Rent control just rewards people who are lucky enough to get locked in lower rates. The best way to make rent affordable is to increase supply, then the price will fall.
It's good politics and bad economics. It literally is wealth redistribution towards renters who are eligible to vote in a given election and will likely vote again in future elections, at the expense of those who have yet to move into the area and transients.
I still hear notions that rent control works and that capitalists just don't want you to know one weird trick! Or that absolute rent control doesn't work, but limiting how much rent can increase year over year does (no). Models where rents are allowed to be raised when tenants move out also have the unfortunate effect of strongly impairing peoples ability to freely move to a new home in a more suitable location for them as their personal and professional life changes, not just impairing new development. Not to mention the renoviction phenomenon, and landlords making their tenants life hell to force them to move.
I think the only argument you could make for rent control is as a protective against monopolisation/price fixing/cartel behaviour amongst landlords who would love to jack prices up above market value using price fixing software like realpage which are a new phenomenon. But it seems like a rather blunt instrument to accomplish that.
In this case it does, by effectively removing a portion of the money which can be extracted from tenants from the land market, which can then be redistributed towards other ends. Or you could lower taxes elsewhere. It also minimises impact on development by not taxing improvements on land and directly incentivising densification.
It's an extremely bad tax if you are a land speculator, but the point of the tax is land speculators are the penultimate example of those who become rich for being rich without actually adding value to the system.
Just like with roads, more lanes means more cars. More flats can also mean more people moving to the cities.
I don't think anyone would look at Tokyo and be like, yeah more apartments is the solution. It's been what they have been doing forever, and the population and cost of the apartments just keep going up.
Tokyo actually builds a lot of new housing which accounts for why housing is affordable there. People think Tokyo is an expensive city -- and relatively speaking it is -- but it's a lot cheaper than the small US city I'm living in now.
Tokyo is a surprisingly affordable megacity because of housing availability.
My understanding that one thing that is unique in Japan is that housing is not an investment vehicle for preserving wealth. Housing is a consumable -- not an investment, and old houses actually lose value (most prefer buying new). Part of it is due to the fact that it's earthquake prone, so houses are ephemeral anyway.
Ever wondered why the population of Tokyo keeps going up? Hint: it's because of the apartments
> In the past half century, by investing in transit and allowing development, the city has added more housing units than the total number of units in New York City. It has remained affordable by becoming the world’s largest city. It has become the world’s largest city by remaining affordable.
> Those who want to live in Tokyo generally can afford to do so. There is little homelessness here. The city remains economically diverse, preserving broad access to urban amenities and opportunities. And because rent consumes a smaller share of income, people have more money for other things — or they can get by on smaller salaries — which helps to preserve the city’s vibrant fabric of small restaurants, businesses and craft workshops.
There’s a limit to how much price can fall when buildings and land are investments. A house which appreciates underneath tenants will get sold, the new owner will have a higher mortgage payment, and rent will necessarily be higher.
Housing isn't bitcoin, it's possible to make more of it. And that's the point: Rent control often ends up disincentivizes construction, making it worse for tenants in the long run.
rent is an economic version of serfdom. The martial winners and their tax collecting partners run the entire market. Practically zero long term successful people in society are renters, perhaps their children at a young age or other temporary versions.
In the modern post-2007 world, capital in massive amounts is travelling to every corner of the West, and also capital from other systems into the West, to own, not rent. The reason to own is to capture the value increase in the market - renters get none of that.
Established theories about economic adjustment of rent prices are like tales of why the dogs nose is cold, or why it rains after a certain holiday. Many modern accepted economic theories are repeatedly disproved. Economic theory is half marketing and alcohol IMO. wave from the Coastal West USA
see also "Supply and Demand are a capitalist hoax"
is this literally true? no.. but neither are the Milton Friedman Chicago Economics theories, so who is "correct" ? see "manufacturing consent" .. "manufacturing desire" .. post-industrial supply chain economics .. history of the savings and loan institutions in America .. more ..
I live in a country that was run by the communists until ~30 years ago, and we built A LOT of housing... until 30 years ago.
They would find an underdeveloped area, build a factory there, build apartment buildings and the city would grow. In existing cities, if there was a need for more apartments, new apartment building blocks were build, and then more, then a school, kindergarden, cultural center, and everything else, and then more apartment buildings.
What if you wanted a private house? You could build it yourself... sometimes literally. Papers were either simplified or you could "forget" about them for a bit, start building and "legalize" stuff after, you could get your buddies to come and help you and you could build stuff on your own, every weekend for 2, 3, 5 years, to get a house to move in to, so you could save on (already cheap government) rent, to finish the second flood, and maybe even put some insulation on.
Clearly, we didn't have a housing problem.
Then the 90s came, no more yugoslavia, the new government didn't want to deal with the upkeep of thousands of buildings and sold the apartments off to current renters for really really cheap (now, compared to a cost of a new car).
Then we got some closing down of factories due to end of communism and a mix of people living in factory cities protesting against those remaining factories (pollution, noise, traffic, ....) and even more ofthose factories closing down.. So people have to drive (mostly) to the capital city to work, because they don't want anything new built in their small towns.
Then we got more and more regulation on building houses, so no way to do anything by yourself anymore, no ore friends helping you, etc. Also, papers first, and just the communal taxes cost approximately the same as bricks and cement do, probably a roof too.
Then more land regulation.. natura 2000, farming land must stay farming, no building here, no there... and we literally have cornfields and cows within our ringroad, next to highways and older 10+ story apartment buildings.
At the same time, more and more people want to move from smaller cities to the capital.
Then we started gentrification in the city center... make it look nice for the tourists, close down the streets for cars (supposedly for more space for pedestrians), rent out that space to restaurants to put tables on (so even less space for pedestrians than before, with cars there), loud music, no car access, and "normal" people move out, since noone wants to live above a hoarde of drunk tourists drinking every night, especially if you have a small kid or something.
Then airbnb happened, and new apartment buildings have people buy multiple apartments at once just for airbnb.
So yeah, we're fucked. Sooner or later someone is going to get his retirement calculated (before you retire you get a calculation), look at the number there, look at the rent, and hopefully, instead of just committing suicide (like a lot of our people already do), take some policians with him.
TLDR: government used to build stuff and let people build stuff, now no building by the government, no building by the people, concentration in (mostly one) large city, and airbnb
That's a great summary of what's happening. I'd probably add in the financialization of real estate and having effective oligopolies in some countries and cities.
It really is that simple. If you want people to have decent, affordable housing, then you build (or simply allow the building of) enough housing, and make sure people own it, not sketchy LLCs owned by investment funds. The NIMBY component isn't that bad in south & east europe yet, but it's building up speed. There's millions of people who just want to live in decent flats with enough space close to the city centre and their jobs, and then there's all these people who don't want anything else built. That's how you end up like LA or London.
The story in Sweden was similar. During the era where Sweden was more heavy into social democracy and the government doing things itself, they had the "million program" where they built a million homes in 10 years (this was when the population was like 7 million). But since the 90's the name of the game has been market economy and privatization and the government doesn't get involved as much (aside from the underfunded local government housing companies). And now those million homes are poorly maintained and decrepit and need to be replaced and nobody is picking up the tab.
Generational real estate and land ownership in general is also first dibs. If you didn’t acquire the asset early on and at the right price, too bad so sad. This is somewhat universal anywhere with land ownership legal frameworks.
If the people want rent control, they’ll get rent control and capital and newcomers will have to deal with it.
“Better” and “worse” are subjective. Affordable housing vs “fair” free market housing selection will be governed by individual belief systems. It’s possible local citizens don’t want what some consider “better.” Up to the people who live there to vote for what they want.
Sweden seems to want rent control, so rent control it is and the discussion is academic (still interesting, but highly unlikely to lead to a delta in current outcome trajectory).
