is about the dangers of market distortion and importance of protecting landlords, so much of the discussion around ownership is precisely about how wonderful it is that it offers stability, market distortion be damned. Of course stable housing is better, but that's one of the many, many things that is preferentially offered to richer (and almost always whiter) people first and then used as a cudgel against people who never had a chance to take advantage of it, who get shuffled around for as long as they can afford to while being told that they're the problem because they're not grounded and invested in a community like a homeowner would be.
posted by Copronymus at 8:37 AM on August 6, 2019 [15 favorites]
posted by Copronymus at 8:37 AM on August 6, 2019 [15 favorites]
Economics has long had the problem of looking at people as figures, not individuals; and of focusing solely on money while ignoring social impact.
Might have just been my education, but one of the first things we were taught is that economics is the study of utility, and that money is merely used as a proxy for utility. However, different people have different evaluations of the utility derived from a good or service, and that helps explain why demand varies.
"Economics ignores people and focuses on money" is the equivalent to "I learned there are only 2 genders in biology." It might be true at the most basic middle- or high-school level, but it's definitely not true for any higher-level study.
That said, it absolutely is true that people who are in charge of writing and voting on policy are operating on those rudimentary understandings of economics and biology. But it gets old seeing economics get a bad rap for people using it dishonestly. Garbage in, garbage out.
posted by explosion at 8:41 AM on August 6, 2019 [5 favorites]
Might have just been my education, but one of the first things we were taught is that economics is the study of utility, and that money is merely used as a proxy for utility. However, different people have different evaluations of the utility derived from a good or service, and that helps explain why demand varies.
"Economics ignores people and focuses on money" is the equivalent to "I learned there are only 2 genders in biology." It might be true at the most basic middle- or high-school level, but it's definitely not true for any higher-level study.
That said, it absolutely is true that people who are in charge of writing and voting on policy are operating on those rudimentary understandings of economics and biology. But it gets old seeing economics get a bad rap for people using it dishonestly. Garbage in, garbage out.
posted by explosion at 8:41 AM on August 6, 2019 [5 favorites]
it absolutely is true that people who are in charge of writing and voting on policy are operating on those rudimentary understandings of economics and biology. But it gets old seeing economics get a bad rap for people using it dishonestly.
Seems to me you should be scolding the University of Chicago rather than the people noting where the Chicago-trained people miraculously end up on policy.
posted by praemunire at 8:46 AM on August 6, 2019 [10 favorites]
Seems to me you should be scolding the University of Chicago rather than the people noting where the Chicago-trained people miraculously end up on policy.
posted by praemunire at 8:46 AM on August 6, 2019 [10 favorites]
But it gets old seeing economics get a bad rap for people using it dishonestly.
Are economists still praising Milton Friedman instead of condemning him? If so, perhaps the field needs to clean itself up before complaining that outsiders view it unfairly.
posted by NoxAeternum at 8:50 AM on August 6, 2019 [11 favorites]
Are economists still praising Milton Friedman instead of condemning him? If so, perhaps the field needs to clean itself up before complaining that outsiders view it unfairly.
posted by NoxAeternum at 8:50 AM on August 6, 2019 [11 favorites]
the chief problem with rent control — well, the chief problem aside from the fact that we don't all have it — is that it's not transferable between tenants. if tenants could sell their rent-controlled rates to other new renters, rent control would become a gradual transfer of equity from landlords to tenants — a type of land reform, implemented slowly enough to avoid the shocks that come with just immediately transferring formal control of homes away from people who live off the practice of landlording and to the people who actually live in those homes.
posted by Reclusive Novelist Thomas Pynchon at 8:53 AM on August 6, 2019 [13 favorites]
posted by Reclusive Novelist Thomas Pynchon at 8:53 AM on August 6, 2019 [13 favorites]
The problem with rent control is that it's mostly a net wealth transfer from new tenants to old tenants, and poorer people tend to not have the the job or life stability to enable them to become old tenants. Rent-controlled units rightfully command a premium (why would you not be willing to spend more when you know you'll save money long-term), and a fair part of that premium gets paid by poor people when they are unable to enjoy the cost-recouping years later on.
You can't solve a social justice problem with weird levers on free market mechanisms. Health insurance companies have mandated medical loss ratios, effectively caps on their profit. Do the same for landlords and you won't need rent control because everyone will be paying the same fair price.
posted by 0xFCAF at 9:05 AM on August 6, 2019 [10 favorites]
You can't solve a social justice problem with weird levers on free market mechanisms. Health insurance companies have mandated medical loss ratios, effectively caps on their profit. Do the same for landlords and you won't need rent control because everyone will be paying the same fair price.
posted by 0xFCAF at 9:05 AM on August 6, 2019 [10 favorites]
We have this debate frequently in Montgomery County Maryland. I posted this comment a little while ago in a different forum:
"It's a complicated issue, at first glance it really does seem to be a good idea. But then thinking about things more holistically housing and housing services is a large fraction of the total economy (~18%) and impacting that big a fraction of the economy with price controls can potentially have some severe side effects. Think of everyone involved in constructing and maintaining housing, Construction workers, HVAC, landscapers, painters, window washers, cleaners the list goes on and on. With a price control on housing less of all of that stuff will be done leading to an overall slow down of economic activity. Also with price controls one can generally expect there to be shortages of a product and we also don't want to create shortages of housing in high opportunity areas. Walling people off from opportunity is bad policy
Although this all needs to weighed against the fact that people who live in price controlled housing can benefit. Also Germany seems to have been able to encourage housing production while still maintaining price controls so we should investigate the mix of policies they are using there."
Let me know what you all think, my views are softening on rent stabilization I don't think that has been proven to have significant negative side effects.
posted by YIMBYMoCo at 9:08 AM on August 6, 2019 [1 favorite]
"It's a complicated issue, at first glance it really does seem to be a good idea. But then thinking about things more holistically housing and housing services is a large fraction of the total economy (~18%) and impacting that big a fraction of the economy with price controls can potentially have some severe side effects. Think of everyone involved in constructing and maintaining housing, Construction workers, HVAC, landscapers, painters, window washers, cleaners the list goes on and on. With a price control on housing less of all of that stuff will be done leading to an overall slow down of economic activity. Also with price controls one can generally expect there to be shortages of a product and we also don't want to create shortages of housing in high opportunity areas. Walling people off from opportunity is bad policy
Although this all needs to weighed against the fact that people who live in price controlled housing can benefit. Also Germany seems to have been able to encourage housing production while still maintaining price controls so we should investigate the mix of policies they are using there."
Let me know what you all think, my views are softening on rent stabilization I don't think that has been proven to have significant negative side effects.
posted by YIMBYMoCo at 9:08 AM on August 6, 2019 [1 favorite]
Life in a rent-controlled CA city (*anecdotal, FWIW):
Two tenants live next door to each other, and the younger one pays more than twice the rent of the older.
Those same two tenants work at the same company, doing the same job. The older one earns nearly twice as much as the younger one.
I guess rent control might be nice for those who have already been in a place for a long time, but for those starting out it seems to be nothing more than another obstacle and complication.
posted by anarch at 9:09 AM on August 6, 2019 [9 favorites]
Two tenants live next door to each other, and the younger one pays more than twice the rent of the older.
Those same two tenants work at the same company, doing the same job. The older one earns nearly twice as much as the younger one.
I guess rent control might be nice for those who have already been in a place for a long time, but for those starting out it seems to be nothing more than another obstacle and complication.
posted by anarch at 9:09 AM on August 6, 2019 [9 favorites]
the chief problem with rent control — well, the chief problem aside from the fact that we don't all have it — is that it's not transferable between tenants. if tenants could sell their rent-controlled rates to other new renters, rent control would become a gradual transfer of equity from landlords to tenants — a type of land reform, implemented slowly enough to avoid the shocks that come with just immediately transferring formal control of homes away from people who live off the practice of landlording and to the people who actually live in those homes.
I don't know if I recall all the details (perhaps a historian of British landholding may be able to expand), but this is how the Copyhold of inheritance worked in England c1500-1800. The holder was legally a tenant and owed rent - though that was sometimes so out-of-date as to be only symbolic - but the right to rent the property could be inherited or sold. This security of tenancy meant that landlords in England could never carry out the kind of clearances that they could in the Scottish highlands, where most small occupiers were only tenants-at-will. That's not to say that landlords didn't try to extract whatever they could - increasing rents, trying to revive old labour duties, enclosing wastes, etc. - and the pressures of the market also definitely pushed many smallholders off their land. But it was a slower and less (immediately) destructive process.
As for housing stock: while I agree that rent stabilization (e.g. capped increases) is important (I would never willingly rent anywhere without it), it's also of limited help in the housing crisis without outright subsidized housing. No urban market in the history of humanity has ever provided adequate housing for the poorest inhabitants; at best, markets has only provided slums, or (more commonly) just no housing for the poor. It's a market failure and always has been. That's why the medievals had almshouses.
Subsidized housing fills in the missing bottom - and it also eases the pressure on the private housing stock and thus keeps increases (somewhat) under control. We need to have a massive subsidized housing building program, only this time - unlike our mid-century constructions - we can't just abandon the residents in regards to maintenance and then wonder why the buildings (and communities) crumbled. We have to invest in the housing as if the residents are people worthy of equal respect and comfort as homeowners, because they are.
posted by jb at 9:12 AM on August 6, 2019 [4 favorites]
I don't know if I recall all the details (perhaps a historian of British landholding may be able to expand), but this is how the Copyhold of inheritance worked in England c1500-1800. The holder was legally a tenant and owed rent - though that was sometimes so out-of-date as to be only symbolic - but the right to rent the property could be inherited or sold. This security of tenancy meant that landlords in England could never carry out the kind of clearances that they could in the Scottish highlands, where most small occupiers were only tenants-at-will. That's not to say that landlords didn't try to extract whatever they could - increasing rents, trying to revive old labour duties, enclosing wastes, etc. - and the pressures of the market also definitely pushed many smallholders off their land. But it was a slower and less (immediately) destructive process.
As for housing stock: while I agree that rent stabilization (e.g. capped increases) is important (I would never willingly rent anywhere without it), it's also of limited help in the housing crisis without outright subsidized housing. No urban market in the history of humanity has ever provided adequate housing for the poorest inhabitants; at best, markets has only provided slums, or (more commonly) just no housing for the poor. It's a market failure and always has been. That's why the medievals had almshouses.
Subsidized housing fills in the missing bottom - and it also eases the pressure on the private housing stock and thus keeps increases (somewhat) under control. We need to have a massive subsidized housing building program, only this time - unlike our mid-century constructions - we can't just abandon the residents in regards to maintenance and then wonder why the buildings (and communities) crumbled. We have to invest in the housing as if the residents are people worthy of equal respect and comfort as homeowners, because they are.
posted by jb at 9:12 AM on August 6, 2019 [4 favorites]
> I guess rent control might be nice for those who have already been in a place for a long time, but for those starting out it seems to be nothing more than another obstacle and complication.
this can be solved by the imposition of vacancy control, which disallows the practice of raising rents between tenants.
this is to say that the problem you are observing isn't that long-term tenants have lower rents than new tenants. the problem you are observing is that our legal system is built to cater to landlords at the expense of people who work for a living. the problem isn't that the long-term tenants have rents that are too low. the problem is that landlords are legally allowed to soak the new tenants.
the profits of landlords are not something we should defend, and the practice of landlording is not something we should encourage.
posted by Reclusive Novelist Thomas Pynchon at 9:13 AM on August 6, 2019 [18 favorites]
this can be solved by the imposition of vacancy control, which disallows the practice of raising rents between tenants.
this is to say that the problem you are observing isn't that long-term tenants have lower rents than new tenants. the problem you are observing is that our legal system is built to cater to landlords at the expense of people who work for a living. the problem isn't that the long-term tenants have rents that are too low. the problem is that landlords are legally allowed to soak the new tenants.
the profits of landlords are not something we should defend, and the practice of landlording is not something we should encourage.
posted by Reclusive Novelist Thomas Pynchon at 9:13 AM on August 6, 2019 [18 favorites]
Two tenants live next door to each other, and the younger one pays more than twice the rent of the older.
This is part of what the article calls "first generation rent control" - prices getting locked in, which absolutely benefit the longer-term tenant. (Of course, property markets have the exact same issue, in that the cost of the property is locked at the time of the sale).
Under rent stabilization systems, where rent increases are allowed but capped, you have much less disparity. Also, if you don't have a free-for-all with every vacancy (aka "vacancy control", as noted by RNTP), you can ensure that new tenants will benefit from the rent stabilization. A new tenant moving in under a system of rent AND vacancy control would pay exactly what an older tenant would pay.
That said, the example of rent stabilization in the article is ridiculous: 7% + inflation? That's a big increase AFTER inflation! Why should landlords have the right to make an even greater profit margin off a depreciating asset? I'm not against landlords making a profit - as long as we continue to rely on private rental housing providers, this is necessary - but we don't have to allow them to make any level of profit the market will bear (see my previous comment noting how markets will happily bear slums and widespread homelessness). In Ontario, rent stabilization is just about AT inflation, which means that the landlords continues to receive the same profit margin (which is a damn good one - you don't see landlords going under like restaurants).
Of course, we don't have vacancy control in Ontario, which hamstrings our rent control/stabilization. Our rents in larger cities are now so insane that the cost of a room with a shared bathroom and kitchen EXCEEDS the entire monthly check on anyone on basic social assistance (Ontario Works). If you aren't working, you don't just need to have a housemate to live, you have to a share a bedroom with them. This is a social disaster - and also a breeding ground for abusive relationships. Even on ODSP (payment for people too disabled to work), you have to pay 70-80% of your monthly check to rent a room with a shared kitchen and bathroom.
posted by jb at 9:27 AM on August 6, 2019 [6 favorites]
This is part of what the article calls "first generation rent control" - prices getting locked in, which absolutely benefit the longer-term tenant. (Of course, property markets have the exact same issue, in that the cost of the property is locked at the time of the sale).
Under rent stabilization systems, where rent increases are allowed but capped, you have much less disparity. Also, if you don't have a free-for-all with every vacancy (aka "vacancy control", as noted by RNTP), you can ensure that new tenants will benefit from the rent stabilization. A new tenant moving in under a system of rent AND vacancy control would pay exactly what an older tenant would pay.
That said, the example of rent stabilization in the article is ridiculous: 7% + inflation? That's a big increase AFTER inflation! Why should landlords have the right to make an even greater profit margin off a depreciating asset? I'm not against landlords making a profit - as long as we continue to rely on private rental housing providers, this is necessary - but we don't have to allow them to make any level of profit the market will bear (see my previous comment noting how markets will happily bear slums and widespread homelessness). In Ontario, rent stabilization is just about AT inflation, which means that the landlords continues to receive the same profit margin (which is a damn good one - you don't see landlords going under like restaurants).
Of course, we don't have vacancy control in Ontario, which hamstrings our rent control/stabilization. Our rents in larger cities are now so insane that the cost of a room with a shared bathroom and kitchen EXCEEDS the entire monthly check on anyone on basic social assistance (Ontario Works). If you aren't working, you don't just need to have a housemate to live, you have to a share a bedroom with them. This is a social disaster - and also a breeding ground for abusive relationships. Even on ODSP (payment for people too disabled to work), you have to pay 70-80% of your monthly check to rent a room with a shared kitchen and bathroom.
posted by jb at 9:27 AM on August 6, 2019 [6 favorites]
Rent-controlled units rightfully command a premium (why would you not be willing to spend more when you know you'll save money long-term)
Wait, what.
Do you think a rent-stabilized unit in Manhattan rents for more than its comparable market-rent unit?
You guys know you don't have to imagine from crude first principles how rent-control or rent-stabilization works, right?
posted by praemunire at 9:28 AM on August 6, 2019 [15 favorites]
Wait, what.
Do you think a rent-stabilized unit in Manhattan rents for more than its comparable market-rent unit?
You guys know you don't have to imagine from crude first principles how rent-control or rent-stabilization works, right?
posted by praemunire at 9:28 AM on August 6, 2019 [15 favorites]
(but, yeah, I agree with jb that this is not a problem that modest tinkering around the margins on the market is going to solve.)
posted by praemunire at 9:30 AM on August 6, 2019
posted by praemunire at 9:30 AM on August 6, 2019
I guess rent control might be nice for those who have already been in a place for a long time, but for those starting out it seems to be nothing more than another obstacle and complication.
One tenant in Burbank, where there is no rent control. Tenant (young, with a new baby) is paying $1700 a month and has been doing so for two years on a two year lease. Market in that city has improved, so that tenant's rent has been raised to $3100 (which they can't afford, so they are moving out at the end of the month.) No improvements to the unit have been made in the interim, and the landlord says they won't fix or replace the washer/dryer if they break during the next tenant's tenancy.
Live where there are rent controls, pay more up front but have a stable situation long term. Live where there are no rent controls, pay less up front but risk losing your home at the whim of a landlord chasing the market. Both have downsides, and a given downside may be more or less impactful depending where you are in your life. Either way, there is no guarantee the landlord will spend money to keep up the unit.
posted by davejay at 9:32 AM on August 6, 2019 [2 favorites]
One tenant in Burbank, where there is no rent control. Tenant (young, with a new baby) is paying $1700 a month and has been doing so for two years on a two year lease. Market in that city has improved, so that tenant's rent has been raised to $3100 (which they can't afford, so they are moving out at the end of the month.) No improvements to the unit have been made in the interim, and the landlord says they won't fix or replace the washer/dryer if they break during the next tenant's tenancy.
Live where there are rent controls, pay more up front but have a stable situation long term. Live where there are no rent controls, pay less up front but risk losing your home at the whim of a landlord chasing the market. Both have downsides, and a given downside may be more or less impactful depending where you are in your life. Either way, there is no guarantee the landlord will spend money to keep up the unit.
posted by davejay at 9:32 AM on August 6, 2019 [2 favorites]
It's like there's this bizarre intuition in people's minds that capitalists only want to make "enough" profit, and then they'll be satisfied.
It's the same mindset that leads people to ask, "Why is this product so expensive, it can't cost all that much to make?!" Like companies just want to make a reasonable profit and call it a day. The real reason it costs that much is because that's how much people are willing to pay. The cost to make the thing has almost nothing to do with it.
That's a concept that was presented in intro to micro econ but very few people who take any econ courses at all will ever take anything more than intro to macro econ and I think most of those don't understand the material very well.
In theory, competition for tenants will have some downward pressure on rent pricing but in reality it doesn't provide very much because it's not really a free-market since being homeless isn't a choice most people are willing to make which distorts market forces.
posted by VTX at 10:11 AM on August 6, 2019 [13 favorites]
It's the same mindset that leads people to ask, "Why is this product so expensive, it can't cost all that much to make?!" Like companies just want to make a reasonable profit and call it a day. The real reason it costs that much is because that's how much people are willing to pay. The cost to make the thing has almost nothing to do with it.
That's a concept that was presented in intro to micro econ but very few people who take any econ courses at all will ever take anything more than intro to macro econ and I think most of those don't understand the material very well.
In theory, competition for tenants will have some downward pressure on rent pricing but in reality it doesn't provide very much because it's not really a free-market since being homeless isn't a choice most people are willing to make which distorts market forces.
posted by VTX at 10:11 AM on August 6, 2019 [13 favorites]
In theory, competition for tenants will have some downward pressure on rent pricing
There's not no effect here, but landlords effectively coordinate informally and, as you say, people can't simply opt of the market altogether. Where you do see rent reductions via free months or other concessions that don't hurt the nominal rent roll? In these new high-end rental places. Because those people do have reasonable alternatives.
(Please note to anyone claiming that rent-stabilization prevents building in NYC--no new buildings are rent-stabilized unless they opt into the program for tax benefits. They could build middle-income housing, though they wouldn't get the big lenders. It could still be profitable. They just don't wanna, because they wouldn't get all the money.)
posted by praemunire at 10:19 AM on August 6, 2019 [3 favorites]
There's not no effect here, but landlords effectively coordinate informally and, as you say, people can't simply opt of the market altogether. Where you do see rent reductions via free months or other concessions that don't hurt the nominal rent roll? In these new high-end rental places. Because those people do have reasonable alternatives.
(Please note to anyone claiming that rent-stabilization prevents building in NYC--no new buildings are rent-stabilized unless they opt into the program for tax benefits. They could build middle-income housing, though they wouldn't get the big lenders. It could still be profitable. They just don't wanna, because they wouldn't get all the money.)
posted by praemunire at 10:19 AM on August 6, 2019 [3 favorites]
i'd like to direct everyone's attention to the mention of vienna's strategy found within the original post. quote:
posted by Reclusive Novelist Thomas Pynchon at 10:30 AM on August 6, 2019 [26 favorites]
One extreme example is Vienna, Austria, which has progressive zoning, massively funds social housing, and maintains rent stabilization through public or nonprofit ownership of most of its housing stock. In fact, Vienna used rent control to bring about its housing miracle. During the Red Vienna period, the City used rent control to drive down property prices then bought up lots of apartment buildings. A blunt and hard to replicate method, but it worked. Vienna is consider one of the most affordable and livable cities in the world. Since so much land is in public hands, the City has acted as the primary developer basically ever since, running competitions to come up with the best designs for a particular plot–designs must excel on affordability and eco-friendliness.once you stop thinking of landlords as valid stakeholders — they aren't — and stop thinking of landlords' profits as worth defending — they're not — a range of viable options open up. establishing extensive rent controls, vacancy controls, and (ideally) straightforward price controls is a way to drive down the price of rental properties. once the price of rental properties goes down, it becomes cheaper for municipalities to buy up formerly private properties and convert them to publicly owned and managed property. the competition established between relatively expensive, generally ill-maintained privately-owned property and relatively affordable, relatively well-maintained publicly-owned property thereby forces private landlords to lower their rents, maintain their buildings better, and (ideally) sell their property to the city. this sets up a virtuous cycle that keeps rents low by gradually pushing the market out of housing altogether.
posted by Reclusive Novelist Thomas Pynchon at 10:30 AM on August 6, 2019 [26 favorites]
housing and housing services is a large fraction of the total economy (~18%) and impacting that big a fraction of the economy with price controls can potentially have some severe side effects
I mean. Maintaining a militarized southern border in the US generates significant economic activity. That doesn't mean that concentration camps are ethical. I learned in my university econ classes that natural disasters tend to contribute positively to GDP, due to the economic activity of rebuilding from a natural disaster. That doesn't mean that natural disasters are desirable and we should welcome more of them or more destruction from each individual natural disaster. The fossil fuel industry generates not insignificant economic output in the US. That doesn't mean we don't need to completely retool our economy away from fossil fuels and toward lower energy usage and renewables in order to survive beyond the next 100 or 200 years. I could go on.... It's like that video of whats-his-name trying to interview Warren after the last democratic debate, though, asking her about how universal health care would impact taxes as she repeatedly tries to make the point about total cost, and that most people's total cost (health care premiums, spending, and taxes in combination) would go down with universal health care. Saying that housing and "housing services is a large fraction of the total economy" similarly avoids the larger picture.
posted by eviemath at 10:30 AM on August 6, 2019 [4 favorites]
I mean. Maintaining a militarized southern border in the US generates significant economic activity. That doesn't mean that concentration camps are ethical. I learned in my university econ classes that natural disasters tend to contribute positively to GDP, due to the economic activity of rebuilding from a natural disaster. That doesn't mean that natural disasters are desirable and we should welcome more of them or more destruction from each individual natural disaster. The fossil fuel industry generates not insignificant economic output in the US. That doesn't mean we don't need to completely retool our economy away from fossil fuels and toward lower energy usage and renewables in order to survive beyond the next 100 or 200 years. I could go on.... It's like that video of whats-his-name trying to interview Warren after the last democratic debate, though, asking her about how universal health care would impact taxes as she repeatedly tries to make the point about total cost, and that most people's total cost (health care premiums, spending, and taxes in combination) would go down with universal health care. Saying that housing and "housing services is a large fraction of the total economy" similarly avoids the larger picture.
posted by eviemath at 10:30 AM on August 6, 2019 [4 favorites]
>"Think of everyone involved in constructing and maintaining housing, Construction workers, HVAC, landscapers, painters, window washers, cleaners the list goes on and on. With a price control on housing less of all of that stuff will be done leading to an overall slow down of economic activity."
If apartment buildings were owned by community land trusts and/or cooperatively by the tenants that lived in them, there'd be plenty of appetite to make repairs and improvements. Landlords who own buildings as a financial asset, completely divorced from their housing needs, are only incentivized to make repairs or improvements as required by law.
On preview, what Reclusive Novelist Thomas Pynchon said.
posted by Grimp0teuthis at 10:35 AM on August 6, 2019 [6 favorites]
If apartment buildings were owned by community land trusts and/or cooperatively by the tenants that lived in them, there'd be plenty of appetite to make repairs and improvements. Landlords who own buildings as a financial asset, completely divorced from their housing needs, are only incentivized to make repairs or improvements as required by law.
On preview, what Reclusive Novelist Thomas Pynchon said.
posted by Grimp0teuthis at 10:35 AM on August 6, 2019 [6 favorites]
On an overlapping topic, "New Studies Say Gentrification Doesn’t Really Force Out Low-Income Residents."
posted by PhineasGage at 10:36 AM on August 6, 2019
posted by PhineasGage at 10:36 AM on August 6, 2019
People who think that rent control is of no use to younger or poorer tenants should reread davejay's comment. Around here, rents can easily jump 25 percent or more on a new lease. The rent controlled stock can only rise 5 percent. That's a hell of a lot easier to plan for.
posted by tavella at 10:37 AM on August 6, 2019 [3 favorites]
posted by tavella at 10:37 AM on August 6, 2019 [3 favorites]
I mean. Maintaining a militarized southern border in the US generates significant economic activity. That doesn't mean that concentration camps are ethical.
Sure that's a valid point, but I was referring to things like making repairs on HVAC units, painting and building new homes for people. Those things I consider to be desirable economic activity that we should encourage. That being said my views on rent stabilization have softened I haven't really seen any evidence that less of that stuff gets done with rent stabilization laws. What I have seen is that maintenance and new construction can be curtailed by strict price ceilings on rent.
The key thing many housing policy experts agree on is that increasing the supply of housing is the best way to meet everyone's housing needs. That requires zoning reforms in growing cities and increased government investment in housing via rental vouchers or public housing.
*rent stabilization is a cap on percentage increases in rent per year
posted by YIMBYMoCo at 11:22 AM on August 6, 2019 [1 favorite]
Sure that's a valid point, but I was referring to things like making repairs on HVAC units, painting and building new homes for people. Those things I consider to be desirable economic activity that we should encourage. That being said my views on rent stabilization have softened I haven't really seen any evidence that less of that stuff gets done with rent stabilization laws. What I have seen is that maintenance and new construction can be curtailed by strict price ceilings on rent.
The key thing many housing policy experts agree on is that increasing the supply of housing is the best way to meet everyone's housing needs. That requires zoning reforms in growing cities and increased government investment in housing via rental vouchers or public housing.
*rent stabilization is a cap on percentage increases in rent per year
posted by YIMBYMoCo at 11:22 AM on August 6, 2019 [1 favorite]
I live in a city without rent control, and I can assure you that no landlords here are rushing out to do repairs on HVAC units until they fucking break in the middle of winter.
Landlords will not do maintenance unless required by law, regardless of how much they're allowed to charge for rent. Any money spent on maintenance beyond that required by law is simply eating into their profits, so they won't do it until their hand is forced.
posted by tobascodagama at 1:09 PM on August 6, 2019 [16 favorites]
Landlords will not do maintenance unless required by law, regardless of how much they're allowed to charge for rent. Any money spent on maintenance beyond that required by law is simply eating into their profits, so they won't do it until their hand is forced.
posted by tobascodagama at 1:09 PM on August 6, 2019 [16 favorites]
> The end result is a politically palatable half-measure that doesn't address the real problem.
alternately, rent control can be a transitional move toward implementing the full program — the replacement of the market housing allocation scheme with socialized housing. rent control isn't socialism, but it can address the immediate crisis, can put the squeeze on landlords, and can help tenants recognize the power we hold in our hands when we organize as a group against landlords.
posted by Reclusive Novelist Thomas Pynchon at 1:25 PM on August 6, 2019 [4 favorites]
alternately, rent control can be a transitional move toward implementing the full program — the replacement of the market housing allocation scheme with socialized housing. rent control isn't socialism, but it can address the immediate crisis, can put the squeeze on landlords, and can help tenants recognize the power we hold in our hands when we organize as a group against landlords.
posted by Reclusive Novelist Thomas Pynchon at 1:25 PM on August 6, 2019 [4 favorites]
What I have seen is that maintenance and new construction can be curtailed by strict price ceilings on rent.
Sincere question: where? I'm not aware of anywhere in the US that has any actual price ceilings on rent. But perhaps I'm not thinking of somewhere.
posted by praemunire at 1:49 PM on August 6, 2019 [7 favorites]
Sincere question: where? I'm not aware of anywhere in the US that has any actual price ceilings on rent. But perhaps I'm not thinking of somewhere.
posted by praemunire at 1:49 PM on August 6, 2019 [7 favorites]
The end result is a politically palatable half-measure that doesn't address the real problem.
Is there a deeper problem here? Sure. Probably three or four, in fact. But the real problem here is also "I, an actual human being, cannot make rent this month" and, you know, if you, that actual human being, are in an effective rent-control or -stabilization system, that does actually address that problem!
I've seen multiple times here on the green or blue lately rejections of certain poverty-amelioration actions or programs because they won't solve the systematic problem of poverty (or related issues). Obviously I don't pin the responsibility for this on you personally and your one comment, but there is almost nothing that makes me feel more profoundly the class biases of Mefi. Because talking like it's misguided to do anything to alleviate actual real suffering of actual real people in this present moment, right now, which is actually happening, until we can come up with some nice neoliberal magic wand to wave and solve all the systemic problems, it's just...well, it requires a particular sort of hard heart that so often comes along with affluence. People can't imagine being dope-sick, they can't imagine being on the verge of being evicted, they can't imagine not having somewhere to sleep, or they wouldn't talk as if there's no point in helping any given individual right in front of you in one of those situations because, God forbid, it might incentivize the wrong behavior and it wouldn't fix everybody.
Housing policy is a hugely thorny problem and I don't pretend that rent-control or -stabilization would be some kind of magic bullet. There may be circumstances or implementations where it would be actively harmful, in fact.
But rejecting it because it only puts roofs over some people's heads and doesn't solve poverty or zoning or whatever...that's wrongheaded.
posted by praemunire at 2:08 PM on August 6, 2019 [14 favorites]
Is there a deeper problem here? Sure. Probably three or four, in fact. But the real problem here is also "I, an actual human being, cannot make rent this month" and, you know, if you, that actual human being, are in an effective rent-control or -stabilization system, that does actually address that problem!
I've seen multiple times here on the green or blue lately rejections of certain poverty-amelioration actions or programs because they won't solve the systematic problem of poverty (or related issues). Obviously I don't pin the responsibility for this on you personally and your one comment, but there is almost nothing that makes me feel more profoundly the class biases of Mefi. Because talking like it's misguided to do anything to alleviate actual real suffering of actual real people in this present moment, right now, which is actually happening, until we can come up with some nice neoliberal magic wand to wave and solve all the systemic problems, it's just...well, it requires a particular sort of hard heart that so often comes along with affluence. People can't imagine being dope-sick, they can't imagine being on the verge of being evicted, they can't imagine not having somewhere to sleep, or they wouldn't talk as if there's no point in helping any given individual right in front of you in one of those situations because, God forbid, it might incentivize the wrong behavior and it wouldn't fix everybody.
Housing policy is a hugely thorny problem and I don't pretend that rent-control or -stabilization would be some kind of magic bullet. There may be circumstances or implementations where it would be actively harmful, in fact.
But rejecting it because it only puts roofs over some people's heads and doesn't solve poverty or zoning or whatever...that's wrongheaded.
posted by praemunire at 2:08 PM on August 6, 2019 [14 favorites]
our interlocutor is conflating two things: maintenance, and new construction.
the argument on rent control reducing maintenance work is grounded in the idea that landlords will retaliate against rent-controlled tenants. In a snit over not being able to extract as much profit as they would have otherwise, they will deliberately and maliciously let units fall into disrepair. or, slightly more charitably: without the need to chase after choosy picky rich tenants who will pay top dollar, they will see no financial reason to deliberately let units fall into disrepair. In either case, people with human-scale salaries never get to live in a well-maintained rental property.
the argument on "strict price ceilings" reducing new construction is obfuscated by our interlocutor's wording, but i believe the idea is that lenders will refuse to fund any project that might not be able to extract the maximum conceivable amount of profit, and that any measure by tenants and municipal governments to ensure anything resembling affordable housing will cut into those profits and thereby scare off the lenders, making the construction not happen. either that or our interlocutor believes that there are such a thing as strict price ceilings anywhere in the world? unclear.
one thing that i hope we can all reach agreement on is that the market, left to its own devices, prefers not to produce enough housing supply to meet real demand. this is because under our current pattern of wealth distribution, it is much more profitable to oversupply housing for the people who are able to muster huge amounts of effective demand, while radically undersupplying housing for everyone else. the standard new urbanist move is to say that there will be a "trickle-down" effect — that the adequate supply of housing for the extremely rich will turn into an adequate supply of housing for humans as the rich people housing ages. this argument is, well, daft on several axes, but the most straightforward way to respond to it is to note that there are not very many rich people, and so when the rich people houses become too run-down to be rich people houses, they won't result in enough housing to meet the middle- and working-class demand — no matter how aggressively we part up the run-down mansions.
we need rent control. we need vacancy control. we need price control. we need municipality-provided housing. we need the seizure of private property and its conversion into public property. we need all of these things together and we need land reform and we need the damn revolution.
nevertheless, failing the damn revolution, any of the above things in isolation is by itself better than the alternative. rent control isn't the revolution, but it's better than the absence of rent control.
posted by Reclusive Novelist Thomas Pynchon at 2:24 PM on August 6, 2019 [4 favorites]
the argument on rent control reducing maintenance work is grounded in the idea that landlords will retaliate against rent-controlled tenants. In a snit over not being able to extract as much profit as they would have otherwise, they will deliberately and maliciously let units fall into disrepair. or, slightly more charitably: without the need to chase after choosy picky rich tenants who will pay top dollar, they will see no financial reason to deliberately let units fall into disrepair. In either case, people with human-scale salaries never get to live in a well-maintained rental property.
the argument on "strict price ceilings" reducing new construction is obfuscated by our interlocutor's wording, but i believe the idea is that lenders will refuse to fund any project that might not be able to extract the maximum conceivable amount of profit, and that any measure by tenants and municipal governments to ensure anything resembling affordable housing will cut into those profits and thereby scare off the lenders, making the construction not happen. either that or our interlocutor believes that there are such a thing as strict price ceilings anywhere in the world? unclear.
one thing that i hope we can all reach agreement on is that the market, left to its own devices, prefers not to produce enough housing supply to meet real demand. this is because under our current pattern of wealth distribution, it is much more profitable to oversupply housing for the people who are able to muster huge amounts of effective demand, while radically undersupplying housing for everyone else. the standard new urbanist move is to say that there will be a "trickle-down" effect — that the adequate supply of housing for the extremely rich will turn into an adequate supply of housing for humans as the rich people housing ages. this argument is, well, daft on several axes, but the most straightforward way to respond to it is to note that there are not very many rich people, and so when the rich people houses become too run-down to be rich people houses, they won't result in enough housing to meet the middle- and working-class demand — no matter how aggressively we part up the run-down mansions.
we need rent control. we need vacancy control. we need price control. we need municipality-provided housing. we need the seizure of private property and its conversion into public property. we need all of these things together and we need land reform and we need the damn revolution.
nevertheless, failing the damn revolution, any of the above things in isolation is by itself better than the alternative. rent control isn't the revolution, but it's better than the absence of rent control.
posted by Reclusive Novelist Thomas Pynchon at 2:24 PM on August 6, 2019 [4 favorites]
Do you have an example of the type of seizure of private property to convert into public property that you consider desirable?
posted by Selena777 at 2:53 PM on August 6, 2019
posted by Selena777 at 2:53 PM on August 6, 2019
the argument on rent control reducing maintenance work is grounded in the idea that landlords will retaliate against rent-controlled tenants. In a snit over not being able to extract as much profit as they would have otherwise, they will deliberately and maliciously let units fall into disrepair. or, slightly more charitably: without the need to chase after choosy picky rich tenants who will pay top dollar, they will see no financial reason to deliberately let units fall into disrepair. In either case, people with human-scale salaries never get to live in a well-maintained rental property.
I know that the plural of anecdote is not data, but I do have a friend who has directly experienced this recently. She's lived in the same studio apartment since 1996 and so, even with all of the allowed increases and some above-guideline increases, she's still paying less than the apartment would get from a new tenant (given Ontario's lack of vacancy control). So now her landlord has been sending her letters threatening eviction on spurious grounds. If she hadn't found people who knew that the grounds were spurious, she might have moved out (into a market she definitely can't afford).
Do you have an example of the type of seizure of private property to convert into public property that you consider desirable?
Not to speak for anyone else, but I would start with vacant housing. I might also target property from landlords found to be consistently in violation of the law when it comes to safety and maintenance.
I generally would prefer other measures myself (subsidized housing, rent control, landlord licencing, actual enforcement of health & safety standards and significant fines that are paid directly to tenants when landlords are found to be contravention of the law*) myself, since I'm a social democrat rather than a socialist. But property should never be inalienable. Property, at least in the form of real estate, should be a privilege, not a right. Western elites will talk about "property rights", but they don't really believe that property is a right, or else they would guarantee that everyone had some.
* For example, in my province, you can pay rent on an illegal apartment for years - that is, a space that is not legal to rent for human habitation (e.g. lacking a second exit). But if it's discovered, you get no compensation. The apartment is closed, you are evicted - and if there are less than 5 units in the building, you get bupkis; if there are more than 5 units, you get a couple of month's worth of rent to help move. But if you had lived there for 5 years and paid $1000/month in rent, your landlord received $60,000 for illegal activity (renting you an illegal apartment).
Or, as I recently heard on the Scarlet E [for Eviction] series from On the Media, in the states, a property could be completely condemned for health & safety and you are immediately evicted - and even if you had just paid rent for the month, but were kicked out a day later, you get nothing back.
It's all a messed up system.
posted by jb at 3:23 PM on August 6, 2019 [6 favorites]
I know that the plural of anecdote is not data, but I do have a friend who has directly experienced this recently. She's lived in the same studio apartment since 1996 and so, even with all of the allowed increases and some above-guideline increases, she's still paying less than the apartment would get from a new tenant (given Ontario's lack of vacancy control). So now her landlord has been sending her letters threatening eviction on spurious grounds. If she hadn't found people who knew that the grounds were spurious, she might have moved out (into a market she definitely can't afford).
Do you have an example of the type of seizure of private property to convert into public property that you consider desirable?
Not to speak for anyone else, but I would start with vacant housing. I might also target property from landlords found to be consistently in violation of the law when it comes to safety and maintenance.
I generally would prefer other measures myself (subsidized housing, rent control, landlord licencing, actual enforcement of health & safety standards and significant fines that are paid directly to tenants when landlords are found to be contravention of the law*) myself, since I'm a social democrat rather than a socialist. But property should never be inalienable. Property, at least in the form of real estate, should be a privilege, not a right. Western elites will talk about "property rights", but they don't really believe that property is a right, or else they would guarantee that everyone had some.
* For example, in my province, you can pay rent on an illegal apartment for years - that is, a space that is not legal to rent for human habitation (e.g. lacking a second exit). But if it's discovered, you get no compensation. The apartment is closed, you are evicted - and if there are less than 5 units in the building, you get bupkis; if there are more than 5 units, you get a couple of month's worth of rent to help move. But if you had lived there for 5 years and paid $1000/month in rent, your landlord received $60,000 for illegal activity (renting you an illegal apartment).
Or, as I recently heard on the Scarlet E [for Eviction] series from On the Media, in the states, a property could be completely condemned for health & safety and you are immediately evicted - and even if you had just paid rent for the month, but were kicked out a day later, you get nothing back.
It's all a messed up system.
posted by jb at 3:23 PM on August 6, 2019 [6 favorites]
Also to add to my preferred approaches to housing: vacancy fines. Property owners who let housing sit empty in areas with high housing demand should have to pay for that privilege.
(I would also extend that to commercial property, to prevent empty storefronts from landlords who are holding out for bigger tenants).
posted by jb at 3:25 PM on August 6, 2019 [6 favorites]
(I would also extend that to commercial property, to prevent empty storefronts from landlords who are holding out for bigger tenants).
posted by jb at 3:25 PM on August 6, 2019 [6 favorites]
> Do you have an example of the type of seizure of private property to convert into public property that you consider desirable?
posted by Selena777 at 2:53 PM on August 6 [+] [!]
see the section on vienna from the original article, also see the other articles on vienna linked to from the article. here's a key quote from the second article i linked there:
posted by Selena777 at 2:53 PM on August 6 [+] [!]
see the section on vienna from the original article, also see the other articles on vienna linked to from the article. here's a key quote from the second article i linked there:
Even before the Red Vienna period, a key policy was imposed that was crucial to the city’s later success: strict rent control. The government had imposed it to prevent war wives from being evicted while their husbands fought at the front. It was never repealed. The government outlawed raising rents beyond a minimal amount and, in the presence of extreme currency inflation, made it less profitable to build new rental stock.posted by Reclusive Novelist Thomas Pynchon at 3:27 PM on August 6, 2019 [2 favorites]
Ordinarily, this would be a very bad thing for affordability, as rental stock is usually less expensive per month (in the short term at least) than home ownership. Thus, policies that impede the construction of rental housing are generally frowned upon. This is true here in Vancouver, where successive city governments have gone to herculean lengths to induce the private market to produce new rental stock — through subsidy, relaxed development taxes or density bonuses. The city has been nominally successful, reversing a decades’ long decline in purpose-built rental starts; but the monthly rents charged for these new market-rate units are unaffordable for all but the upper tier of renters.
Vienna provides an interesting counterpoint. Because rent control disincentivized the private development of rental buildings, landlords were, for a time, removed from the market for urban land. Consequently prices finally went down, allowing the city to buy land at a much reduced price; often it was the only buyer in the market.
If apartment buildings were owned by community land trusts and/or cooperatively by the tenants that lived in them, there'd be plenty of appetite to make repairs and improvements.This isn't a hypothetical, and it doesn't seem to be supported by our actual experience with the decent number of cooperative apartment/condominium associations that currently exist in the US. These are generally no more or less well-maintained than other properties (if anything, they lean on the conservative side of renovations/maintenance).
Co-op drama can also be batshit insane and racist AF. I have serious doubts about this being the model that we want to push, unless serious other protections are in place.
posted by schmod at 5:07 PM on August 6, 2019 [2 favorites]
I'll conceed maintenance issues could be addressed with more enforcement. One other thing that also needs to be considered is that if rent stabilization/control laws are enacted you need to have a provision to prevent landlords from converting units into condos or taking rental units off the market in another fashion. Bay area rent control laws had so many loop holes that they essentially did almost nothing for general affordability (although one can not discount that a few people did benefit). I agree that the government should play a more active role in providing housing to people, the problem is that it does require investment at the federal level, that is certainly not forthcoming with the current administration. I hope this changes soon ie the 2020 election. Maybe something at the state level could be done in the meantime??
posted by YIMBYMoCo at 5:13 PM on August 6, 2019
posted by YIMBYMoCo at 5:13 PM on August 6, 2019
Co-op drama can also be batshit insane and racist AF.
New York City co-op drama can be, etc. That's because of who lives in them. The co-op I grew up in had no more than the usual amount of drama of any voluntary organization trying to solve many tasks over time and would've struggled to be racist (collectively, anyway, I can't guarantee the hearts of every resident) given that maybe 20% of the building was occupied by white people, who didn't have disproportionate representation on the various committees.
posted by praemunire at 6:05 PM on August 6, 2019 [2 favorites]
New York City co-op drama can be, etc. That's because of who lives in them. The co-op I grew up in had no more than the usual amount of drama of any voluntary organization trying to solve many tasks over time and would've struggled to be racist (collectively, anyway, I can't guarantee the hearts of every resident) given that maybe 20% of the building was occupied by white people, who didn't have disproportionate representation on the various committees.
posted by praemunire at 6:05 PM on August 6, 2019 [2 favorites]
My fantasy world is one where the ability for landlords to collect rents is contingent on five star ratings from tenants.
posted by OlivesAndTurkishCoffee at 7:42 PM on August 6, 2019 [4 favorites]
posted by OlivesAndTurkishCoffee at 7:42 PM on August 6, 2019 [4 favorites]
Bay area rent control laws had so many loop holes that they essentially did almost nothing for general affordability
There's a ton of people living in the Bay Area in rent controlled apartments. It doesn't affect new tenants at all, and a lot of the people in rent controlled apartments are wealthy tech workers who are the last people who need protection, but the rent control laws are far from toothless. But they don't and can't fix the problem that San Francisco has been gaining residents 3x faster than residences for at least two decades.
posted by aubilenon at 8:29 PM on August 6, 2019 [4 favorites]
There's a ton of people living in the Bay Area in rent controlled apartments. It doesn't affect new tenants at all, and a lot of the people in rent controlled apartments are wealthy tech workers who are the last people who need protection, but the rent control laws are far from toothless. But they don't and can't fix the problem that San Francisco has been gaining residents 3x faster than residences for at least two decades.
posted by aubilenon at 8:29 PM on August 6, 2019 [4 favorites]
My fantasy world is one where the ability for landlords to collect rents is contingent on five star ratings from tenants.
In a more ideal world regulations would create the incentives so that market forces would make this a reality without any direct interaction. In other words, we'd use the regulatory power of the state to get the rental market to actually function more like a free market (as defined by economists). To me, that's what real free-market capitalism is.
posted by VTX at 6:54 AM on August 7, 2019
In a more ideal world regulations would create the incentives so that market forces would make this a reality without any direct interaction. In other words, we'd use the regulatory power of the state to get the rental market to actually function more like a free market (as defined by economists). To me, that's what real free-market capitalism is.
posted by VTX at 6:54 AM on August 7, 2019
I mean sure, such a fantasy world might be nice, but it is in fact a fantasy world.
Housing has a lot in common with healthcare when it comes to their potential to function as completely free markets. In both cases, there's real-world reasons why people cannot engage with them in the kind of theoretical, detached manner that might work when say, buying a car. If I'm bleeding to death after a car accident, I can't really start shopping around for which ER best meets my needs at a price I feel is fair. I similarly may not be in any position to move elsewhere if landlords where I am are shitty, because that also may mean getting a new job, moving my kids to a new school, no longer being able to care for elderly relatives, etc.
The idea that housing can ever be a truly free market assumes a level of detachment that few people other than the ultra rich can actually afford.
posted by tocts at 7:08 AM on August 7, 2019 [2 favorites]
Housing has a lot in common with healthcare when it comes to their potential to function as completely free markets. In both cases, there's real-world reasons why people cannot engage with them in the kind of theoretical, detached manner that might work when say, buying a car. If I'm bleeding to death after a car accident, I can't really start shopping around for which ER best meets my needs at a price I feel is fair. I similarly may not be in any position to move elsewhere if landlords where I am are shitty, because that also may mean getting a new job, moving my kids to a new school, no longer being able to care for elderly relatives, etc.
The idea that housing can ever be a truly free market assumes a level of detachment that few people other than the ultra rich can actually afford.
posted by tocts at 7:08 AM on August 7, 2019 [2 favorites]
In other words, we'd use the regulatory power of the state to get the rental market to actually function more like a free market (as defined by economists)
It functions exactly like a free market: everything is worth exactly what someone will pay. That's the problem. As long as private property ownership is the dominant paradigm, and real-estate speculation is legal, it's incumbent on government regulation to keep housing prices from spiking up to the point that large swaths of humanity can't afford to live anywhere near their job/friends/family.
posted by Mayor West at 7:27 AM on August 7, 2019 [4 favorites]
It functions exactly like a free market: everything is worth exactly what someone will pay. That's the problem. As long as private property ownership is the dominant paradigm, and real-estate speculation is legal, it's incumbent on government regulation to keep housing prices from spiking up to the point that large swaths of humanity can't afford to live anywhere near their job/friends/family.
posted by Mayor West at 7:27 AM on August 7, 2019 [4 favorites]
If price is higher than the marginal cost of production, it's not acting like a free market.
posted by GCU Sweet and Full of Grace at 7:34 AM on August 7, 2019 [1 favorite]
posted by GCU Sweet and Full of Grace at 7:34 AM on August 7, 2019 [1 favorite]
this is a utopian idea of how markets work. prices typically don’t fall to the level of the cost of producing them, since (as adam smith observed) two people of the same trade rarely meet, even for merriment and diversion, without the conversation turning to a conspiracy against the public.
free market supporters need to talk about things in terms of actually-existing free markets, rather than positing rules for how an ideal free market works and then pretending that those ideal rules match how markets actually behave.
posted by Reclusive Novelist Thomas Pynchon at 8:15 AM on August 7, 2019 [2 favorites]
free market supporters need to talk about things in terms of actually-existing free markets, rather than positing rules for how an ideal free market works and then pretending that those ideal rules match how markets actually behave.
posted by Reclusive Novelist Thomas Pynchon at 8:15 AM on August 7, 2019 [2 favorites]
NIMBYism is the biggest problem in the "free market" for housing, much more than developer "greed" or "speculation." Developers would LOVE to build more housing all over the place, which would in fact temper housing price increases. (Every developer would much rather build something right now and make some profit, rather than be limited to building less, building more slowly, or often not building at all.)
It's the in-place locals who are making it excruciatingly difficult and expensive to do so in cities - not just in San Francisco (which is merely the most news-making example) but all over America. Combine such brakes on housing development with the desire of increasing numbers of people (young and old, high- and low-paid) to move to and work in those same cities, and you have inevitable sky-rocketing costs for housing. An even better acronym I heard years ago, which seems more relevant than ever is BANANA: Build Absolutely Nothing Anywhere Near Anything. That's the biggest problem we face.
posted by PhineasGage at 8:58 AM on August 7, 2019 [1 favorite]
It's the in-place locals who are making it excruciatingly difficult and expensive to do so in cities - not just in San Francisco (which is merely the most news-making example) but all over America. Combine such brakes on housing development with the desire of increasing numbers of people (young and old, high- and low-paid) to move to and work in those same cities, and you have inevitable sky-rocketing costs for housing. An even better acronym I heard years ago, which seems more relevant than ever is BANANA: Build Absolutely Nothing Anywhere Near Anything. That's the biggest problem we face.
posted by PhineasGage at 8:58 AM on August 7, 2019 [1 favorite]
If rent control hurts more people than it helps, if it restricts housing supply and drives housing costs up, then it shouldn't be done.
I do not think you read my comment with care. I explicitly said that rent control/stabilization may in fact be harmful in some circumstances and I was not proposing it as a panacea for all circumstances. What I objected to is the outright dismissal of the concept because it doesn't solve "the real problem," when in fact not being able to make the rent any given month for any given individual is in fact a very very real problem. Unless the people involved aren't quite real to you.
Don't underestimate the willingness of the affluent (in particular, but of course there are others) to latch onto the soothing notion that nothing should be done to even modestly ameliorate the situations of people who aren't the right kind of people, who make them feel uncomfortable, who they don't like to think about, until we can unveil some brilliant technocratic solution that will fix everything without really costing that much and spawn some really triumphant TED talks.
It's hard to treat your comments about voters not caring as anything other than disingenous considering the violent struggle over rent-stabilization reform that just took place in New York over just the past several months. Landlords are affluent, landlords are voters, and landlords fight it tooth and nail. I get it, landlords pay your bills, but we didn't just fall off the back of the turnip truck here.
Most of the evidence seems to point this way,
(*)Citations needed.
posted by praemunire at 9:03 AM on August 7, 2019 [1 favorite]
I do not think you read my comment with care. I explicitly said that rent control/stabilization may in fact be harmful in some circumstances and I was not proposing it as a panacea for all circumstances. What I objected to is the outright dismissal of the concept because it doesn't solve "the real problem," when in fact not being able to make the rent any given month for any given individual is in fact a very very real problem. Unless the people involved aren't quite real to you.
Don't underestimate the willingness of the affluent (in particular, but of course there are others) to latch onto the soothing notion that nothing should be done to even modestly ameliorate the situations of people who aren't the right kind of people, who make them feel uncomfortable, who they don't like to think about, until we can unveil some brilliant technocratic solution that will fix everything without really costing that much and spawn some really triumphant TED talks.
It's hard to treat your comments about voters not caring as anything other than disingenous considering the violent struggle over rent-stabilization reform that just took place in New York over just the past several months. Landlords are affluent, landlords are voters, and landlords fight it tooth and nail. I get it, landlords pay your bills, but we didn't just fall off the back of the turnip truck here.
Most of the evidence seems to point this way,
(*)Citations needed.
posted by praemunire at 9:03 AM on August 7, 2019 [1 favorite]
Here's a citation about the effects rent control in the bay area. Results are mixed and yes certain people do benefit. There are some holistic negative effects to consider as well though. I didn't read this study as poo pooing rent control but it does highlight some side effects that need to be considered when crafting rent control/stabilization legislation.
"We find that, on average, in the medium to long term the beneficiaries of rent control are between 10 and 20% more likely to remain at their 1994 address relative to the control group and, moreover, are more likely to remain in San Francisco. Further, we find the effects of rent control on tenants are stronger for racial minorities, suggesting rent control helped prevent minority displacement from San Francisco. All our estimated effects are significantly stronger among older households and among households that have already spent a number of years at their current address. On the other hand, individuals in areas with quickly rising house prices and with few years at their 1994 address are less likely to remain at their current address, consistent with the idea that landlords try to remove tenants when the reward is high, through either eviction or negotiated payments.
We find that landlords actively respond to the imposition of rent control by converting their properties to condos and TICs or by redeveloping the building in such as a way as to exempt it from the regulations. In sum, we find that impacted landlords reduced the supply of available rental housing by 15%. Further, we find that there was a 25% decline in the number of renters living in units protected by rent control, as many buildings were converted to new construction or condos that are exempt from rent control. This reduction in rental supply likely increased rents in the long run, leading to a transfer between future San Francisco renters and renters living in San Francisco in 1994. In addition, the conversion of existing rental properties to higher-end, owner-occupied condominium housing ultimately led to a housing stock increasingly directed towards higher income individuals. In this way, rent control contributed to the gentrification of San Francisco, contrary to the stated policy goal. Rent control appears to have increased income inequality in the city by both limiting displacement of minorities and attracting higher income residents."
https://web.stanford.edu/~diamondr/DMQ.pdf
posted by YIMBYMoCo at 9:27 AM on August 7, 2019 [1 favorite]
"We find that, on average, in the medium to long term the beneficiaries of rent control are between 10 and 20% more likely to remain at their 1994 address relative to the control group and, moreover, are more likely to remain in San Francisco. Further, we find the effects of rent control on tenants are stronger for racial minorities, suggesting rent control helped prevent minority displacement from San Francisco. All our estimated effects are significantly stronger among older households and among households that have already spent a number of years at their current address. On the other hand, individuals in areas with quickly rising house prices and with few years at their 1994 address are less likely to remain at their current address, consistent with the idea that landlords try to remove tenants when the reward is high, through either eviction or negotiated payments.
We find that landlords actively respond to the imposition of rent control by converting their properties to condos and TICs or by redeveloping the building in such as a way as to exempt it from the regulations. In sum, we find that impacted landlords reduced the supply of available rental housing by 15%. Further, we find that there was a 25% decline in the number of renters living in units protected by rent control, as many buildings were converted to new construction or condos that are exempt from rent control. This reduction in rental supply likely increased rents in the long run, leading to a transfer between future San Francisco renters and renters living in San Francisco in 1994. In addition, the conversion of existing rental properties to higher-end, owner-occupied condominium housing ultimately led to a housing stock increasingly directed towards higher income individuals. In this way, rent control contributed to the gentrification of San Francisco, contrary to the stated policy goal. Rent control appears to have increased income inequality in the city by both limiting displacement of minorities and attracting higher income residents."
https://web.stanford.edu/~diamondr/DMQ.pdf
posted by YIMBYMoCo at 9:27 AM on August 7, 2019 [1 favorite]
... the class biases of Mefi. Because talking like it's misguided to do anything to alleviate actual real suffering of actual real people in this present moment, right now, which is actually happening, until we can come up with some nice neoliberal magic wand to wave and solve all the systemic problems, it's just...well, it requires a particular sort of hard heart that so often comes along with affluence.
I'm confused - has a comment been deleted? I can see the response, but not the original.
I'm also further confused, as no "neoliberal magic wand" has been waved anywhere near this conversation; it's been split between social democrats arguing for regulation and rent control, and socialists arguing for property expropriation.
Speaking of which: Barcelona has begun to expropriate housing which has been left vacant for over two years. This article has more detail on the process, which targets organizations which own multiple properties who have left the property vacant for more than two years; they are using the housing as subsidized housing.
posted by jb at 10:33 AM on August 7, 2019 [1 favorite]
I'm confused - has a comment been deleted? I can see the response, but not the original.
I'm also further confused, as no "neoliberal magic wand" has been waved anywhere near this conversation; it's been split between social democrats arguing for regulation and rent control, and socialists arguing for property expropriation.
Speaking of which: Barcelona has begun to expropriate housing which has been left vacant for over two years. This article has more detail on the process, which targets organizations which own multiple properties who have left the property vacant for more than two years; they are using the housing as subsidized housing.
posted by jb at 10:33 AM on August 7, 2019 [1 favorite]
> We find that landlords actively respond to the imposition of rent control by converting their properties to condos and TICs or by redeveloping the building in such as a way as to exempt it from the regulations. In sum, we find that impacted landlords reduced the supply of available rental housing by 15%.
the correct frame for understanding this response from landlords is as a "capital strike" — in response to the exploited class taking measures against being exploited, the ownership class takes their ball and goes home. it's something like an industrial manufacturing concern shuttering their doors altogether in response to a successful unionization drive.
if one views the ownership class as valid stakeholders, this indicates a flaw in the strategy. if one (correctly) understands the ownership class as a threat to general prosperity, this indicates that more aggressive measures must be taken by the exploited class in order to prevent the capital strike from working.
just as the appropriate response to an industrial capital strike is for the state (or, ideally, the workers themselves) to seize the physical plant and continue production on a public-ownership or (ideally) syndicalist model, an appropriate response to landlords taking their property off the market is for municipalities to use eminent domain to counter the capital strike. if the municipality, for whatever reason, can't or won't step in, squatting and other forms of direct action are called for.
posted by Reclusive Novelist Thomas Pynchon at 10:35 AM on August 7, 2019 [4 favorites]
the correct frame for understanding this response from landlords is as a "capital strike" — in response to the exploited class taking measures against being exploited, the ownership class takes their ball and goes home. it's something like an industrial manufacturing concern shuttering their doors altogether in response to a successful unionization drive.
if one views the ownership class as valid stakeholders, this indicates a flaw in the strategy. if one (correctly) understands the ownership class as a threat to general prosperity, this indicates that more aggressive measures must be taken by the exploited class in order to prevent the capital strike from working.
just as the appropriate response to an industrial capital strike is for the state (or, ideally, the workers themselves) to seize the physical plant and continue production on a public-ownership or (ideally) syndicalist model, an appropriate response to landlords taking their property off the market is for municipalities to use eminent domain to counter the capital strike. if the municipality, for whatever reason, can't or won't step in, squatting and other forms of direct action are called for.
posted by Reclusive Novelist Thomas Pynchon at 10:35 AM on August 7, 2019 [4 favorites]
My apologies: I shouldn't describe anyone as "social democrat" or "socialist", as I don't know their personal identities/ideologies (and I hate it when people make assumptions about me). What I meant to say is that this conversation has been entirely dominated by policies which range on the scale from generally-market-oriented solutions (regulation, taxes, etc.) through more socialist/non-market solutions (not having private landlords). Neither are anywhere near the neo-liberal end of things.
posted by jb at 10:36 AM on August 7, 2019 [1 favorite]
posted by jb at 10:36 AM on August 7, 2019 [1 favorite]
as someone holding down the left flank here i'd like to add that whenever possible anarchist solutions are preferable to socialist solutions. the state is a powerful but dangerous tool. if we can do it without the state, we should do it without the state.
posted by Reclusive Novelist Thomas Pynchon at 10:49 AM on August 7, 2019 [2 favorites]
posted by Reclusive Novelist Thomas Pynchon at 10:49 AM on August 7, 2019 [2 favorites]
I'll chime in as an opponent of rent control, even though I am a direct beneficiary. There is no moral or intellectual reason a small, individual property owner (my landlady, who is a retired public school teacher) should be subsidizing me, who earns a perfectly fine private sector income.
We absolutely do have a completely borked system of housing that is harming almost everyone, especially the neediest. But in the messy real world, rent control is not the proper approach to remedying these problems.
I understand although don't agree with full socialist arguments like Reclusive Novelist Thomas Pynchon's, offered many times above. I understand and do agree with many of the social democratic ideas (offered by many, above and elsewhere) for society collectively better providing for housing needs via income support, housing subsidies, public housing, expedited building of new housing, etc. But rent control is a poorly focused instrument with many flaws detailed above.
If you are opposed to free market housing economics, rent control is obviously a half-assed, incorrect approach. If you believe in an idealized notion of free markets, it's obviously misguided. And if you are a social democrat, there are ample examples and arguments for why it is ineffective, unfair, diagonal to the core problem of affordable housing for all, etc.
posted by PhineasGage at 11:02 AM on August 7, 2019
We absolutely do have a completely borked system of housing that is harming almost everyone, especially the neediest. But in the messy real world, rent control is not the proper approach to remedying these problems.
I understand although don't agree with full socialist arguments like Reclusive Novelist Thomas Pynchon's, offered many times above. I understand and do agree with many of the social democratic ideas (offered by many, above and elsewhere) for society collectively better providing for housing needs via income support, housing subsidies, public housing, expedited building of new housing, etc. But rent control is a poorly focused instrument with many flaws detailed above.
If you are opposed to free market housing economics, rent control is obviously a half-assed, incorrect approach. If you believe in an idealized notion of free markets, it's obviously misguided. And if you are a social democrat, there are ample examples and arguments for why it is ineffective, unfair, diagonal to the core problem of affordable housing for all, etc.
posted by PhineasGage at 11:02 AM on August 7, 2019
The idea that housing can ever be a truly free market assumes a level of detachment that few people other than the ultra rich can actually afford.
Right, that's exactly what I'm saying. Even without the presence of firm regulations (a "free-market" in certain senses of the term) it's not really a free market since the nature of the product includes constraints that prevent the market from really being free. So use regulations (or whatever works, really) until you start to emulate the outcomes.
One of the problems is that people can't really choose to do without housing/healthcare. But if you have state sponsored healthcare and state owned housing (maybe like Vienna as an example) then people can choose not to purchase private housing and healthcare. Now you've started to address one of the constraints that keeps housing from functioning more like a proper free-market and given buyers more power.
It's a product or service where it's not realistic to shop around? Cool, regulate it until you've mostly removed the need to shop around. If there are ways you can regulate that product or service so that competition drives better outcomes, do that.
The market has high barriers to entry that reduces competition? Use incentives and/or regulation to lower them where it makes sense to do so (no free passes for pollution).
A "perfectly competitive" market is a platonic ideal that simply does not exist in reality and yet " free market capitalism" basically treats every product as if it exists in a perfectly competitive market. So if you want capitalism and free-markets to achieve better outcomes you'll need to address the ways in which those specific markets deviate from that ideal. In some cases that's going to mean straight-up socialism, in some cases a kind of socialism-lite will be a better fit. I just hate this idea that socialism is somehow anti-capitalist when it really doesn't have to be especially when most of the successful applications of socialism seem to ensure that capital is used more effectively, with better outcomes for society, and force some markets to be more competitive. Socialism doesn't really do away with capitalism, it just makes it less dysfunctional and make it work more like the way free-markets would if everything were the platonic-ally ideal perfectly competitive product.
posted by VTX at 11:10 AM on August 7, 2019 [2 favorites]
Right, that's exactly what I'm saying. Even without the presence of firm regulations (a "free-market" in certain senses of the term) it's not really a free market since the nature of the product includes constraints that prevent the market from really being free. So use regulations (or whatever works, really) until you start to emulate the outcomes.
One of the problems is that people can't really choose to do without housing/healthcare. But if you have state sponsored healthcare and state owned housing (maybe like Vienna as an example) then people can choose not to purchase private housing and healthcare. Now you've started to address one of the constraints that keeps housing from functioning more like a proper free-market and given buyers more power.
It's a product or service where it's not realistic to shop around? Cool, regulate it until you've mostly removed the need to shop around. If there are ways you can regulate that product or service so that competition drives better outcomes, do that.
The market has high barriers to entry that reduces competition? Use incentives and/or regulation to lower them where it makes sense to do so (no free passes for pollution).
A "perfectly competitive" market is a platonic ideal that simply does not exist in reality and yet " free market capitalism" basically treats every product as if it exists in a perfectly competitive market. So if you want capitalism and free-markets to achieve better outcomes you'll need to address the ways in which those specific markets deviate from that ideal. In some cases that's going to mean straight-up socialism, in some cases a kind of socialism-lite will be a better fit. I just hate this idea that socialism is somehow anti-capitalist when it really doesn't have to be especially when most of the successful applications of socialism seem to ensure that capital is used more effectively, with better outcomes for society, and force some markets to be more competitive. Socialism doesn't really do away with capitalism, it just makes it less dysfunctional and make it work more like the way free-markets would if everything were the platonic-ally ideal perfectly competitive product.
posted by VTX at 11:10 AM on August 7, 2019 [2 favorites]
In Atlanta, they're building new luxury condos like crazy. They are building fewer apartments and even fewer apartments that an ordinary person can afford. How is the preference of rich people to make huge amounts of money selling overpriced property to rich people rather than providing affordable housing for people who actually need it somehow that the fault of NIMBYs?
posted by hydropsyche at 3:03 PM on August 7, 2019 [3 favorites]
posted by hydropsyche at 3:03 PM on August 7, 2019 [3 favorites]
I mean, nimbys play a role, certainly. i’m in a minority here, but i think that at least on an unconscious level nimbys understand that restricting the supply of housing pushes up their own property values. (i admit, though, that most people think that nimbyism is less driven by cold hard material interests and more by foolish nostalgia).
we can’t stop at blaming nimbys, though, since the market left to its own devices — even without nimbys — prefers to undersupply housing. our new urbanist friends tend to suffer from something like the just world fallacy when they take the position that the market can solve the housing crisis. but why would the market solve a crisis that’s so good for business?
i don’t expect everyone to follow me to the conclusion that it’s unethical to be a landlord, that landlords are a drag on the economy and a threat to the quality of life of everyone who has to deal with them, and that the proper solution to the housing crisis involves replacing, insofar as is possible, the market provision of housing with socialized housing instead.
the question i want you to ask yourself, though, is what restraints on the actions of landlords are best. and when you ask yourself this question try to abandon any sort of axiom about hypothetical unlimited or barely-limited rights to profit from property ownership. if you can derive those rights, sure, do that (opinions differ as to whether deriving them is possible), but at the very least don’t just assume them.
posted by Reclusive Novelist Thomas Pynchon at 5:24 PM on August 7, 2019 [2 favorites]
we can’t stop at blaming nimbys, though, since the market left to its own devices — even without nimbys — prefers to undersupply housing. our new urbanist friends tend to suffer from something like the just world fallacy when they take the position that the market can solve the housing crisis. but why would the market solve a crisis that’s so good for business?
i don’t expect everyone to follow me to the conclusion that it’s unethical to be a landlord, that landlords are a drag on the economy and a threat to the quality of life of everyone who has to deal with them, and that the proper solution to the housing crisis involves replacing, insofar as is possible, the market provision of housing with socialized housing instead.
the question i want you to ask yourself, though, is what restraints on the actions of landlords are best. and when you ask yourself this question try to abandon any sort of axiom about hypothetical unlimited or barely-limited rights to profit from property ownership. if you can derive those rights, sure, do that (opinions differ as to whether deriving them is possible), but at the very least don’t just assume them.
posted by Reclusive Novelist Thomas Pynchon at 5:24 PM on August 7, 2019 [2 favorites]
our new urbanist friends tend to suffer from something like the just world fallacy when they take the position that the market can solve the housing crisis. but why would the market solve a crisis that’s so good for business?
Well, because it's not good for business. It's not good for businesses -- any business, really -- when they can't hire people even at high salaries because they can't afford to live in the area. True for a small restaurant, and true even for big companies with plenty of money. It's not good for business when the rents they pay are ridiculously high. It's not good for housing construction companies when housing is not being constructed. The only business it's good for is the rent-seeking property owner business, and the homeowner-investor "business", but it just so happens that those are exactly the people who set government policy.
posted by alexei at 12:16 PM on August 19, 2019 [1 favorite]
Well, because it's not good for business. It's not good for businesses -- any business, really -- when they can't hire people even at high salaries because they can't afford to live in the area. True for a small restaurant, and true even for big companies with plenty of money. It's not good for business when the rents they pay are ridiculously high. It's not good for housing construction companies when housing is not being constructed. The only business it's good for is the rent-seeking property owner business, and the homeowner-investor "business", but it just so happens that those are exactly the people who set government policy.
posted by alexei at 12:16 PM on August 19, 2019 [1 favorite]
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Of course it did. Economics has long had the problem of looking at people as figures, not individuals; and of focusing solely on money while ignoring social impact.
posted by NoxAeternum at 8:19 AM on August 6, 2019 [10 favorites]