To make housing affordable, one must make it unpalatable to investors. Lack of housing is not a problem - an excess of demand from speculative investors fueled by too low interest rates is the problem.
Affordable housing is uninvestable housing. Until advocates admit this, the walking in circles will continue.
i) Price controls do not work at reducing prices, there are two millennia worth of proof for this.[1]
ii) Higher interest rates lower housing prices by lowering the availability of loans. This is a good thing unless you are already bought into the ponzi of ever declining rates.
iii) Affordable housing is uninvestable housing. A house is a deprecative asset, the same way cars are. A house does not produce anything. You live in it and it wears down.
I’m going further to say that the speculative investment style itself is the problem, for many if not all areas. Once this kind of investor comes in, they want to squeeze the market for all it has, effects be damned. They may as well bet on crop failure – and they do.
The problem as I see it, is investment without value added, a.k.a rent seeking.
Buying an apartment and renting it for long duration without any value added is a problem. If you buy something without expectations of its economical value increasing, only its price, that's a problem.
Buying an apartment and hosting it for short duration in Airbnb (or another way) to tourists, while providing real service, is a real investment. It created real economic value. I'm OK with these kind of investments.
The root of the problem comes from the central bank. There's asset inflation that is virtually ignored, created by low rates, QE, and regulation around mortgages. That asset inflation makes "investing" without creating value a good strategy.
I truly feel that people who think that property prices are going to go up forever are in for a shock.
In many countries, the population has already began to stabilize or decrease. Look at Japan for an example of what is in store for many other countries. There is just not enough people being born to drive the sort of demand required to keep property prices increasing forever.
Maybe innovation in housing drives some type of infinite growth picture, where houses keep getting better so whoever is left on earth just keeps paying more for them, but I'm not sure if that's a reality.
There might be a large influx of immigrants to fill apartments thanks for climate refugees, but they're (very sadly) not going to be coming to NYC with a bunch of money?
Are property price slumps sad for people? Yes, are they the end of civilization? I don't think so.
Interesting point taking population growth into account. If everyone owned a good house and had no reason to change house –probably would never happen, although there are forces like remote working and VR pushing to remove the need to concentrate around city centres–, genuine demand for housing would halt, leaving only speculation. If new technologies enabled us to built more and cheaper houses –and governments didn't oppose it–, offer might increase. And maybe housing would come back to being what should have always been, a commodity.
In reality, these massive companies buying up apartments can hold apartments vacant for 20 years. If an investment company has $100 billion in funds, what does it matter to them if they have $100 million in apartments in Manhatten? It's only .001 of their funds. It's nothing to them. And as new properties become available to them, they can snap them up creating even more of a oligopoly and quasi-price-fixing - or at least contribute to it.
And the problem is that it is everywhere, not just New York. "Fundrise LLC, an online property-investing platform that purchased 124 houses in Conroe, Texas, for $32 million, paying building firm D.R. Horton Inc. "roughly twice what it typically makes selling houses to the middle class" — illustrating how home builders stand to make more money by selling houses to investment firms instead of middle-class Americans who want to own their first home." The report goes on to detail how "yield-chasing investors are snapping up single-family houses to rent out or flip," contributing to the scarcity of houses for sale and driving up prices for everyone. According to one estimate from John Burns Real Estate Consulting, as many as 1 in 5 houses sold in the nation's top housing markets is purchased by someone who will never move in. As a result, the consulting firm expects prices to continue to rise. "You now have permanent capital competing with a young couple trying to buy a house," said company CEO John Burns. "That's going to make U.S. housing permanently more expensive." Burns notes there are more than 200 big money companies and investment firms competing with families and first-time buyers for houses, including titans of finance J.P. Morgan Asset Management and BlackRock Inc.
These companies will buy up new neighborhoods or start buying piecemeal in desireable neighborhoods and due to the near monopoly will jack prices up double.
All this can lead to a housing bubble, to be sure, but then the capital companies snap up undervalued homes and hang on to them, just like they did in 2008.
Invitation Homes is owned by Blackstone Group, the world’s largest real-estate investor. Created after a company called Treehouse Group was folded into Blackstone, then renamed in 2012, Invitation Homes was on a $10 billion spree, purchasing $150 million worth of houses per week. “At an auction in Sacramento, a house flipper named Ryan Heck was bewildered by a bidder who bought every house that hit the block,” Dezember writes, noting that the bidder went one dollar over every other bid until the other bidders conceded. “He had a handful of cashier’s checks,” Dezember writes. “The new guys had duffle bags full.”
The bonanza really took off in 2011, when Morgan Stanley issued a report called “A Rentership Society.” With over 1.6 million foreclosed homes in the United States and more on the way, the report forecast “a surge in the number of renters and a potentially massive opportunity for investors to convert the glut of repossessed homes into rental properties.”
America’s investment managers were all in. By 2012, “more than $1 billion had been raised by investors for the purpose of doing just that. Some of the biggest names in finance were hoarding houses.”
Soon we will return to feudal times when there are a few vast landholders and everyone else is a serf.
There is even a lobbying organization, the National Rental Home Council, to look after large investment companys' interests in the government, such as defeating rent-control laws.
a three-bedroom, two-bath home in Spring Hill, Tennessee, that went on the market in April 2017. In the strong, fast-growing market, the seller had four bids on the house within hours.
“The high bid of $208,000 came from a couple with a child looking for their first house,” Dezember writes. “American Homes 4 Rent matched their offer, all cash.”
American Homes got the house, the seventh it had purchased on that street. since 2010, 700 houses in Spring Hill have been purchased by just four companies, including American Homes 4 Rent and Progress Residential, Dezember writes. As a result, rents skyrocketed. The town’s vice mayor, Bruce Hull, in April 2017, said, “It hasn’t been that long since you could get a three-bedroom, two-bath for $1,000 a month.” Those houses were now closer to $1,800 a month, and this was by design.
Personally, I think the government should put limits on how many units - houses, apartments, duplexes, etc - that a corporation or subsidiaries can purchase. I don't like this, but the larger societal implications must be taken into account.
Meanwhile, people need apartments right now. To live.
They created economic value. The tourists couldn't buy the house themselves just for few days visit, and there was economic value in the cleaning, the service, the flexibility of making the reservation in quick timing.
There's no economic value in "providing long term housing to residents". You hodl the asset which someone else required and added no economic value. They could've bought the asset themselves because they wanted to be there for a long term. But they can't because everyone is hodling. When economic incentives are good, you should sell an asset or an investment when you do not expect to gain economic value from it anymore.
Why do people "provide long term housing" instead of just selling their assets ? I see houses as an asset similar to cars. They decay, they break, old houses are horse trade, they require high maintenance. Their economic value only goes down, and their prices would too if there wasn't a housing cartel opposing new construction and high population growth combined with bad government housing policy, but most importantly, if the regulation around mortgages was similar to any other asset.
The root problem isn't the central bank. Central banks are relatively new inventions while rent seeking is thousands of years old.
The core problem is that land ownership is an entitlement (derived ultimately from the application of historical violence) and not a liability.
I expect these entitlements will be expunged from humanity one day but it'll be as arduous to eradicate as absolutist monarchy was. Land redistribution of any kind always invites a violent backlash from elites.
I'm going further to say that every investing is speculative in itself, because investing is the activity of buying an asset, speculating that there will be a return.
while that's true, it's not black and white. The invested asset produces output. This output is useful, and speculative demand of that asset will, in normal circumstances, produce more of that output due to the pressure to increase the number of those assets.
Housing is not different. Except that there are some people who would prefer to limit the builds of new housing.
> A house is a deprecative asset, the same way cars are. A house does not produce anything. You live in it and it wears down.
This is 100% inaccurate.
Land, which is the real "value" in owning a home does not depreciate, nor can you make more of it. As more and more people mature and look to enter the real-estate market they can either:
- Pay more to live where they want and convince someone to move
- move further away, to a new subdivision.
Next, not all cars depreciate, nor do houses. If properly maintained they last a long time. Head over to your local car show and see what it costs to buy a car from the 1960's now vs what is cost back then.
I once owned a house built in 1915 and it was still in great shape.
> i) Price controls do not work at reducing prices, there are two millennia worth of proof for this.[1]
Strongly agree. it is insane when renters protest they want more and more rent control. It simply doesn't work and demanding more of something that has failed to do anything is odd.
Land most often does not wear down, but the built structure obviously does.
And even for a condo in a desirable neighbourhood in Manhattan, >50% the value of the property is likely in the value of the structure. i.e. the land value portion would be <50%
Let's say the price in your desirable NYC neighborhood is between $1,000 and $2,000 per square foot. New construction is between $100 and $200 per square foot, so $900 to $1,800 has to be for the land it's built on, no? (And if that's a 10 floor condo, the underlying land value is actually 10x that number.)
Even in not-so-fancy neighborhoods, you're paying a lot for the land itself these days. I live in a <1M provincial city in Belgium in a semi-detached house, and a property assessor calculated that our house represents 30-35% of the total value of our property.
> and a property assessor calculated that our house represents 30-35% of the total value of our property.
THIS!
I live in Ontario (Canada) and my property assessment shows something similar, the value of the home is ~40% of the assessed value.
There are plots of land in Toronto where the house is not livable selling for north of a million dollars. Given they have no house, it is purely land value.
"As land values increase, we see more units on a single property, which means many of those individual units are smaller," said Greg Martino, MPAC Vice President and Chief Valuation and Standards Officer.
MPAC is responsible for determining property values in Ontario, so do they know a thing or two about this topic. (https://www.mpac.ca/en)
If structures wear down, how long until they reach zero value? Have you seen many houses for sale in the zero dollar range because of depreciation?
it is not obvious that structures wear down. As i posted below, many of these houses are from the 1700's
> These houses are very old, and must be worn out. Therefor they would have depreciated to zero...
That is quite obtuse.
Depreciation can be countered with maintenance. It is literally a physics concept: Entropy. It is a natural process but not unavoidable.
A house that is thirty years old that has not been maintained can be a complete wreck. The roof has leaked all over the interior finish, the windows have broken and let in local animals to make their nests. Etcetera.
The house next door that is thirty years old and had the roof maintained and windows fixed etcetera might be pristine.
I think it is fun to see people on Hacker News forgetting about, even denying, entropy!
When house values "fall" this is NOT depreciation, but market forces (supply/demand, interest rates, mortgage rates, government policy...).
The point of "depreciation" is normally to allow things to be written off at a reduced value over the assets lifetime.
Cars do "depreciate" because over time, they face wear and tear and at the end of their lifespan they are traded in for "scrap value".
Homes do not depreciate because there is no logical reason why this asset's value would reduce over time/wear/tear when it can be properly maintained, as is the case of the houses from the 1700's i sent you.
If your not being purposefully obtuse, do you understand the concept of differing timespans?
Given enough, time, such as millions of years, yes any human made structure will likely depreciate to zero value. Because even solid granite can be eroded down into dust from simple weathering, let alone normal building materials.
That doesn't guarantee any specific structure, such as the one you linked, will depreciate to zero within human timescales.
And obviously if structures are maintained they will probably not.
That doesn't invalidate the concept of wear and tear or depreciation.
If you maintain a structure you are by definition putting resources such as energy, materials, labor, etc., into it, so maintenance isn't free.
Those resources represent a real cost that someone has to pay for.
So, moving the goalposts your new position is that houses depreciate over geological timescales?
Got it.
Instead of posting here, why not take your fantastic housing model (they depereciate) and go buy homes.
you can show up at their house with your spreadsheeet and show them how you applied an appropriate depreciation factor and now they should sell the house because this is the fair market value.
You can also explain to everyone how over longer times scales houses almost always appreciate. If you look at the SP500 for a week it may go down, but over a decade it is almost always positive.
Houses are the same, so where exactly is the depreciation you speak of?
Again, using your theory of depreciation and long time scales.
From the linnk i sent you: "W. B. Yeats so much that he purchased it for £35 around 1917. From then on it became known as the Yeats’ Tower."
What is the current value of this house, after factoring in your depreciation factors?
> Instead of posting here, why not take your fantastic housing model (they depereciate) and go buy homes.
It is often true that the old house on a piece of valuable land would cost more to repair than it would cost to build a new house on that land.
Often enough the added cost of removing the old house (the use of asbestos in the past often vastly increases that cost) added on top of everything means that the land itself can loose its value.
We see this a lot with old industrial sites, but it happens to residential buildings too.
As for "timescales", do not be mean. The time-scale for depreciation of a car that is in use is measured in seconds New cars loose a third (? I know more about property than cars?) of their value when driven off the lot. Houses take a bit longer, but not "geological time-scales"
This is starting to sound like a lame attempt at trolling, or an auto-generated text.
If you genuinely cannot understand that the concepts of depreciation, wear and tear, etc., can exist side by side with the concept of appreciation of the underlying land value, then I recommend you do some reading before engaging in conversations on HN that simply discredit yourself.
In any case, since the last reply seems to not make any coherent points at all, I won't try to deduce if there's any further meaning.
> > Over all no it's not as we have population declines everywhere outside the USA and Africa.
The rate of increase is falling everywhere except sub-Saharan Africa, last time I checked a decade ago.
Many developed countries have falling populations.
It is still (as of a decade ago when I stopped actively studying this) a mystery as to why.
It used to be thought that it was because of life long secure prospects for the children you do have and for yourself in old age. What children you do have will live, and you do not expect to need a lot of children to support you in your old age.
But them some developed countries went into serious decline. The USSR, as was in particular. The population rate did not go up.
The latest theory (a decade old, "latest") is that it has to do with the education of women.
It has nothing to do with availability of contraception, surprisingly.
You are looking at the population of the country. What is relevant here is the population of large cities. Ie people leaving rural china to live in big cities.
And for US and most european countries, they may have ageing populations with low fertility, but they still have massives immigration inflows.
Lol it's still the same people where ever they move around to within China, that number doesn't change and you don't magically get more people if they move into a city.
This has absolutely zero to do with the demographics crash, you are talking about migration patterns.
The total demand from investors is a drop in the bucket compared to aggregate demand. Additionally, investors don’t actually consume housing, so they aren’t increasing demand. What you’re suggesting is that investors purchase housing and then somehow charge tenants more than they otherwise would be charged, which is of course absurd. Tenants will be charged as much as the landlord can charge.
I agree about making housing uninvestable, but the issue is supply, not demand.
It’s both and local factors are huge. Over 30% of the single family homes bought in the last two years where I live have been from investors that are turning them into short term rentals. It’s completely fucked the market.
The figure cited was 30% of 2 years’ worth of sales of a segment of the market (SFRs) going to investors. That might be a net total of a mid-single digit percentage of the total market.
I did res real estate about 10 yrs ago for a very brief period.
Housing prices are driven by comps. That is, what did similar-ish properties in the same area sell for. In other words, one sale today can drive the price of multiple other properties tomorrow.
If investors are more able and willing to bid up, those effects will be felt elsewhere in that area whether investors are involved in those other properties or not.
I do agree, the solution is to address supply. But I wanted to address your point about investors not impacting all sales. The fact is, they can and I presume do.
No, this is not how markets function. The increase in "comps" is merely the reflection of changing underlying supply/demand imbalance. These types of liquidity shocks are mean reverting if not fundamentally sound.
Again, I didn't say investors don't impact pricing...I said they are a symptom.
One home is not a market. My point is, an able and willing investor(s) can be more willing to "go big". That in turn alters perception - as nudged by agents - and prices "naturally" creep up. One sale is not impacting supply/demand that significantly.
Investors have different motives, and those motives are often self-fulfilling.
People say things like this without actually tying it to a conclusion or walking it to its logical endpoint.
Ok, an investor can be more willing to "go big"...whatever that means, but presuming it means to bid more aggressively, so what? Self-fulfilling motives? What does this even mean?
You've said a lot of hand-wavy things without actually arguing how any of this results in mispricing.
It means they have deeper pockets and can hyper-affect price because of comps.
Self-fulfilling means that they have enough "positions" to raise prices and pull up the value of their portfolio value as they do so.
You know...the things everyday Joe & Jane can't do. Am I hand waving or are you too slow to figure out the nature of the game? It's not rocket science. To equate institutional investment outfits with solo families is naive. No one should have to explain that here.
In other words, price discovery happens at the margins. Most people don't realize this but it's true.
You can move the prices of all houses in a market by moving the sale price of less than 0.25%-0.5% of the total supply. Some people will learn this fact the hard way when prices go the other direction.
> You didn't read the article. Investors are sitting on empty properties which directly removes supply.
I did. This is a specific microcosm in one city. My comment was in reply to many other commenters here speaking more generally.
But see my other comment re: govt intervention. This dynamic exists because of price controls. Price controls do not work, and will never work...they always results in supply shortages which is what you're seeing here.
True. I used to have this analysis: It must be untrue that many rich people own unoccupied houses. They are forgoing tremendous cash flow. Why would they do that?
Then I encountered a senior lawyer. They earned in a month what a person on an average wage gets in a year. They were running out of places to put money and some of it went into property, as a "stash". They had not much thought of "return". The high pressure hose pipe of cash they were receiving swamped that.
Being a lawyer they would have no illusions about the morality and ethics of the "financial advisor" system, so would not use it. Hence leaving money lying around, in houses. Tenants were just another bother and the financial return of tenants when compared to the cash income....
It happens. Rich people by housing ad leave it empty.
Astonishingly high land taxes on empty houses in shortage areas is the only solution I can see
Land*time is the unit that people consume, and the land produces this at an instantaneous rate of 1. So you're wrong about it not producing anything, but right about everything else, in my view.
If you want to properly make land uninvestable, you have to put property taxes at the rental rate.
I don’t think people are buying a 1960s car because of “engine options”. New engines are objectively better in both performance and emissions.
If a new law allowed an old 289 design to be installed in a new mustang with no modern emission requirements, the new car would not suddenly skyrocket in value.
There's an objective truth beyond Marxism. Markets, demand, offer.
You seem to have the vision that my property is not my property and somebody else should decide what I do with my property, not me. This kind of vision ended up in blood and death of some many millions of people all over the world.
This got me wondering. How does one aquire property such that it your own? I'm thinking of some patch of land that doesn't belong to anybody, since nobody owns it there is noone I can aquire it from. Seems like there is some form of original sin involved in any form of owning land.
This is the mindset all young people should have. One works for what one owns. It doesn’t matter how ‘hard’ the times are. We are Americans: we “beat the odds”, just like we did from the start.
This is highly inaccurate. Every boom in any market is due to it being a good investment. This is the success of capitalism and one of the reasons it is hard to beat.
Saying investing will kill something is easy. The alternative is much, MUCH harder. It is easier to run a mail service like usps than create more housing and maintain it using govt money. People have like zero clue about finance smh
So many people here do not know the details of NYC rent regulation, and are posting generalizations and falsehoods.
Basically, you cannot raise rents aside from annual increases that are below inflation, and you are limited to a relatively small amount of renovations, and cannot increase the rents much if you do.
So you either commit to a potentially multi lifetime below market tenancy that will bankrupt you eventually, or you keep it vacant and hope to demolish it or combine units or pray that the law will change.
Or sell it to a guy who will run air bnbs until the city puts him out of business at which point it will go in the tax lien sale. In any event, nobody is investing in bringing these units back online in this legislative environment.
But isn’t this only true if you want to profit from the property?
What about you buy the property for you and your family to live in rather than as an investment that needs high return?
The property value will still increase with time. That should offer some form of protection for the initial capital investment if you need to sell later in life.
Buying it for you and your family to live in *is* an investment.
The only thing you're doing when prioritizing that type of investment over others is you're picking winners and losers for political reasons... at great cost to everyone else.
Buying a house to live in it is fulfilling a crucial basic need.
It's extremely different from an investment in many ways. If the value of a house goes up spending a day in it does not feel any different.
If someone offers you a lot of money for it you can sell it but you still have to buy or rent another one. Very very few people want to have a lot of cash but live under a bridge.
> Buying a house to live in it is fulfilling a crucial basic need.
Absolutely.
> It's extremely different from an investment in many ways
That is not so true, and is part of the problem, in two ways.
(1) People are buying properties to live in at one stage in their lives, when they have high incomes, or prospect of high incomes, thinking they will sell when they are older and make a large profit they will use to fund their retirement. This drives up prices and drives out people with lower incomes.
(2) The above is part of the cause of the housing bubble. Also driven by increasing populations. As that bubble goes the way of all bubbles, especially as population decline sets in, those people get to retirement with an asset that is not worth anything like what they expected. This will cause a lot of impoverishment (some actual poverty too) amongst a lot of those older people
Yes. We all need somewhere to live. Also most of us (those who have incomes) need a place to save.
It is a problem that the two things are confused now.
> We all need somewhere to live. Also most of us (those who have incomes) need a place to save.
The first is a crucial need, the second is a want.
> It is a problem that the two things are confused now.
Yes, that's what I meant. And when they mix together the investment market takes over because it drive prices above the house-as-necessity market. Which translates into: houses are taken away from people who need shelter and give to people with money to invest.
Likely the people renting these apartments couldn’t afford to buy at almost any price.
A much more logical system would be for the government to raise minimum wage and welfare to the point that people can afford rentals at the market rate rather than rent control which is a head in sand solution.
> Thats why housing should never be part of a market, because people don't want houses, people need houses.
I don't understand this at all.
A market is designed to solve the problem of allocation of resources (think: scarce).
Can you state your non-market proposal to provide housing (in economic terms)? Sorry, but the idea of managing allocation of resources without a market is very foreign to me. I just don't know what you're proposing, and I can't imagine how it would work.
Separately - not much talk about the importance of location. NYC housing is expensive... why live in NYC?
I don't know where you're from, but it's generally known under the name "public housing" and is basically a gigantic success throughout many western countries. So much so, that its systematic demolition throughout the neoliberal glory-years of the 80/90s has caused serious housing crises throughout those countries, which we are now stuck with.
Managing resources without a market is actually quite simple: you work out what people actually need, and what you have, and you divide what you have over the people that need it.
This might sound weird because we're bringing it up in the context of housing, but it's something we do all the time everywhere. Some good examples here are: healthcare, insurance, infrastructure, military, utilities, public transport, science, education, etc. Basically anything your taxes go to is managed this way, its pretty boring stuff.
Most of these things have long histories of socialist community-thinking that make them very obvious shared resources that are placed outside markets, but somehow housing missed the boat. This does not make housing significantly different in any way though: one can own a mansion just like one can own a Tesla, it does not prevent public housing or public transport from existing, nor does it adversely affect the market from profiting off luxury goods where common goods are freely available. The trouble is, a house is now a luxury, even though you can feel in your guts that this is just not true.
The market effect on housing should decide the quality of house that you have, not whether you have a house at all.
> Can you state your non-market proposal to provide housing (in economic terms)? Sorry, but the idea of managing allocation of resources without a market is very foreign to me. I just don't know what you're proposing, and I can't imagine how it would work.
Easy. There are so many options. Here is one:
Establish housing trusts, whose purpose of existence is to house people. Non profit (that is not their purpose) . No debt, start them off with a huge wad of cash. Allow them to build, convert, do what ever.
Such a trust can set up its own systems for allocation, but not entirely at whim. There can be political control too.
Allow an occupation right where tenants cannot be evicted for no reason (that can be applied to all housing, and in civilised places it is - not where I live amongst barbarians)
Not perfect, nothing is.
There is no need to outlaw private property or private land lords, there will still be niches for them. But the great mass of rental housing could be supplied by such trusts.
> but the idea of managing allocation of resources without a market is very foreign to me
Please open yur mind, look into some economic history, look around the world. Markets are not the only solution to allocation and markets can reach terrible equilibriums.
The Irish Potato Famine happened in a free market. Markets can even be genocidal.
Lots of people live in vans by choice, I've considered it. A PO Box, a cell phone and a van is pretty cheap.
Furthermore, in context of the topic at hand, we're talking about housing _in NYC_, which people certainly don't need. I certainly don't. I don't even want it.
You need land to park your van on. Land is pricey. Land in or near "a city where all the jobs are" is even pricier. A house (residential building) on land near amenities is going to be expensive. All a van does is reduce the cost of building on top of that land - and not by a great deal. I mean the UK has large numbers of "trailer parks" in the South East and those suckers go for 100K plus. More than half the cost of average house price in the UK.
A van does not solve the problem. A van is a shitty place to raise a family. And remote working is not going to cut it - if your job does not pay you enough to afford a house, it's unlikely to be a nice middle class job where you can sit at a laptop.
Your way of argumentation can be applied to anything.
"People don't need nutritious food, you can survive just fine on bread and water for many decades. Do people suddenly "need" to live long healthy lives."
The point is that society should agree on some level of basic needs, if you think a van fulfills the requirements for a residence for the majority of people this discussion needs to be held on a much more fundamental level of how you view other people and their requirements for life.
And yes, if you want the future to be in any way a human future, "being able to raise a family" is absolutely in the "need" column.
Finally, to give you some perspective of problems a real society would actually face if this ridiculous scenario were true: what do you think would happen to the price of Walmart parking spots if "van-life" was a common choice.
> Your way of argumentation can be applied to anything.
That's because it's a good argument. And no, people don't need nutritious food either. Unless you _want_ them to live healthy lives. To satisfy your "want", there is a list of "needs". If you really want to, you can turn any want into a need by applying it to a higher level want. I happen to want people to live long healthy lives but I'm not going to frame that as a "need" because it simply isn't.
> The point is that society should agree on some level of basic needs
Ok, let's start there.
> how you view other people and their requirements for life.
I would _like_ everyone to live a happy and fulfilled life free of suffering. I pay taxes and donate to charity to help provide that for people. It is, however, not a requirement for life or a "need" in any way.
> And yes, if you want the future to be in any way a human future, "being able to raise a family" is absolutely in the "need" column.
Ok. If that's the goal, yes. Is that the goal? People are having children at a sub-replacement level. It doesn't seem like that's really a goal for those people.
I _want_ to live in a free society. I _want_ there to be no or minimal human suffering. If humanity goes extinct through a process of dwindling birthrates because people choose not to have children, I really could not care less.
Every "need" has an implicit "in order to accomplish [goal]" on the end of it. Framing something as a "need" assumes a common goal which is often abused people to put more and more things into the "need" column when there is no consensus goal.
So what do people "need" housing for? The availability of affordable housing is already an accomplished goal. The availability of affordable housing in NYC is not an accomplished goal.
The availability of affordable housing in NYC is only a need for the survival of NYC itself which I, again, could not care less about (provided humans don't suffer in the collapse).
People talk past each other constantly by omitting their priors discussing these things. When you say "housing is a need", for what? And in the context of this article, I'd interpret your statement of "need" to be NYC specific so, "housing in NYC is a need", for what?
Feel free to reframe the word "need" into a philosophical all or nothing, what-does-it-even-mean-to-want-something kind of way, but then there's no common ground to discuss anything on. Talk about omitting priors, how about this prior: lets use words the way people use words generally.
If you don't consider happiness and lack of suffering a goal that is worthy of using the word "need" you are just doing some Jordan Peterson-esque word salad defense of something that cannot be coherently understood outside your in-group, even if you wrote a book on it.
How many van-living people do you think will be able to squat on Walmart property before they're getting knocks with armed officers and drug dogs in the middle of the night?
Yes, without question being able to raise a family is a need for a functional society. Longterm living mobile in a van is not viable for anyone except the most fringe members of society.
How about a vacancy tax? Then sellers are forced to sell driving prices down so more people who actually want to live there (not rent it out) can afford to buy?
Once the rent increases enough, new construction becomes more and more worth while. Artificially depressed rents lead to a slowdown in construction while allowing them to rise uncontrolled keeps construction flowing at a desirable which itself controls rents because its increasing the supply.
Sure, artificially decreasing supply with pricing controls is a bad idea, but artificially increasing demand with subsidies isn’t the solution to that problem.
Exactly, that just enforces the idea that the ownership itself is meaningless, and the investment aspect is the only thing of value.
A landlord owns a house like a hedge-fund owns stocks: its not about the houses or the stocks themselves. Obvious problems arise since houses are actually rare things people want for their own sake, and stocks are not.
I feel like the discussion often trends towards criticizing legislature, but we should not forget that choosing the darwinist approach is still very much a choice made by the individual in their own favor.
Why is lowering risk/maximizing gain at the expense of others a defendable choice because it produces/saves money for an already wealthy individual. Why is this not viewed similarly to other things which are legal but unethical, say cheating on a spouse?
Why is it that the government needs to produce ever smarter and more complicated legislature to prevent people from exploiting others for wealth?
Is government really to blame for this rat race? I don't think so.
> Why is lowering risk/maximizing gain at the expense of others a defendable choice because it produces/saves money for an already wealthy individual. Why is this not viewed similarly to other things which are legal but unethical, say cheating on a spouse?
Most people I know absolutely hate landlords. I've hated 3/4 of mine. But what are you going to do? I can sneer at my landlord all I want but I still have to pay him my rent. I don't want to move out of New York (not yet at least) and buying seems nonsensical.
I don't think anyone is defending them, but do you expect the investor who owns 100 units to not attempt to maximize profit? Most people who get into that business can be assumed to prioritize money over community. The only realistic way to change things is to make it not profitable to sit on these.
> Why is it that the government needs to produce ever smarter and more complicated legislature to prevent people from exploiting others for wealth?
Humanity has kind of always been that way. And even if most people aren't, a small number can disproportionately affect many.
Credit score is not a thing outside of US. Sure if you borrowed something and you didn't pay you may land on some blacklist but usually nobody can see if you borrowed something and paid it without issue. Nor does anyone take it into account.
When you need to buy an apartment and have a job you go to the bank and the bank assesses if you earn enough to pay back the mortgage and if you do they pay for your new apartment which might be just being built.
The reason scalping is possible is that the official prices are below market prices. In this case, is the inference is that scalping is made possible by rent control? That's what I'm getting out of the parent's comment.
The current implementation seems to be causing an issue where it is not in the landlord's interest to offer the units to the market. It is the regulation's fault for creating disincentives for the landlord, so it depends on how you allocate blame for making a judgement based on that.
That doesn't mean we shouldn't try, or that we need to stick to a counterproductive plan because some people think arguing about regulations on free markets is more important than fixing a pressing problem.
No you just made it sound like it was kind of stupid to even attempt such a law.
Similar laws exists in Tokyo and it seems like a non-issue. Find me an empty apartment in Tokyo and I’ll be surprised. Maybe the problem exists elsewhere in society, for example: maybe the cost of living and property in NYC is just too expensive no matter what regulations exist?
I’m saying this because I’d imagine if people don’t think it’s worth renting the apartments, why not sell to citizens so they can buy in them and live there?
I feel like the world is starting to wake up to the fact that while it’s not easy to outlaw properly speculation, it’s going to be one if the major problems that define our time.
How it sounded to you was not my intended tone. If you read what I wrote again you may take away from my response that knee-jerking an argument about regulations in general is not something I find productive, but rather discussion of specific policies. It appears this one is not effective at its goal.
Tokyo has significantly stronger property rights thay make it almost impossible for anyone including the government to stop someone from building something on their land.
Rent control is about as useful as solving climate change by drawing a lower number on the screen of the thermometer.
Rents are a product of market conditions. You have to solve those conditions rather than try to stop the output from changing. Fixing the rent results in supply dropping off so the supply/demand equation is still met.
There is a misconception about private property. People think they work and then the thing they have is private property for free. As if private property only has a physical manifestation in the form of a product. Private property is a physical object plus the services provided from the institution we call private property. This means that private property is protected by the judicial system. It is protected by the police. It is possibly protected by neighbours watching over the neighborhood. It's value may be a function of the value of adjacent property. If you consider unavoidable positive externalities as a positive aspect of private property, then those positive externalities are also a service provided by the private property instituion. In fact, governments build utilities and road networks, they protect the land through a military force. The government does a lot of things to make your land valuable.
Then there is the community surrounding your property, the businesses providing jobs and shops selling products, your neighbors, etc.
When I think of private property I not only think of the object itself but also a stream of public services for which you barely even have to pay something. If you are a landowner you could now come up with the idea of selling the public services. The revenue that this process produces is called ground rent.
Is the market distorted by the landowner who is basically just selling free services from the government or is it the government that makes these blatant gifts paid for with taxes unrelated to land ownership?
Manipulation of rents will not reduce those public services, the value of the land remains.
Elasticity of a market is a scale. Elastic markets quickly adjust demand or supply while inelastic markets require a lot of time if they change at all.
Housing on the supply side is relatively inelastic when compared to other markets. Even if demand is high it might not quickly lead to new construction.
On the demand side the market is also relatively inelastic as moving has a lot of friction compared for instance with not making a luxury good purchase or postponing a holiday.
Yup. You can’t be “half in” the market. You’re either entirely in or not. Otherwise every intervention just squeezes the balloon and it bulges somewhere else.
The problem is a lack of housing. You either live with higher prices (reduced demand) or increase supply.
I mean if you own a parcel of undeveloped land are you going to build a small mobile-home park or expensive condos? One of those two is going to make you a fantastic profit.
They are not predatory. They are entirely market based. Why shouldn't companies be allowed to charge whatever is the market price? Or maybe in general we should start applying price controls to absolutely everything. Let's say only ever allow 5% net profit on any good or service.
Every economist knows price caps never worked and yet you're being downvoted for stating a plain fact. Price controls only make it so that nobody can buy the thing in the first place by exhausting supply. It's way better to let the thing be sold at whatever price it has than to just exhaust it. In this case it means property sits empty which is the worst possible outcome.
“The beauty of YieldStar is that it pushes you to go places that you wouldn’t have gone if you weren’t using it,” said Kortney Balas, director of revenue management at JVM Realty, referring to RealPage’s software in a testimonial video on the company’s website.
The nation’s largest property management firm, Greystar, found that even in one downturn, its buildings using YieldStar “outperformed their markets by 4.8%,” a significant premium above competitors, RealPage said in materials on its website.
So they are fixing an inefficiency in market by actually charging what market can bear. Should be applauded for the work, as inefficient markets are bad. Now they genera more profit which they can invest in more property thus enabling possibly more units to be build.
Moving all the money into the hands of landlords means that the population has no money to spend on anything else. This is massively detrimental to society.
> Now they genera more profit which they can invest in more property thus enabling possibly more units to be build.
Except that investing in new property might bring the revenues and profits of their current properties down, so there's a direct disincentive not to build more.
Any time you apply artificial price controls you create scarcity. Ask Venezuelans. The same bad policies are applied over and over with the same effects.
Three reasons. It's a store of value asset, a speculative asset, and a real option that the law will get changed.
Also, these kind of things get priced in, leading to lower property values. There will always be a willing buyer as long as the market price is above $0, implying that the benefits exceed the costs of ownership.
Rent controlled buildings are priced in during the sale so they go for lower values. As for why the very original people even bothered to invest in the building in the first place, then the answer is that the regulatory environment was one that allowed of incentivized it back then.
Why would it bankrupt you? "Rent stabilization" is in place in the big French metropolises (a landlord can only increase rents at a specific rate at specific intervals) and there's no shortage od landlords due to compensating policies encouraging building.
It’s unreal how many people in the comments here haven’t spent any time researching basic issues in Western housing markets.
People keep talking about evil investors and taxing secondary and investment properties. But the biggest group of housing investors are primary residence owners: we turned housing into a nest egg retirement plan, and now we can’t undo that.
Housing cannot be both affordable and a good investment. Housing should not be any different from any other good or service. This all stems from massive government intervention in housing markets decades ago on the basis of horrible conclusions of family wealth, and further intervention isn’t going to fix things.
You want cheaper housing? Slash regulations and NIMBYism, and get government out of the equation.
Some time ago I saw a TV programme with a couple that invested in housing like that, kind of as a side-business. They also gave seminars on how to do that as a regular person; the tagline was "everyone in the country can get rich by investing in housing!" Ehhhh...
That said, there seem to be multiple factors going on, all combined resulting in the prices we're seeing today: housing as retirement plan, investment companies, population growth, increased urbanisation, AirBnB and short-term rentals, increase of expats, dysfunctional government. It's very hard for me to tell which factor is responsible for how much, which will probably differ per locality, but I don't think there a single factor that explains it all.
Yes on slashing NUMBYism. Its a form of predatory control where those who walked in the door first shut it in the face of the person behind them.
Sadly, NIBMYism was created to give more voice and democracy to everyone. Giving local community groups veto power and other rights empowered some of the worst of us into using it to block all types of housing (especially affordable housing). A perfect example of how a republic is sometimes better than a democracy.
> Sadly, NIBMYism was created to give more voice and democracy to everyone.
NIMBYism wasn't created, it's a naturally emergent property of a rational actor. Then the government poured fuel on the fire with subsidized housing loans, and quantitative easing more generally.
But NIMBYism exists because most people have been conditioned over the past decades that they will make a lot of money from their primary residence. And this is what needs to die.
I see this sentiment a lot, but it doesn't match what I've seen. One of my friends recently bought a relatively expensive house in South Texas and then a bit later plans arose to build an apartment complex nearby (maybe a few hundred units - I forget the details). He rallied his neighbors to talk to their city council and the project was cancelled.
I talked to him about it a bit and mentioned that it was almost textbook NIMBYism and he agreed. The thing is that at no point was home value ever part of his thinking - he bought this house at a bit of a premium to live in the neighborhood that had larger lots, relatively older, professional families, and quiet nights (his old house was near a college campus and had lots of renters who liked to party it up on all nights of the week).
He just wanted to keep his quiet, low-traffic neighborhood. He'd be happy if his house never increased in value since he plans on living there indefinitely and all an increase in price means to him is more in wealth/property taxes.
He is not the only one I've talked to who thinks this way.
I don't know about where you live; but, here in Texas, NIMBYism is an outgrowth of redlining, whose stated purpose was anti-Semitic & anti-nonwhite: it was literally rooted in antidemocratic ideals.
What makes you say that NIMBYism stems from redlining? I've always assumed that NIMBY feelings naturally occur in any society because people dislike change. Under that theory, NIMBY has always existed and always will among those content with their lives. Redlining is a particularly toxic outgrowth of NIMBYism, as I understand it -- a lot of rich property owners saying "no" to folks who don't look just like them living in their neighborhood.
I don't think NIMBYism is inherently undemocratic: in most cases, it has to work through (semi) democratic means, like elected officials.
NIMBYism has an impact on democratic representation sometimes through gerrymandering, though. Maybe that's the connection you're talking about?
My wife is actively involved in redistricting litigation, in Texas, and core root of it is from pro-segregation redlining in the early-to-mid 20th century; the intent is disenfranchisement. The set of laws, covenants, HOAs, and attitudes (NIMBY) towards the construction of suburbs is entirely rooted in segregation. That was one of their literal selling points. To this day, there are home purchase covenants restricting Jews and Colored Persons — it's super unfunny when the real estate agent laughs and asks "you're not Jewish, are you? There's this weird, unenforceable provision..."; and, then, you still have to get a Judge to strike the restriction.
But other communities, a long way physically and culturally from Berkley have the same problem.
Here in Aotearoa we have just bought in a law that allows housing intensification, as a right, in three of our largest cities. (The local councils are screaming blue murder in at least one of those). This is because of nimbyism and a chronic housing shortage.
Redlining is literally a form of zoning where the explicit law is “I don’t want that person in this neighborhood”
When that became illegal it turned into you can’t build a certain type of housing in this neighborhood. It’s not coincidence that the type of housing that was banned was the type that certain people could afford.
How do you avoid NIMBYism without the government intervening? Communities tend to self-segregate and self-police unless there's a higher power that doesn't allow it.
NIMBYism is the government intervention. People pass laws giving the government additional powers to regulate specific aspects of zoning and construction.
Gentlemen, experts of economy, it's time to realize we are walking in circles from one government intervention to the other. Capping rents, reducing inflation, minimum wage and UBI, cutting or raising taxes, regulations regulations regulations. Each comment here points out the failure of the last intervention, only to promise the next silver bullet recipe.
100-200 years ago your voice would be shouting about how government intervention in the labour market was hurting it. How giving workers more rights was big government taking over the economy and that we should be free from it.
Interventions might fail, just like leaving this to the market might fail. It's all a constant juggling of incentives, unforeseen consequences and catching up. UBIs and minimum wage are not designed to solve house affordability, so I'm not even sure why you'd lump it into capping rents, etc.
Without interventions you leave all the power to the profiteers, to the ones seeking to rent-seek as most as possible, so I'm very sure your approach of "less intervention" would just bring another set of unforeseen consequences with a worse side: complete lack of accountability. At least a failed governmental intervention has someone accountable for it, leaving the system to regulate itself (free market™) leaves no one accountable for the suffering it causes. Or even worse, it becomes a personal responsibility™ issue and the victims will be blamed for not trying hard enough.
I don't mind the interventions, and the goal of the economy is to serve the people, not the other way round, but narrative that government "gave the workers more rights" is largely false.
We became richer, thanks to the industrial revolution, not government coordination, and could afford to abolish slavery and work less. Same way we stopped wars of conquest conveniently when they stopped being profitable compared to large scale manufacturing and trade.
Government is at the mercy of these large trends just like the people.
> but narrative that government "gave the workers more rights" is largely false.
That's not my narrative. The government was forced to give more rights after a lot of bloodshed in multiple countries, it was ultimately a governmental intervention in the labour market which turned those protections into law.
The industrial revolution made societies richer, the workers through social movements and the power of government made the industrial revolution livable. If left by its own devices the industrial revolution barons would still be requiring people to work 12-14h days, including children over 12 years old.
Government is the collective voice of the people, we should let a decently democratic government have power over the markets, that's my narrative.
"Research has shown that the average age at which children started work in early 19th-century Britain was 10 years old, but that this varied widely between regions. In industrial areas, children started work on average at eight and a half years old."
> Reformers took up the issue of the working hours from the end of the 18th century onwards. Their campaigns resulted in the passage of legislation in 1802 and 1819 regulating the working hours of children in workhouses and textile factories to 12 hours a day.
> In 1833, the Factory Act banned children under 9 from working in the textile industry, and the working hours of 10-13 year olds was limited to 48 hours a week, while 14-18 year olds were limited to 69 hours a week, and 12 hours a day. Government factory inspectors were appointed to enforce the law.
I didn't mean to say that intervention is wrong. On the contrary, I believe in strong interventions. Just that they shouldn't be dismissed so quickly with the next hack.
There is no trick to make a free market work, for certain things we are in this together and should funnel a lot of money to lift up the poor.
The essence of civilization is helping out each other, that's why the first civilizations are defined as the ones where archeologists could find signs of medical procedures.
Are you willing and ready to work 12-14h a day, every single day of the week? And for your kids as well? Or perhaps you are part of the strata of society who won't be affected by the abolishment of labour protections, in that case you either don't have empathy or don't care about having it.
I don't think you completely understand what a regression to a world with no labour protections would mean. Either that or you'd be the one exploiting such lack of protections.
What's your proposal for the abolishment of labour protections, exactly?
That's just plain old corruption... Which is already illegal and immoral as far as I know, no?
Please, I expect deeper conversations than this from HN, don't just create a new account to use whataboutism and a dumb rhetoric of asking simpleton questions instead of refuting my arguments, that doesn't foster any stimulating debate. It just makes you look pathetically dumb.
The rate of NYC housebuilding was fastest in the 1950s when its rent control laws were strongest and rent was most affordable. Rent control apparently doesnt inhibit construction significantly.
I suspect it inhibits NIMBYism by keeping asset values down. Land is more scarce than construction materials and labor.
High rents->high asset values->freaking out about your riculous mortgage->freakimg about additional supply driving down your property price->turning up to town planning meeting to declare a laundrette "historic".
Were houses rent controlled in addition to multifamily residential? I'd expect developers to focus on houses when multifamily residential apartment buildings were under rent control. Is that the point you were trying to make?
It's good to point out a lot of nimbyism is defensive. As much as we like to demonize it, people are legitimately worried about their life savings investment getting cut in half if suddenly tons of new places were built
We should stop thinking of houses as an investment first and foremost. Their purpose is to be a dwelling for humans, not to park cash. When you look at it from that perspective, the house that one owns and lives in doesn't become any worse as a dwelling regardless of the state of the market. Those owned as investment, yeah, their owners should be legitimately worried - but they are also a big part of the problem, so let them worry.
I have the solution but it will require massive government investment and oversight.
Incentivize construction and cutting red tape to mass produce housing of a few million houses a year. This will hurt property owners but will open up affordability.
I think for high demand urban centres/markets, this is just going to lead to Braess's paradox of more roads = more cars = more traffic. More units = more people = more opporunities = maybe even higher rent. Unless there's ridiculous amount of oversupply. Perhaps greater NYC needs 60 million units to stablize price for 59M people that want to move there to reach the demand equilibirum of a overcrowded megacity 3x population of the current state. Gov needs to keep building units to put supply ahead of demand until until an urban centre becomes undesirable and people stop coming. Soon, ecumenopolis.
E: over comment limit
@Eisenstein They're not. I'm a fan of them. Like JP mega cities are relatively affordable with greater Tokyo having "reasonably" 22M people. But for US/west, highly desirable cities + high immigration, cities like NYC, I think has capacity draw/support people that push past what's stustainable based on regional geographic ceiling. NYC's already depend on stupidenous water transport infra. I feel (based on no evidence in particular) that NYC would grow to 40M people and run out of water, but rent stays the same/if not higher because there's even more opportunties and 80M people wants to move there.
Mega cities aren't really a bad idea. Less sprawl and more population density is a great solution to overuse of recourses devoted to moving people and things around.
Well, when working with with malevolent economic actors, stopping intervention is probably the last thing you want to do. It’s like saying you’ll stop pursuing robberies because there are always robberies.
"More regulations" and "less regulations" are both wrong perspectives, arrived at from ideology. We need more good regulations (e.g. banning waste dumping) and less bad regulations (e.g. price controls). There's absolutely no substitute for pragmatism and evaluating each individual regulation on its own merits.
You mean the common person who is getting evicted or having their rent increased by double digit percentages or getting priced out of their neighborhoods? Or the common person who owns a dozen high rises and is pissed about paying slightly more taxes?
The answer is obvious. Just follow the public land strategy of Singapore in urban centers. The city slowly purchases the land from citizens over a thirty year period.
I've seen a few comments already pointing out government regulations that are in fact working in other countries (France and Japan were already mentioned).
I would think that having discussions about working, net positive regulations would be pointless. I'm not sure why you think that discussing broken ones is indicative of all of them.
The system seems to working pretty well for you. You are fed, have a home and a computer, and are probably very wealthy compared to the rest of world. What exactly is broken?
Yeah I’m pretty well off thanks to the current system. But the same system is also leading to fair percentage of kids going to school hungry, people homeless or close to homeless (if any emergency happens) and a shitty chromebook if they are lucky and it has been getting worse. So I think the system is broken?
It is a bit of leap to go from 'I am doing well but some things aren't working' to 'trash it all and let's do the late 19th to early 20th century economic system again'.
It's not a leap to realise that the past 20-30 years has seen an increasingly accelerating trend of wealth concentration on the top. The scraps being left on the table for the rest of us are slowly dwindling while the system actively fights any reasonable voice trying to bring these social issues to the table.
We live in a world of abundance where kids in developed countries (UK, US) still go hungry, and it got worse in the past 10 years.
I don't think most left-ish people like me are asking to a return of 19th/early-20th century economic models, we are asking for a return of social democratic values over the hegemony of markets and finance. It's not that hard to imbue some humanity back unto an amoral system, we know now through empiric experience that pricing simply has not taken into account human suffering and externalities wreaking havoc into our environments, we just look for more humane ways for markets to function. Left to their own devices markets will only seek profits, at all costs, we, the people and workers, are the ones who can steer it into boundaries where profit-seeking isn't, ultimately, life-destroying.
The top level comment I was replying to was about removing all economic regulation. I'm not sure how that turned into 'social democratic values' but that's what you were replying to me replying to.
Sorry, I got lost in the comment thread and thought your reply was to something else. Honest mistake but I will keep my soapboxing-ish comment up as I believe there is some value for other readers.
Edit: did you really create a whole new smurf account just to reply to me in multiple threads? And just to keep asking questions instead of refuting anything I said?
For me it’s not about literally going back to Wild West but addressing this point by the other person.
> A broken system is very unlikely to ever produce correct results.
I agree there are plenty of net positive regulations made by good systems _at the time_. But it’s not producing good regulations _now_ and is very resistant to change.
If you're proposing making housing a 'right' and not a personal asset, how do we go about that? One debate in NYC is over people who have rent controlled or rent stabilized units in very expensive neighborhoods. Should their subsidized housing be a "luxury product" or not?
I'm of the mindset where if you need housing, the community or government should provide housing. American is wealthy enough to do this and it's just the ethical thing to do. I also feel that if you are given housing, it should be local, but not always your desired location. For example, if you grew up in the East Village and you now need public housing, be prepared to move to Inwood. You're still in Manhattan, but its a 30 minute express train to your old neighborhood.
Holy crap. If I owned one of these, I'd also let it fall into disrepair until the city condemned it, then build literally anything else:
> Any time a tenant vacated, landlords received a “vacancy bonus” that let them increase the rent of the unit by up to 20%, and once an apartment’s rent reached a certain dollar amount — most recently, $2,774 a month — the unit left the rent-regulation system entirely, allowing the landlord to rent it at any price.
$2774 / month is definitely less than I'd want to charge to deal with a tenant that cannot be evicted, but whose apartment must be maintained using labor priced for NYC. I'd guess most of the apartments that are being held off-market are way below that threshold, and also need substantial repairs.
Wait, I pay 3K for my apartment in Manhattan. It’s by no means a palace but it’s not a shithole. The previous tenant lived in my apartment for 8 years. The “maintenance” you speak of constituted of painting everything with a single coat of white paint. I’m pretty sure that’s a lot less than 3K a month
My friend pays 2,600 for a one bed in LES.
So why are you making it sound like 2,774 is somehow poverty?
nah, my friend lives in a regular 800+ square feet one bedroom, it's just in Manhattan you don't get a dishwasher or laundry. She has to lug her clothes to the laundromat.
> $2774 / month is definitely less than I'd want to charge to deal with a tenant that cannot be evicted,
Being a landlord isn’t really a full time job unless you have a lot of units. I think my landlord puts in <1hr a month of work so anything I pay over his mortgage seems like “free money”.
Most people are normal innocent people who won’t cause trouble even if they can’t be evicted.
Most apartments in SF are rent controlled and you can’t be evicted (everything in SF is rent controlled unless the city exempts it from being too new). It seems like that’s the least of the cities problems. If anything, the city needs more rent controlled units to encourage land development.
If you have an apartment that hasn't turned over for 20+ years, you can either rerent it at a low text and get sued by your tenant for lead or habitability violations, or you can borrow money and invest it at less than 2% in a renovation. Both ways you lose a fortune.
Or you leave it vacant and still lose money, but you don't have to work as hard doing it
I’ve been curious about the dynamics around the often-cited statement “rent control doesn’t work”.
It seems that with rent control, you’d have higher demand and lower supply resulting in excess demand (both theoretically and it seems in practice). Does anyone know of any studies that:
- Analyse the effects of rent control in the presence of “vacancy-busting” measures like heavy vacancy tax/fines? (i.e forcing supply to stay high?)
- Analyse the price elasticity of the demand and supply respectively? (i.e is the excess demand mostly demand driven or supply driven?)
No links, but Berlin's rent control policy was practically an RCT because it only applied to half the city. Many papers were written on the situation and I'm sure one answers your questions.
- western house prices are driven (up) mostly by available mortgages and a vaguely poor future discounting ability by most people. In other words adding 10k to the offer just to get the win does not add much to your mortgage but gets you a house.
- increases in rates badly hurts people
- a free market in real estate is never really going to happen (because politics) but if it existed it would move the politics over to other parts of the economy- if people could not afford to live in the city, wages would need to be adjusted.
In short there is no place for a "free" market because the point of human civilisation is to protect (ourselves / our tribe / those we sympathise with) people from the cold winds of unfettered nature. Whatever part of the whack-a-mole politics is being focused on, the end goal is "decent lifestyle with minimised suffering / extremes".
Ie - insurance against the worst.
providing insurance against the worst for all society is either a question of paying the huge cost of tragedy for everyone as their tragedy hits, or it is a question of government laying their hands across all ye whack-a-moles and trying to prevent anyone from having the worst outcomes.
I think I am arriving at a theory of government that has the goals of totalitarianism but different methods - probably Thaler's Liberterian Paternalism.
Anyway - understanding the mechanisms of the housing market is important from mortgage availability, land availablity, road and infrastructure building and workers available all seem the big parts.
I mean you can just look at practical, realist governments like in Singapore, and even China to some extent.
The problem is once you're deep in the problem, how do you get out? If you let prices collapse then a lot of homeowners will face negative equity.
It's scary in Europe where we are facing rising interest rates coupled with the energy crisis and cost-push inflation from that and supply chain issues. It's like the governments have just accepted that hundreds of thousands of people will face redundancy and homelessness next year, with no plan whatsoever.
> The problem is once you're deep in the problem, how do you get out? If you let prices collapse then a lot of homeowners will face negative equity.
Easy. You tax the shit out of non-primary and empty residences. This puts negative pressure on 'investing' into a house/apartment and waiting for it to appreciate, then selling it, without ever living in it or renting it. This also doesn't disadvantage people who bought to live.
Many locations already do this, though I guess it could be increased. Where I live now, non-owner occupied housing pays 4-5x more in property taxes. It most likely get passed on to renters.
It also has a weird effect in a nearby, very expensive neighborhood where most of the houses are vacation homes. Since locally, a total property tax number is decided and then split among houses, anyone actually living in the very expensive neighborhood is subsidized by second homes and pays some of the lowest property taxes around.
China has its own problems, so not sure which portion you are referring to. In China, there is almost nothing to invest in except for houses. The Chinese stock market is filled with scams, and I've heard many Chinese don't dare to touch it. So everyone invests in housing (apartments), and prices go through the roof. Some years ago, the government restricted investment, limiting the number of properties a person can own. So people put properties in their relatives or children's name.
Aside from those issues, recently Evergrande (one of China's biggest real estate developers) failed to service it's debt, and is considered by many to be extremely over leveraged. China recently updated regulation to place stricter limits on real estate developers debt.
In Europe (or at least Sweden) you don’t make money by working; you make it on your home appreciation. People even talk openly about their “housing careers”. I’m not kidding, that’s the exact wording they use and it’s a mainstream term, e.g. used regularly on Swedish television. You can regularly hear indoctrinated youth say things like “when you own a home you pay (interest) to yourself” and other such nonsense.
Now all those that bought into this giant Ponzi scheme of course want to be made whole, with tax money. It will get ugly for sure, and I’m not at all certain that they won’t succeed (to the unspeakable detriment of the country/continent).
> In short there is no place for a "free" market because the point of human civilisation is to protect (ourselves / our tribe / those we sympathise with) people from the cold winds of unfettered nature. Whatever part of the whack-a-mole politics is being focused on, the end goal is "decent lifestyle with minimised suffering / extremes".
If that were even a tiny, tiny bit true, corporations would have been banned from SFH long ago. As would 'investors' and AirBNB...
I remember the last time this came up and vacancy rate was mostly a combination of units that were being given away free to family/friends, normal cyclical turnover, and renovation projects. We had crazy low interest rates - it would make sense to see a lot of ownership shuffle.
But it's kind of ironic to me that one of the known negative externalities of rent-stabilization is a loss of inventory. I'm not so sure how shocked I should be to see ... a loss of inventory.
We don't need rent regulation. We need progressive property tax. This would make professional investors drop real estate on the market like hot potatoes, tank the real estate price and made it affordable to buy for people who intend to live in properties they buy.
Wasn’t it like 50 years ago when NYC landlords were torching their own rent stabilized property for the insurance? Because the rent levels were making the buildings money sinks?
Advocates want landlords to manage their property as unprofitably as possible. These kinds of anti-profit policies are enormously harmful to housing affordability/availability. See rent control for example:
If rent-controls are the solution, why not expand them? Why not have price controls for housing in general? Let's say only allow to sell housing for inflation-2% per year more than you bought it for? That would keep it affordable for everyone and stop the unearned gains from price rices?
From the article, the primary reason landlords are holding inventory back is because some of the predatory practices they were incentivized to use to deregulate their apartments got revoked and they are hoping court cases work in their favor.
It’s also important to remember that rent stabilization is not rent control - landlords are free to raise the rent by an amount set annually by a board of landlord and tenant representatives. As a practical matter, that means that the rent increases track closely to inflation and consumer prices.
What it protects isn’t rising rent, it protects tenants from landlords jacking up the rent to kick them out, and then lowering it back again to get tenants of a different age or ethnicity, or saddling tenants with the risk that if they advocate for their rights as tenants that their lease may not be renewed next year.
It’s easy to say “price controls don’t work” while ignoring that the landlord / tenant relationship is so skewed from a power dynamic that there needs to be some sort of protection from abuse.
It is absolutely a rent control and price control policy. You are literally preventing rents from rising.
Landlords abusing tenants is totally irrelevant because rent control doesn't address that problem at all, it just shifts that abuse to new tenants for the benefit of long term residents, since the entire policy is a wealth transfer to people who never move from where they live.
This is inaccurate. Rent control as defined in NYC is a wealth transfer mechanism. Rent stabilization is a mechanism for protecting tenants.
Without rent stabilization, landlords can and do raise rents arbitrarily to drive our particular renters and then offer better rents to preferred renters. Or equally likely drive out a family to subdivide an apartment into multiple rooms to rent.
If you pass laws that say, for example, you have to offer a renewal to an existing tenant, that doesn’t help, they’ll just play the same game with the rent. Mandate that the same rent has to be offered to new and existing? Well now we are in the realm of price controls.
The power dynamic is so massive between landlords and tenants, especially for people who aren’t fortunate enough to have disposable income, that there needs to be some sort of protection.
> ...landlords can and do raise rents arbitrarily to drive our particular renters and then offer better rents to preferred renters...
This is positing that landlords engage in complicated schemes to lower the rent they are paid. I speak with supreme confidence, the median landlord is not going to do that unless these 'preferred renters' are measurably better than the people getting kicked out, in ways that make objective sense. Frankly, if a landlord is engaging in this practice then they probably aren't a 'landlord', they've just taken the property out of the rental market so their kids can live there or something.
> ...drive out a family to subdivide an apartment into multiple rooms to rent.
A landlord is much more likely to do that, but the complaint here is that there are people willing to value the m2 of the apartment higher than the family. There is no way to block that from happening without price controls and, eventually, shortages emerging.
The landlords in the article are greedy, they don't want their apartments to be empty. They want to be renting them out for whatever the most willing renter is going to give them. But they also aren't stupid, and they aren't going to rent them out anticipating that they will make losses.
> there are people willing to value the m2 of the apartment higher than the family
That’s all well and good but that isn’t the issue. Part of the contract for renting an apartment in NYC is that you must offer renewals. A lease is a contract that, unless there’s an eviction, only the tenant can end. And allowing landlords to violate the spirit of the law by saying “we didn’t kick them out we only raised the rent to $10k/mo” defeats the whole purpose of it which is to not rip housing out from underneath people.
Yeah. The law wants people to be able to live in an apartment without paying to build it, where someone else handles the maintenance and the rent doesn't go up that much. Great deal for the tenant, if they can find it.
But it is going to be mighty difficult to take people who take up the landlord side of that deal. And things like, say, 60k rent controlled apartments sitting empty seems like a reasonable outcome - y'know, might have to be an idiot to rent out an apartment for a deal that bad. It sounds ruinous. Sounds like a bad law, really.
It sounds like you think landlords got tricked into this system - rent stabilization (again, that is different than rent control, as you named it) has been around for more than 50 years. Very few of these landlords owned these buildings before they became rent stabilized, so they knew what they were getting themselves into before they bought them.
I'll also point out that despite the fact that rent stabilization isn't required for new rental construction, there are a few areas in nyc where the city offered incentives in the form of property tax abatements in exchange for the landlords agreeing to rent stabilization - what do you think happened? Almost all of the new construction in those areas agreed to being rent stabilized. If it was so bad, so ruinous, why would they agree to that?
The story here isn't "rent stabilization is bad", it's "landlords are having a hissy fit that they can't exploit their tenants as much as before, so they're keeping apartments off the market on the off chance they win a court case"
Why do people work lousy jobs? It just has to be a smidgen better than doing nothing for a landlord to rent out there apartment. And the microeconomic situation of taxes and who-knows-what can cause strange things to happen. But if pushed far enough they'd start losing money and stop renting out apartments. Or you'd get some new rental stock but less than a freer market would provide.
And no-one is getting tricked here, it seems pretty obvious what is going on.
> The story here isn't "rent stabilization is bad", it's "landlords are having a hissy fit that they can't exploit their tenants as much as before, so they're keeping apartments off the market on the off chance they win a court case"
What do you think the symptoms would be if rent stabilisation was bad?
> What do you think the symptoms would be if rent stabilisation was bad?
Bad for whom? Tenants? Landlords?
If landlords of rent stabilized buildings were declaring bankruptcy and the city had to take over and operate the buildings, that would be a clear sign that the economics of rent stabilization made it impossible for the free market to work.
Except that hasn’t happened, in fact, being a landlord is still so lucrative that they can afford to keep units off the market in the event of the small chance that the laws get changed in the next year.
I can guarantee you that once the court case is settled, those units will gradually come back on the market and everything will go back to the way it was.
I am - I'm a shareholder in blackstone, which among other things is the owner of Stuyvesant town, a 10k+ apartment complex in NYC that is entirely rent stabilized. Presumably the people at blackstone are savvy investors who wouldn't buy an asset like that if they couldn't make money off of it.
Wow, so the rate at which the price of RENT is increasing is being subject to CONTROLS?
In any case, the exact same economic phenomena has been observed regardless of if you fix rent increases to inflation or never allow for rents to increase, because the two approaches are just incredibly similar variants of price controls.
> What it protects isn’t rising rent, it protects tenants from landlords jacking up the rent to kick them out
The landlord is the property owner. Yes, they can kick renters out of their house after the lease, a contractual agreement to temporarily live in it, has expired. As long as the renter signed the contract, understood the terms, and wasn’t under duress that should be the end of it.
When someone otherwise takes something that doesn’t belong to them (In this case, someone’s house) that’s called stealing. When the government enables people to steal you get a bunch of weird market dynamics that reduce the supply of affordable housing.
Problem is that the contract has additional terms, and the relevant one is you must offer lease renewal in NYC. The contract is only temporary from the perspective of the tenant, it’s actually indefinite from the landlord’s view. And both the tenant and landlord knew the law when offering the lease and signing it so that’s the end of it.
You cannot end run around the law by trying to be “clever” and technically offering a lease renewal of 10 billion dollars a month. The world doesn’t work by programmer logic.
It's not called stealing. When you purchased an apartment in NYC you purchased it with the understanding that it was subject to rules and regulations of the city, which could change.
Some rent control systems have a safeguard against jacking the rent, then lowering it: The prior tenant gets right of first refusal when it comes back on the market within N years.
I can imagine other creative ways to achieve the goal. However, I'm having difficulty wraping my head around your scenario.
The landlord decides they want an 18 year old Liliputian, but accidentally rents it to an 85 year old Belfuscian instead? Later, they realize their error, and temporarily jack the price up to kick out the Belfuscian they were totally fine renting it to earlier?
Isn't it more likely that, instead of suddenly becoming racist/ageist, the landlord is trying to get rid of them for some reason that became apparent after they signed the lease (late payments, noise, illegal activity, etc...)?
Appreciate the engagement with the idea, but you’re missing the mechanics of all this.
There are a few scenarios:
- landlord rents to belfuscian because that’s the market. Then a Lilliputian makes a popular tv show that depicts the neighborhood as cool and affordable. Landlord starts getting interest, so they force out the belfuscian so they can get the Lilliputians.
- landlord just wants to run a building and make a living. They get an offer too good to pass up and sell the building. New owner plans to make the money back by forcing our existing tenants and jacking the rent.
- the tenant believes that they have a right to an apartment without roaches and mice. The landlord feels like that’s not reasonable because it’s NYC, and there are roaches and mice. The landlord decides to get rid of these tenants and hope to raise the rent.
And yes, sure, there are bad tenants who landlords want to kick out. But let’s talk about who is more likely to end up in a bad situation- the low income tenant trying to get by, or the landlord who owns a building they want to maximize revenue from?
That makes sense. I forgot that tenants typically come with the building when they change hands in NYC.
Around here, most bigger buildings are corporate-owned (equally good or terrible to all), or small enough where loopholes allow everyone to be evicted at sale.
With stablization, the rent can be set to market rate when you rent to a tenant. Afterwards, the rent increases are controlled. The increases are based on inflation and consumer pricing.
Rent control is where both the initial rent price, and the increases are controlled.
We're in a technical forum, so it's reasonable to actually differentiate terms we're discussing.
Tell me you know nothing about NYC real estate without telling me you know nothing about NYC real estate.
“Rent control” in NYC is a specific term that applies to a separate set of regulations and laws that govern a particular set of rental properties. Tenants who live in these properties are effectively immune from rent increases for as long as they or their families live in the apartment.
Of course rent stabilization is a form of rent control, but it is not the same as Rent Control in NYC. In online discussions about NYC rental law, the two things often get conflated, as they have at several points in this thread.
> rent stabilization is not rent control - landlords are free to raise the rent by an amount set annually by a board of landlord and tenant representatives
It’s not rent control, but someone else is, ah, controlling how much I can charge for the building I paid for.
Price controls are useful if you want to ensure a supply or demand surplus, not if you're interested in absolute efficiency.
Artificially lowering prices is a good way to lower supply of housing, if that's what you're going for. Since people generally aren't interesting in lowering supply of housing and making the market less efficient, it's not a good approach.
The other thing rent control specifically does is give you are larger incentive to live where you've already been living, so if everybody did it, everybody would figure out it was irrational to ever move from the first home they ever rented. This doesn't actually stop "gentrification", it merely slows it, by simply making it hard to move to a new home in general. It also makes the existing residents more wealthy than newcomers, and the existing residents don't consider themselves the "Gentry" no matter how valuable the NY real estate they sit on is.
I feel there is a huge mismatch between what rent control actually does and what people are trying to accomplish by implementing it.
I'm not sure if increasing supply by pricing people out of their homes is the better alternative.
Real world free markets consistently fail to reflect the cost of externalities such as the effect of only rich people being able to afford housing in a wide area.
If you want to ensure people are never priced out of housing, it's possible to guarantee this. You just build a home for every person, and beggars can't be choosers in terms of location, quality of accommodations, roommates, or size. Homelessness will still exist if you do this, as people will simply refuse to live in such places, even if you force them to USSR style, but it's about the only workable approach I'm aware of. Mass scale social housing. If housing isn't connected to price to begin with, you can hardly be priced out of it now can you?
Rent controlling privately owned real estate does not work and has never worked. It literally just doesn't do what is claimed. It mostly repeatedly crops up generally because of how politics is structured means long term residents have a lot of clout to propose policies that benefit themselves while spinning BS about how rent control ends homelessness.
If you want the right to live in a specific area with specific amenities, well you can't always get what you want. The reality of resource scarcity and power differentials always crops up somewhere.
We don't speak of down-votes here, but I'm fascinated by why this was down voted. Do people find anything false in the above? Do NH people actual believe in rent control? I personally know people who kept (or keeps?) a rent controlled apartment they don't need or barely use, because it's so cheap to keep it. Seems like a good example of unintended consequences.
There's a lot of vilifying of landlords here. I was a landlord for a while because I wasn't ready to move. That got me my two first and only legal cases (one settled, one won but never collected $10k owed because the con artist skipped country). The insane level of stress got me out of that and I was lucky because only months later, all landlords got left holding the bag with the covid non-eviction mandate which meant renters could just stop paying rent. I'll never ever rent anything out again.
Price controls prevent rents from reflecting the cost of building new housing. Therefore, building new housing is irrational.
If people could build a house to rent out at a reasonable profit (and if the planning commission let them do so), then they'd build new housing. It's not like there's a capital shortage in NYC or SF, or new houses are some magic unproven technology.
The increased supply of modern units would create a downward pressure on old unit pricing, and therefore the rents paid by blue collar workers. This would decrease the price of construction to something vaguely approaching national norms.
Rent control (and, at least in California, insane codes) breaks this loop, so we have a situation where there is a shortage of housing, housing is completely unaffordable, and building new housing is unprofitable. (Also, the cost of construction has been completely decoupled from the price of materials. In most places, material costs are most of the budget!)
Can't speak for California but new construction in NYC is NOT genereally rent stabilized. It is rented at market rates, unless the landlord voluntarily chooses to place some of their apartments under rent stabilization in exchange for very generous tax breaks. A friend of mine recently moved into rent-stabilized new construction that she obtained a lease to after winning a housing lottery. The entire development has approximately 1100 units of which just under a third were offered with rent stabilized leases. She pays about $2100 for a 1 br and the equivalent market rate units are around $1000 more. There's quite a bit of ongoing new rental construction in her area, so there's profit to be made.
> Few things have been proven as resoundingly as "price controls don't work", or more accurately "are very net negative".
I don't see how this follows. NYC has had rent stabilization for over 50 years, and the story here is: "the number of rent-stabilized homes reported vacant on annual apartment registrations rose to over 61,000 in 2021 — nearly doubling from less than 34,000 in just a year as the city emerged from COVID lockdown."
In other words, a very recent problem.
If price controls don't work, then wouldn't they have failed in the year 1971 rather than the year 2021?
> Altogether, the state numbers show a loss of over 95,000 stabilized apartments for rent after 2019 — the year a major overhaul in Albany of the state’s rent laws blocked landlords from significantly jacking up rents on vacant units when letting them to new tenants.
Failure doesn't just manifest as vacancies. Also the change in vacancies over a two year period doesn't say much about 10 years ago. Show me a time series over the last few years.
Remember, high rents are always one of the following:
A. Evil landlords meet at their secret underground fortress and collectively agree to charge too much for rent
B. Evil rich people / foreigners (pick whichever you find more objectionable) have bought up all the housing and are keeping the units vacant to spite everyone
Supply and demand doesn't apply to housing, of course. If we build more housing that will just drive prices up! Somehow!
Keeping property vacant because you only care about appreciation and don’t want the hassle of being a landlord is a reasonable course of action, even if immoral. Property tax acts as friction against this, but often isn’t good enough to force people to rent out their property.
Is it moral for a city to control how I price my products? Is it moral for that same city to give me nothing when renters stop paying rent and utterly destroy my property before they leave after many months or years of mandated delays? Is it moral for a city to keep prices so low I can’t possibly afford to maintain the place for tenants and also make my own mortgage payments?
Well that does nothing to address my questions, but at a minimum New York landlords are paying the highest taxes in the country. They are literally being forced to contribute to the public good with a little or no oversight as to the effectiveness of their involuntary contributions. Also you appear to have hallucinated things I didn’t say.
Sure, but in that instance the correct policy response there is to stop the policies that force house prices eternally upwards, meaning that this strategy doesn't work in the long term.
It takes quite distorted incentives for the obvious course of action to be (1) build a house => (2) leave it empty. For that to make economic sense for more than maybe 12 months, the government has to have really come in swinging with crazy policies.
And I'm of the mind that letting people hoard a scarce, necessary to life resource, when they aren't even using it is immoral.
The discomfort you experience of having to let out your bought-for-the-purposes-of-renting properties, instead of letting them sit fallow is less important to me than the discomfort of the person you're evicting. Fortunately, vacancy taxes can solve this problem very easily.
You want to be a landlord? Comply with tenant laws. If you don't like it, you won't be missed, it's not like you can leave and take that apartment with you.
If the tenant laws mean being a landlord isn’t profitable, then no one will bother doing it. Capital will flee from the market chasing better returns elsewhere, and then who is servicing rental demand?
In China, rental returns are so paltry compared to purchase prices that many property speculators simply don’t rent out their properties (renovating a property reduces its value in that market, so leaving it unfinished is a winning strategy). That has nothing to do with regulation and everything to do with an out of control property bubble, but the same principle applies. Here in Seattle, being a landlord is an increasingly untenable position, especially for private individuals. They are instead in it just for the appreciation (property bubble again) and so it makes sense for them to just leave the house vacant and keep squatters away.
If we build more housing, existing land owners are best positioned to buy more housing.
I've certainly been told by a corporate landlord "we checked nearby rentals, and decided that we should match their rent increases" so I guess A is the proper option?
The article says B is also true, and the evil landlords are aiming to coerce policy change by making people homeless
> In economics, induced demand – related to latent demand and generated demand – is the phenomenon whereby an increase in supply results in a decline in price and an increase in consumption. In other words, as a good or service becomes more readily available and mass produced, its price goes down and consumers are more likely to buy it, meaning that demand subsequently increases. This is consistent with the economic theory of supply and demand.
Building lots and lots of housing will never induce more per capita housing use in the same way that better roads induce longer per capital commutes.
Because the fundamental concept of induced demand doesn’t really track with the concept of having a place to live. You need a place to live, you don’t start using more “place to live” because there are more of them.
It can only happen at the fringes — fewer shared leases, more people with 2nd homes. The vast majority will still have one place to live for their family.
Population mobility to desirable neighborhoods is also
not “induced demand”.
Building more housing in hit areas can unsuppress suppressed demand. Say, somebody in Spokane really wants to move to Seattle, but hears about how hard is to get a place to live so stays put in Spokane. But then they build a bunch of new apartments, leading to vacancies, making their dream of moving to the big city more realistic. So if Seattle caters to all housing demand, they could grow from 700k to 7 or 70 million. Which obviously isn’t feasible.
Likewise, when we (Americans at least) talk about housing shortages, we don’t mean the USA as a whole, it’s just a few cities that everyone wants to live in, not say small towns in the Midwest or Deep South. So a lot of demand and is already suppressed because not everyone can live in those few hot places.
Building more houses is just like building roads. It increases demand for that housing. Higher population means more demand, which outstrips how fast you can build, which leads to higher prices.
There's your "somehow". Being intentionally obtuse just makes you look stupid at best.
This is exactly right. The only way to lower housing prices is to start demolishing housing. The more apartments we convert to office space, the lower prices will go.
Roads are free at the point of use, so this analogy doesn't hold (and I think you'd be hard-pressed to find empirical evidence of what you're describing)
I don’t think this is as much of a slam dunk as you think it is: keeping properties empty is a timeless tradition among NY realtors, and applies equally to commercial and uncontrolled residential properties as well. You just don’t hear about it because they aren’t tracked.
Real estate, as far as markets go, is exceptionally prone to profiteering via reduced supply. It’s unlikely that these 60k units would be unprofitable for their owners; the owners have simply determined that they’re not profitable enough.
Does economic theory even account for this concept of holding out? It's like those supply and demand graphs assume a good or service is automatically living and moving in a market
That leads to the US healthcare billing practice of over inflated billing to see how much insurance will pay. If you give people money without fixing prices, the prices will rise based upon how much free money was given.
There is a maxim I apply to all these sorts of stories - the best explanation of a rule, political or otherwise, is not its purported reason for existence, it is the results. If a rule performs so badly, and everyone wants it changed, it just gets changed. If it doesn't get changed, it is usually because it is performing exactly as desired (if not always as intended).
I think it is based on a mathematical theorem or something, but i have long since forgotten.
My understanding is that socialized healthcare isn't cheaper because it's subsidized, it's cheaper because it has a monopsony buying power when negotiating.
And to a lesser extent, I bet it can be marginally cheaper because of a reduction in redundant administration costs across multiple providers. But that, and all other of those facets are dwarfed by the single payer negotiating.
how do you incentivize building, and yet have a vacancy tax? If you invest in building, but couldn't lent it out (as it's been incentivized so lots of new competition), it would get hit with a vacancy tax! So the risk of building becomes high under a vacancy tax - therefore, it would cost more to incentivize.
A vacancy tax would make it less attractive to investors but people purchasing it to live there as their primary residence wouldn't mind. I dont see how forcing a landlord to rent a property out at market rates or pay a tax is a massive burden. It doesn't have to be a real tax, but it would help stop landlords withholding units for no reason except they aren't making enough profit.
I never understood this. Don't property rights operate on a similar principle? Lets say you own a home, live in it for many years, go on vacation for a week, come back and other people are living in it. Lets also say you live in libertarianstan and there is no state. What do you do? If you try to remove them from some place you believe to be rightfully yours you are using coercion and violence to remove them. Unless you are a pacifist you believe in the use of violence and coercion for some purposes. So saying that a state is illegitimate because it uses such tactics seems silly.
In libertarianism, the non-aggression principle is not a commitment to pacifism. When someone trespasses on someone else's property, the trespasser is considered the initial aggressor, and the property owner is within their right to remove the trespasser from the property.
> Consider the following hypothetical example:
>> Trespass: George is walking across a field when David jumps out
from behind a bush, grabs him, and gently but forcefully removes him
from the area.
> In this example, it certainly looks as though David is the one committing
an act of aggression against George. After all, George is simply walking
along, minding his own business, when David comes from out of nowhere,
physically lays hands on him, and drags him off the field.
> But suppose that the field in this example is David’s property, and that
George is knowingly trespassing across it. In that case it is clear that
most libertarians would say that it is actually George who has committed
aggression. David’s violence, they would say, is simply an appropriate
response to George’s impermissible intrusion upon his land.
Libertarians oppose expropriation and eminent domain because the government is the one initiating the aggression against the property owner by forcible seizure. (Although libertarians support limiting the power of the state, it is not the same thing as eliminating the state entirely. That would be anarchism, not libertarianism.)
Libertarians don't account for externalities. When the property owner three miles over is dumping toxic waste into the river, what are you going to do about it?
The state works because they have a monopoly on violence and imprisonment. As long as they operate for general good and operate via a strict system of laws which prevents abuses and maintains rights, then that is a good thing.
Making my neighbor stop dumping waste into my drinking water (which I don't own at the point they are dumping in) by having to come up with enough money to buy them out and shut them down is not viable.
Of course it accounts for externalities. If someone is dumping toxic waste onto your property, there is nothing anti-libertarian about suing them to stop it and compensate you for the damages.
If someone dumps toxic waste onto their property, which then bleeds into your property because they failed to contain it, the dumper is effectively dumping toxic waste onto your property and you are able to respond with legal action. This is the case in any society that recognizes and enforces property rights, libertarian or not.
How far away does it have to be from you to count? What do I need to prove that it is getting into my water? Do I need to hire a lab to prove that a certain chemical causes cancer 20 years later and that it is in the product they are putting in the water? What if it is air, instead? What about climate change? What if they operate a business, say, they buy tiger feet, and it is causing a growth in a market for tiger feet which leads to poaching of tigers who have been endangered and are needed for a local ecosystem which I rely on to work?
The courts will decide how the damages for the toxic waste dumping should be assessed. The government regulates the use of public and common goods, and it can also file lawsuits.
When you said:
> The state works because they have a monopoly on violence and imprisonment. As long as they operate for general good and operate via a strict system of laws which prevents abuses and maintains rights, then that is a good thing.
did you think that most libertarians would disagree? The status quo is that the state has a role in protecting human and property rights, and in regulating public and common goods. No pragmatic libertarian would suggest removing the state from these roles without finding a suitable replacement.
> did you think that most libertarians would disagree?
If you believe that a state should exist and should protect human rights, even so far as to use their monopoly on violence to shut down a private property holder who is causing damage to property owners no where near them based on economic externalities such as providing markets for endangered species parts, then what is the difference between a 'statist' and a 'pragmatic libertarian'?
The government with jurisdiction over the tigers would be filing the lawsuit against the poachers for misusing common goods (killing endangered species), not necessarily the purchaser.
Because most libertarians are not anarchists, and because statism encompasses all sizes of governments, statism can be compatible with libertarianism. However, people who want to abolish government altogether cannot be statists, and people who support government expansion to an excessive and unnecessary extent cannot be libertarians.
You haven't clarified anything except that you don't actually consider externalities. If buying endangered animal parts and thus creating a market for poaching animals is not an externality then I must not understand what an externality is. Let's try another one. I put kiddie pools full of stagnant water all around my property in order to breed mosquito larvae to feed my pets. These mosquitos end up causing a malaria epidemic for everyone around including you but I am not affected by malaria and don't care. Are you saying that you have to go to court to sue me and prove that it is my mosquitoes giving you malaria? Why not sue the person the mosquito bit who had malaria who then gave it to you? You say the government would do this, but I have trouble believing a libertarian state would allow them to act in such a way since it would involve having departments extremely similar to the EPA and CDC.
The problems I have with libertarianism are around these issues and your handwaving of them, and this is compounded by the fact that you haven't defined what libertarianism actually is, besides that it is 'not anarchy'.
Have you really thought about these things, or do you just find the idea of self-sufficiency and absolute personal freedom enticing?
Both the government and the individuals who caught malaria can sue the person who created the code-violating pools, especially since that person is aware of the resulting health effects. A lawsuit against someone who inadvertently caught malaria will obviously go nowhere, because courts consider intent.
Since the status quo is that public lands are regulated by the state, the state will sue people who illegally poach endangered species within its jurisdiction. However, if another state allows the poaching of the same endangered species within its jurisdiction, a libertarian approach in the first state would allow for animal parts to be imported from the second state and sold within the first state.
A comprehensive definition from Wikipedia:
> Libertarians seek to maximize autonomy and political freedom, and minimize the state's encroachment on and violations of individual liberties; emphasizing pluralism, cosmopolitanism, cooperation, civil and political rights, bodily autonomy, free association, free trade, freedom of expression, freedom of choice, freedom of movement, individualism and voluntary association. Libertarians are often skeptical of or opposed to authority, state power, warfare, militarism and nationalism, but some libertarians diverge on the scope of their opposition to existing economic and political systems.
You seem to be painting all libertarians as a homogeneous extremist bloc, which is just as fallacious as ascribing minority hardline stances to "all liberals" or "all conservatives". The above describes general concepts that libertarians support, and absolutes such as "absolute personal freedom" are ideologies that pragmatists recognize as infeasible.
> You seem to be painting all libertarians as a homogeneous extremist bloc, which is just as fallacious as ascribing minority hardline stances to "all liberals" or "all conservatives". The above describes general concepts that libertarians support, and absolutes such as "absolute personal freedom" are ideologies that pragmatists recognize as infeasible.
No, libertarians are not like 'liberals' or 'conservatives', they are libertarians, and they believe in an absolutely minimal amount of state intervention. Have you talked to any before? It seems like you read a few books and have some notion of some kind of libertarianism which is not at all what is advocated for by real life 'libertarians'. There is a 'Libertarian' party in the USA and they have candidates and an agenda. You may believe one thing, and call other people's views 'fallacious' but those views are based very much on Libertarianism as represented by Libertarians.
Here are some candidates for the Libertarian party.
The U.S. Libertarian Party does a better job of representing libertarian values in general than the two major parties, but the Libertarian Party platform does not encompass all of libertarianism, just like how there are conservatives who disagree with parts of the Republican Party platform and liberals who disagree with parts of the Democratic Party platform.
Since the first-past-the-post voting system used in most U.S. states makes it difficult for third parties to gain traction, most politicians who prioritize winning elections run under one of the two major parties. A libertarian candidate who focuses on reducing taxes is more likely to become elected on the Republican ticket than the Libertarian ticket. A libertarian candidate who prioritizes legalizing marijuana will stand a better chance on the Democratic ticket than the Libertarian ticket. The goal is to push for changes that would advance the libertarian agenda on specific issues while maintaining the status quo party line on other issues, since it is easier to enact targeted changes than to fight on all fronts. Political candidates who choose to be affiliated with the Libertarian Party need to be sufficiently radical to reject the two dominant platforms that are much more likely to win them elections.
Voters know that third parties including the Libertarian Party are disadvantaged in U.S. elections, and in races that Libertarian Party candidates are certain to lose or do not participate in, many libertarian voters select the candidate from one of the two major parties that they believe would do the best job advancing or preserving the parts of the libertarian philosophy that they prioritize. This is the most effective short-term voting strategy when voter prefers one of the major party candidates more than the others. In the long term, libertarians in the U.S. support ranked choice voting and other reforms that would empower third parties like the Libertarian Party. If the Libertarian Party does manage to gain traction, its platform would adapt to become more moderate, mainstream, and pluralistic to accommodate its larger voter base and encompass more of the libertarian philosophy.
There aren't many surveys that focus on libertarians, but this 2014 one from the Pew Research Center shows that self-described libertarians tend to be more diverse and less radical than you perceive them to be:
> Self-described libertarians tend to be modestly more supportive of some libertarian positions, but few of them hold consistent libertarian opinions on the role of government, foreign policy and social issues.
...
> None of the seven groups identified by the 2014 political typology closely resembled libertarians, and, in fact, self-described libertarians can be found in all seven. Their largest representation is among the group we call Business Conservatives...However, they are also supportive of an activist foreign policy and do not have a libertarian profile on issues of civil liberties.
Libertarian's as described in that survey (and as you probably are as well) are 'Republicans who like smoking weed and don't have a problem with homosexuals'.
The article shows that self-described libertarians do not uniformly align with the Libertarian Party platform. In the same way, self-described liberals do not uniformly align with the Democratic Party platform and self-described conservatives do not uniformly align with the Republican Party platform.
Your perception of what libertarians believe in is more closely attuned to anarcho-capitalism, which is a radical subset of libertarianism. Most libertarians are not anarcho-capitalists. I described your comments as fallacious because you are attacking libertarianism using arguments directed at anarcho-capitalism (straw man).
I have never described my political affiliation here, so please don't make assumptions. The Pew Research survey says that 12% of Republicans, 6% of Democrats, and 14% of independents describe themselves as libertarians, so it is not reasonable to label all libertarians in that survey as Republicans.
The Pew study said exactly 'not in line with libertarianism'. If you want to keep trying to redefine what libertarian is, you are welcome to, but you shouldn't use sources which directly contradict you.
At this point in time it is clear you are not going to change your mind on this -- and as long as you continue to claimn that I am wrong and fallacious for making assumptions about libertarian political ideas based on my direct experience with people espousing them, then I am afraid we are at an impasse.
The Pew study never used the phrase "not in line with libertarianism". It said that "few of them hold consistent libertarian opinions on the role of government, foreign policy and social issues", meaning that self-described libertarians in the U.S. do not tend to subscribe to the entire libertarian agenda, even though their positions are "modestly more supportive of some libertarian positions" than the general population. Libertarians are free to break from libertarian positions on certain issues, just as liberals and conservatives are able to break from liberal and conservative positions. Most people are not ideologues who treat party platforms like religious texts.
Radicals tend to be louder than moderates, but judging an entire demographic based on the opinions of its most radical subset is not going to yield a realistic picture of the demographic. If you only consider people libertarians if they pass a purity test that requires them to subscribe to radical beliefs such as the complete abolition of the state, then the resulting group of people will be radical and non-representative of libertarians as a whole.
"Suing it". Sure, me as a small-time citizen with not much money in this libertarian utopia will have the power and money to sue a massive corporation who installed a factory to dump their toxic waste unto me.
It doesn't account for massive differences in power, there's nothing in libertarian philosophy which takes into account that a multi-trillion dollar corporation will, always, have absurdly more power than any citizen or small collection of citizens.
Suing someone/something is not a magic bullet, in your utopian libertarian world you'd have to pay lawyers for that. You'd require lawyers that want to work with you instead of large corporations, corporations which would be free to blacklist any lawyer working against them to work for them. Not taking into account that these corporations can just slowly dial up the inconvenience to communities they'd like to push out, are you gonna sue them multiple times? What exactly do you expect that your powerless minimal government be able to do if you win a trial against such actors, to fine them? If they can just pay the fine, over and over, and they calculate those fines are just a cost of business that will be paid off by ROI, is that ok? Or do you expect the government to take action and shutdown a company that's constantly breaking the law?
I simply cannot understand why you really believe that suing a massively more overpowering force in a libertarian world is achievable, not only achievable but required to keep a balance of... Power.
What do you think a "libertarian world" is, and how would that differ from an "authoritarian world"? Libertarianism vs. authoritarianism is a spectrum, and nobody in this discussion has advocated for eliminating legal systems or law enforcement. In general, libertarians support systems that are required to enforce property rights.
Libertarian world = no control of the government over any aspect of the economy, no public ownership, only private property is a right, everything is negotiated through contracts between private parties in society.
Authoritarian = almost total to total control of society by the government. Economy, customs, culture, speech. No dissent to the official government line of policies is tolerated, the people are completely controlled and submissive to the whims of the leadership. Decision-making is reserved to the political elites and the people have no voice in the process of it.
One is an economic-political philosophy, the other is a political system of control, not sure why you want to compare both.
"Libertarian" is a relative term, just like "liberal" and "conservative". Someone who identifies as a libertarian does not necessarily desire an extreme libertarian world as you have defined it. For example, a libertarian can oppose civil asset forfeiture abuse and support the legalization of marijuana, while still accepting the status quo of allowing the government to regulate the use of public and common goods.
When people say things such as "Libertarians don't account for externalities" and use a caricature of a "libertarian utopia" to attack libertarianism at large, it pigeonholes libertarians as extremists, and does not paint a realistic picture of how libertarianism actually influences politics every day.
I clearly mention those are the extremes, it's the first line of my comment.
I'm aware that Libertarianism as a philosophy has much broader branches of it, that it includes by definition concepts of freedoms and autonomy. Unfortunately most of the interactions I have with self-identified libertarians (both in Sweden and in Brazil) go towards extremism. As much as most of the philosophies under the umbrella of Libertarianism aren't that extreme that's what I see in public discourse, it's a caricature.
Libertarian thinking is also responsible for inspiring trickle-down economics, free market privatisations across the board and so on. These policies have been, at least, a mixed bag of results with plenty of it being failures (e.g trickle-down and privatisation of healthcare/education). We know, empirically, what the consequences of purely libertarian policies such as the ones brought by neoliberalism can be: monopoly/monopsony formations (i.e corporations mergers), empowerment of elites, diminished power of labour and so on.
Libertarianism defers too much power to private individuals, without much regard to the power imbalances that will arise from its philosophy, just trusting that certain mechanisms will balance it all out. That's my main reservation with the philosophy as a whole.
> When people say things such as "Libertarians don't account for externalities" and use a caricature of a "libertarian utopia" to attack libertarianism at large, it pigeonholes libertarians as extremists, and does not paint a realistic picture of how libertarianism actually influences politics every day.
Is it your contention that people are misrepresenting libertarianism as extremist out of ignorance or malice?
Do you think that is unreasonable to view libertarianism as extreme because people who are 'real' libertarians are forced to run as Republicans, and because in the future the libertarian party is going to become more moderate and reasonable?
I am trying to understand why you expect people to have a nuanced view of a political group that does not present itself as such, because you feel that it should or will be something else.
In the U.S., self-described libertarians as a whole do not uniformly hold the views that you assume they hold. When 11% of people in the U.S. describe themselves as libertarians and correctly identify the term per Pew Research's definition ("someone whose political views emphasize individual freedom by limiting the role of government"), yet only 1.2% of U.S. voters chose the Libertarian Party ticket in the 2020 U.S. presidential election despite a 66.8% turnout rate,* you are not accounting for most libertarians in the U.S. when you limit your awareness of libertarianism to what is presented in the Libertarian Party platform.
Taking land from landowners, and giving it out to whoever wants it has also worked to reduce housing costs -- you can see it in action by how the US took land from the natives to dole out
Price caps generally don't work, however EU examples show that some balanced 'price control' can work. There are rent moderation schemes in place in France, Germany, Ireland and parts of Spain. It's working well so far.
Rental market is not a free market. Is not like if you let the prices go up, you'll have more supply.
There are building permits with harsh rules. The reasons of these permits and rules is to keep the city livable, beautiful and functional.
Since you cannot build freely if left unchecked the prices would go to the sky. And you don't want that because functional city needs working class people, you need nurses, shop attendants, janitors, etc...
Maybe you think city planning and urbanism are bad ideas and that we should let the free market magically solve all the problems.
You think that's such a good "gotcha", but it's just pathetic, really. Like you do so much better.
It's perfectly fine to complain about a system, without being a perfect citizen yourself. I can complain about oil companies, and still be dependent on a car.
Companies like Apple and Google make huge profits. That means they are clearly profiteering of the customers. We should strip the stock from their owners and set them to sell at much much lower prices. Even below cost for good of the world.
In the past, civilisation has been held together by the threat of violence on the landed classes. Now that is essentially no longer possible, corruption and inequality have grown unchecked.
It is a solution - "Those who make peaceful revolution impossible will make violent revolution inevitable."
its an effective way to remove the high value of housing and landlording, but the government also then has to take over the creation and management of housing
There are many modern, developed, market economy countries where the government enacts controls to ensure access to affordable housing. The US is somewhat of an outlier in that regard.
As someone who is renting right now and doesn’t want to own a home currently, where would I live if not for a landlord? Government housing? What in the heck is wrong with someone renting out something that they own?
Yes, government owned and managed housing. Across the more-left leaning parts of Europe this is not controversial at all. It's mostly a US/UK/Canada thing that "government housing" = "scary and full of drugs" because these governments only ever adopted policies for the very bottom of society, and then left these projects to rot over time.
OK, but that option doesn't exist here currently. So in the actual situation we're living in, are you actually saying that you think it's wrong/evil for a person to choose to invest in a rental property? IE buying a house for the purpose of renting it out? Because I know a lot of people renting and looking to rent who wish more people would do that.
Some find it immoral, especially when the landlord has multiple properties, or when, like in the article, they hold up the apartments vacant until their conditions are satisfied. There are also people who are basically social parasites, living off of rent and the work of those who actually contribute to society.
You can't break the site guidelines like this, regardless of how wrong someone is or you feel they are. We ban accounts that post this way, so please don't do it again.
Edit: it looks like you've been posting unsubstantive and/or flamewar comments repeatedly. Would you please stop? We ban that sort of account. It's not what this site is for, and it destroys what it is for.
I bought my apartment a decade ago. I needed to move to another area so I rented it out.
I regularly see these takes hn and I don't get what's so assholeish about my situation. I know that my tenant is on a temporary visa. Are we arguing that ethically he should have bought my property?
Developer buys land. Spends all their money on land and building a house.
Investor comes along and buys the house to rent it out.
Developer now has money to buy another lot and build another house (and other developers notice that they can build houses and get paid to do so).
Without the investor money in step 2, developers build a lot fewer houses in steps 1 and 3.
You literally admitted it, landlords provide nothing, all they do is finance private spending. Once the property is paid for the landlord gets to keep an appreciating asset and generate cash flow from it by stealing from the tenant's paycheck. Literally leeches on society.
If the landlord isn't there to buy the house, it won't get built in the first place. Not everyone can afford to buy a house, so someone needs to provide that capital in order for the housing to exist. No one is stealing anything; the tenant is paying the landlord for the service of lending them the house to live in. The landlord is being compensated for the funds they have tied up in the house, that they can't use to invest in (buy) other things.
Like, literally, if there were no landlords, by definition there would be no rental properties. So people who couldn't afford to buy a house outright would have nowhere to live. That can't be what you're advocating?
No, if the funds to buy the resources, physical and human, to build the housing aren't there then it won't get built. There's no rule that these funds have to come from private entities trying to turn a profit on housing.
Are you really so ideologically brainwashed that you're incapable of imagining any other system that doesn't inherently exploit poor people and concentrates cash at the top???
Are you so ideologically bent on thinking that things ought to work some other way to utterly reject the reality of how things actually work right now?
This condescension is so tiring. You're literally so brainwashed by your ideology that you can't conceive of anyone disagreeing with it. Clearly they must all be idiots who just don't understand economics. There's no way you could be wrong. Housing just inherently has all these problems and there's nothing we can do about it I guess.
You are not disagreeing with any ideology. You are just categorising a whole class of people as leeches by disregarding the economic realities of the situation, because it doesn’t fit with your economically uninformed one.
It's my honestly held belief that private landlords (both private individuals and even more so corporate) are systemically pushed to provide the least amount of maintenance, repair, and amenities for the most amount of money. Having a market based system for a necessity, especially when the market is allowed to get as incredibly distorted as it has (in the US and Western Europe), is a moral travesty.
I have just given up trying to be nice about this, despite HN's capitalist slant
> systemically pushed to provide the least amount of maintenance, repair, and amenities for the most amount of money
That argument can literally be applied to any product or service, yet here we are.
There is a peculiar correlation I have noticed with these views - it tends to be (white) upper middle class suburban upbringing Americans that profess them. Principal agent problem of sorts, I guess.
> Having a market based system for a necessity, especially when the market is allowed to get as incredibly distorted as it has (in the US and Western Europe), is a moral travesty
Markets for food work pretty well. And for loans.
Markets are pretty efficient. That doesn’t mean you don’t regulate them.
This take I can see, that market forces (especially in the presence of distortions like rent controls) do not provide the best result for tenants, and that better systems are possible. What I don't believe follows is that given our existing system, individual landlords are doing something wrong.
It kind of reminds me of the argument that philanthropy is bad because individual rich people shouldn't get to choose who is helped; governments should tax the rich more and use it to help people. Well yeah, I agree, they should. But if they don't, it certainly doesn't make someone a bad person for choosing to voluntarily donate to charity.
The sad thing is that people don’t bother digging much into it and take simple answers like “greed” instead of figuring out exactly where the monies are going.
Strange, we were assured in a HN thread a few days ago that landlords would never keep units vacant because the economics just don't make sense!
https://news.ycombinator.com/item?id=33224502 - discussing how Yieldstar, a consultancy, advises some landlords/property managers to hold or accept a higher vacancy rate while raising rents to increase overall profit.
Note that the vacancy rate is attributed to "rent-stabilized" apartments. Something else is going on here that is peculiar to that particular form of rent control.
For one thing, rent-stabilization may mean that if a landlord lowers the rent to fill a vacancy, he will not be able to raise the rate again. This creates a very powerful incentive to not lower the rates. Another pernicious effect of government price controls.
This is inaccurate. If a landlord lowers the rent of a rent stabilized apartment, they are able to raise it again at the next renewal to whatever the authorized rent is.
I lived in an NYC rent stabilized apartment for a number of years, and my rent was always articulated as legal rent is X, offered rent is Y.
It seems that before now you’d be stuck with and X% increase, but when the tenant moved you could bring the rate back to “normal” - something apparently changed and you can’t do that (maybe?).
It’s interesting how rent controls work perfectly but property tax controls (prop 13) is widely known to be the cause of all ills.
It could not be simpler - they lost a lot of loopholes right before the pandemic and they are hoping the courts change things. It’s not a real free market problem.
This is actually not correct any more. 2019's housing stability and tenant protection act changed it so that the preferential rent must continue as long as the tenant keeps the apartment, subject to the same percentage increases as the legal rent.
Yeah, this is all well-established. When you buy an apartment building you know the legal rent for every apartment. That only changes by a percentage amount every year, and the amounts are available historically, and landlord reps make up a big chunk of the board that sets those percentages.
There’s no mystery here, everyone knows the score, it’s just that landlords try to take advantage.
Doesn’t everyone try to take advantage? I’ve never heard of renters offering to pay more than rent, it’d be like haggling with a street vendor to pay a higher price.
Sure, but there used to be big loopholes, so, for example, if you made capital improvements to an apartment you could increase the rent further. Landlord buys a $500 fridge and hires his buddy to install it and gets from him a receipt for 8k in installation fees. Now he can raise the rent $800/mo. the same sort of shenanigans aren’t available the opposite direction for the tenants.
We can't determine if this is a large number or not without knowing the total population - of either rent stabilized apartments, or all apartments available for rent.
A certain amount of empty property should be expected - they do require renovation and repair.
In commercial real-estate, I believe 10% is considered healthy for offices.
It looks like 3% is considered healthy for apartments?
> A certain amount of empty property should be expected - they do require renovation and repair.
You'd expect a lot more empty property than just what currently needs maintenance. If you have no empty and rentable properties, then when someone comes to you wanting to rent an apartment, you can't rent them one. That's a big problem for you.
This is the same reason you don't expect a secretary's day to be filled with work. You need idle capacity so that when something comes up, you can handle it.
3% is alarmingly low. We need enough vacancies that landlords actually need to compete on rent and conditions, and bad ones risk losing market share. When the worst landlord in the city can easily fill their building with (resentful) tenants, it’s no wonder they’re often despised.
Prices for rent are such a weird ratchet effect, they may only go up. It basically shows that landlords really aren't that interested in being efficient market actors, it's also about validating their own egos (even on an institutional level). If prices were to decrease, then they may see a direct loss of revenue, versus an empty unit which is simply an "unrealized asset"
I imagine marginal costs of occupation like wear & tear, utilities carried by the landlord, and so on would increase that loss of revenue you mention, and push the calculus even farther towards letting it sit unoccupied.
Commercial property mortgages and valuations are strongly based on rental rates - and until vacancies hit a certain percentage they’re not counted much at all.
One popular way to “flip” an apartment building of 100 units or so is buy one that is 100% rented and slowly raise rents until it is 80-90% rented and then sell it n
By definition when you have constraints on the natural levers of supply and demand in the form of price controls, markets aren’t going to act rationally.
This sounds more like profit optimization. Maybe it is true that it is acceptable to have x% vacancy if it means that your overall occupied rental price remains higher.
An analogy here would be if you're running a hot dog stand, you start selling hot dogs for $10 instead of $5, and have greater unsold hot dogs but higher overall profit.
If these pricks are deliberately leaving flats unoccupied to drive up cost of housing, then local government should step in and confiscate them and allocate to people who really need housing at a decent rent amount.
Affordable housing is uninvestable housing. Until advocates admit this, the walking in circles will continue.
i) Price controls do not work at reducing prices, there are two millennia worth of proof for this.[1]
ii) Higher interest rates lower housing prices by lowering the availability of loans. This is a good thing unless you are already bought into the ponzi of ever declining rates.
iii) Affordable housing is uninvestable housing. A house is a deprecative asset, the same way cars are. A house does not produce anything. You live in it and it wears down.
[1] https://en.wikipedia.org/wiki/Edict_on_Maximum_Prices