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What Should Be Done To Protect Renters in Expensive Cities?

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rent21

Since for at least some of you, evidently rent control is the greatest evil in human history, I am wondering what should be done to protect renters?

More than three dozen New York officials stepped into a high-profile court battle over rent stabilization yesterday, filing a brief on behalf of tenants who have sued their Lower Manhattan landlord, claiming they were denied rent caps that should have been guaranteed under a state tax program.

The fight between residents of 90 West Street and developer Kibel Companies, which ProPublica first chronicled in a story published in May, could determine the legality of two decades of rent increases in more than a dozen downtown high rises.

Developers received hefty tax breaks for converting these former office buildings into luxury rentals under an obscure program known as 421-g. In exchange, they were supposed to provide tenants with leases that limited yearly rent increases to levels set by the city. In practice, they often haven’t, maintaining that units renting for more than a certain amount (now 2,700 dollars) were not subject to rent stabilization.

The amicus brief filed late Thursday afternoon by New York City Public Advocate Letitia James, twelve state senators, twelve assembly members, and thirteen city council members, all Democrats, accuses Kibel of claiming a “windfall grant of tax abatements…in exchange for nothing at all.”

Officials said they decided to wade into the case, in part, to demand stronger oversight of an array of programs that swap tax benefits for rent limits, potentially affecting hundreds of thousands of units citywide. Preserving rent-stabilized units has become an increasingly hot political issue, with many local leaders calling for Mayor Bill de Blasio to do more to expand lower-cost housing options.

“The deal behind 421-g was clear—tax breaks for housing in lower Manhattan must include more affordable housing,” State Sen. Daniel Squadron, who represents the neighborhood, said in a statement. “It is not acceptable to shortchange the tenants or the community.”

I am not saying rent control is the only answer. But I do think it can and should be part of the answer. Not having rent control certainly isn’t working. And those who oppose it have no program to fix these problems. Just saying “build more housing units” doesn’t work well in many cities, where foreign billionaires are buying up whole floors of the luxury apartment complexes arising in New York, Seattle, Vancouver, and other cities. Of course, we do need a lot more housing units. But if you are a developer and you have control over what kind of housing unit you build, why not go for the profit on the high-end? Obviously that’s what you are going to do. Far more mandates are needed on rent control and the types of housing that are built. Unfortunately, we do not have that and whole cities are becoming completely unlivable for the working-class, or even the upper middle-class in the cases of New York and Vancouver. And that’s simply not sustainable in any way.

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  • Murc

    I have to confess, I don’t see why some form of rent control can’t be salutary.

    Because here’s the thing. It… doesn’t actually cost that much more to maintain an apartment complex in Manhattan than it does say, upstate in Syracuse, right? The property taxes are probably pretty high but that’s it. So the sky-high rent is basically pure profit-taking; it ought, to my untrained layman’s mind, be possible to force landlords to take less profit, but still take a profit, without causing things to collapse.

    Only apparently it doesn’t actually work that way?

    • Manny Kant

      I would assume that any kind of maintenance is some considerable amount more expensive in New York than it is in Syracuse because labor costs are higher.

    • West

      costs are about $1,500 to $2,000 per unit per year higher in NYC than in Syracuse. That doesn’t cause all the price differentials, of course.

      • Murc

        That’s nothing, though. That’s less than an extra two hundred a month.

    • Brett

      Rent control works reasonably well in Germany. As long as you can build for cheap enough so that the developers/owners can make a profit on even rent-stabilized apartments, then it could work.

      The problem is that rent control tends to follow situations where there’s spikes in prices due to a lag in supply in the face of increased demand. A place where rent control isn’t causing problems is a place where the market rents are low and stable enough so that rent control is just locking things in, and there’s plenty of supply.

      • West

        Germany, both at the national and the state (Land) level of government, does a vastly better job of ensuring that the supply of housing meets demand. They are actually gearing up to create housing for the > 1M refugees that have arrived. No certainty that they’ll pull it off well, but there’s an understanding within the government that “we let all these people in, now we have to house them.”

        We fail at this miserably in the US. And thus your second paragraph is entirely accurate. If we functioned like Germany does on housing policy, we wouldn’t be having this conversation.

      • djw

        Rent control works reasonably well in Germany. As long as you can build for cheap enough so that the developers/owners can make a profit on even rent-stabilized apartments, then it could work.

        The problem is that rent control tends to follow situations where there’s spikes in prices due to a lag in supply in the face of increased demand. A place where rent control isn’t causing problems is a place where the market rents are low and stable enough so that rent control is just locking things in, and there’s plenty of supply.

        The second paragraph is key. How much of new housing is allowed to be built via local zoning laws is a big factor in the cost of construction. When, as is the case in many expensive American cities, a tiny fraction of the land is allowed to have dense multifamily housing built, that artificial scarcity drives up the cost of that land, which in turn drives up the effective cost of construction, necessitating higher returns for the projects to pencil out and get funding.

        One of the reasons I remain somewhat skeptical of the long-term impacts of rent control coming down as a net positive for progressive goals in the US is this key difference between the US and Germany–local control of zoning and land use regulations. Homeowners obviously benefit, via a shortage-induced price hikes, from restricting the number of units available. Renters’ interests tend to fall on the other side–if increased demand is met with equally increased supply, you’re less likely to see the kind of low vacancy rates that typically precipitate steep rent increases. Rent control protects some renters, but divides renters’ interests politically, between those who are fortunate enough to have protections from any ill-effects from a housing shortage and those who are not. This is the dynamic that turns avowed socialist tenant’s rights people into the political allies of millionaire homeowners, united together to screw over those who didn’t win the good timing lottery that they did (either in buying or leasing).

        In Germany, there’s far fewer mechanisms for people to prevent new housing units from being built (whether to preserve their preferred aesthetic environment, protect their privileged access to free car storage on public property, or simply drive up the scarcity and value of their main asset) in their neighborhood or town. One of the unfortunate political consequences of rent control is significantly minimized in a place like Germany.

        • Dilan Esper

          +1

    • sky

      The main expense is the mortgage or the opportunity cost (you sunk $2 million into a property of your own money into a building that you could have bought stocks or bonds with).

    • Just_Dropping_By

      It… doesn’t actually cost that much more to maintain an apartment complex in Manhattan than it does say, upstate in Syracuse, right? The property taxes are probably pretty high but that’s it.

      You’re assuming a fully paid for building here. The cost of acquisition and construction is going to be astronomically higher in NYC than in Syracuse.

    • los

      more capital “tied up” in .a more expensive (purchase price) property”ties up” more capital.

      • los

        (ugh, drag n drop mess)
        meant:
        a more expensive (purchase price) property “ties up” more capital.

    • Chuchundra

      Because high rents aren’t the problem, they’re the symptom. The problem is a shortage of housing.

      Trying to fix that with rent control is like trying to fix a broken ankle with handfuls of Oxycontin. You’ll mute the worst of the pain for a while, but in the end you cause a lot more problems than you solve.

  • J. Otto Pohl

    Experiments in state or employee provided housing have had in some cases very good results. Not sure how you get single payer housing for everybody in the US. But, other countries have managed to have a bigger and role by the state to make housing affordable.

  • Confiscatory tax policies! Live in your unit at least 50% of the time or pay a 1000% property tax rate.

    • Something along these lines, definitely.

      • Lost Left Coaster

        This has been debated and debated and debated here in British Columbia. For now they have settled on a 15% foreign real estate purchase tax — anyone who is not a Canadian citizen or permanent resident will have to pay a 15% tax on real estate purchases in the Vancouver metropolitan area. We’ll see if that suppresses prices at all and whether or not that translates into a better rental market.

        • Too low. Should be first born son.

          • Ahuitzotl

            No, charge them something of value

    • Manny Kant

      Doesn’t that prevent owning rental properties at all (and, thus, the existence of rental properties)?

      I do think you should have confiscatory tax rates for residential units that nobody is living in for the vast majority of the time, but I’m not sure how you’d enforce that.

      • Clearly there can be different categories between people renting out places and people letting their 7th apartment/house stand empty for the 2 weeks a year they spend in San Francisco.

      • That’s fine. But Russian billionaires and Columbian drug lords should not be owning speculative – and empty! – real estate investments in cities in which people are suffering under the high cost of rent and mortgages.

        I mean, the empty rental units are a problem too. Axl Rose shouldn’t be allowed to rent an apartment in NYC that he never steps foot in. Someone is without a home of their own because the trickle down effect of that selfish waste of an apartment.

        • Manny Kant

          Yes, absolutely – our most attractive real estate shouldn’t become artificially expensive because a bunch of plutocrats want to have their own apartment in New York City for the three nights a year they stay there, and taxation is probably the best way to address that.

          But how do you enforce it? How do you prove that an apartment is unoccupied?

          • Let me be the first to volunteer for the civilian patrol. And let the one or two upper class twits who decide to simply pay the fine fund the detective agency that will police this law.

            • Brad Nailer

              Ask the doormen. According to Law & Order, they know everything about the tenants.

              • Bill Murray

                Carlton always knew what was going on

          • Brad Nailer

            Ask the doormen. According to Law & Order, they know everything about the tenants.

            Oops. Sorry for the double post.

          • ASV

            Is somebody listing it as their primary residence on their tax return? If not, tax the shit out of it.

  • Alex.S

    Is your argument that the primary way to keep rent affordable in cities is via rent control?

    I ask because rent control seems to be separate from that entirely, concentrating mostly on short-term and long-term individual stability and not making the overall city affordable.

    • Philip

      I think it’s more like a safety buffer. It means that when the rest of your housing policy is failing, existing residents aren’t immediately driven out, and you have time to fix the other things.

      • Brett

        Does that ever actually happen in practice? New York City has had rent control/stabilization for decades – it didn’t make it any easier to reform the problems with its housing policy.

        If anything, it made it worse. Long-term rent-controlled tenants act like homeowners and do the same type of NIMBY anti-development stuff in their neighborhoods.

        • polyorchnid octopunch

          Yes, that sort of thing does happen in practice. It’s certainly happened in Vancouver. The fact that it’s not something that happens overnight doesn’t mean it doesn’t happen, it’s the time horizon is 1-2 years to really see an effect.

          Similar things have happened in popular regions of Ontario because of MVA property taxes (in particular the Muskokas and Prince Edward County), where long term homeowners on fixed incomes in their retirement have had to sell the homes they grew up and raised families in because an influx of wealthy Toronto folks resulted in their property taxes sometimes quintupling over the course of a few years.

          As I understand it, Aspen is another good case of this sort of thing. So yeah… it happens.

    • My argument is that rent control probably needs to be a serious part of policy solutions for these problems, at least in the short-term.

      • West

        Please be aware that there are many hundreds of thousands of rent-controlled apartments in the US: Section 8 (including the Sec 202 senior offshoot), low income housing tax credit units, RD units, the dwindling number of pure public housing units.

        We do rent control in this country. The LIHTC works well within its too-narrow parameters. Sec 8 is hugely improved over its darkest years, is pretty good now, but is also underfunded and too narrowly aimed.

        I know this isn’t what you mean by “rent control”, but as someone working within the affordable housing field, I find myself doing the head desk thing very often in these conversations. Rent control exists in every state, if you know where to look for it. I can take you on a tour of rent controlled properties in Houston TX, NYC, Boston, San Francisco, Jackson Mississippi – name the city, I can probably find you some rent controlled apartments there. In many cases in my company’s own database.

        ETA: that should read millions in the first paragraph, not hundreds of thousands.

        • veleda_k

          People wait years for section 8 housing to open up, as I trust you know. And even if that issue were improved, there are still lots of people who are being priced out of their apartments who won’t qualify for that kind of public assistance.

          The rent control Loomis is talking about clearly goes far beyond section 8 or tax credits.

          Aaaand I looked down one comment, and I realized you expanded on this comment. Disregard my pedantry.

        • SIS1

          If you know that those development subsidy or rent subsidy programs you mentioned aren’t in fact rent control in a meaningful way, then why insists on incorrectly labeling them as such?

          • West

            You’ve misread my comment. I am not incorrectly labeling LIHTC and Sec 8 as rent control. I’m saying that those programs do in fact have rent control built into them. I mean that very explicitly. I was suggesting that Erik probably wasn’t referring to those programs when he used the phrase “rent control”, because that’s almost never what anyone means when they say the phrase “rent control”. What is usually meant, and I believe Erik’s original post fit into this, is that there should be governmental controls on the rents of all properties.

            My point is that the only time rent controls work is where there are also policies in place to assure an adequate supply of new units to meet a growing population, and adequate income support of some type to assist households that cannot meet the bare bones basic cost of running units. Germany has been cited a country that does this well, and I think that’s true, albeit imperfectly. But Germany DOES NOT only focus on constraining rents, they also focus on maintaining supply. In America’s most successful urban areas – and this is sadly truer in liberal cities – we absolutely suck at providing for adequate supply. So long as we fail at the supply of housing, there’s zero chance that rent control alone could work over time. I believe that if we had truly widespread rent control in the big successful liberal cities, without any increase in a linked production program, we’d just drive first construction and then renters to Texas.

            The LIHTC and Section 8 programs work well within their too-limited scope. The former especially makes an explicit link between the supply of housing and the control of future rents within that housing. The LIHTC program IS rent control, very meaningful rent control (meaningful in the impact to renters in high cost cities), and it is linked to production, very meaningful production (meaningful in the quantities of units built). For reasons that escape me, most Americans are blissfully unaware of the program entirely, and whenever I bring the program into conversations about rent control, I get blank looks all around.

  • West

    1) Expand the Low Income Housing Tax Credit program dramatically, especially in high cost areas, by adding another tier of the credit aimed at the 60-80 AMI tier of households in all areas (current top level is 60AMI), and yet another tier at the 80-100 AMI range for high cost areas. The tax credit program has actually enjoyed bipartisan support, and it links long-term rent control to a combination of construction subsidy AND a compliance regime that has worked quite well over time. This would absolutely spur construction of affordable units above the current level.

    2) Expand both the Project-based Section 8 and voucher Section 8 programs dramatically; could increase the reach into higher income tiering a la the above suggestions.

    3) In high cost areas, link the expenditure of federal housing dollars, both direct (section 8) and indirect (LIHTC), to receipt of other federal funding. Massachusetts (where I live): fail to use all the newly allocated LIHTC and Section 8? Lose your highway and school funding. Let the states sort out how to force the cities and towns to pull their fair share of the weight so that not only Boston, Lowell, Chelsea, etc, are making room for it.

    Full disclosure: I work in the LIHTC biz, so the above comments are partially self-serving. But I believe them to be good ideas nonetheless.

    Numbers 1 and 2 could be doable with a Democratic Congress. Number 3 is my personal pipe dream. I’d like to force the dear sweet pseudo-liberals in places like Massachusetts be forced to stop being such NIMBY-ers.

    The problem with rent control isn’t on the moral side, it’s on the practical side. If it’s only in a few places, it spurs conversions of rental units to owner-occupied – saw it happen in Berkeley in the 80s while I lived there. And it gets scammed, because the compliance regime inevitably sucks. Or at least it sucked in NYC while I lived there, and sucked in Berkeley, too: everyone knew someone who was not at all low income but had a great rent-controlled place.

    • tribble

      It seems like, solving the problem of incredibly high housing costs in these cities is going to take multiple interventions. Getting rid of rent control might be one of them eventually, but it should go after other actions such as Section 8 expansion and rent subsidies (direct or through tax credits) and increases in construction.

    • Dilan Esper

      The problem with rent control isn’t on the moral side, it’s on the practical side.

      This is 95 percent true, but there is a moral issue too. I know a lot of people believe it to be common sense that incumbents should be protected, but housing supply crunches essentially put a metaphorical wall around cities and prevent people from moving in and reaping the economic benefits. This really isn’t fair.

      A lot of problems I have with Erik’s economic philosophy, whether on this, trade, or even unions, is that he ignores in-group/out-group distributional effects (or just writes them off completely and pretends they do not exist, as with trade). I’m not saying these problems are easy, and I’m definitely not saying conservative economics does any better (it does much worse).

      But simply benefitting a small sub-group of the working class at the expense of outsiders does not actually solve the problems of the working class or the poor– in many ways it makes them worse.

      • mpowell

        This seems like a lot more than just 5% of the problem with rent control. It seems like a fundamental error to try to arrange a substantially lower cost of living for some people than others.

        • djw

          I think it’s tricky. On some questions, time has moral significance. I agree with Joe Carens, for example, that the longer a non-citizen has maintained a residence in a country, the more morally fraught it is, and the higher the bar ought to be, for expelling him.

          For housing, I’m cool to rent control because of the clear harm to newcomers, who had the bad timing to miss the affordable rent window. I’m hate hate hate the way citizens of desirable locales scapegoat and sneer at more recent arrivals (“Californians” in the PNW, “tech people” in the Bay area, etc) which strikes me as every bit as ugly and illiberal as anti-immigrant sentiments. On the other hand, I can’t help feeling there’s something troubling enough to use public policy to try to avoid about steep rent increases pushing out an elderly person of limited means, deeply integrated into the neighborhood over decades of living there. I can make the case for this harm on utilitarian grounds–the literature on gerontology and loneliness is pretty clear this person’ remaining years will likely be shorter, less healthy and less happy for losing their home–but it feels wrong to me even beyond the quantifiable quality of life harm.

          I don’t have a good public policy strategy that fits well with both of these instincts (beyond the imperfect but essential “build build build so these situations happen less often”).

          • Dilan Esper

            Build build build is the right strategy. If you build enough, everyone who wants to stay will get to stay (especially if, as you discuss above, some German style rent control is imposed after the housing supply is radically increased). They may lose their views and their aesthetics and their neighborhood character, but those things are worth less than the benefit of staying.

            In contrast, it isn’t as though rent control actually ensures everyone gets to stay.

            • Linnaeus

              As long as you’re actually building more units. Right across the street from my apartment, as we speak, a new set of condos is being built to replace the apartment building that the owner demoed. But the number of units hasn’t increased in the new building – a less expensive building is simply being replaced by a more expensive one.

              • mds

                Indeed. All the rage in our current neigborhood are condo conversions + new luxury apartment buildings with a fig leaf of a few “affordable” units. So the pool of affordable apartments isn’t actually increasing all that much, while every upward tick in the mill rate is used to justify hiking the rent on existing properties every year. Meanwhile, downtown has a new skyscraper full of extremely expensive apartments, and multiple old office buildings and factories have been converted into extremely expensive apartments. So I guess I’m wondering when the glut of high-priced apartments will ever actually translate into lower rents for the rest of us.

                Unfortunately, Loomis uses the term “rent control,” which in NYC is entirely different from “rent stabilization.” I don’t necessarily see the problem with restricting how much rent can increase each year, nor with extending it to the rents chargeable to new tenants. (IIRC, New York’s stabilization only applies to existing tenants, with the rent re-settable upwards once they leave.) We think it’s an outrage when universities levy those tuition increases that so greatly outpace inflation; why should it be okay when landlords do the same?

          • Linnaeus

            I’m hate hate hate the way citizens of desirable locales scapegoat and sneer at more recent arrivals (“Californians” in the PNW, “tech people” in the Bay area, etc) which strikes me as every bit as ugly and illiberal as anti-immigrant sentiments.

            This annoys me, too. I personally haven’t caught any heat for being a transplant (I guess the state I came from is not deemed a threat) and by now I’ve lived here long enough and acquired enough local knowledge that most people don’t bother to ask where I’m originally from. But when I do hear this kind of regional nativism, I usually point out that unless you’re in, say, Sherman Alexie’s family, your ancestors were newcomers at some point.

            • djw

              Dayton is a refreshing change on that front. “You actually came here from Seattle? WTF? Welcome, sorry we’re not cooler”

              • Linnaeus

                I love Rust Belt self-deprecation.

  • shah8

    prop
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    Getting rid of mortgage deduction would help, too.

    Of course, too many powerful people benefit, so things have to crash before any change.

    • Philip

      and burn prop 13 to the fucking ground

    • djw

      Yes.

    • Just_Dropping_By

      Except that if the alleged source of the problem is ultrawealthy individuals acquiring multiple luxury units then the mortgage interest deduction is basically irrelevant: the mortgage interest deduction is capped at the interest paid on $1 million worth of mortgage debt and you can only count mortgages on two properties toward meeting the total. Source: https://www.irs.gov/publications/p936/ar02.html There are also substantial restrictions on the deductability of mortgage interest for individuals subject to the AMT.

      • Rob in CT

        The mortgage interest deduction should go away, though. I think I like the idea of just letting inflation slowly kill its value. Others might feel that’s too slow.

        • Just_Dropping_By

          Oh, I’m fine with getting rid of the mortgage interest deduction too, preferably via some long-term phase out. My point is simply that eliminating the mortgage interest deduction is going to do virtually nothing to increase the amount of housing on the market in NYC if the cause of rising rents is actually ultrawealthy individuals acquiring multiple luxury units as Loomis posits in the OP and many other liberal writers on the subject (e.g., Hamilton Nolan over at Gawker) also tend to assume. Anyone who can afford to purchase a multi-million dollar condo merely to use it as a “pied à terre” is almost certainly not choosing to do so for purposes of getting the benefits of the mortgage interest deduction.

        • Srsly Dad Y

          I totally agree. The deduction and the exclusion of capital gains up to $500K per person are outright gifts to rich people (like me). The history of the Tax Reform Act of 1986 is not encouraging on that point, though. The mortgage interest deduction was on the chopping block then, but got saved by senators from high-home-price states with the support of the usual housing industry suspects. It’s hard to imagine Congress getting anywhere near it again outside the context of another Grand Bargain of horse trading on tax reform, which in itself is not noticeably likely.

        • Chuchundra

          I know that the elimination of the mortgage interest deduction is pretty popular around here, but I think that people really underestimate the bad effects it would have.

          The tax advantages of home ownership are baked into home prices. Eliminating or severely curtailing the deduction, even over time via inflation, is basically taking money out the pockets of a lot of middle-class people for whom their home is their primary financial asset.

          Doing it quickly, would basically crater the real estate market nationwide and result in waves of defaults and foreclosures.

          Also, the deduction is one of the few ways that middle-class/upper middle earners in high-tax, blue states can claw back some of the money we send to Uncle Sugar to support low-tax red states. Without the mortgage interest deduction, my state plus property taxes would be barely above the standard deduction.

  • Brett

    And those who oppose it have no program to fix these problems. Just saying “build more housing units” doesn’t work well in many cities, where foreign billionaires are buying up whole floors of the luxury apartment complexes arising in New York, Seattle, Vancouver, and other cities.

    It works better than you think. This is from New York City:

    Listing inventory numbers across Brooklyn and Manhattan increased 29.6 and 30.3 percent respectively in the past year, reaching 7,681 in Manhattan and 2,424 in Brooklyn, the report found.

    July also marked the highest inventories recorded in Brooklyn and Manhattan in more than 7 years, according to the report.

    And listing inventory numbers in Queens rose 15 percent from 464 in July 2015 to 534 in July 2016.

    In addition, as more inventory flooded the market, especially at the high end, brokers saw a rise in vacancies in Manhattan — or 2.49 percent — the highest point in the past nine years, according to the Douglas Elliman report.

    As inventory and vacancies expanded, increased competition slowed or reversed the growth of median rental prices in Manhattan, Brooklyn and Queens.

    Median rental prices increased only .9 percent in Manhattan and slipped .8 percent in Brooklyn and 8.2 percent in Queens, the report found.

    Median prices for luxury rentals — where new developments have flooded the market — dropped by 5 percent in Queens and .4 percent in Manhattan, and only rose 2.1 percent in Brooklyn.

    Granted, the median rent isn’t about to take a 50% plunge or anything like that, but it’s heartening to see this. It also flies in the face of claims that luxury apartment demand is so perpetually massive that a decline in prices is unthinkable in a place like New York City.

    • djw

      See also Tokyo, where the population has been growing at a fair clip, but prices are stable because supply has comfortably kept up with demand.

      There was an idea floating around to charge a tax on units in NYC a few years ago that were kept vacant X number of days a year. This would help a lot–it’s really perverse that it makes economic sense to own expensive housing without renting it out, but when that economic logic prevails it can be fixed with the tax code. (In the end, the legislature wouldn’t give the city permission to do it, so it died, but it seems like a good idea to deal with speculation. States v. Cities, again.) It’s too early to draw any conclusions, but initial evidence suggests Vancouver’s new foreign buyers tax seems to have really slowed down the propensity for global capital to park itself in detached homes in Vancouver. If these trends hold, costs are going to start to come down, or at least stabilize.

      • Brett

        I’d absolutely support something like Vancouver’s law and a vacancy tax. It’s great for the city, raising extra revenue while dealing with a social problem (empty apartments amidst high demand).

    • Sebastian_h

      Exactly. The title of the post is a bit perverse because the most expensive cities in the United States are the ones with rent controls.

      The very best you can hope for with rent control is trapping people in the place they are in right this very second. For some retirees that might be good enough, but that isn’t a good overarching policy. If you get a job somewhere else, you’re screwed. If your family grows or shrinks over time, you’re screwed. We shouldn’t be discouraging people from moving when appropriate.

      NYC and SF prices are all about NIMBY housing construction constraints and (to a MUCH LESSER extent) a failure to tax housing that sits un-occupied. Rent control just adds to the NIMBY situation.

      Policy-wise if you feel you ‘need’ rent control that means your housing policy is deeply fucked up. If your housing policy is ok, you don’t need rent control. So saying that it is ‘part of’ good housing policy isn’t really true. It isn’t particularly damaging with good housing policy, but it doesn’t make sense as a place to start with housing policy either.

      Sidebar on ‘luxury’ housing. Yes developers want to sell to rich people. But that is fine with a good housing policy because the rich people will be selling to middle class people who sell to poor people. Even if that was all you did it would be MUCH better than the current idiocy in SF and NYC. If you want to bundle luxury housing with some small amount of forced lower income building, fine, but it isn’t the big deal a lot of progressives seem to worry.

      • Exactly. The title of the post is a bit perverse because the most expensive cities in the United States are the ones with rent controls.

        Which ones? I know SF has rent control and is probably the city with the fastest increasing high rents. But I think Silicon Valley isn’t far behind, is that rent-controlled? New York City is definitely near the top, and has rent control. But, as I understand, it has much less rent control than it did, say, two decades ago, and affordability has substantially decreased in those years. Boston is another perennial contender for the top three most expensive cities, and Massachusetts abolished rent control in the 1990s. I’m guessing that any relationship between expensive cities and rent control is mostly caused by rent control being enacted as a proposed solution to a city being expensive.

        • djw

          But I think Silicon Valley isn’t far behind, is that rent-controlled?

          San Jose and East Palo Alto have rent control legislation.

    • lunaticllama

      I work in NYC and people have been talking for the past year about the real estate market at the high-end softening. Interesting to see the actual numbers.

  • NewishLawyer

    1. Building as much as quickly and as safely as possible is ultimately going to be the best way to lower rent and owning costs whether we want to admit it or not.

    2. Unlike others, I am not opposed to rent stabilization/control though. I don’t think it is the evil that economists make it out to be. Germany shows that you can do it well.

    3. The issue with building is the displacement issue. NYC just announced that they are shutting down the L train in 2019 between Bedford and Manhattan for necessary repairs. The argument is that the temporary pain of a year long shutdown is better than three years or more of service interruptions. Same with building. How do you help prevent displacement while doing all the building because in some areas you will need to knock down and build up?

    • I think this is about where I am on the issue. You need to build enough housing. But that’s pretty much going to inevitably lag demand. And it’s going to be hard to get the demand and the supply to match well geographically as well. And there’s really no good reason to protect the ability of landlords to realize windfall profits as a neighborhood gentrifies. So a rent stabilization program seems like a good thing as long as you’re building at a decent rate.

  • Gregor Sansa

    A cap on average square footage. CAFE for housing.

    • djw

      As an urbanist and environmentalist, I love it. Politically, though, this is all kinds of DOA.

    • Brett

      That would be a hard sell in the suburbs, unless you set the standard really high (i.e. >5000 square feet).

      • Just_Dropping_By

        Since the context here was a discussion about rent control and affordable housing, I’m guessing Sansa was referring to NYC and other dense urban areas.

  • Limit tax advantages for REITs. Limit tax deductions for mortgage interest and depreciation for real estate LLCs – tie deductions to a formula that requires a percentage of real estate company’s units to be within an affordable range.
    Local zoning regulations need to include provisions that encourage clustering, infill, and the creation of affordable rental units.

  • N__B

    I agree with the argument, but 90 West Street is the wrong building to look at. It was an office building until it was damaged on 9-11, and was then converted into a high-end rental aimed at Wall Streeters who want to walk to work. It’s a big frat house of 23-year-old MBAs. What’s happening to them may be unfair, but there are much, much better examples of poor and middle-class people being displaced.

    • “It’s a big frat house of 23-year-old MBAs.”

      Did the city have to install and extra drainage line for all the excess testosterone?

  • a_paul_in_mtl

    I can speak to the situation faced by renters in three cities (two in this country, one in Canada):

    In Montreal, where I am from, rents are “controlled” in that there is officially a limit on how much landlords can raise rent year-upon-year. The allowed rate is determined based on how much landlords’ costs are deemed to be increasing. Tenants can also “refuse” rent increases on certain grounds and litigate the issue in front of the housing authority (Regie de logement).

    This is good but there are some problems. One is that Montreal’s renter population is highly transient and new renters don’t necessarily know what the previous tenant paid, so it can be in the landlord’s interest to encourage turnover in order to raise rents more than they would otherwise be allowed to do. Another is that virtually all new housing development is in condos, and some old rental units are even converted into condos. This reduces the availability of rentals, forcing some tenants to settle for substandard apartments or inflated rents.

    In New York City, where I lived for a time, rent is generally very high. The “rent controls” that do exist tend to be Section 8 housing (for which is a long waiting list) or tenants whose tenancy dates back to an earlier rent controlled era who pay much lower rent than everyone else. Such rent controls don’t come close to benefiting all those who need more affordable housing.

    In Burlington, Vermont, there doesn’t seem to be any rent control apart from Section 8 and rents are remarkably high considering that it’s really a small town, not a mini-Manhattan at all. However, it is also a university town and a lot of renters are students who just need a room and shared space, and so can split a $2000 a month rent with, say two or three other room-mates and end up paying less than they would in dorm. These apartments are also not very well maintained.

    So I’d say rent control is one tool a policymaker wishing to improve housing affordability should use, in conjunction with others. It will only work as part of a broad package of initiatives aimed at improving affordability.

    • sky

      In the Los Angeles city limits, only units built before 1978 are covered under rent control. That way, developers still have incentives to build nice, new apartments.

  • sky

    Rent control can’t help enough people. You can’t subject new construction to rent control, or no one will want to build. You can’t even make them think that they’ll be subject to rent control in the future.

    Building more units has to be the answer. If you have $1 million housing units in a city and $1.1 million households that want to live there, then at least 100,000 people won’t be able to afford their own unit no matter what you do to help them. They’ll double up, be homeless, or move away.

    • a_paul_in_mtl

      Let me get this straight. If rent regulation is what is keeping the number of units down, then deregulation would increase supply. But rents are already too high for people to afford, and you are saying they are too low for supply to increase. A bit of a conundrum, no?

      Also, how many more units can be added in NYC? Surely not enough to reduce rents, especially if you are proposing to increase them even more to start to bring more developers into the market.

      • a_paul_in_mtl

        Sure, building more units would be a good thing, but what units, by whom and for whom? If all the new housing being build is high-end condos, it doesn’t really help affordability that much. If there isn’t much profit in affordable housing, you’re not going to be able to rely on developers riding market forces to make housing affordable.

        • Sebastian_h

          “If all the new housing being build is high-end condos, it doesn’t really help affordability that much.”

          That isn’t true. Older places in the expensive cities are ridiculously expensive now. If rich people move into expensive new places, the old places become cheaper or at least stop appreciating. Now some of that can be hurt (in London or the UK) by rich people buying to just visit every now and then. That needs to be dealt with a non-occupancy tax or some such. So long as you are actually adding lots of new units, it will help the whole market.

        • djw

          If all the new housing being build is high-end condos, it doesn’t really help affordability that much.

          This just isn’t true. For this to work, not building high-end condos would have to prevent rich people from moving to the city. But of course if they want to live there, they’re going to come and find somewhere else to live. If there aren’t enough units built for newcomers with money, they’ll just start outbidding people with less money in older, not-so-high-end housing. Filtering, generally speaking, actually works, but not if new units aren’t allowed to be built at a rate that keeps up with population growth.

          • Here in Boston, we seem to be building high-end condos as fast as we can, and rents are still exploding. Maybe things will calm down once all the Seaport district developments are finished, and the other big high-end ones going on right now, but we seem to have no trouble getting new rich people to move into the city to fill every unit that we build and then some. So I’m pretty skeptical that building our way to affordability is going to happen without other policy interventions.

            The best way of thinking about what’s happening that I’ve run across is that it’s a case where there are two different markets. The new high-end developments in the right neighborhoods are drawing residents from all over the world that are looking at high-end developments in the right neighborhoods. Or, a bit down-market, there are the trendy, up-and-coming neighborhoods. But all that is fairly segregated from the market that the city’s working class is in, which is a much more local market. So if you’re in those areas, and there’s no rent control, you pretty much fear any development that makes your neighborhood one of the right ones to attract rich outsiders.

            Also, there’s too many rich people, please remove some. I am not a crank (just a socialist).

            • djw

              1. In 2015, around half of Boston’s building permits were for middle or low income housing.

              2. Boston’s extensive local control means you really aren’t building “as fast as you can”–new construction lacks well behind new jobs, which is a pretty good explanation for fast-rising rents. I can’t think of any good reason to believe rents would be increasing at a slower rate with less construction. The notion that people are moving across the country/world to Boston, not for a job but because someone built a fancy condo they wanted doesn’t seem particularly plausible.

              I don’t understand the claim about separate, distinct, non-overlapping housing markets. (What evidence would there be for that?) Imagine you’re a very rich person who has decided to move to Boston. Maybe you’ll move into a fancy new luxury condo. What possible reason is there to think that if that Condo hadn’t been built, you would bag the whole Boston plan? You’d just outbid a slightly less rich person for a slightly less fancy condo.

              • 1. In 2015, around half of Boston’s building permits were for middle or low income housing.

                What is that measuring? Does, say, Millennium Tower, with 442 luxury condos count as a single building permit? 442 separate permits? Something else? Because a lot of the really high-end stuff is these large single building, many unit developments. I’m just going by what I see around.

                2. Boston’s extensive local control means you really aren’t building “as fast as you can”–new construction lacks well behind new jobs, which is a pretty good explanation for fast-rising rents. I can’t think of any good reason to believe rents would be increasing at a slower rate with less construction. The notion that people are moving across the country/world to Boston, not for a job but because someone built a fancy condo they wanted doesn’t seem particularly plausible.

                New construction is always going to lag new jobs. Buildings take a while to get built. Especially in an already pretty dense city. And I’m certainly not advocating less construction. But we’re in the midst of what I believe is Boston’s biggest building boom ever, and it’s insufficient to keep rent down. Boston has a goal of adding 53,000 more housing units by 2030 (PDF)to keep up with expected population growth. That’s a pretty decent rate for a city of around 600,000 people (and thus, I guess, in the vicinity of 300,000 housing units). We’re theoretically trying to increase the number of housing units by 20% in 15 years, in a city that’s already pretty well built-out. Sure, that’s not literally “as fast as possible,” but we’re working on it. I figure a 20% projected population increase is probably going to strain our shitty transportation infrastructure to the breaking point faster than we can build the housing to accommodate it.

                Also, I meant to address it before, but then deleted that sentence and didn’t follow up on it, but I’m talking specifically about the city of Boston here, not the metro area. Many of our suburbs probably have no intention of doing their part to keep housing affordable. But in the actual city of Boston, it really looks to me like we’re implementing the plan of building a lot of market rate housing, and it’s not enough to keep… well, to keep me from bouncing neighborhood to neighborhood every couple years as landlords jack up the rent.

                I don’t understand the claim about separate, distinct, non-overlapping housing markets. (What evidence would there be for that?) Imagine you’re a very rich person who has decided to move to Boston. Maybe you’ll move into a fancy new luxury condo. What possible reason is there to think that if that Condo hadn’t been built, you would bag the whole Boston plan? You’d just outbid a slightly less rich person for a slightly less fancy condo.

                I think the dichotomy between the two markets is a concept I picked up from Aaron Renn, who’s really much more of an annoyingly free-market guy than I can deal with (he’s at the Manhattan Institute these days, I believe), but that article struck me as really insightful. I’ll try to track it down. He surely explained it much better than I did.

                Still, as an example, Boston just won(?) the privilege(?) of getting GE to move its corporate headquarters here. That’s basically 800 well-paid corporate executives, from what I understand, moving from Connecticut. And all it took was at least $150 million in tax breaks. I’m just going to say that this wouldn’t have happened if the Seaport district, where GE’s going to move, wasn’t being currently being filled with large luxury condo developments (and a whole bunch of new “class A” office space).

                • djw

                  I think the dichotomy between the two markets is a concept I picked up from Aaron Renn, who’s really much more of an annoyingly free-market guy than I can deal with (he’s at the Manhattan Institute these days, I believe), but that article struck me as really insightful.

                  Interesting. I associate the “two distinct markets with nothing to do with each other” from people who are pretty much the exact opposite of annoying free market types (expect for the annoying part)–supply/demand denialists.

                  What is that measuring?

                  Housing permitted in 2015. Millenium Tower is allegedly nearly done, so it was obviously permitted well before that. I don’t recall where I read/heard the story, but here’s something for the first half of 2015:

                  Almost half of the 2,461 apartments, condos, and homes the city approved in the first half of 2015 were listed as affordable, for low-income residents, or priced as middle-class units,

              • And I think this is the piece I was taliking about, “Priced Out of Downtown Detroit”:

                Detroit is an interesting lab to show this at work. This is a city that simultaneously has a tight housing market with rising prices in Downtown at Midtown at the same time the city is proposing to spend almost $2 billion dollars to demolish about a quarter of its housing stock. There would appear to be ample housing and land available for almost free in Detroit, even in urban Detroit, but the differences in the markets are stark. Why is this?

                In 2009 I wrote a piece called “Migration: Geographies in Conflict” in which I explore this issue. In the age of globalization there are really two types of labor markets, global and local. People who work in global labor markets can command significant wage premiums over those in local ones. The modern globalized economy is been very good to those with top level global skills, while more traditionally local markets have been exposed to new, low-wage from offshore and crushed.

                The problem is that those two economic and labor market geographies can exist in the same physical geography. In those cases, the global market workers are able to outbid local market workers for housing and other goods and services, leading to rising prices and displacement. Read the whole piece as I talk about this in much more depth, especially with regards to California.

                I included the link to his earlier piece in the quote above, but I don’t think I’ve read it yet.

                • djw

                  Huh. My first read is that there’s a very small number of neighborhoods in Detroit affluent white people are willing to consider living in, and they’re in high enough demand that rent is going up. Typically this would lead to nearby neighborhoods gentrifying and going up in price, and there’s some reason (I can think of a few possibilities, but I don’t actually know) that that isn’t process isn’t happening, or is happening more slowly than usual, in Detroit. I don’t really see much similarity to this dynamic and anything going on in Boston, where most of the city is acceptable to white people who can afford it. The majority of Detroit has housing that is for all practical purposes essentially free to whoever wants it. There’s nothing like that in Boston, and if there were it would be snapped up, fixed up, and gentrified in about five minutes. The situations don’t seem comparable at all.

      • a_paul_in_mtl

        I understand from a previous comment that you are proposing only to deregulate new housing development but the problem remains. That, in fact, has been the approach in NYC for decades (grandfathering rent controls and allowing new rentals to exist outside of rent controls) and rents are sky high there.

        • sky

          The biggest problem is zoning and NIMBYs. We need to allow much more density.

  • Crusty

    Not sure if I’m trolling or not, but here goes- why is this a problem that needs fixing? I moved when my rent got too expensive. I don’t live or buy in places that I can’t afford. I don’t think its something that’s unfair or requires government intervention.

    • If you don’t see diversity, income and otherwise, as something that planners should seek to allow in cities, I don’t know what to tell you.

      That’s not even to mention the fact that service workers now have to commute increasingly long distances for their low-paying jobs.

      • Crusty

        I also have a longer commute to my job, seeing as how I moved because I could no longer afford the rent. I didn’t move somewhere more convenient, I moved somewhere less convenient. That’s why its less expensive. I don’t enjoy the commute. Now, I realize this is a my life sucks so everyone else’s should too type of argument and that may not be a good argument, but it is a type of argument.

        Diversity, income and otherwise is something planners should seek to allow, but I don’t know why anyone has the right to occupy a space when someone else is willing to pay more to occupy that space. Doesn’t that end up hurting people in the middle, and arbitrarily?

        • Seems to me like the only people that hurts are capitalist landlords and developers.

          • mpowell

            How about the poor or middle income people who want to move in but can’t because they don’t get rent controlled prices? I mean, wtf, isn’t this obvious?

            • All those poor people finding housing in Manhattan and San Francisco. OK. Clearly that’s what is going to happen if rent control is ended. The poor will finally have affordable housing in those cities.

              • Sebastian_h

                You’re right, they won’t. But rent control won’t keep enough of them there either because people sometimes have to move. That’s because rent control is a generally bad solution to the problem you’re posing. You don’t want “low rents for where people are living right this second” you want “lower housing costs so people can afford to live in the city”.

                Those two wants aren’t the same thing. The second is fixed by building more housing so that the supply catches up with the demand. Rent controls barely stop the bleeding for right this second and then wreck your supply pipeline. It is like eating seed corn. Yes you do it if you are going to die, but you’re just dooming yourself for next season.

          • Crusty

            It hurts anyone willing to pay a price higher than the controlled price but who can’t afford the market price. If you can’t see that, I don’t know what to tell you.

            • JustRuss

              But if there’s not rent control, how will someone who can’t afford the market price convince the landlord to charge him somewhat less than market but more than a rent-controlled price? I don’t think that happy middle exists.

              BTW, I want to frame this and put it on my wall:

              Now, I realize this is a my life sucks so everyone else’s should too type of argument and that may not be a good argument, but it is a type of argument.

    • The Temporary Name

      Displacement of the people you know and love and depend upon in favour of rich non-citizens isn’t a winning political position.

      • Crusty

        The nine and ten figure apartments being built for Chinese, Russian and middle eastern billionaires has a negligible impact on affordable housing prices in places like New York. Most of those apartments are built in the vicinity of Central Park South and West, where there was not previously anything that could reasonable be called affordable housing, now will there ever be. That ten million dollar apartments are being replace with 100 million dollar pads isn’t changing things for the poor, because they would not otherwise be living there anyway. It might change the calculus for what a developer would choose to build, but developers are already incentivized to seek maximum profits.

        • Pseudonym

          You don’t think the former occupants of those former ten-million-dollar apartments are going to relocate to somewhere else in the city and drive up prices there, and so on and so forth?

          • djw

            Right. Pretending different segments of the housing market have nothing to do with each other is just clearly and obviously false. Shortages at the top spill down.

            • Crusty

              But there isn’t a shortage at the top. If anything, there’s a surplus.

              And most of the new mega-apartments are built super tall on existing footprints. They have to be- existing footprint for desirability, i.e., an existing area like CPW, CPS or Park Avenue, and super tall for views and a trophy factor.

              • super tall for views

                and to block the views of others!!!

    • Brett

      We’re talking about some of the most economically productive, dynamic cities in the country with very low unemployment rates. If rents were more affordable, then these places would be a godsend for working-class people – tons of jobs, comparatively high pay, good range of access to goods and services, low cost of living, etc.

      It’s a problem that that isn’t happening. It makes the country weaker economically, and a lot of people poorer. Matt Yglesias comes in for a lot of justly due criticism, but I really liked this from what he wrote on it a few years back:

      Silicon Valley should be the site of tons of working-class construction jobs and a big population boom. Qualified engineers from around the country should be moving there and pushing the frontiers of innovation, with the population growth and construction also supporting employment all up and down the skill spectrum. Doctors and nurses and teachers and retail-store clerks and chefs and busboys and carpenters and plumbers and used-car salesmen and all God’s wonderful creatures. But instead faced with NIMBYs and restrictive zoning, we’re seeing modest population growth, double-digit housing price increases, falling real earnings for the working class, and a boom in homelessness. It’s absurd, and it’s tragic.

      • djw

        Yes, that’s an important point. Tim Redmond, one of the most egregious of the San Francisco millionaire homeowners pretending restricting the housing supply is good for the poor, once actually argued that market rate housing construction is bad because if more rich people move in, we’ll need more teachers, police, firefighters, etc to serve more people and then we’ll have to build housing for them, too!

        In approximately zero other contexts would “if we do X, it’ll create some more stable middle class jobs, so we shouldn’t do X” be an argument one could plausibly make with a straight face.

      • Just_Dropping_By

        Except that points to needing changes in zoning, not rent control (a point that I believe Yglesias would agree with, since he’s generally opposed to rent control, IIRC). Rent control would simply lock in the status quo.

      • bender

        Meanwhile, really nice houses and apartment buildings in rust belt cities stand vacant. Instead of moving more people to places where there are jobs but no housing, why not move the jobs to where the housing already exists? Why can’t there be a technology boom in Detroit?

        • Linnaeus

          I think you already know the answer to those questions.

        • djw

          How is this supposed to work, exactly? Let’s say we decide it’s a good idea to move 25 K jobs from the Bay Area to Detroit. What does the public policy that makes that happen look like, in your mind? Tax incentives or some such would have to be awfully large to overcome the economic benefits of clustering.

    • djw

      In addition to what I would have assumed would be the obvious value of economic diversity in neighborhoods, some instances of economic displacement involve people who’ve been there for quite some time. The benefits for the aging/elderly of being remain close the friends/family/community/networks that they’ve come to know over decades and start over somewhere else is associated with significantly worse health, mortality, and reported happiness outcomes. Stripping people of access to the community they know late in life leads much higher rates of loneliness, which is terrible for one’s health and well-being, physically and psychologically.

      • Crusty

        Those are all strong reasons for having economic diversity within a small geographic area. But how do you achieve that without picking some winners and losers?

        • djw

          I don’t know. This is a classic wicked problem. Obviously building lots and lots is the most important part of any solution, but that’s not going to help everyone we’d like to help.

          I’m pushing back against what I took to be the “what’s the big deal?” framing of your question, but not claiming any solution is simple, easy, or free from unintended consequences.

        • Bill Murray

          But how do you achieve that without picking some winners and losers?

          we’re picking winners and losers now, why are you wedded to keeping the current winners winning?

          • Crusty

            Can you be more specific as to how we’re picking winners and losers? What are you referring to?

            • djw

              The way cities are zoned now seems pretty clearly-to-me to be ‘picking winners and losers’ in all kinds of ways. Zoning that doesn’t allow supply to rise to meet demand in a particular location makes huge winners out of incumbent homeowners, for example.

              This all seems overdetermined. I struggle to envision public policy, good or bad, in almost any area that couldn’t be fairly characterized as “picking winners and losers.” When they decide to fix the potholes on my street this year, but wait a while to fix the ones on your street, that’s “picking winners and losers.”

  • frylock

    I totally agree with you that rent control is a huge part of the solution. As a Vancouverite, though, I want to push back against the idea that Vancouver is unlivable for the “upper-middle class.” It is perfectly livable. My wife and I have a combined income of 70k CAD. For $1450, we rent an 800 sq ft suite in Mt. Pleasant, a lovely neighbourhood close to downtown. It’s not dirt cheap, and it isn’t luxurious, but it is most definitely very livable.

    What upper-middle class people in Vancouver often seem to mean when they claim the city is “unlivable” for them is that they can’t buy a 3500 sq ft detached house on a large lot in close proximity to downtown, with enough left over for a boat and private school tuition. See, for example, the anecdote of the software engineer in this execrable Walrus article.

    Yes, we need cheaper housing options for all income levels. But the poor are getting hit the hardest, as ever, and much of our efforts so far seem to focus on making sure it’s rich white people, instead of rich Chinese people, who are buying houses on the West Side. Pretending that the city is unlivable for the upper middle class just props up that misguided focus.

  • Pseudonym

    Obviously we need to elect a president with expertise in building more real estate, and that will solve all our problems.

    • GeorgeBurnsWasRight

      Well, if anyone can solve this problem by means of driving everyone into bankruptcy, Trump’s the man.

  • NewishLawyer

    Another issue with rent control and other low income housing systems are often gamed by the well-to-do.

    A lot of rent controlled apartments either remain in families or seem to go through background channels of the relatively to very elite.

    There are also apartments in NYC that are reserved for low-income buyers. The people who tend to get these apartments are income poor but asset rich. Think of a 23 year old college grad with a low paid design or art job but upper-middle class parents who can afford a down payment.

    • lunaticllama

      Right on time is last weeks’ Real Estate section in the NY Times which has an article describing a young “creative”, using a low-income tax credit (because she has a low-income job) and a down payment from her parents.

      • NewishLawyer

        I saw that. The Times ran a more in-depth story into this phenomena in a more serious way a few years ago.

        Again it goes to knowledge and access. Upper-middle class enough people have access to people who can point this out. In the case of the young woman, she stumbled upon these apartments accidentally through her broker.

    • Just_Dropping_By

      There’s also the issue of “key money,” which I understand was pretty common under NYC’s older, more aggressive, rent control scheme.

  • rewenzo

    Boy, do I feel this. The previous rent on my Manhattan apartment right before I moved in was less than $1300, back when it was rent stabilized. The landlord made the apartment all pretty, and raised the rent to $2650, thereby turning it from a rent stabilized apartment to a market apartment. They’re going to raise the rent by at least $400 a month. We just had a kid and can’t afford it.

    Now I have to debate whether to move, or to challenge the landlord’s declaration that he took the apartment out of rent stabilization properly.

    • Crusty

      Move to New Jersey.

      • Bill Murray

        you going to chip in to pay his expenses?

        • Crusty

          Why would I pay his moving expenses? Is there some sort of God given right to remain in place that you presently occupy for all eternity?

          Why do I think the tenor of this conversation would be different if rewenzo had inherited property from his parents, lived there and was then driven out by rising property taxes?

          • The Temporary Name

            Why would I pay his moving expenses? Is there some sort of God given right to remain in place that you presently occupy for all eternity?

            No, but there is a desire for social stability on the part of the populace. Moving is a big stressful deal. Kids shouldn’t be moved from school to school. Old people shouldn’t get turfed willy-nilly. Elasticity in these principles is fine, but having a city’s worth of people move because rich guys show up is obviously an injustice.

    • sky

      Are you sure that’s legal? There’s no way that can be done in LA, even if they tore it down and rebuilt.

  • YosemiteSemite

    Rent control can result in all kinds of distortions. Families whose children leave keep the rent-controlled units because they’re cheaper than any other housing. That keeps families who could benefit from the space out of the units. Renters sublet — illegally — their units to other renters, subverting any requirements for occupancy. Developers are reluctant to develop units that might fall under rent control because of fears that rents might not continue to cover upkeep and maintenance. That tends to reduce the growth in the housing stock. All those distortions can be mitigated with regulation and enforcement, but that increases the administrative cost. Similarly with rent stabilization, rather than control.

    The two best solutions are to build more housing — creating more supply — and to increase wages — making it more affordable. Neither is easy; changing zoning meets a very strong reactionary force — one of my urban economics profs at the University of Oregon called it the “Slam-the-door theory”: I’ve got mine and too bad about you. And we’ve seen how hard-fought the battle to raise wages has been (the $15/hr minimum wage).

    Of course, maybe there’s a demand-side solution. The mayor of Palo Alto, Patrick Burt, suggested in a recent interview that Palo Alto should try to reduce the job growth rate in the city. He said that Palo Alto should try “to increase the rate of housing growth, but decrease the rate of job growth.” (http://sf.curbed.com/2016/8/23/12603188/palo-alto-mayor-housing-interview) Any takers on that one? Vancouver, B.C., tried a somewhat different demand-side tack, by putting a surtax on foreign buyers. That was put in place only this month; it has roiled the water some, but it’s unclear if it will have any significant effect, because it doesn’t include areas surrounding metro Vancouver.

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