> in an effort to spur new homebuilding, became the only state to eliminate single-family-only zoning in many of its residential neighborhoods
But this is good. Allowing to build new homes will obviously help with the housing crisis. Usually decision makers just won't allow enough new construction, so its effect will usually stay too small.
> Unfortunately, rent control will have the opposite effect of what Oregon thinks, and only make housing scarcity worse.
I always found it odd that rent control always seems to be an all-or-nothing policy: either things are tamped down on, or it's a laissez faire system.
Does any locality have a "hybrid" approached. Something like:
* buildings 0-5 years old, allow up to 3x inflation rent increases
* buildings 5-10 years old, allow up to 2x inflation
* 10+ years old, allow only at inflation
This would (in theory?) encourage the construction of new rental units by allowing investors to recoup their costs sooner and counter the risk of any unforeseen expenses. But as the buildings get older, and costs (theoretically) become more predictable, stabilize prices for renters.
I can imagine this can have a domino effect. Older buildings require more maintenance. A landlord who plans poorly may find themselves squeezed at the bottom from deferred maintenance and from the top due to rent restrictions.
Those landlords should go out of business in a free market. Not properly accounting for maintenance costs is a business failure, not the tenant’s fault. If property prices are higher than rents that’s a market failure, not a cost to be passed onto tenants.
So a landlord should be subject to the free market, but tenants shouldn’t be? Tenants should be protected from rent increases, but property owners shouldn’t be protected against cost increases? That isn’t the free market.
One way to look at this is, land owners are generally wealthier than renters. According to the Federal Reserve Survey of Consumer Finances landowners are 44 times wealthier. It makes sense that the government protects people who are less able to deal with financial instability.
Yup it’s a combination of protecting those who are less powerful and I would argue a way to avoid perverse incentives. If a landlord can arbitrarily raise rent, they have no incentive to perform ongoing (inexpensive maintenance). They can wait until the problems become critical and much more expensive and then pass those costs onto the tenant. With rent control the landlord knows they have to control costs and has more incentive to perform the cheaper preventative maintenance.
It's a nice theory, but also a very well tested one. Just read an article on bloomberg about the policy being a wash in San Francisco, with some concerns that it may have had some other effects they weren't able to measure.
It's akin to the minimum wage; why are people so bent on capping prices? Why not work on the underlying problems instead, ie what's causing those prices?
It makes sense, but it is also a bad idea. If someone can't afford the cost of living, they should relocate to somewhere else where they can.
Western civilisation has had phenomenal results with the principle that when there isn't enough of something then the owner of that thing gets to decide who goes without. Housing is not so special that it deserves an exemption. Squeezing landlords is one of several ways to lock a housing shortage in for the long term. It has been established that letting people make big profits doing something is a great way to get more of the something - and that applies to renting out houses too. The only role for the government in making sure it is easy to build more houses and that everyone sticks to what they signed when it comes to contracts.
I agree, except that housing right now isn’t a free market precisely because of zoning rules that artificially limit what can be built and where. Until existing land owners lose the right to rig the market, markets should be rigged in favour of tenants who have less power.
Where it’s easy to build new housing supply I’m in favour of looser rent control or removing rent control because it’ll be redundant.
In most situations it would be good for rich renters and bad for poor renters, for an older building with apartment sizes and amenities that are typical of older buildings to be replaced by a new building with apartment sizes and amenities that are typical of new buildings.
It would be bad for those poor renters who already had apartment. But good for those poor renters who are just entering the market and looking for a home.
Poor tenants are not renting new apartments. In general, you could say that new apartments are added to the overall stock so that's good for all renters. ITT however we're specifically talking about the kind of apartments that are rented by the poor being replaced on the same site by the kind of apartments that are rented by wealthier tenants. That is actually good for one group and bad for another group.
Widely anticipated wonderful new laws are usually chock-full of this kind of crap. Lobbyists don't try to step in front of oncoming political trains. They do successfully redirect those trains to their own purposes.
In California there are tough demolition protections in the highest demand cities. Proposed state-wide legislation (SB 50) designed to spur homebuilding will actually make it illegal to demolish any home where a no-fault eviction has occurred. So at least in California I'm not too concerned about this particular side-effect.
Older buildings have all kinds of maintenance issues. Even if predictable, they're still an added expense, especially for major systems. Without allowing rental unit owners to pass those costs along to the renters, either the units will be taken off the rental market or they will be allowed to disintegrate over time until they're no longer habitable.
That assumes that the market is able to bear those costs. What do landlords do in stable markets where rents are flat or track inflation? Are all rentals dilapidated in those markets?
In most of Europe building maintenance costs are counted outside of rent. This makes it difficult to hunt and compare flats as those costs can greatly vary.
Combine it with laws that protect a decent standard for apartments and make it much harder to kick tenants out without a good reason.
I.e. enforce basic tenants' protection instead of worrying about what incentives landlords have. It shouldn't matter whether the landlord wants to take a unit off the market if the tenants aren't willing or can't move. Then it lies on the landlord to create an incentive for tenants to move out, for example by extracting less rent from uncontrolled units to make them more affordable.
Another good idea is for tenants to unionize and share the legal costs of e.g. questioning the legitimacy of a lease termination or challenging sub-standard living conditions.
Maybe, but the effect has to be considered together with the proposed "hybrid approach" to rent control. Los Angeles rent stability ordinance (which lately caps rent increases at 4% since this year) only affects apartments built before the 80s, and rents are on average up 6% since last year. Using a moving free market window and a lower cap may have a different effect.
Maintenance can be passed through to renters in California. The landlord just needs to ensure the maintenance is actually legitimate (i.e. they can't put in a gold toilet and charge for it), otherwise the rent board could rule the costs can't be passed through.
Older buildings should sell for less, to compensate for this risk. If the mortgage payments eat up too much of the rental income then the owner overpaid, and should sell at a price that's more appropriate for the risk associated with the building.
How does this work? The $2m valuation would be based on income from current tenants, would it not? Most rent control laws, and especially not the one in Oregon, don't retroactively change rents charged to current tenants.
That is unless the $2m valuation is based on a speculative estimate of how much rents will go up in the near future?
A good example would be single family homes in SF. Currently no rent control. If the rent control laws were changed to include SFHs, you’d see a pretty drastic decrease in the value of them, since yes, currently they are valued based on expected future rent increases.
Most landlords just paint the walls and cross their fingers on an older place. You've seen these dingbats in LA? Deathtraps and most are not to code at all.
> I always found it odd that rent control always seems to be an all-or-nothing policy: either things are tamped down on, or it's a laissez faire system.
It's not. Rent control argument on the internet looks like that because it's always a bunch of strawman arguments about political philosophy. In fact the Oregon laws in question have features exactly like what you're talking about.
Out of curiosity, have you ever owned a building? I might suggest that your opinions might change once you have. Owning rental property isn’t a tidy math problem.
Newer buildings have more predictable costs, definitely not older buildings. It’s pretty much the opposite of what you said in the real world. Newer buildings can lease to higher quality tenants at higher rates with lower eviction/non-payment/damage risk. Older buildings can run the gamut. You can have an older building filled with stable senior citizens that runs perfectly for decades or you can have an older building filled with tenants who constantly break things, are late on rent, run meth labs, or simply trash a place and vacate in the middle of the night. You might have to evict someone and the process could take a year. Air conditioners fail randomly and expensively. Roof leaks develop and tenants might not even report it for months (yes, that sort of thing happens all the time. As a building gets older, the risks increase, but the rent you can charge decreases compared to a new building.
My suggestion is to actually ask people who have owned building exactly why they oppose rent control so fiercely and the answers aren’t going to be about greed but about increased financial risk.
If we can agree that profit is essentially what we call "greed," any financial risk means deceased profits, in other words less opportunity for greed. I'm not a communist so I'm not against profit, but in Marxist theory this kind of profit is seen as the problem with capitalism.
You might want to re-read your Marx; one of his more famous and less controversial observations was that the rate of profit tends to decrease over time in a healthy market.
High rates of profit wasn't the problem, it was the negative effects that were theorised to occur when the rate of profits, inevitably, fell too low.
> Owning rental property isn’t a tidy math problem.
I'm not talking about owning, but about encouragement of building. If income is limited to CPI, regardless market characteristics, what incentive is there to take a risk and build?
Of course it is easier to change zoning or make reforms when you address people's concerns. Thinking that there can be development when everyone is either fearing having to move or have most of their assets in housing is what doesn't work.
> Unfortunately, rent control will have the opposite effect of what Oregon thinks, and only make housing scarcity worse.
It depends on the kind of rent control. Housing has important asymmetries it's reasonable to address through legislation. One is asymmetry in scale: you have one unit; landlords have many more. This gives them stronger negotiating power. Another is cost of change. It's much more expensive for me in time and money to move than it is for a landlord turn over a new unit. That means a landlord can extract money well above a true market rate. A third is of interest. Individuals and the community have a interest in healthy social bonds, while absentee lords mainly want to extract cash.
The first 15 years of a new building are free from rent control, and after that they can increase rent at 7% above CPI, meaning in real terms rents can still double circa every 10 years. And if a tenant moves out, landlords can raise rents as much as they like.
For this to affect construction today, a builder would have to be betting on a very tight market continuing unabated during the 2035-2045 period. But that's a ridiculous bet to make, rent control laws or not. Anybody building new housing will want to be sure the economics work if rent increases return to their long-term average, which is well below 7% above CPI: https://www.apartmentlist.com/rentonomics/rent-growth-since-...
> It depends on the kind of rent control. Housing has important asymmetries it's reasonable to address through legislation. One is asymmetry in scale: you have one unit; landlords have many more.
Not necessarily true. Sure , the landlord knows more about the apartment but you know more about yourself as a tenant. Landlord takes a huge risk in terms of allowing someone rent, especially given protections afforded to that individual. Most experienced landlord will cite tenant selection as very important and a huge risk. One tenant that refuses to pay rent or damages property can wipe out the return of 9 other units.
> This gives them stronger negotiating power.
I have more options as to where to move. The landlord owns a very expensive illiquid property. He can't just sell it tomorrow but I could easily choose another rental.
> Another is cost of change. It's much more expensive for me in time and money to move than it is for a landlord turn over a new unit.
Its very expensive to fill a rental. A landlord usually needs at least a month to find another tenant. That's a month of foregone rent
> That means a landlord can extract money well above a true market rate.
Market rate is the rate the landlord can get. If a transaction happens at that rate, that's the market rate.
> A third is of interest. Individuals and the community have a interest in healthy social bonds, while absentee lords mainly want to extract cash.
Not sure what "absentee lords mainly want to extract cash" means. Yes, most landlords manage properties as an investment. Landlords also have an interest in the community as they own equity in that community that would appreciate if the neighborhood gets nicer. I don't see your point.
That doesn’t establish how common vacancy rates are. You need to look at the rate, not the number. And politicians passing a law means nothing about the fundamentals: you’d need to know if the law is well targeted, or instead perverse.
Do you have any data on how long properties are vacant? And if they’re vacant, are they vacant for a reason like renovations or construction?
Every landlord I’ve ever had has wanted to rent their place quickly. They hate missing a month.
We had to rent our former home for 4 years after we moved, but couldn't sell because the market value was too low after the real estate crash. It's really hard to find tenants that aren't total deadbeats. Raise your rent and it's almost impossible to fill the vacancy. Lower the rent and get nothing but unqualified applicants with terrible credit and criminal records. So sure, maybe I could lower the rent to get someone in there, but that means there's a high chance they'll either a) not pay their rent, b) damage the property, or c) both.
Great! If you can't fill the spot to your liking, you should get out of the game. Sell to someone who needs a place to live, or is comfortable lowering rents and dealing with the work load.
This would have required me to take a huge loss on the property, which I would have had to pay out of pocket, to the tune of tens of thousands of dollars, which I did not have. I would have preferred to never rent at all.
I think vacancy rates in some metropolitan areas increased primarily due to rent control, rent stabilization, tenant rights or the risk of future legislation.
If you can't raise rents, you'd be less likely to react to lower market rents. So prices stay sticky on the way down. Even if the laws are not in place now, there is a risk of them being in place in the near future and you'll be stuck at below market rents.
Also if you can't remove tenants then you'd be more selective and naturally that would increase vacancy rates.
A high vacancy rate doesn't prove that its not expensive to fill a rental. In fact higher vacancy rates means losing a tenant is even greater than if there were low vacancy rates. That means that an empty apartment is going to stay on the market even longer. And most landlords have some debt arrangement, are paying interest, taxes and insurance in addition to forgoing rental income.
>If a month of foregone rent was such a huge burden to landlords then it wouldn't be so common for them to keep their properties vacant.
Landlords estimate a vacancy rate and keep that amount in reserves. However, they all earn more money if it's not vacant. It's almost never the case that they can make more money by keeping the rent high and units vacant.
Also, is they are using a property management company (which surprisingly many do), then turnovers are likely more expensive for the landlord than the tenant's cost to move - they usually charge 50% of one month's rent to find a new tenant for you.
If they're too optimistic in that vacancy rate, they will lose money.
For anyone thinking landlords have all the power, hang out on real estate forums. After all expenses (including vacancy), most RE investors target $100-200/month per unit. Now often, over several years, if rents shoot up in the city, they'll make good money from the increased rent. But they don't rely on that - their usual hope is the property's value will go up so they can sell it one day. The landlords who make huge piles of money are outliers. The vast majority of landlords do not make anything close to a SV SW developer and are not aiming to (of course, though, whatever they do make is almost "free", which makes the difference to them).
The top skill for a landlord is to estimate costs. At $100-200/unit, if they underestimate a lot, they are out of business. Surprisingly, most do not carry vandalism insurance. So if a disgruntled tenant trashes a place, they could easily lose the property. If they do not reserve money for evictions, they could easily lose the property.
>Unless they can hold out until property values rise and they can sell for a profit.
Sure, if they've got piles of cash sitting around to pay for the loan, insurance and real estate taxes.
Here's another tidbit people don't understand. If the property has more than 4 units, the value of the property is determined almost entirely by the revenue it generates.[1][2] The bank who will provide the loan to the buyer will look at those numbers, and the buyer will look at those numbers. In particular, what people will not look at are the comps (the value of nearby properties). So a "Let's lose money until the property values go up" strategy won't work there.
> "Here's another tidbit people don't understand. If the property has more than 4 units, the value of the property is determined almost entirely by the revenue it generates."
actually, that's pretty straightforwardly "income-based valuation", and it's logical because having more than 4 units means the property is primarily a business and not primarily a residence. businesses are valued by the income (i.e., profits) they generate. the sales comparison method (employing "comps") is primarily used with residences because the more accurate income-based valuation isn't available to residences, as non-income-generating assets. (the third valuation method is cost approach, which is used as a primary method of valuation in markets with low turnover/few comps, and in many tax assessment jurisdictions).
This greatly depends on the number of units. If you’re managing 1,000 units renting them all is a sign you have left money on the table. The safest approach to maximize profit is to increase prices as your vacancy rates drop. The ideal situation is to effectively always have 1 vacancy of each size not 0.
>If you’re managing 1,000 units renting them all is a sign you have left money on the table.
That is the very definition of an outlier. Most landlords (easily over 90%) don't even have a 100 units. In fact, most landlords have a target number of units they need to "retire", and that number is usually less than 100.
From the market’s perspective it’s the ratio of units managed by each type that matters.
Hypothetically, if 1 company managed 1,000 units and 1,000 people managed 1 unit then that outlier owns 50% of the market while representing 0.1% of the land lords.
It would be interesting to see this breakdown in numbers. I would suspect there's some kind of power law at work, although probably not as extreme as the example you gave.
Also, keep in mind that on the flip side, landlords likely view tenants the same way - looking at aggregates and not individuals: "Yes, lots of people can't afford the rent, but as long as I can get enough to make a profit, who cares about the rest?"
> Landlords also have an interest in the community as they own equity in that community that would appreciate if the neighborhood gets nicer.
Yes, but obviously people care most about the communities that they actually live in. "Absentee lords mainly want to extract cash" probably means that, as you say, a landlords interest in their community is related to their investment and the opportunity for the value to rise. People that actually live there have other interests, as the landlord does with the location they actually live. Someone renting out a room in their house or half of a duplex isn't absentee, and would have many non-profit interests in the local community. A landlord that lived a few hours away probably would not.
> He can't just sell it tomorrow but I could easily choose another rental.
At worst, the landlord loses money. At worst, the tenant is on the streets. Emotionally, finding a new tenant is business (maslow level.. 4?). Emotionally, finding a new home touches on your core safety and wellbeing (maslow level 2). Switching tenants means a new contract and new risk to lose money. Switching neighbourhoods means losing your neighbours, your area, any ties you have there, and having to build it all anew.
And since we're talking about areas where rent control is necessary, a landlord can quite easily find another tenant and a tenant has a hard time finding another house. But as you can see above that's just a "bonus".
Economic analyses tend to discount emotional factors, by their very nature. Make no mistake about it: landlords have a massive advantage in any negotiation with a tenant.
> Make no mistake about it: landlords have a massive advantage in any negotiation with a tenant.
This isn't a very strong argument because it applies to, eg, purchasing food at a supermarket. Worst case for a supermarket; wasted produce. Worst case for consumers; literal death. Yet the supermarkets are generally famous for being very low margin and cut-throat competitive. A tenant is only forced to move neighborhoods if the market is rising in lockstep; individual landlords can't force anything.
Moving neighborhoods due to financial stresses would be completely miserable. But unfortunately reality is unfair and if people want to live the way they like they also have to make a measurable contribution to the economy. If they are relying on the charity of other people, or the state, then they will have to put up with real inconvenience. If other people are bearing the cost, other people get to make the decisions.
Going grocery shopping is not similar to moving. If you can't shop at one grocery store, you can go to the next. Finding a new place to live and moving is a major undertaking.
I’m pretty sure you lost track of your own analogy there. If there are better deals at a different supermarket, people will just go there. They might even go to multiple supermarkets in pursuit of deals. Literal death is not a realistic consequence of switching supermarkets (thanks in part to food safety regulations!). There’s a very efficient market here.
On the other hand, if there’s a better deal on a different apartment, (1) it probably won’t be available; (2) even if it’s available, it probably won’t really be cheaper after accounting for the huge direct and indirect costs of moving; and (3) even if it’s really cheaper, people will still rightly be reluctant to upend their life to take advantage of it. It’s not “charity” when you’re paying through the nose for something that you don’t have a realistic choice about.
If a house is being rented out to a tenant for $1,000 a month when it could plainly be rented out to a different tenant for $1,200 a month then there is charity afoot. It might be rent control (ie, compulsory charity) but someone is getting something that they didn't work for.
Now I'm not against charity as a concept, but we have a century or so of economic experience on this matter. If charity becomes compulsory, first people make stupid decisions and then the vulnerable have to live with the consequences of those decisions.
Being born gives everyone a right to dignity but it certainly does not give anyone a right to choose that someone else sets them up in a house and area of their preference. If somebody wants control of their own life, they are going to need to earn enough to either buy their own house, learn to build their own house or pay market rates for rent. It would be nice if there was a better way; but all the alternatives that are tried turn out worse than being honest about the economics of the situation up front.
> I’m pretty sure you lost track of your own analogy there. If there are better deals at a different supermarket, people will just go there...
If there are better deals in a rental market, people absolutely will go there. There are substantial costs of the order of a few hundred dollars to hire removalists, that isn't cheap but people aren't going to be so overwhelmed with emotion that they can't move a few blocks over for a $3,000 a year improvement in rents.
> It’s not “charity” when you’re paying through the nose for something that you don’t have a realistic choice about.
I've lived in 4 different communities in my life. I don't accept that moving somewhere with a lower cost of living is so terrible that people need to be protected from it - I can do it, it isn't bad. Somebody who can't afford to live in a neighborhood should be encouraged to move somewhere cheaper, and the idea that landlords should be protecting them from that outcome is a great way to set up a housing shortage. If they want to be part of a community then they should find a job that lets them rent in that community at the market rate.
> thanks in part to food safety regulations
You misunderstand; starvation from not being able to afford food. The point is that a vendor of a product can't unilaterally deny anyone access to market rates for that product because the competition will step in and undercut that vendor.
> At worst, the landlord loses money. At worst, the tenant is on the streets.
At worst, the landlord loses the money they were relying on to pay the mortgage on the property. Not every landlord owns hundreds of properties and can eat the cost of one sitting idle. Or worse, the cost of major damage to one by a bad tenant.
I'm biased. I have rented and owned. In both cases, it was what was right for me at the time. When I rented, I was happy to pay the money to my landlord in exchange for living in their property. Admittedly, I've had nothing but good landlords (with the exception of one), but I'm a very good tenant in exchange.
No, at worst the landlord loses enough rent to miss mortgage payments and lose the entire house, years of savings and all their equity and credit worthiness.
"The landlord owns a very expensive illiquid property. He can't just sell it tomorrow but I could easily choose another rental."
It is not necessarily easy to move. It can mean a longer or harder commute. It can mean changing which school your children go to (which can be a hardship for them). It can mean losing a connection to some social circle or religious organization (yes, this matters to some people). Trying to stay in the same neighborhood can mean dealing with the same management company, thanks to local governments giving developers effective monopolies over entire neighborhoods.
Landlords do not need to sell their property in order to enter a new market; they can use one property as collateral to take out a loan for another. That is more or less how real estate developers operate.
"Its very expensive to fill a rental. A landlord usually needs at least a month to find another tenant. That's a month of foregone rent"
In the NYC region every landlord I have dealt with has included a clause in the contract requiring 60 days notice before moving out, and reserve the right to bring potential new tenants into my apartment to show it off before I even leave (while I am still paying rent and living in the unit). It is also more expensive than one month's rent to move, at least in my experience in this area, and landlords are notorious for keeping security deposits as payment for "repairs" to their units.
"Landlords also have an interest in the community as they own equity in that community that would appreciate if the neighborhood gets nicer"
I have yet to see any landlord voluntarily do anything to improve a community. In every case where a property owner has done something to improve a neighborhood, it has been because they were forced in some way by the local government. When neighborhoods decline in ways that threaten their profits, landlords seem to just demand that the government step in rather than taking any action themselves.
"I don't see your point."
It is not hard to understand. Landlords, especially larger management companies with many large properties, have built-in advantages over their tenants that are not corrected by market forces.
Landlords do dick around with prices on small business owners, and Walmart has the scale to not get dicked around with. This is just another thing that helps them to be exceptionally competitive in pricing their goods.
The GP was talking about real estate and it doesn't have much to do with how competitive socks and toilet paper are.
It’s not theoretical at all, and Walmart does dick you around, albeit indirectly. They dick around the supplier and force them to make cuts in quality to meet the price. And if Target/Amazon/Dollar General weren’t around, there’s no reason they wouldn’t increase prices and pad their margins.
In a landlord situation, their cost of goods is so small that they can afford to sit on an empty apartment while prospective renters need to put a roof over their family or business.
> It’s not theoretical at all, and Walmart does dick you around, albeit indirectly. They dick around the supplier and force them to make cuts in quality to meet the price.
People are aware of this, and purposely choose products that are 80% as good for 20% of the cost. Other people shop at Whole Foods and Apple. None of them is ripping you off. They all provide options that you knowingly and willfully choose over your other options.
> And if Target/Amazon/Dollar General weren’t around, there’s no reason they wouldn’t increase prices and pad their margins.
The comparison to landlords being that if one of them had a monopoly on local housing they could charge really high prices. But that seems pretty fantastical considering that a local housing monopoly hasn't happened basically anywhere and would presumably yield antitrust scrutiny besides.
> In a landlord situation, their cost of goods is so small that they can afford to sit on an empty apartment while prospective renters need to put a roof over their family or business.
The cost of goods is the cost to buy housing (and the opportunity cost of the interest you could have had on that money), plus that of maintaining the property. If that is so cheap then why is anybody renting?
>In a landlord situation, their cost of goods is so small that they can afford to sit on an empty apartment while prospective renters need to put a roof over their family or business.
I'm not a landlord, but I did consider getting into it once, and studied how the system works. And a number of my friends are landlords (including one who quit his job because the passive income is enough).
No - probably over 95% of landlords do no have a small cost. Almost everyone is paying a mortgage/loan on that property. The exceptions are old people whose house was paid off and they just want free money. Those people almost always charge low rent, BTW - they just want some extra cash. The standard tactic is to buy properties on a loan, and try to get $100-200/month profit per house/unit. So if the apartment costs $1500/month in rent, assume their monthly cost to the bank (principle + interest) is about $700-800. Then add in the insurance and real estate fees. The remaining money goes to long term costs (repairs, vacancy, etc). Then they keep about $100-200.
If the apartment sits empty, they're still on the hook for close to $1000/month in taxes, insurance and loan payments.
Over time, if the property appreciates significantly, the plan is to sell the property, and use the gain in appreciation to buy a larger apartment complex, where they are down to $100-200/month again, but because the place has, say, double the number of apartments, their overall gain is double. Lather, rinse, and repeat. They only stop once they are making enough to live on in the lifestyle they want - which could be anywhere from 30-60 units.
They are almost always in debt, and vacancies are almost always very expensive.
A lot of the anti-landlord comments are similar to anti-employer comments, where it's always a given that employers have large piles of money and they can afford X, whether X is higher wages, better equipment, etc. Once you step into the "other" role, you'll find your assumptions were wrong.
Of course, if the state/city needs to pass laws to help with housing, so be it. Let's not just blindly assume that most landlords can absorb it.
There is another point missed — freezing rents seems fair only if all the other costs are also frozen — property taxes would need to be frozen, and utility costs, and repair costs. Otherwise you just have a situation where one party is squeezed from both sides.
Yep. The idea that you have one unit while the landlord has multiple units is not true.
You have the choice of a hundred units. And its their responsibility to fight with each other to make you choose one of them. Thats what keeps them honest and gives you bargaining power.
For renewing your lease, you have a choice of exactly one unit. Since the switching cost is high, the landlord has the ability to extract money beyond what a new renter would pay for the unit.
> If it was true the gigantic Walmart could completely dick me around when buying socks and toilet paper. In reality prices are very competitive.
If you switch TP vendors, that's not a big deal for either Walmart or you, so yes, prices are competitive. But if you switch housing, you are switching 100% of your housing, which will be ~30% of your total budget. I've had 13 landlords, and not one of them has had only one unit. And small-time landlords tend to have other work, so regardless, it's a much smaller deal to them to have a tenant move.
> It also completely ignores that fact that most landlords are small operations, and often the tenants are richer than their landlords.
I look forward to your citations on both points.
I'm sure the average landlord doesn't own more than, say, 10 units. But in major markets there are a small number of large rental companies, so I suspect the average unit is not owned by a small landlord.
I'm entirely skeptical about your claim that tenants are "often" richer than landlords, but would be happy to be corrected with data.
The negotiation power comes from different moving costs. As a tenant, you have to spend time finding new space, you have to pay for a moving company, you may have to renovate either the rooms that you are leaving or the rooms into which you are moving. Additionally you may lose direct contact to neighbors you like. All landlords have to do is look for another tenant. As long as it is not a buyers market, that's not much effort.
You're comparing the wrong things. Negotiating power ultimately only comes from having other options. I could choose other apartments or the landlord could choose other tenants. The balance obviously depends on the individual market, but I think it's much closer to parity.
> It's much more expensive for me in time and money to move than it is for a landlord turn over a new unit.
I'm not so sure about this, either. It's a pain for landlords to move new tenants in, too. Most would prefer to keep good tenants around as long as possible.
Because it's too simple. Market distortions shift the price people pay away from what the true market price would be in a competitive market.
As an example, I live in one of the US's few competitive ISP markets. I pay $40/month for gigabit fiber, no limits. Comcast, which is often a monopoly or a duopoly, charges $90-140/month [1] for gigabit service, and they have assorted restrictions that I don't have to deal with, like data caps and limited upload speeds.
So what's the true market price for full gigabit? The person you're responding to, bassman9000 would apparently say it's $140, because tautologically that's what people pay. I'd say it's much lower.
Further evidence to support my position is that when you measure actual speeds delivered on gigabit, many of the ISPs are local providers, not the big nationals. [2] Customer satisfaction with my ISP is hugely higher than Comcast as well [3], with Comcast's Net Promoter Score actually being negative. [4]
Those are not signs of a competitive market, and if the market isn't competitive, I think it's a 101-level mistake to say that the price people pay is the true market price.
> What about houses? Millions of residential houses change hands every year, and they cost more than stock shares. If we expect the stock market to be well-priced, shouldn’t we expect the same of houses?
> The answer is “no,” because you can’t short-sell a house. Sure, there are some ways to bet against aggregate housing markets, like shorting real estate investment trusts or home manufacturers. But in the end, hedge fund managers can’t make a synthetic financial instrument that behaves just like the house on 6702 West St. and sell it into the same housing market frequented by consumers like you. Which is why you might do very well to think for yourself about whether the price seems sensible to you before buying a house: because you might know better than the market price, even as a non-specialist relying only on publicly available information.
In this case, since the GP is referring to rent increases, the only members of the market are you and the landlord, and the landlord can leverage the large burden of moving to increase rent to a higher price than one that would be competitive on the broader market.
If you were a perfect rational decisionmaker you could perhaps have priced this risk in at the start and said "$1000/month is too expensive because I know the landlord will increase it 25% as soon as I finish unpacking". But in practice, people budget according to the price they're advertised.
* the only members of the market are you and the landlord*
But that's not true. The landlord can increase the price of the rent, knowing that, as some point, you'll leave, because you, the buyer, consider it too high. The market around you, other possible renters, may not, and so the price the landlord sets will still be the market price.
Now, the landlord knows you're a good customer: no pets, no parties, always clean. He has an incentive to keep you as such: you're predictable, no unforeseen costs, and knowing that, there may not be many possible renters willing to pay more, according to his estimations, and so it keeps the price stable (+CPI). That's still the market price.
I can't understand why in HN, out of all places, people dismiss the superiority of a fully decentralized, uncoordinated, resilient information distribution system (free market prices), in favor of a centralized, brittle, obscure, arbitrary ruled one.
It is definitely true. The market for renewing your lease has exactly one seller.
Last time I moved I spent maybe 60 hours looking and another couple hundred hours packing, cleaning, moving, and unpacking. Call it 250 hours, plus all sorts of stress and hassle. There were also a variety of expenses involved, plus having to have two deposits in play at once.
I am definitely willing to pay more than $0 to avoid that hassle. Landlords can take advantage of that in lease renewal negotiations.
As to having this discussion here, yes, HN has plenty of free-market fundamentalists. But it also has plenty of people who see markets as a tool for optimization. Like any tool they have necessary preconditions and failure modes. You can't design the market for housing like you do the market for candy bars and expect it to work just as well. You need the right tool for the job.
> The first 15 years of a new building are free from rent control, and after that they can increase rent at 7% above CPI, meaning in real terms rents can still double circa every 10 years. And if a tenant moves out, landlords can raise rents as much as they like.
There are two possibilities here. One is that the maximum rent control rate is above the market rate of housing cost increases, in which case those rent control laws do nothing. This is better than most other rent control, but still no better than no rent control. The other option is that it isn't, and then the rent control laws do something bad, i.e. reduce the incentive to build more housing to fight the expanding market rate rents, and screw new renters a lot to benefit older renters a little. There is still no circumstance where they cause good.
Also, since which possibility happens isn't known ahead of time, they reduce the incentive to build housing today by landlords who expect rents to increase by a lot in the future, even if they turn out to be wrong.
That is not just wrong, but the opposite of what this law does. Since new properties have no rent control for 15 years, during any periods where market rates might reasonably be predicted to rise that much faster than the PCI, new property would be a more valuable investment than existing property (and churn in the rental market would increase as more evictions become profitable.)
Rent control for existing properties raises market rents by encouraging existing tenants to stay even if their apartment is bigger than they need anymore and they might otherwise move to a smaller one or e.g. retire to Florida or Arizona, thereby keeping those units off the market and requiring the remaining demand to be satisfied by fewer units.
Moreover, the relative value of investing in old vs. new apartments is not particularly relevant, because what really matters is the value of investing in building new housing as compared with all other alternative investments, including real estate in other cities or stocks or anything else. And the prospect of rent control at any point in the future lowers the net present value of those investments by the corresponding amount, causing reduced investment in building new housing.
Worse, if the old buildings have rent control and the new ones don't, the tenants will prefer a rent controlled apartment, driving rents up in the old buildings and down in the new buildings (because, unlike investors, tenants do specifically need housing in that city so the relative difference matters), which both increases rents on existing buildings and reducing the incentive to build new buildings.
> Rent control for existing properties raises market rents by encouraging existing tenants to stay even if their apartment is bigger than they need anymore and they might otherwise move to a smaller one or e.g. retire to Florida or Arizona, thereby keeping those units off the market and requiring the remaining demand to be satisfied by fewer units.
Rent would only be cheaper in "rent-controlled" properties during periods of extreme growth in market rents. The primary issue in such cases is not "mis-matched" tenants (if anything, reducing churn should increase effective supply). While it would provide less incentive for retirees to move out of the city , it also limits the degree to which the impoverished are forced to leave the city. Once the period of extreme growth passes, all rents will stabilize back at the market price.
So yes, this can lead to slightly higher market rents for new tenants during periods of extreme growth, but it does this because fewer people are forced out of the city.
> And the prospect of rent control at any point in the future lowers the net present value of those investments by the corresponding amount, causing reduced investment in building new housing.
You think you can predict accurately which cities will have rent-control laws 15 years from now? While I can see how current or near-term rent control can affect a properties value, the incredibly marginal effects of this 15 years out is complete washed out by the much larger unknowns that affect the value of the property 15 years from now. One could has plausibly even argue that seeing a law like Oregon's being passed reduces the chance of seeing more draconian rent control laws introduced, which should INCREASE the attractiveness of investing in rentals in Oregon.
> Worse, if the old buildings have rent control and the new ones don't, the tenants will prefer a rent controlled apartment, driving rents up in the old buildings and down in the new buildings (because, unlike investors, tenants do specifically need housing in that city so the relative difference matters), which both increases rents on existing buildings and reducing the incentive to build new buildings.
>Worse, if the old buildings have rent control and the new ones don't, the tenants will prefer a rent controlled apartment, driving rents up in the old buildings and down in the new buildings (because, unlike investors, tenants do specifically need housing in that city so the relative difference matters), which both increases rents on existing buildings and reducing the incentive to build new buildings.
This is completely wrong and confused.
Somehow you have created a situation where in your mind where:
1) the tenants expects to pay less rent (over the next X years) on OLD buildings
somehow implies
2) the investor expects to be paid less rent (over the next X years)on NEW buildings.
Obviously, one of those expectations must be wrong which means your argument is invalid.
If you do see lower initial rents on newer buildings, you only see them offered to the degree that landlords expect to make up the difference in the following years.
If you do see higher initial rents on older buildings, you only see them paid to the degree that renters expect to make up the difference in the following years.
I think there are plenty more than two possibilities, because there are many kinds of "good" that we could be pursuing, some which conflict and some which reinforce.
As an example, One of the major problems for developers in building both housing and office space is how cyclical the markets are. When prices are spiking, developers rush to build. This can lead to gluts, causing big price crashes later on as they try to pay their mortgages.
It's perfectly possible that smoothing out the spikes of short-term price increases results in a more stable, predictable market. That would not only mean it'd be better for tenants, but it'd be better for landlords in that they are more confident they'll have good ROI over time. Risk mitigation can be very valuable in long-term investments.
And of course there are many more possible complex interactions. E.g., if lower turnover means richer social connection and better neighborhoods, then renters might be willing to pay more over the long term, keeping landlord property values up. Or more stable prices mean that people are less likely to, say, vote to expropriate large landholdings and shift to the sort of socialized housing we see in other countries.
So no, I don't think there are two possibilities here.
All of this really depends on the scale of the landlord.
There are many retiree types that are renting out their in-law suite or have an extra rental property and definitely cannot afford bad tenant behavior.
They are probably in a worse negotiation position compared to a squatting bad tenant in those cases and very much care about their neighborhood, probably more than the renter.
---
OTOH, rent control doesn't matter too much if the max percentage cap is high enough and tenants can't squat in eviction court for months as they destroy the old person's inlaw suite and their home.
If you’re renting to young person or couple, there’s a better chance than not that they will voluntarily move out in a few years. And pro-construction legislation means the cap on rent will likely not mean much if you’re starting at a market rate rent today.
While I appreciate your viewpoint, you did nothing to address the argument being made: putting restrictions on rent prices will result in less rentals available. You instead put forward a moral argument as to why we should have rent control, ignoring the real world effect the GP was claiming such a move would mean.
" > Unfortunately, rent control will have the opposite effect of what Oregon thinks, and only make housing scarcity worse."
I couldn't agree more.
Proposal: Current* property owners love new commercial property and HATE new residential units. (This is how you game the system to get prices up). What state governments should be doing is requiring new residential property on all approved new commercial property. This way, if a local city board really wants that new "Panera Bread" - they must approve new housing.
> Unfortunately, rent control will have the opposite effect of what Oregon thinks, and only make housing scarcity worse.
Agreed. However, there is an orthogonal reason to be pro-rent control: housing stability.
Housing stability, as in people's freedom to remain in their home, even if their landlord, for whatever reason would rather they not. This is often a big reason why people in the US want to buy their own home, but there's no reason you couldn't give comparable stability to renters, as other countries have already done, by only letting tenants be kicked out for a handful of specific reasons (e.g. non-payment, destruction of property, etc.).
The one catch is that you can't have housing stability clauses without rent control, because otherwise the landlord could always "soft evict" by simply raising the rent until the current tenant leaves.
It’s not as if the country is physically full. People behave as though it’s a human right to pile on top of one another in a few places. Why pander to that, and reduce people’s chance to live in a house?
No housing? Then go where there is housing or space to build it!
> Unfortunately, rent control will have the opposite effect of what Oregon thinks, and only make housing scarcity worse.
I agree in general, but Oregon's law only limits increases to 7% per year. In the long run, that should easily be enough to keep up with inflation, even in a hot market. If San Francisco's law were 7% and not 1-2%, I doubt it would be nearly as much of an issue as it is today (where you have people with rents effectively from decades ago, because that isn't enough to keep up with the market).
The 7% limit seems designed to limit extreme short term increases, but still allow rents to reflect market value in the long term. I think this is a politically smart strategy, without the long term damage of holding rents below market value.
edit: and combined with the zoning changes... I'd say the open market approach to managing housing supply and demand came out way ahead with this law.
Small nitpick, but the actual cap seems higher than 7%:
> The resulting legislation would cap rents statewide at 7% annually plus inflation
Which, if I'm reading that correctly, would put the real cap closer to 9-10%.
I don't have a strong opinion about this, but a 10% cap on rent increases seems reasonable to me, keeping in mind that this only applies to existing tenants—if the tenant leaves, you can increase rent by however much you want. This seems like a fair way to help reduce the number of people that are priced out of their homes, without significantly impacting landlords. That said, I'm personally more excited about the zoning changes; single-family zoning was never a good idea IMO, and it's great to see Oregon slowly moving away from that.
Rent control does little to discourage building in fact (1). One of the biggest, and imo only agreeable argument, against rent control is that leads to higher rents on uncontrolled units. However, if an entire region is under the same rent control, that just wont happen. A 7% cap I think is still very generous for landlords. It's probably still well above the rate of wage growth, though.
Generally, when the government interferes with the market price of things, the result is a glut or a shortage, often with the emergence of a black market. If the price difference between the government price and the market price is large enough, criminal gangs step in to take advantage of the opportunity.
Limits on rent increases (at levels well beyond the rate of inflation) don't have the same negative effects as rent controls.
To actually resolve the housing crisis, you need there to be sufficient profit potential that private landlords are incentivized to build more housing. Rent control forbids this. Limits on rent increases, however, don't, really. Building a new apartment complex usually takes 3-4 years from permitting to completion to move-in. If rent increases are capped at 7% annually, then by the time your new project is ready for move-in, you can count on rents having gone up by 30-40%, assuming that that's where the market-clearing price would be. And if they haven't, they'll be higher the next year, and so on, until they equilibrate.
The idea behind caps on rent increases is to slow the bleeding and minimize disruption to families - having your rent go up 7% for 5 years is a lot less of a problem than having it go up 35% in one year and getting a month to decide whether to renew your lease, because it gives you time to look for alternatives and figure out what else in your life needs to change to make the numbers work.
Yup, this is how "rent stabilization" works in Ontario, Canada. When a tenant has a lease, rent increases are capped to a rate set by the government. When a tenant leaves, there is "rent decontrol" and the landlord can charge whatever the market will bear for the next tenant. Similarly newly built units for rent get market rates. No one dictates what a landlord can charge, only how much they can increase rents for existing tenants.
Of course this does lead to shenanigans to get old tenants out, but it's not rent control in the sense that all rents are everywhere anytime are set by the government.
Good. Mandatory single family home zoning should not exist, anywhere. It is exclusionary by nature; economic segregation is often the intent, and in most cases the impact.
It's one thing to accept the free market causing this sort of segregation as the collective result of individual choices, quite another to suggest that the government ought to be using regulatory power to help enforce the creation of invisibly gated communities. It's a great wrong -- in particular, the impact it has re: school districts -- that it is long past time be rectified.
That said, there is much more to be done. While going from SFH's to fourplexes or small apartment buildings is usually fine by itself, greater levels of density usually need changes to infrastructure and transit service and other parts of zoning to accommodate the increased population.
How is the desirability of homes in single family neighbourhoods inconsistent with the fact that they tend towards creating haves and have-nots in the market for housing?
The definition of a market is haves and have-nots.
Saying that building expensive things is segragation is thinly veiled strict socialism. What's the alternative, everyone is forced to live in the same housing? You can't force cheap apartments in nice neighborhoods, those neighborhoods will become not nice. Thats how rent control works
I accept that, but policy seems to enforce single family home neighbourhoods in many places. This exacerbates the problem of haves and have-nots in the housing market.
I'm not in the "ban SFH neighbourhoods" camp, but I think we shouldn't have as much of a problem with them becoming denser. Particularly not when the people already living there tend to have the chance to be well-compensated by selling to developers if they want.
This doesn't mean developers should be allowed to let rip either - as one of the other posts says, increased density leads to increased demand for other infrastructure as well.
Basically neither Manhattan nor Houston are really ideal states in my mind. There should be a way to live in the burbs if you want to do that, but I don't think public policy should be vigorously defending the people who do that regardless of obvious social and economic costs.
> Particularly not when the people already living there tend to have the chance to be well-compensated by selling to developers if they want.
the developers have a significant amount of leverage in this situation. if they can build one large apartment building in a low-density sfh neighborhood, they can take a significant chunk of value off all the neighboring homes. if they can secure land to build several large buildings, they can seriously devalue these homes. when they start looking to buy property for the nth building, the homeowner isn't going to get anything close to the original value.
as a society, we should never have allowed this situation to happen in the first place, but now that we have, it's not going to be easy to solve. until you get to pretty high percentiles of wealth, homes tend to be a large fraction of a family's net worth. to suddenly remove the zoning would be a pretty big hit for these people; a lot of them could get upside-down on their mortgages.
Are you also going to build the infrastructure to support your apartment building in a neighborhood of single-family homes? Are you going widen the streets, create parking, improve sewer and water lines, add traffic lights, build larger parks, route mass transit, hire more school bus drivers, hire more police? Urban planning and zoning exist for a reason.
If I'm happy to have gains when I do nothing but my neighbours improve their properties, then I’m also happy to risk losses when I do nothing but my neighbours make changes.
If they're indeed so greatly desirable then there wouldn't be this weird fixation with banning literally every other form of housing (something which has caused the homelessness crisis, as well as making rent pathologically high).
> anti-social lifestyle decreases face to face contact and increases barrier to connect with others
This cannot be overstated enough. My pet theory is that the suburbification of America led to our current division and political strife. You cannot expect great results when those with the most combined political power and wealth in the nation sequester themselves individually away from others and even each other. This ends up with anti-social people driving social policy for the nation. And it shows.
The older I get, watching the first generation fully raised in "suburban culture" seems to be a lesson in watching the threads of a society break down in real time. It's amazing to me that within 2-3 generations we completely blew up the notion of extended families and close-knit community taking care of each other.
That said...
> If I could vote to make these neighborhoods illegal, I would.
I'm not quite willing to go that far. I would simply make zoning them illegal. If an area is desirable enough to toss up a giant single family home next door to a few 3 flats - so be it. But I should be just as allowed to come buy that place, tear it down, and toss a small apartment building in it's place. Additionally I'd be in favor of laws that make it illegal (or exceedingly difficult) to require setbacks/minimum parking/etc. for most areas.
Basically I'd like to see a legal framework that brings us back to "natural" incremental city development vs. this BS planned crap that never works. The only cities in the world people marvel at (at least in western societies) are those that predated zoning law.
Choice and freedom are a beautiful thing. The problem now is there is little choice due to subsidy and zoning laws.
Sorry, yes that's exactly what I meant and we're in total agreement. There's no way I'd advocate tearing these neighborhoods down, only make it illegal to continue to protect their zoning, just like this new law in Oregon. I think that's a super solution, and I'd happily vote for it in my own state.
It somewhat works in Japan because you can't register a car without having a dedicated parking space.
In the US, an apartment complex in an ordinary suburban neighborhood would swipe all the on-street parking and probably people's lawns as well. Those home owners expect nearly exclusive use of the street parking for their guests.
I found the opposite to be true, we lived in the South Bay in denser townhomes and everyone was very anti-social. Now that we’ve moved to the east bay to a SFH area the neighbors are more invested in the neighborhood and we have far more social interactions. We’re also a 10 minute walk to great shops/bars/doughnuts. The options aren’t burbs or dense urban housing, you can have SFH in an urban area.
Luckily, my vote for single family houses will cancel out your vote.
A single family house in a good and expensive neighborhood is something many people want to get and when people want to get something, they put effort into that and drive the economy up. I'm one of those people and I'm putting a lot of effort to get such a house, paying high taxes on my way there. People who vote for dense multi family housing have probably never lived there. But I did, I came from a ghetto and don't want to go back. Those dense apartment complexes don't solve any of the problems you've listed, but rather introduce new, such as drunk addicts wandering around your complex when you're returning from work. Apartment complexes don't make anyone's lifestyle any less sedentary and any less car dependent, because you still need a car in such a huge country. The US has plenty (too much) land: that's obvious to anyone who's bothered to go on a road trip. Most of that land just sits around unused. The carbon intense lifestyle is caused by the disposable junk products that are intentionally made flawed so we'd have to keep buying new. There is nothing "carbon intense" in putting together a bunch of trees and calling that a house. The cause of materialistic lifestyle is caused by greed: a fundamental flaw in our mentality that humanity will take tens of thousands years to overcome. Petty housing laws aren't going to change that, just like laws aren't going to make a teen grow faster. Economic "segregation" is a good thing as it gives people a choice where to live. Anti-social lifestyle? ROFL. Like I've said, I lived in a ghetto good 20 years. That kind of lifestyle can't be any more anti social. Some people have that detached from reality idea that if we make all sorts of people live together in packed apartment complexes, the "pro-social lifestyle" would flourish, we'd get nice parks with crowds of happy people and kids running around. None of that would happen. What would happen is a bunch of depressing big apartment buildings with all sorts of sketchy folks wandering around your neighborhood, looking for something to keep themselves busy. And that something is rarely a talk about arts. In such neighborhoods you'd want a car even more, but now for safety reasons and you wouldn't dare to leave your kids alone in such places. "Increases barrier to connect with others" - gosh, I can't stop laughing. The kind of people you would have easier, with no barriers, communication are not MIT professors and you would want a car with tinted windows just to have that barrier to connect with others.
The single family house neighborhoods with HOAs, tiered by social status, is the right way to go as it gives everyone a choice where to live. If you want to build a bunch of tall apartment complexes next to the city center, so you could walk to work, fine, do it, vote for it, but please, keep your hands away from single family houses and HOAs.
Sedentary? So you think you’re going to legislate exercise? Let me tell you what’s sedentary: helpless urban dweebs ordering dinner from Postmates, who’ve never mown a lawn or used a table saw or planted a garden. Pasty-handed yuppies who call for help at the slightest adversity instead of learning to fix things themselves.
Racial and economic segregation? HOW? By not reducing EVERYONE to a cow parking herself in a pathetic stall every night, chewing on the processed feed from the overpriced corner specialty food store?
Anti-social? I know more about the suburban neighbors I grew up with than I do about people in my urban apartment building. Don’t project your antisocial behavior on everyone else.
Materialistic lifestyle? Fuck you. I want to grow vegetables and fix my own car. Too bad if you’re threatened by that, urban dandy.
There's a lot wrong with the government mandating them in a particular area, especially when that 'particular area' is actually 'most residential land'.
> It is exclusionary by nature; economic segregation is often the intent, and in most cases the impact.
This seems awfully reductionist. I think often the intent is more along the lines of- "We want to live in a place where kids can walk to their friends house without an adult escort and/or play kickball in the street. We've observed that this becomes unsafe in places with high density populations, so lets prevent high density housing to maintain that lifestyle"
There are lots of poor neighborhoods that are single family housing (the entire south side of Chicago comes to mind). The issues greatly impacting San Francisco should not be generalized like this- most places do not have them.
> We've observed that [leaving children unattended] becomes unsafe in places with high density populations.
Is that factually accurate, or just a false impression that people get?
Let's assume it is objectively more unsafe. Is the problem the high density or is it some other aspect that causes issues?
Most kids in East European countries, the vast majority of which grow up in high density neighborhoods, are left unattended to play in the streets, yet they are not abducted, get hit by cars etc. (Source: I grew up in Romania.)
I think the problem is imagined. The “problem” of safety has made its way out to the burbs now too. The public world is mostly safe, and kids are mostly capable of navigating it on their own and in small groups — the adults in America have chosen not to believe that, and written laws forbidding parents from allowing their children to even attempt it.
These choices may have resulted in a few less kidnappings, but they’re also core to the creation of the loneliness epidemic, as kids never learn how to engage with the world on their own.
Well I feel much more worried about being a pedestrian in the suburbs than in a city. Drivers seem to forget people and bikes exist unless they’re constantly reminded of their presence.
Trying to get from point A to point B? Absolutely. Just hanging around near point A? Absolutely not. Point A in the suburbs invariably has a space within 2 blocks that sees two to three cars a day (excluding rush hour).
I dont think ive ever seen a fast car on a dense city street (difficult to go fast when theres gridlock) whereas speeds above 55 mph were common on the 'nice' suburban street I grew up on
I mean it was a street with on street parking, sidewalks, a school etc. I am unsure how you can make such a universal statement unless youve experienced literally every suburb in america.
In san Francisco, most city traffic is less than 30 mph because of high density
"If I redefine everything to fit my parameters, then nothing can contradict me."
I mean, okay, but if you want to avoid being intellectually disingenuous you can't do that anymore. You don't get to just randomly redefine things until they fit your arguments better.
A lot of this goes back to 80s and 90s daytime TV and its sensationalization of a small number of kidnapping cases. An example would be the Johnny Gosch case which almost single handedly ended the job of paper boy. (There is a crime podcast called Faded Out that looked deeply into this one, starting by examining the sensational claims but later finding a much more likely explanation.)
The top risk to kids outdoors is cars. Strangers don't even rank. >90% of child physical or sexual assaults are committed by someone the child knows.
I would say John Walsh as well. On the one hand, he didn't want others to go through what he went through. On the other hand, he scared the poop out of an entire generation of TV watchers.
Media really distorts risk perception. People are afraid of random child predators, terrorists, and mass shootings when none of these things even compare to car accidents, standard issue child abuse by someone the kid knows, cancer, heart disease, etc. Another example is that people are more afraid of nuclear power than coal when coal is dirtier and drives scary things like ocean acidification and climate change.
One 9/11, random kidnapping, etc. has more "virality" than a constant undercurrent of far larger risks.
My take is it's not about gross safety statistics. It's about feeling safe. A lot of unsightly activity in your hood may make it feel totally unsafe even though statistically it's pretty safe.
This is disingenuous. Lets admit that there are racist people who use and/or co-opt these types of regulations and address the genuine arguments in their favor. Then maybe we can find compromises that help both `sides`.
Assuming that one "side"--the one inventing things about people with more melanin--is in any way deserving of compromise is immediate and irrevocable surrender.
The white-supremacist contingent understands this and are not looking to compromise. They'll take whatever compromise is handed to them and immediately refuse to change their behavior at all.
As far as these regulations are a proxy for racism, yes absolutely they need to be removed. But lets understand the arguments that aren't based in racism, and I think they exist, to try and accommodate those aspects of single family home neighborhoods.
I think if 1/4 of high density space is dedicated to public parks, that would go a long way towards addressing the real issues. Those parks can't just be space 'somewhere' either. There has to be one within ~two blocks of every home in my estimation.
> Is that factually accurate, or just a false impression that people get?
I don't know, and its a good question; the answer should definitely inform regulations like these. Though, even if the fear is imagined, it will still affect your behavior and how you're able to parent. I think its also important to note that it isn't just safety at risk here- its opportunity. High density areas are unlikely to support multi-use infrastructure since the primary use will force out secondary uses (e.g. playing kickball in the street).
There are also a variety of other things you can slot into that sentence that dont invoke the sanctity of kid safety. Admittedly, a lot of them are more personal decisions that don't require regulations enforced on others.
From what I can tell, most of the people arguing that cities are safe for kids also seem to think that letting street people do whatever they want in the urban core is okay. You can cite all the stats about stranger danger that you want, but no sane parent is going to let their kids play outside in American urban cores as they currently exist. Urban cores are not human friendly places. Adults put up with it so they can live in a more stimulating environment. They are not suitable for children to wander in the same way that my kids can wander in our neighborhood in the suburbs.
>> We've observed that [leaving children unattended] becomes unsafe in places with high density populations.
> Is that factually accurate, or just a false impression that people get?
I don't feel safe as an adult living in downtown seattle due to the homeless population (this person's experience 100% matches mine [0]) and homeless people are going to naturally gravitate towards high density areas where there are more people to panhandle from.
Also, it's much riskier to commit a crime in a low density population where you can be recognized much more easily.
It's not the density that makes urban areas unsafe, it's all the cars.
A downtown pedestrian street is perfectly safe for kids to hang out and play. Neighbors, older kids and shopkeepers keep an eye out without being in helicopter mode.
In the few cities I've been to that have banned vehicular traffic in downtown areas, you do see bunches of kids running around, as done for millennia.
It's really about planning. Modern Swiss towns mostly consist of high density buildings with parking underground and most of the areas around the buildings are for walking & biking. The really good thing about high density is that it allows for much more efficient public transport which reduces the need for cars.
Yes, but Geneva and San Jose have the same density. I think it’s worthwhi to see where scaling breaks down with constant density and also worthwhile to not a priori dismiss the idea as non-scaling.
I'm sorry, this is hilarious to me. You see, urbanists constantly get pushback from people who know almost nothing about urban planning, or cities in other countries, who say, "uh, you can't apply lessons from Japan/UK/Germany/France/etc., because the US is so much more spread out, duh."
And now we have someone arguing literally the opposite. Now it's the US that's apparently too dense.
We need a new word for this brand of snowflakey NIH syndrome, where unless you can't prove that [city/country] is exactly the same as [other city/country], there is nothing one could learn from them.
I think you read a lot in my post that wasn't there.
But also sure... I don't know why you would be so naive to think that scaling issues don't work both ways. Perhaps what works for Switzerland and it's one city over 250k people might not work for USA with it's eighty eight over different climates, areas, densities, geological formations. No, surely I'm just being hilarious :D
With respect, you have it exactly backwards. It's the US, with its predominately low density, car-dominant building style that has vastly more traffic fatalities than higher-density Germany or Japan.
It's true that low-density SFH areas often seem more peaceful, but in practice cars there usually travel much faster than they do in higher-density neighborhoods, and it's speed that kills.
Those traffic fatalities are vastly more vehicle-vehicle collisions. I believe the EU even in the last decade legislated car design changes to address the risks of vehicle-pedestrian accidents that are far more prevalent there.
Of course they're more vehicle-vehicle in the US; hardly anyone walks in America. Just look at the stats. Even the walk-iest big city in the US, NYC, only has like 6% walk mode share.
However, controlled for number of trips/distance, being a pedestrian in the US is generally quite dangerous compared to elsewhere.
That link is only considering commutes to/from work. That traffic is very segregated in suburban communities. Notably, its also usually very far from where children hang out.
I'd be interested to see a source about comparative pedestrian safety. I'd be literally shocked if small suburban streets weren't safer than almost any other option.
Here is Scarborough, an eastern suburb (with the suburban neighbourhoods you'd expect) in the City of Toronto.
> Incidents in Scarborough have accounted for more than 46 per cent (or 19 of 41) of pedestrian deaths this year, despite the eastern borough containing just 23 per cent of the city’s population and about 26 per cent of its road kilometrage.
> I'd be literally shocked if small suburban streets weren't safer than almost any other option.
Depends on what you mean by 'small suburban streets' I guess. If you mean in small suburbs, I would find that surprising, if you mean the street itself being very narrow then yeah maybe. But relatively few American suburbs have actually narrow streets. To most Americans, "there's only barely enough room for parked cars on both sides plus 2 lanes of moving traffic to pass each other" means it's narrow.
Random reference I just saw: so far this year Seattle has had 10 traffic fatalities, 4 of them on foot vs 5 with vehicles, despite walking being far less popular than driving in Seattle (which is not nearly as walk-friendly as NYC).
I think it has nearly zero to do with cars and 100% to do with growing homelessness and grewing drug activity in homeless camps. Nobody who has become weary in Portland claims car traffic. They're all terrified by the growing homelessness and unsafe drug activity in their hood. Needles in your front yard type of thing.
> We've observed that this becomes unsafe in places with high density populations, so lets prevent high density housing to maintain that lifestyle
This is a generalization that finds its roots in "white flight", which was itself driven by racism and fear mongering and the side effects of redlining and mortgage discrimination. Suburbs as we know them today didn't exist a hundred years ago. And in fact, perpetuating this belief drives more folks with money/privilege/economic mobility away from cities, increasing economic hardship (and in turn, crime) in the areas they leave.
You invalidate your own point. The south side of Chicago is not a place many people would consider safe, and yet it has a huge amount of single family units. "this becomes unsafe in places with high density populations" really means "this becomes unsafe in places with lots of poor people" or "this becomes unsafe in places with lots of people who look different from me".
Can this really be tied to "white flight"? I think you make a compelling point, but white flight also happens to suburbs- which I guess is also part of your point. I don't know the reasons and history of suburb development. It seems to me that it should have a lot to do with the commoditization of fast travel costs, and its simply that rich white people were first able to take advantage.
If socioeconomic status weren't so linked to race (good lord maybe this can happen in my lifetime), would people still want single family housing neighborhoods? I think the answer is yes. They have some real advantages over living in the city or in true rural localities.
There's a difference between "moving to a single family home" and "preventing my neighborhood from becoming high density". I don't care how many people live in SFUs so long as it's not illegal to build higher density buildings.
Germany has MUCH more kids walking around by themselves than the US, even with higher population densities and a complete lack of mandatory single family home zoning. The US actually sucks big time for child independence.
If anything, these sort of car dominant neighborhoods make it more dangerous for kids to go around by themselves. Cars go much faster there.
> There are lots of poor neighborhoods that are single family housing
This entirely misses the point. The point isn't that every SFH-only neighborhood is affluent or even middle-class, it's that having all these SFH-only neighborhoods supports stratification. Such rules will block a poorer family from living in a richer area, whereas with more density-friendly zoning rules, they may choose to just live in a smaller home in a nicer neighborhood, thereby preventing severe segregation.
> This entirely misses the point. The point isn't that every SFH-only neighborhood is affluent or even middle-class, it's that having all these SFH-only neighborhoods supports stratification.
Is that the point? Is stratification what we are trying to prevent by removing single family home regulations? I don't think it will work.
You can't just say "I don't think it will work" without saying why. Allowing for smaller home forms would mean affordable options in desirable neighborhoods. Do you have a reason to believe poorer families would still universally avoid those options?
It seems to me that stratification of neighborhoods is extreme whether single family housing regulations are in place or not.
These types of regulations probably do make it more extreme. But I also question the base motive. Is de-stratisfying neighborhoods actually a worthwhile goal? I can certainly see some benefit- its nice to live in a diverse neighborhood. I wonder if that might happen anyways if we address the underlying issues instead- violence, schools, access to public works, probably others- rather than just throwing up our hands and giving up on these underserviced 'bad' neighborhoods.
Come to Munich. I find it very difficult to tell how rich most neighborhoods are here, whether city or suburb, whereas in the US I usually noticed easily without even thinking.
> Is de-stratisfying neighborhoods actually a worthwhile goal?
Well, that depends on how you feel about social mobility and segregation, I suppose. If you support the rich and poor being kept separate from each other, if you want to keep social mobility low, then sure it makes sense to support these regulations.
> rather than just throwing up our hands and giving up on these underserviced 'bad' neighborhoods.
Giving up? In practice, the result is evening out of neighborhood quality and desirability, not some neighborhoods just being randomly abandoned.
> Come to Munich. I find it very difficult to tell how rich most neighborhoods are here, whether city or suburb
That sounds really pleasant. I'd love to have that where I live.
> Well, that depends on how you feel about social mobility and segregation, I suppose. If you support the rich and poor being kept separate from each other, if you want to keep social mobility low
I think you're painting me into a corner here that doesn't need to exist. First, I don't see why social/economic mobility should be predicated on the non-existence of stratified neighborhoods. I think non-stratified neighborhoods are an excellent result of those things.
Second, trying to manufacture non-stratification by telling communities what type of housing they must allow feels a little hamfisted- and also a bit off target. I'd rather have government assistance housing that fits the neighborhood than a fucky landlord building shitty tenements.
Stratified neighborhoods means stratified schools, means stratified networks of connections, which means less social mobility.
> Second, trying to manufacture non-stratification by telling communities what type of housing they must allow feels a little hamfisted
I'm sorry, but this is COMICALLY absurd at this point.
Here we have communities that have used a relatively recent invention, zoning regulation, to force a historically unprecedented urban pattern of building onto the vast majority of residential land in the US, with the express intent of keeping out undesirables. As the libertarians like to put it, at the point of a gun.
And you're saying the ones who want to loosen regulations, to return to more environmentally friendly, historically common urban building patterns, patterns that would not shut out the poor, are the ones "hamfistedly manufacturing" something?
I'm sorry, I'm having trouble believing that you're not being deliberately disingenuous at this point. It's like calling the removal of Jim Crow laws "hamfisted, manufactured non-segregation".
Regulations to fix regulations.... Perhaps the root issue is that the government tries "helping" too much.
Neither California nor Oregon have the the spatial constraints somewhere like NYC does.
Both states and their cities have implement policies which only make sense when you've run out of land and the ability to develop relatively unregulated.
Government intervention except for at the last possible moment almost always has negative long term second order effects.
I did weight that. Most of SF is landfill and falling apart. But there's expansion outside of the city still relatively available.
So I guess my addendum and corelary is that once you do hit that "last possible moment" the action needs to be decisive and absolute. NYC did a pretty good job of it.
Which parts are falling apart, or what do you define as falling apart? I used to live in SF, and I still work there. It looks mostly put-together to me. There is definitely blight and abandoned builds, especially around Civic Center, but that plus landfill is not "most" of SF.
My comment is mostly targeted at the idea that there aren't spatial constraints. SF proper is thoroughly developed. The land is accounted for. We can nitpick over specific plots, but there isn't new land to start developing. People who move here want to live in SF or close enough to public transit, and most of those places are developed too, even if they are suburban. There is no BART in Tracy, etc. so people aren't moving to the undeveloped land there.
Apart from the millennium tower, what else is having trouble? Is it possible that, if it’s only the millennium tower, it could just be related to the way that one was constructed?
Salesforce tower is fine, for instance, and it’s much taller.
Also, if you don’t mind sharing, are you a civil engineer? Just asking because my friends who work as engineers in construction do not share your opinions.
Only in two dimensions. SF and the Bay Area in general are very lowrise. They have plenty of space in the third dimension though the recent experience with the Millennium Tower might dampen the already low level of enthusiasm for building upwards.
There are not 800 acres of "private" golf courses in SF. Most of those golf courses are on public land in public parks. Do you also propose SF tear down Golden Gate Park and replace that with housing?
A lawsuit has been filed challenging New York's rent control laws on constitutional grounds as an illegal taking of private property and as a violation of due process.
Is there any evidence that this has ever explained anything, or is it just racism? Seems like it's the go-to argument of some people to explain away just about any situation where some other country has something desirable and the US doesn't. "We can't have nice things because black people"?
No it’s not because of Black people - it’s because when you don’t have racial homogeneity, people are worried about “them” taking advantage of the system.
It’s a lot easier to be generous to people who “could be their child/relative”. You see the same thing in the justice system.
No they don't. Gypsies are a large ethnic minority in many eastern european countries. Also, although a religious minority instead of racial, there are a large percentage of Muslims in many of those countries too. Don't forget that the last european genocide over ethnic and religious lines happened in eastern europe too.
Also don't forget their is currently an ONGOING war in the Ukraine over divisions between those who are ethnically Russian and those are ethnically Ukranian.
I'm not preaching diversity as a virtue in itself but the idea that places like Eastern Europe are some kind of ethnic utopia where you can leave your doors unlocked and kids play on the streets just because everybody is white is just absurd.
Saying that a country like Romania is not ethnically homogeneous is absurd. Gypsies exist but in low numbers and stay in ghettos. Muslims only exist in some countries of the south of the Balkans.
Ok fair enough, but then why is Romania such a sh*t-hole? (Sorry Romanians). Surely the racial homogeneity there should mean that things are better over there?
I'm form different Eastern European country so I can explain it to you pretty easily.
Communism. It's pretty much same reason in whole Eastern Europe. Some countries managed to recover faster for various reasons whether it was more useful industry which was pretty much centrally planned in whole Soviet block from Moscow, so some countries where more industrially orientated and other remained pretty much agriculture only.
Second important reason is geographical location, especially presence of wealthy neighbors - compare Czechia with Germany and Austria as neighbors to Romania whose economically best performing neighbor is Hungary (which is economically worse off than Czechia itself).
Absolutely, you are right about that. My point was more to argue against the idea that in eastern europe, kids can run free on the streets because its a mostly white society. More likely is that the kids run free because the parents are not infected with american-style parenting and media-induced fear of everything. Literally nothing to do with race at all.
>Saying that a country like Romania is not ethnically homogeneous is absurd.
My team has two people who came from Romania. My company's site here has many more. I know a bunch of them. Your statement is absurd. I've had more than one Romanian literally tell me he doesn't hang out with that other Romanian because of the ethnic differences between them.
You might want to look at the account’s entire comment history - appears to be far right astroturfing, and yes, I know we don’t throw that around lightly here.
Also see account vwdhx.
If you ban me for pointing this out, then I really am done here.
I'm not planning on living in California ever again, but the title here seems a bit prejudiced? Couldn't we lose "vowed not to become California" and keep most of the meaning?
Here’s an anti rent control argument I haven’t heard (this applies to stricter rent control regimes like NYC, SF - not sure about this new OR law). Getting a spot in a rent-controlled apartment is a valuable, non-transferable asset. If you buy a house and it gains $100,000 in equity, you can sell it and buy a bigger house, sell it and cash out while getting a smaller house, borrow against it. With a rent-control asset, you can’t do any of those things, so you have fewer options, but if you move, you just forfeit the asset. That’s a big economic drag.
I wonder how many rent-controlled residents in SF/NYC would accept a $100k buyout that would convert the apt to market rate. Has anyone seen a study of the spreads between market/rent-controlled, by city/zip/census tract? I’d love to see that.
Great idea, I second that! Could there be a special marketplace for rent controlled places? Could allow people to swap with each other and/or use public servant status as a credit, to help teachers, firefighters, etc get living in very pricy districts.
> I wonder how many rent-controlled residents in SF/NYC would accept a $100k buyout that would convert the apt to market rate.
NYC has a possibility for something like this, but only in the context of condo conversion. Although there's always stories floating around about people that didn't take it and are living for $250/mo in some fancy condo building my sense is that generally an arrangement is reached.
Exclusionary zoning is an even worse form of institutionalized privilege that benefits the wealthy and middle class rather than the poor and middle class.
I would love to see that data as well, but can’t find any reliable numbers that control for newness/niceness of the apartments. Anecdotally, I pay about $1000 a month less than market rate on the west side of LA due to rent control, which realistically is a big reason I haven’t already left LA entirely. It would take an offer in the $50k range to buy me out. Landlord offers tend to be lower than that [1].
I'm in a similar position. I was thinking about finding a new smaller place in the west side perhaps one with an in unit laundry or better air-conditioning.
Looking around I've realized that rent control has me paying significantly less than market and that even if I downsized I'd probably end up paying $1000/month extra if I moved. After realizing this I'm unlikely to move until/unless I decide to leave LA.
I'm happy I'm getting a good deal but it doesn't feel very efficient for the housing market over all.
So, I probably drastically misunderstanding how rent control works, but I don’t see how it is going to help. I would argue it will push house prices even higher as you will have less people trying to rent places. Why?
I was reading a bit about renting as a business (plus I have 1 house in Bay Area I rent) and there is so-called rule of 1%, which means for cash flow to be positive you should rent your house for at least 1% of its market price. But it is just not the case in the SF area, you can get 0.3-0.4% at best. House with 1M price can be rented for 4K, which can’t even cover mortgage + tax, I’m not talking about repairs. Based on rule it should be 10k to make it interesting for the investors (buy and rent to make some profit). The only reason I didn’t sell it is the hope that prices will go up in x years, but right now I technically subsidizing people living there + waiting on possible rent increase in couple years. With rent control in place I would’ve been pressured to sell or live there myself. And as I moved out for an interesting opportunity, in a different market I would’ve just stayed in Bay Area.
Which will not lead to drop in prices, But to decrease of available housing.
In supply/demand problem, the only way to decrease price is by increasing supply, not caping the price.
And the reason I would’ve stayed in Bay Area is cause I can’t afford to rent a place for a true market price.
I’m right now paying 5k for the house which is around 1.5M (should be 15k, right?), which is mind blowing. The only reason it is possible is that the owner bought it long time ago and had the opportunity to pay it off. Buying it right now would require 300k in cash + 5.7k mortgage + 1.5k for taxes. + maintenance
So, to me, market rent control already there. And it is already on the verge of what financially feasible.
> Based on rule it should be 10k to make it interesting for the investors (buy and rent to make some profit). The only reason I didn’t sell it is the hope that prices will go up in x years, but right now I technically subsidizing people living there + waiting on possible rent increase in couple years.
Maybe the market is telling you that SF house prices are wildly overvalued. Maybe the best move is not to wait for ever higher prices, but sell now.
People seem to be programmed to buy high and sell low, making the old truism to do the opposite very difficult in practice. Your description isn't uncommon, but is very characteristic of the physiology of a top.
They are not overpriced. When eng with 10 years of expirience can make 250base + 500k in stock per year (or 4 years can get 1M in pre IPO lyft stock), it is hard not to see why Bay Area houses are so expensive. Area with money coming in will become more expensive to live in.
Housing price in SF are tied to valuation of tech companies. Valuation goes up, house prices go up.
Those companies have to pay this much only because otherwise employees wouldn't be able to live there. And even then, the 750k per year is an outlier even in SF. Divide it by 2 to get the more realistic pay.
That may be because you're competing against other owners who bought their houses for peanuts (relatively speaking) and thanks to Prop 13 also pay peanuts in property tax. They can depress market rents (below purchase prices) because for them rents are mostly profit. Even people who bought 5 or 10 years ago at previous prices can rent for less than you but keep the same margins.
I imagine you'd have to do the math. The 1% (or even 2%) rule only really applies to properties in areas where appreciation is minimal (or negative). A simplified view would be:
Total profit = (Rental cashflow + appreciation) - (Maintenance + other costs)
If you predict appreciation to be high, it may offset low net cashflow or even negative net cashflow. Especially if you use leverage (loans), and have appreciation of 5%+/year.
In Austin it's similar (maybe not as extreme): a $300,000 house may rent for $1,500/mo which probably doesn't even cover the mortgage. But 5%/year is $1250/mo. AND there are more than a few tax advantages to barely making money renting (or losing) but selling at a profit later. I am not an accountant or landlord, but I have run the math and it seems to make sense.
They say appreciation is icing on the cake + negative cash flow means that you are constantly investing and can’t pause. Not the best situation to be in.
Wait, but someone who could pay the 1% per month for rent could save the 20% downpayment in 20 months and easily afford the mortgage payments as they are less than 1% per month. The only thing that would stop them from saving money is not having a choice, but to pay the huge rent. It's taken me almost 10 years to save for downpayment for this reason: rent keeps climbing up and eats a good chunk of my income.
Controlling rent is the surest way to discourage new housing capacity addition. If your profits are capped fewer people will be interested in entering the market.
I realize the reasonable 7% cap prevents this in Oregon’s case, but in NYC you will find rent controlled apartments kept thru two generations, now used as storage only because the cost is so low. Sometimes a rent controlled apartment can cost less then a storage unit after 30yrs.
"the only state to eliminate single-family-only zoning in many of its residential neighborhoods." - this is the silver bullet. Minneapolis has done the same, I hope this becomes a nation-wide trend.
I hope it stays in Minneapolis and doesn't spread outside of the city for a number of reasons. I enjoy living in a neighborhood of houses and families where we have some space and nature visible vs tar and housing complexes. Its one of the reasons why I don't live in or closer to Minneapolis.
Sadly this isn't going to help. Have lived in Portland for the last 25 years, Portland was for a time, was the unpopular rainy big town. Now, Portland is known for all sort of things. I see tour buses downtown and big money has moved in. The rich are buying and building, the middle class is moving out and the poor are getting subsidized houses and rent.
It’s crazy how many people advocate for rent caps when all it will do is make the housing shortage worse. And making it harder to evict tenants will also make it worse. If you want housing, sign a year lease and dont be a horrible tenant. landlords have to deal with some of the worst people out there. People who destroy their property and who disrupt the lives of other tenants. And it’s only these horrible tenants that use all these ridiculous tenant protection laws as a way to torment the landlord.
And this article makes it seem like California hasn’t done anything which is complete bullshit. They fail to mention the massive ADU initiative that effectively doubled the amount of housing in residential areas. Making things better for the developer and the landlord which will be a thousand times more effective than anything else. Even commercial developments use these ADUs.
In other words, these are people looking for a free lunch and thinking they have the power to get it by legislating it into existence.
Only, there is no such thing as a free lunch. It will be paid for. And the ones paying for it will be the people providing the housing, so there will likely be less housing.
I wonder why these same people who are so concerned about this don't just go out and build affordable housing instead of forcing their ideas on other people?
Briefly, most cities are unsustainable in their current configurations due to an unaffordable maintenance cost structure. But they can fake it by adding people/businesses and thereby growing the tax base.
This scheme leads to a growth at any cost attitude resulting in market distortions. Throw in some help from a central bank hellbent on levitating the US stock market by shoveling money into the credit system, and you end up in a bad place.
Portland has decided to stop sprawl by investing in density-increasing infrastructure such as rail lines.
Ironically, the result has been to send property prices through the roof, leaving an overhang of unused land in its wake. Owners of these properties look around them to see high density developments everywhere. What's the value of their own land? It will of course be turned into and equally-high value development, so the price is set accordingly.
What's the solution? The author of Strong Towns puts it this way:
> What if along all these rail corridors and at all of these rail stops, instead of being able to build an eight-story condo unit, all a developer was allowed to build was the next increment of intensity? For most of that area, that would mean single family homes. In that case, what would happen to land prices? They would drop. They would crater, in fact. This would free up an incredible amount of land for cheap, affordable development while also taking a substantial amount of pressure off of the existing single-family neighborhoods.
> I'm not advocating for single family homes. I'm advocating for incremental development. Portland (and Austin and San Marcos and...) are trying to skip increments. They are trying to have a toned body without proper diet and exercise. ...
Prediction: If Amazon/MS/Apple/Some-company-that-does-not-exist-yet were to go ahead and create 100,000 dev jobs in Portland over the next decade, Oregon will have the exact same housing crisis, regardless of its laws.
I live in a 2 bedroom apartment in Oregon. Rent went up by close to 11% when I renewed my lease. Management changed 2 or 3 years ago as well. End result is that the quality of life has been going down. Management complained about the color of my curtains when they inspected last time... (Navy blue, not exactly wild or offensive.) So I've been searching for a place to buy. I've also been looking for alternative rentals.
If want cheaper rent, I'd have to move into a rat nest, if I want a house, I'd pay more renting than I would for a mortgage. A couple blocks down a new apartment building was built and is charging $2000+ for 1 bedroom apartments... Every house that's come up within my range is in bad shape, bad location, or gets sold so fast I don't even have a chance to view it. So, yes, the housing situation is tight.
That all makes me think that the allowing denser zoning is a good thing. I'm not willing to live in that dense of a location, but for those that are, it should help.
The part I'm not sure of is the rent control. Maybe someone here has read up on this enough to know the answers, I'll look for them myself soon.
So, my rent shouldn't go up by more than 7% if I renew my lease, that seems good. But what about fees? One of the annoyances the new management company tacked onto the lease is fees for utilities. I'm fairly neutral on them, but if they can be used to increase rent past the 7% limit, I know they will be.
Also, say I leave my apartment. If my rent was, say, 1000/month, how much will it be for the person moving in after me? Can it go up by more than 7%? If so, doesn't that incentivize landlords to increase rents by much much more than 7% for for new tenants?
Wouldn't that make it a LOT harder for people who need to move?
Also, wouldn't there be another way landlords could bypass this by just making life difficult for tenants so that they move out more often, thus letting the landlord increase rents more frequently?
Personally, from what I've seen under this new management company, they've been trying to push out the old tenants who started renting before they took over. That will make it easier for them to implement policies that are obviously hostile for tenants who don't know that things could be better. (For example, if I remember correctly, they sent a message about no longer offering lock out service. Even though the manager is on site, you have to call a lock smith. The old managers would get back in, you might pay a fee, but you'd get in.) So I could see this particular company trying that method of increasing rents more frequently.
There is no better way to reduce new rental construction then to remove incentives for developers to build with rent control. San Francisco and New York City are prime examples.
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[ 3.2 ms ] story [ 133 ms ] threadUnfortunately, rent control will have the opposite effect of what Oregon thinks, and only make housing scarcity worse.
https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent...
https://www.governing.com/gov-institute/voices/col-rent-cont...
> in an effort to spur new homebuilding, became the only state to eliminate single-family-only zoning in many of its residential neighborhoods
But this is good. Allowing to build new homes will obviously help with the housing crisis. Usually decision makers just won't allow enough new construction, so its effect will usually stay too small.
I always found it odd that rent control always seems to be an all-or-nothing policy: either things are tamped down on, or it's a laissez faire system.
Does any locality have a "hybrid" approached. Something like:
* buildings 0-5 years old, allow up to 3x inflation rent increases
* buildings 5-10 years old, allow up to 2x inflation
* 10+ years old, allow only at inflation
This would (in theory?) encourage the construction of new rental units by allowing investors to recoup their costs sooner and counter the risk of any unforeseen expenses. But as the buildings get older, and costs (theoretically) become more predictable, stabilize prices for renters.
It's akin to the minimum wage; why are people so bent on capping prices? Why not work on the underlying problems instead, ie what's causing those prices?
Western civilisation has had phenomenal results with the principle that when there isn't enough of something then the owner of that thing gets to decide who goes without. Housing is not so special that it deserves an exemption. Squeezing landlords is one of several ways to lock a housing shortage in for the long term. It has been established that letting people make big profits doing something is a great way to get more of the something - and that applies to renting out houses too. The only role for the government in making sure it is easy to build more houses and that everyone sticks to what they signed when it comes to contracts.
Where it’s easy to build new housing supply I’m in favour of looser rent control or removing rent control because it’ll be redundant.
Widely anticipated wonderful new laws are usually chock-full of this kind of crap. Lobbyists don't try to step in front of oncoming political trains. They do successfully redirect those trains to their own purposes.
I.e. enforce basic tenants' protection instead of worrying about what incentives landlords have. It shouldn't matter whether the landlord wants to take a unit off the market if the tenants aren't willing or can't move. Then it lies on the landlord to create an incentive for tenants to move out, for example by extracting less rent from uncontrolled units to make them more affordable.
Another good idea is for tenants to unionize and share the legal costs of e.g. questioning the legitimacy of a lease termination or challenging sub-standard living conditions.
If you’re maintaining a 100 year old building, it would be very easy for costs to exceed that cap.
Your building might be worth$2M, then a rent control law is passed and suddenly it’s worth $1.5M.
That is unless the $2m valuation is based on a speculative estimate of how much rents will go up in the near future?
It's not. Rent control argument on the internet looks like that because it's always a bunch of strawman arguments about political philosophy. In fact the Oregon laws in question have features exactly like what you're talking about.
This seems like it would still be rent-inflationary in nature, you just end up with younger average housing stock.
Newer buildings have more predictable costs, definitely not older buildings. It’s pretty much the opposite of what you said in the real world. Newer buildings can lease to higher quality tenants at higher rates with lower eviction/non-payment/damage risk. Older buildings can run the gamut. You can have an older building filled with stable senior citizens that runs perfectly for decades or you can have an older building filled with tenants who constantly break things, are late on rent, run meth labs, or simply trash a place and vacate in the middle of the night. You might have to evict someone and the process could take a year. Air conditioners fail randomly and expensively. Roof leaks develop and tenants might not even report it for months (yes, that sort of thing happens all the time. As a building gets older, the risks increase, but the rent you can charge decreases compared to a new building.
My suggestion is to actually ask people who have owned building exactly why they oppose rent control so fiercely and the answers aren’t going to be about greed but about increased financial risk.
High rates of profit wasn't the problem, it was the negative effects that were theorised to occur when the rate of profits, inevitably, fell too low.
I'm not talking about owning, but about encouragement of building. If income is limited to CPI, regardless market characteristics, what incentive is there to take a risk and build?
It depends on the kind of rent control. Housing has important asymmetries it's reasonable to address through legislation. One is asymmetry in scale: you have one unit; landlords have many more. This gives them stronger negotiating power. Another is cost of change. It's much more expensive for me in time and money to move than it is for a landlord turn over a new unit. That means a landlord can extract money well above a true market rate. A third is of interest. Individuals and the community have a interest in healthy social bonds, while absentee lords mainly want to extract cash.
I understand free-market fundamentalists hate all rent control, but Oregon's rent control laws are designed to preserve incentives to construct new housing: https://www.npr.org/2019/02/27/698509957/oregon-set-to-pass-...
The first 15 years of a new building are free from rent control, and after that they can increase rent at 7% above CPI, meaning in real terms rents can still double circa every 10 years. And if a tenant moves out, landlords can raise rents as much as they like.
For this to affect construction today, a builder would have to be betting on a very tight market continuing unabated during the 2035-2045 period. But that's a ridiculous bet to make, rent control laws or not. Anybody building new housing will want to be sure the economics work if rent increases return to their long-term average, which is well below 7% above CPI: https://www.apartmentlist.com/rentonomics/rent-growth-since-...
Not necessarily true. Sure , the landlord knows more about the apartment but you know more about yourself as a tenant. Landlord takes a huge risk in terms of allowing someone rent, especially given protections afforded to that individual. Most experienced landlord will cite tenant selection as very important and a huge risk. One tenant that refuses to pay rent or damages property can wipe out the return of 9 other units.
> This gives them stronger negotiating power.
I have more options as to where to move. The landlord owns a very expensive illiquid property. He can't just sell it tomorrow but I could easily choose another rental.
> Another is cost of change. It's much more expensive for me in time and money to move than it is for a landlord turn over a new unit.
Its very expensive to fill a rental. A landlord usually needs at least a month to find another tenant. That's a month of foregone rent
> That means a landlord can extract money well above a true market rate.
Market rate is the rate the landlord can get. If a transaction happens at that rate, that's the market rate.
> A third is of interest. Individuals and the community have a interest in healthy social bonds, while absentee lords mainly want to extract cash.
Not sure what "absentee lords mainly want to extract cash" means. Yes, most landlords manage properties as an investment. Landlords also have an interest in the community as they own equity in that community that would appreciate if the neighborhood gets nicer. I don't see your point.
If a month of foregone rent was such a huge burden to landlords then it wouldn't be so common for them to keep their properties vacant.
Just recently, Los Angeles lawmakers have proposed a vacancy tax on the 111,000 vacant homes in the area.[1]
[1] - https://www.latimes.com/local/lanow/la-me-ln-vacant-housing-...
Do you have any data on how long properties are vacant? And if they’re vacant, are they vacant for a reason like renovations or construction?
Every landlord I’ve ever had has wanted to rent their place quickly. They hate missing a month.
This would have required me to take a huge loss on the property, which I would have had to pay out of pocket, to the tune of tens of thousands of dollars, which I did not have. I would have preferred to never rent at all.
If you can't raise rents, you'd be less likely to react to lower market rents. So prices stay sticky on the way down. Even if the laws are not in place now, there is a risk of them being in place in the near future and you'll be stuck at below market rents.
Also if you can't remove tenants then you'd be more selective and naturally that would increase vacancy rates.
A high vacancy rate doesn't prove that its not expensive to fill a rental. In fact higher vacancy rates means losing a tenant is even greater than if there were low vacancy rates. That means that an empty apartment is going to stay on the market even longer. And most landlords have some debt arrangement, are paying interest, taxes and insurance in addition to forgoing rental income.
Landlords estimate a vacancy rate and keep that amount in reserves. However, they all earn more money if it's not vacant. It's almost never the case that they can make more money by keeping the rent high and units vacant.
Also, is they are using a property management company (which surprisingly many do), then turnovers are likely more expensive for the landlord than the tenant's cost to move - they usually charge 50% of one month's rent to find a new tenant for you.
If they're too optimistic in that vacancy rate, they will lose money.
For anyone thinking landlords have all the power, hang out on real estate forums. After all expenses (including vacancy), most RE investors target $100-200/month per unit. Now often, over several years, if rents shoot up in the city, they'll make good money from the increased rent. But they don't rely on that - their usual hope is the property's value will go up so they can sell it one day. The landlords who make huge piles of money are outliers. The vast majority of landlords do not make anything close to a SV SW developer and are not aiming to (of course, though, whatever they do make is almost "free", which makes the difference to them).
The top skill for a landlord is to estimate costs. At $100-200/unit, if they underestimate a lot, they are out of business. Surprisingly, most do not carry vandalism insurance. So if a disgruntled tenant trashes a place, they could easily lose the property. If they do not reserve money for evictions, they could easily lose the property.
Unless they can hold out until property values rise and they can sell for a profit.
Sure, if they've got piles of cash sitting around to pay for the loan, insurance and real estate taxes.
Here's another tidbit people don't understand. If the property has more than 4 units, the value of the property is determined almost entirely by the revenue it generates.[1][2] The bank who will provide the loan to the buyer will look at those numbers, and the buyer will look at those numbers. In particular, what people will not look at are the comps (the value of nearby properties). So a "Let's lose money until the property values go up" strategy won't work there.
[1] https://theresabradleybanta.com/value-a-multi-unit-property/ [2] https://www.biggerpockets.com/blog/2016-07-06-multifamily-re...
actually, that's pretty straightforwardly "income-based valuation", and it's logical because having more than 4 units means the property is primarily a business and not primarily a residence. businesses are valued by the income (i.e., profits) they generate. the sales comparison method (employing "comps") is primarily used with residences because the more accurate income-based valuation isn't available to residences, as non-income-generating assets. (the third valuation method is cost approach, which is used as a primary method of valuation in markets with low turnover/few comps, and in many tax assessment jurisdictions).
That is the very definition of an outlier. Most landlords (easily over 90%) don't even have a 100 units. In fact, most landlords have a target number of units they need to "retire", and that number is usually less than 100.
Hypothetically, if 1 company managed 1,000 units and 1,000 people managed 1 unit then that outlier owns 50% of the market while representing 0.1% of the land lords.
Also, keep in mind that on the flip side, landlords likely view tenants the same way - looking at aggregates and not individuals: "Yes, lots of people can't afford the rent, but as long as I can get enough to make a profit, who cares about the rest?"
Yes, but obviously people care most about the communities that they actually live in. "Absentee lords mainly want to extract cash" probably means that, as you say, a landlords interest in their community is related to their investment and the opportunity for the value to rise. People that actually live there have other interests, as the landlord does with the location they actually live. Someone renting out a room in their house or half of a duplex isn't absentee, and would have many non-profit interests in the local community. A landlord that lived a few hours away probably would not.
At worst, the landlord loses money. At worst, the tenant is on the streets. Emotionally, finding a new tenant is business (maslow level.. 4?). Emotionally, finding a new home touches on your core safety and wellbeing (maslow level 2). Switching tenants means a new contract and new risk to lose money. Switching neighbourhoods means losing your neighbours, your area, any ties you have there, and having to build it all anew.
And since we're talking about areas where rent control is necessary, a landlord can quite easily find another tenant and a tenant has a hard time finding another house. But as you can see above that's just a "bonus".
Economic analyses tend to discount emotional factors, by their very nature. Make no mistake about it: landlords have a massive advantage in any negotiation with a tenant.
This isn't a very strong argument because it applies to, eg, purchasing food at a supermarket. Worst case for a supermarket; wasted produce. Worst case for consumers; literal death. Yet the supermarkets are generally famous for being very low margin and cut-throat competitive. A tenant is only forced to move neighborhoods if the market is rising in lockstep; individual landlords can't force anything.
Moving neighborhoods due to financial stresses would be completely miserable. But unfortunately reality is unfair and if people want to live the way they like they also have to make a measurable contribution to the economy. If they are relying on the charity of other people, or the state, then they will have to put up with real inconvenience. If other people are bearing the cost, other people get to make the decisions.
On the other hand, if there’s a better deal on a different apartment, (1) it probably won’t be available; (2) even if it’s available, it probably won’t really be cheaper after accounting for the huge direct and indirect costs of moving; and (3) even if it’s really cheaper, people will still rightly be reluctant to upend their life to take advantage of it. It’s not “charity” when you’re paying through the nose for something that you don’t have a realistic choice about.
Now I'm not against charity as a concept, but we have a century or so of economic experience on this matter. If charity becomes compulsory, first people make stupid decisions and then the vulnerable have to live with the consequences of those decisions.
Being born gives everyone a right to dignity but it certainly does not give anyone a right to choose that someone else sets them up in a house and area of their preference. If somebody wants control of their own life, they are going to need to earn enough to either buy their own house, learn to build their own house or pay market rates for rent. It would be nice if there was a better way; but all the alternatives that are tried turn out worse than being honest about the economics of the situation up front.
> I’m pretty sure you lost track of your own analogy there. If there are better deals at a different supermarket, people will just go there...
If there are better deals in a rental market, people absolutely will go there. There are substantial costs of the order of a few hundred dollars to hire removalists, that isn't cheap but people aren't going to be so overwhelmed with emotion that they can't move a few blocks over for a $3,000 a year improvement in rents.
> It’s not “charity” when you’re paying through the nose for something that you don’t have a realistic choice about.
I've lived in 4 different communities in my life. I don't accept that moving somewhere with a lower cost of living is so terrible that people need to be protected from it - I can do it, it isn't bad. Somebody who can't afford to live in a neighborhood should be encouraged to move somewhere cheaper, and the idea that landlords should be protecting them from that outcome is a great way to set up a housing shortage. If they want to be part of a community then they should find a job that lets them rent in that community at the market rate.
> thanks in part to food safety regulations
You misunderstand; starvation from not being able to afford food. The point is that a vendor of a product can't unilaterally deny anyone access to market rates for that product because the competition will step in and undercut that vendor.
At worst, the landlord loses the money they were relying on to pay the mortgage on the property. Not every landlord owns hundreds of properties and can eat the cost of one sitting idle. Or worse, the cost of major damage to one by a bad tenant.
I'm biased. I have rented and owned. In both cases, it was what was right for me at the time. When I rented, I was happy to pay the money to my landlord in exchange for living in their property. Admittedly, I've had nothing but good landlords (with the exception of one), but I'm a very good tenant in exchange.
It is not necessarily easy to move. It can mean a longer or harder commute. It can mean changing which school your children go to (which can be a hardship for them). It can mean losing a connection to some social circle or religious organization (yes, this matters to some people). Trying to stay in the same neighborhood can mean dealing with the same management company, thanks to local governments giving developers effective monopolies over entire neighborhoods.
Landlords do not need to sell their property in order to enter a new market; they can use one property as collateral to take out a loan for another. That is more or less how real estate developers operate.
"Its very expensive to fill a rental. A landlord usually needs at least a month to find another tenant. That's a month of foregone rent"
In the NYC region every landlord I have dealt with has included a clause in the contract requiring 60 days notice before moving out, and reserve the right to bring potential new tenants into my apartment to show it off before I even leave (while I am still paying rent and living in the unit). It is also more expensive than one month's rent to move, at least in my experience in this area, and landlords are notorious for keeping security deposits as payment for "repairs" to their units.
"Landlords also have an interest in the community as they own equity in that community that would appreciate if the neighborhood gets nicer"
I have yet to see any landlord voluntarily do anything to improve a community. In every case where a property owner has done something to improve a neighborhood, it has been because they were forced in some way by the local government. When neighborhoods decline in ways that threaten their profits, landlords seem to just demand that the government step in rather than taking any action themselves.
"I don't see your point."
It is not hard to understand. Landlords, especially larger management companies with many large properties, have built-in advantages over their tenants that are not corrected by market forces.
This is one of those theoretical arguments that sounds good but have no empirical foundation at all.
If it was true the gigantic Walmart could completely dick me around when buying socks and toilet paper. In reality prices are very competitive.
It also completely ignores that fact that most landlords are small operations, and often the tenants are richer than their landlords.
Landlords do dick around with prices on small business owners, and Walmart has the scale to not get dicked around with. This is just another thing that helps them to be exceptionally competitive in pricing their goods.
The GP was talking about real estate and it doesn't have much to do with how competitive socks and toilet paper are.
In a landlord situation, their cost of goods is so small that they can afford to sit on an empty apartment while prospective renters need to put a roof over their family or business.
People are aware of this, and purposely choose products that are 80% as good for 20% of the cost. Other people shop at Whole Foods and Apple. None of them is ripping you off. They all provide options that you knowingly and willfully choose over your other options.
> And if Target/Amazon/Dollar General weren’t around, there’s no reason they wouldn’t increase prices and pad their margins.
The comparison to landlords being that if one of them had a monopoly on local housing they could charge really high prices. But that seems pretty fantastical considering that a local housing monopoly hasn't happened basically anywhere and would presumably yield antitrust scrutiny besides.
> In a landlord situation, their cost of goods is so small that they can afford to sit on an empty apartment while prospective renters need to put a roof over their family or business.
The cost of goods is the cost to buy housing (and the opportunity cost of the interest you could have had on that money), plus that of maintaining the property. If that is so cheap then why is anybody renting?
I'm not a landlord, but I did consider getting into it once, and studied how the system works. And a number of my friends are landlords (including one who quit his job because the passive income is enough).
No - probably over 95% of landlords do no have a small cost. Almost everyone is paying a mortgage/loan on that property. The exceptions are old people whose house was paid off and they just want free money. Those people almost always charge low rent, BTW - they just want some extra cash. The standard tactic is to buy properties on a loan, and try to get $100-200/month profit per house/unit. So if the apartment costs $1500/month in rent, assume their monthly cost to the bank (principle + interest) is about $700-800. Then add in the insurance and real estate fees. The remaining money goes to long term costs (repairs, vacancy, etc). Then they keep about $100-200.
If the apartment sits empty, they're still on the hook for close to $1000/month in taxes, insurance and loan payments.
Over time, if the property appreciates significantly, the plan is to sell the property, and use the gain in appreciation to buy a larger apartment complex, where they are down to $100-200/month again, but because the place has, say, double the number of apartments, their overall gain is double. Lather, rinse, and repeat. They only stop once they are making enough to live on in the lifestyle they want - which could be anywhere from 30-60 units.
They are almost always in debt, and vacancies are almost always very expensive.
A lot of the anti-landlord comments are similar to anti-employer comments, where it's always a given that employers have large piles of money and they can afford X, whether X is higher wages, better equipment, etc. Once you step into the "other" role, you'll find your assumptions were wrong.
Of course, if the state/city needs to pass laws to help with housing, so be it. Let's not just blindly assume that most landlords can absorb it.
You have the choice of a hundred units. And its their responsibility to fight with each other to make you choose one of them. Thats what keeps them honest and gives you bargaining power.
If you switch TP vendors, that's not a big deal for either Walmart or you, so yes, prices are competitive. But if you switch housing, you are switching 100% of your housing, which will be ~30% of your total budget. I've had 13 landlords, and not one of them has had only one unit. And small-time landlords tend to have other work, so regardless, it's a much smaller deal to them to have a tenant move.
> It also completely ignores that fact that most landlords are small operations, and often the tenants are richer than their landlords.
I look forward to your citations on both points.
I'm sure the average landlord doesn't own more than, say, 10 units. But in major markets there are a small number of large rental companies, so I suspect the average unit is not owned by a small landlord.
I'm entirely skeptical about your claim that tenants are "often" richer than landlords, but would be happy to be corrected with data.
You're comparing the wrong things. Negotiating power ultimately only comes from having other options. I could choose other apartments or the landlord could choose other tenants. The balance obviously depends on the individual market, but I think it's much closer to parity.
> It's much more expensive for me in time and money to move than it is for a landlord turn over a new unit.
I'm not so sure about this, either. It's a pain for landlords to move new tenants in, too. Most would prefer to keep good tenants around as long as possible.
If the landlord has only the one unit, doing so is probably a risky, undesirable option. Probably not so if they have 100 units, though.
The market rate IS what the landlord extracts from it, which is what the market, you, is willing to pay.
As an example, I live in one of the US's few competitive ISP markets. I pay $40/month for gigabit fiber, no limits. Comcast, which is often a monopoly or a duopoly, charges $90-140/month [1] for gigabit service, and they have assorted restrictions that I don't have to deal with, like data caps and limited upload speeds.
So what's the true market price for full gigabit? The person you're responding to, bassman9000 would apparently say it's $140, because tautologically that's what people pay. I'd say it's much lower.
Further evidence to support my position is that when you measure actual speeds delivered on gigabit, many of the ISPs are local providers, not the big nationals. [2] Customer satisfaction with my ISP is hugely higher than Comcast as well [3], with Comcast's Net Promoter Score actually being negative. [4]
Those are not signs of a competitive market, and if the market isn't competitive, I think it's a 101-level mistake to say that the price people pay is the true market price.
[1] https://www.cnet.com/news/comcast-offering-1-gigabit-per-sec...
[2] https://www.vice.com/en_us/article/7xgne9/locally-run-isps-o...
[3] https://www.sonic.com/care
[4] https://npsbenchmarks.com/blog/best-internet-service-provide...
https://equilibriabook.com/an-equilibrium-of-no-free-energy/
> What about houses? Millions of residential houses change hands every year, and they cost more than stock shares. If we expect the stock market to be well-priced, shouldn’t we expect the same of houses?
> The answer is “no,” because you can’t short-sell a house. Sure, there are some ways to bet against aggregate housing markets, like shorting real estate investment trusts or home manufacturers. But in the end, hedge fund managers can’t make a synthetic financial instrument that behaves just like the house on 6702 West St. and sell it into the same housing market frequented by consumers like you. Which is why you might do very well to think for yourself about whether the price seems sensible to you before buying a house: because you might know better than the market price, even as a non-specialist relying only on publicly available information.
In this case, since the GP is referring to rent increases, the only members of the market are you and the landlord, and the landlord can leverage the large burden of moving to increase rent to a higher price than one that would be competitive on the broader market.
If you were a perfect rational decisionmaker you could perhaps have priced this risk in at the start and said "$1000/month is too expensive because I know the landlord will increase it 25% as soon as I finish unpacking". But in practice, people budget according to the price they're advertised.
But that's not true. The landlord can increase the price of the rent, knowing that, as some point, you'll leave, because you, the buyer, consider it too high. The market around you, other possible renters, may not, and so the price the landlord sets will still be the market price.
Now, the landlord knows you're a good customer: no pets, no parties, always clean. He has an incentive to keep you as such: you're predictable, no unforeseen costs, and knowing that, there may not be many possible renters willing to pay more, according to his estimations, and so it keeps the price stable (+CPI). That's still the market price.
I can't understand why in HN, out of all places, people dismiss the superiority of a fully decentralized, uncoordinated, resilient information distribution system (free market prices), in favor of a centralized, brittle, obscure, arbitrary ruled one.
Last time I moved I spent maybe 60 hours looking and another couple hundred hours packing, cleaning, moving, and unpacking. Call it 250 hours, plus all sorts of stress and hassle. There were also a variety of expenses involved, plus having to have two deposits in play at once.
I am definitely willing to pay more than $0 to avoid that hassle. Landlords can take advantage of that in lease renewal negotiations.
As to having this discussion here, yes, HN has plenty of free-market fundamentalists. But it also has plenty of people who see markets as a tool for optimization. Like any tool they have necessary preconditions and failure modes. You can't design the market for housing like you do the market for candy bars and expect it to work just as well. You need the right tool for the job.
There are two possibilities here. One is that the maximum rent control rate is above the market rate of housing cost increases, in which case those rent control laws do nothing. This is better than most other rent control, but still no better than no rent control. The other option is that it isn't, and then the rent control laws do something bad, i.e. reduce the incentive to build more housing to fight the expanding market rate rents, and screw new renters a lot to benefit older renters a little. There is still no circumstance where they cause good.
Also, since which possibility happens isn't known ahead of time, they reduce the incentive to build housing today by landlords who expect rents to increase by a lot in the future, even if they turn out to be wrong.
Moreover, the relative value of investing in old vs. new apartments is not particularly relevant, because what really matters is the value of investing in building new housing as compared with all other alternative investments, including real estate in other cities or stocks or anything else. And the prospect of rent control at any point in the future lowers the net present value of those investments by the corresponding amount, causing reduced investment in building new housing.
Worse, if the old buildings have rent control and the new ones don't, the tenants will prefer a rent controlled apartment, driving rents up in the old buildings and down in the new buildings (because, unlike investors, tenants do specifically need housing in that city so the relative difference matters), which both increases rents on existing buildings and reducing the incentive to build new buildings.
Rent would only be cheaper in "rent-controlled" properties during periods of extreme growth in market rents. The primary issue in such cases is not "mis-matched" tenants (if anything, reducing churn should increase effective supply). While it would provide less incentive for retirees to move out of the city , it also limits the degree to which the impoverished are forced to leave the city. Once the period of extreme growth passes, all rents will stabilize back at the market price.
So yes, this can lead to slightly higher market rents for new tenants during periods of extreme growth, but it does this because fewer people are forced out of the city.
> And the prospect of rent control at any point in the future lowers the net present value of those investments by the corresponding amount, causing reduced investment in building new housing.
You think you can predict accurately which cities will have rent-control laws 15 years from now? While I can see how current or near-term rent control can affect a properties value, the incredibly marginal effects of this 15 years out is complete washed out by the much larger unknowns that affect the value of the property 15 years from now. One could has plausibly even argue that seeing a law like Oregon's being passed reduces the chance of seeing more draconian rent control laws introduced, which should INCREASE the attractiveness of investing in rentals in Oregon.
> Worse, if the old buildings have rent control and the new ones don't, the tenants will prefer a rent controlled apartment, driving rents up in the old buildings and down in the new buildings (because, unlike investors, tenants do specifically need housing in that city so the relative difference matters), which both increases rents on existing buildings and reducing the incentive to build new buildings.
>Worse, if the old buildings have rent control and the new ones don't, the tenants will prefer a rent controlled apartment, driving rents up in the old buildings and down in the new buildings (because, unlike investors, tenants do specifically need housing in that city so the relative difference matters), which both increases rents on existing buildings and reducing the incentive to build new buildings.
This is completely wrong and confused.
Somehow you have created a situation where in your mind where:
1) the tenants expects to pay less rent (over the next X years) on OLD buildings
somehow implies
2) the investor expects to be paid less rent (over the next X years)on NEW buildings.
Obviously, one of those expectations must be wrong which means your argument is invalid.
If you do see lower initial rents on newer buildings, you only see them offered to the degree that landlords expect to make up the difference in the following years.
If you do see higher initial rents on older buildings, you only see them paid to the degree that renters expect to make up the difference in the following years.
As an example, One of the major problems for developers in building both housing and office space is how cyclical the markets are. When prices are spiking, developers rush to build. This can lead to gluts, causing big price crashes later on as they try to pay their mortgages.
It's perfectly possible that smoothing out the spikes of short-term price increases results in a more stable, predictable market. That would not only mean it'd be better for tenants, but it'd be better for landlords in that they are more confident they'll have good ROI over time. Risk mitigation can be very valuable in long-term investments.
And of course there are many more possible complex interactions. E.g., if lower turnover means richer social connection and better neighborhoods, then renters might be willing to pay more over the long term, keeping landlord property values up. Or more stable prices mean that people are less likely to, say, vote to expropriate large landholdings and shift to the sort of socialized housing we see in other countries.
So no, I don't think there are two possibilities here.
There are many retiree types that are renting out their in-law suite or have an extra rental property and definitely cannot afford bad tenant behavior.
They are probably in a worse negotiation position compared to a squatting bad tenant in those cases and very much care about their neighborhood, probably more than the renter.
---
OTOH, rent control doesn't matter too much if the max percentage cap is high enough and tenants can't squat in eviction court for months as they destroy the old person's inlaw suite and their home.
I couldn't agree more.
Proposal: Current* property owners love new commercial property and HATE new residential units. (This is how you game the system to get prices up). What state governments should be doing is requiring new residential property on all approved new commercial property. This way, if a local city board really wants that new "Panera Bread" - they must approve new housing.
Agreed. However, there is an orthogonal reason to be pro-rent control: housing stability.
Housing stability, as in people's freedom to remain in their home, even if their landlord, for whatever reason would rather they not. This is often a big reason why people in the US want to buy their own home, but there's no reason you couldn't give comparable stability to renters, as other countries have already done, by only letting tenants be kicked out for a handful of specific reasons (e.g. non-payment, destruction of property, etc.).
The one catch is that you can't have housing stability clauses without rent control, because otherwise the landlord could always "soft evict" by simply raising the rent until the current tenant leaves.
It’s not as if the country is physically full. People behave as though it’s a human right to pile on top of one another in a few places. Why pander to that, and reduce people’s chance to live in a house?
No housing? Then go where there is housing or space to build it!
I agree in general, but Oregon's law only limits increases to 7% per year. In the long run, that should easily be enough to keep up with inflation, even in a hot market. If San Francisco's law were 7% and not 1-2%, I doubt it would be nearly as much of an issue as it is today (where you have people with rents effectively from decades ago, because that isn't enough to keep up with the market).
The 7% limit seems designed to limit extreme short term increases, but still allow rents to reflect market value in the long term. I think this is a politically smart strategy, without the long term damage of holding rents below market value.
edit: and combined with the zoning changes... I'd say the open market approach to managing housing supply and demand came out way ahead with this law.
> The resulting legislation would cap rents statewide at 7% annually plus inflation
Which, if I'm reading that correctly, would put the real cap closer to 9-10%.
I don't have a strong opinion about this, but a 10% cap on rent increases seems reasonable to me, keeping in mind that this only applies to existing tenants—if the tenant leaves, you can increase rent by however much you want. This seems like a fair way to help reduce the number of people that are priced out of their homes, without significantly impacting landlords. That said, I'm personally more excited about the zoning changes; single-family zoning was never a good idea IMO, and it's great to see Oregon slowly moving away from that.
https://dornsife.usc.edu/assets/sites/242/docs/Rent_Matters_...
To actually resolve the housing crisis, you need there to be sufficient profit potential that private landlords are incentivized to build more housing. Rent control forbids this. Limits on rent increases, however, don't, really. Building a new apartment complex usually takes 3-4 years from permitting to completion to move-in. If rent increases are capped at 7% annually, then by the time your new project is ready for move-in, you can count on rents having gone up by 30-40%, assuming that that's where the market-clearing price would be. And if they haven't, they'll be higher the next year, and so on, until they equilibrate.
The idea behind caps on rent increases is to slow the bleeding and minimize disruption to families - having your rent go up 7% for 5 years is a lot less of a problem than having it go up 35% in one year and getting a month to decide whether to renew your lease, because it gives you time to look for alternatives and figure out what else in your life needs to change to make the numbers work.
Of course this does lead to shenanigans to get old tenants out, but it's not rent control in the sense that all rents are everywhere anytime are set by the government.
It's one thing to accept the free market causing this sort of segregation as the collective result of individual choices, quite another to suggest that the government ought to be using regulatory power to help enforce the creation of invisibly gated communities. It's a great wrong -- in particular, the impact it has re: school districts -- that it is long past time be rectified.
That said, there is much more to be done. While going from SFH's to fourplexes or small apartment buildings is usually fine by itself, greater levels of density usually need changes to infrastructure and transit service and other parts of zoning to accommodate the increased population.
Saying that building expensive things is segragation is thinly veiled strict socialism. What's the alternative, everyone is forced to live in the same housing? You can't force cheap apartments in nice neighborhoods, those neighborhoods will become not nice. Thats how rent control works
I'm not in the "ban SFH neighbourhoods" camp, but I think we shouldn't have as much of a problem with them becoming denser. Particularly not when the people already living there tend to have the chance to be well-compensated by selling to developers if they want.
This doesn't mean developers should be allowed to let rip either - as one of the other posts says, increased density leads to increased demand for other infrastructure as well.
Basically neither Manhattan nor Houston are really ideal states in my mind. There should be a way to live in the burbs if you want to do that, but I don't think public policy should be vigorously defending the people who do that regardless of obvious social and economic costs.
the developers have a significant amount of leverage in this situation. if they can build one large apartment building in a low-density sfh neighborhood, they can take a significant chunk of value off all the neighboring homes. if they can secure land to build several large buildings, they can seriously devalue these homes. when they start looking to buy property for the nth building, the homeowner isn't going to get anything close to the original value.
as a society, we should never have allowed this situation to happen in the first place, but now that we have, it's not going to be easy to solve. until you get to pretty high percentiles of wealth, homes tend to be a large fraction of a family's net worth. to suddenly remove the zoning would be a pretty big hit for these people; a lot of them could get upside-down on their mortgages.
Usually an increase in density in an area will increase land values rather then depress them.
Sure, but we're talking about government force, not the market.
It's one thing if the market creates SFH-only neighborhoods, but why should the government be enforcing that as law?
Instead of depriving everyone of houses, we should be addressing any injustices that prevent people from acquiring them.
Do they not, by their very nature, enforce low-density housing? Is that not a bad thing to enforce in places with too few dwellings?
More housing giving people more freedom to choose where to live is good.
More housing helping make living more affordable is good.
More housing making good jobs in economically booming areas more accessible is good.
More housing density is indisputably better for the environment.
There's many good reasons to be for more housing density, and many fewer good reasons to be against.
-sedentary car-dependent lifestyle
-inefficent use of arable land
-carbon intense lifestyle contributing to the collapse of ecosystems
-materialistic lifestyle enforced
-impossible to serve economically with public transit making car ownership mandatory
-energy inefficient buildings
-encourages racial and economic segregation
-anti-social lifestyle decreases face to face contact and increases barrier to connect with others
If I could vote to make these neighborhoods illegal, I would.
This cannot be overstated enough. My pet theory is that the suburbification of America led to our current division and political strife. You cannot expect great results when those with the most combined political power and wealth in the nation sequester themselves individually away from others and even each other. This ends up with anti-social people driving social policy for the nation. And it shows.
The older I get, watching the first generation fully raised in "suburban culture" seems to be a lesson in watching the threads of a society break down in real time. It's amazing to me that within 2-3 generations we completely blew up the notion of extended families and close-knit community taking care of each other.
That said...
> If I could vote to make these neighborhoods illegal, I would.
I'm not quite willing to go that far. I would simply make zoning them illegal. If an area is desirable enough to toss up a giant single family home next door to a few 3 flats - so be it. But I should be just as allowed to come buy that place, tear it down, and toss a small apartment building in it's place. Additionally I'd be in favor of laws that make it illegal (or exceedingly difficult) to require setbacks/minimum parking/etc. for most areas.
Basically I'd like to see a legal framework that brings us back to "natural" incremental city development vs. this BS planned crap that never works. The only cities in the world people marvel at (at least in western societies) are those that predated zoning law.
Choice and freedom are a beautiful thing. The problem now is there is little choice due to subsidy and zoning laws.
Sorry, yes that's exactly what I meant and we're in total agreement. There's no way I'd advocate tearing these neighborhoods down, only make it illegal to continue to protect their zoning, just like this new law in Oregon. I think that's a super solution, and I'd happily vote for it in my own state.
In the US, an apartment complex in an ordinary suburban neighborhood would swipe all the on-street parking and probably people's lawns as well. Those home owners expect nearly exclusive use of the street parking for their guests.
water restrictions that prevent wasteful lawns, eliminate HOA rules that require them
materialism is good right?
self driving EV, also bus stops used to serve suburbia well if the cost of driving was higher it would again.
you got me on the thermal inefficiency surface area to volume trumps any R factor.
how?
sit on your front porch, have block parties. works in many single family neighborhoods. culture not zoning
you can vote for that but I don't think you will be joined by many
A single family house in a good and expensive neighborhood is something many people want to get and when people want to get something, they put effort into that and drive the economy up. I'm one of those people and I'm putting a lot of effort to get such a house, paying high taxes on my way there. People who vote for dense multi family housing have probably never lived there. But I did, I came from a ghetto and don't want to go back. Those dense apartment complexes don't solve any of the problems you've listed, but rather introduce new, such as drunk addicts wandering around your complex when you're returning from work. Apartment complexes don't make anyone's lifestyle any less sedentary and any less car dependent, because you still need a car in such a huge country. The US has plenty (too much) land: that's obvious to anyone who's bothered to go on a road trip. Most of that land just sits around unused. The carbon intense lifestyle is caused by the disposable junk products that are intentionally made flawed so we'd have to keep buying new. There is nothing "carbon intense" in putting together a bunch of trees and calling that a house. The cause of materialistic lifestyle is caused by greed: a fundamental flaw in our mentality that humanity will take tens of thousands years to overcome. Petty housing laws aren't going to change that, just like laws aren't going to make a teen grow faster. Economic "segregation" is a good thing as it gives people a choice where to live. Anti-social lifestyle? ROFL. Like I've said, I lived in a ghetto good 20 years. That kind of lifestyle can't be any more anti social. Some people have that detached from reality idea that if we make all sorts of people live together in packed apartment complexes, the "pro-social lifestyle" would flourish, we'd get nice parks with crowds of happy people and kids running around. None of that would happen. What would happen is a bunch of depressing big apartment buildings with all sorts of sketchy folks wandering around your neighborhood, looking for something to keep themselves busy. And that something is rarely a talk about arts. In such neighborhoods you'd want a car even more, but now for safety reasons and you wouldn't dare to leave your kids alone in such places. "Increases barrier to connect with others" - gosh, I can't stop laughing. The kind of people you would have easier, with no barriers, communication are not MIT professors and you would want a car with tinted windows just to have that barrier to connect with others.
The single family house neighborhoods with HOAs, tiered by social status, is the right way to go as it gives everyone a choice where to live. If you want to build a bunch of tall apartment complexes next to the city center, so you could walk to work, fine, do it, vote for it, but please, keep your hands away from single family houses and HOAs.
No. I vote for what I believe is best for society, and mandatory single-family home neighborhoods are terrible for it.
They're bad for the environment, and they're bad for inequality. The sooner they go away, the better.
Sedentary? So you think you’re going to legislate exercise? Let me tell you what’s sedentary: helpless urban dweebs ordering dinner from Postmates, who’ve never mown a lawn or used a table saw or planted a garden. Pasty-handed yuppies who call for help at the slightest adversity instead of learning to fix things themselves.
Racial and economic segregation? HOW? By not reducing EVERYONE to a cow parking herself in a pathetic stall every night, chewing on the processed feed from the overpriced corner specialty food store?
Anti-social? I know more about the suburban neighbors I grew up with than I do about people in my urban apartment building. Don’t project your antisocial behavior on everyone else.
Materialistic lifestyle? Fuck you. I want to grow vegetables and fix my own car. Too bad if you’re threatened by that, urban dandy.
There's a lot wrong with the government mandating them in a particular area, especially when that 'particular area' is actually 'most residential land'.
This seems awfully reductionist. I think often the intent is more along the lines of- "We want to live in a place where kids can walk to their friends house without an adult escort and/or play kickball in the street. We've observed that this becomes unsafe in places with high density populations, so lets prevent high density housing to maintain that lifestyle"
There are lots of poor neighborhoods that are single family housing (the entire south side of Chicago comes to mind). The issues greatly impacting San Francisco should not be generalized like this- most places do not have them.
Is that factually accurate, or just a false impression that people get?
Let's assume it is objectively more unsafe. Is the problem the high density or is it some other aspect that causes issues?
Most kids in East European countries, the vast majority of which grow up in high density neighborhoods, are left unattended to play in the streets, yet they are not abducted, get hit by cars etc. (Source: I grew up in Romania.)
These choices may have resulted in a few less kidnappings, but they’re also core to the creation of the loneliness epidemic, as kids never learn how to engage with the world on their own.
> speeds above 55 mph were common on the 'nice' suburban street I grew up on
Thats not a suburban street, thats a highway interconnecting the suburb. Non-driving connection within a suburb is certainly a huge problem.
In san Francisco, most city traffic is less than 30 mph because of high density
Sucks that a school is on it
I mean, okay, but if you want to avoid being intellectually disingenuous you can't do that anymore. You don't get to just randomly redefine things until they fit your arguments better.
The top risk to kids outdoors is cars. Strangers don't even rank. >90% of child physical or sexual assaults are committed by someone the child knows.
One 9/11, random kidnapping, etc. has more "virality" than a constant undercurrent of far larger risks.
The white-supremacist contingent understands this and are not looking to compromise. They'll take whatever compromise is handed to them and immediately refuse to change their behavior at all.
I think if 1/4 of high density space is dedicated to public parks, that would go a long way towards addressing the real issues. Those parks can't just be space 'somewhere' either. There has to be one within ~two blocks of every home in my estimation.
I don't know, and its a good question; the answer should definitely inform regulations like these. Though, even if the fear is imagined, it will still affect your behavior and how you're able to parent. I think its also important to note that it isn't just safety at risk here- its opportunity. High density areas are unlikely to support multi-use infrastructure since the primary use will force out secondary uses (e.g. playing kickball in the street).
There are also a variety of other things you can slot into that sentence that dont invoke the sanctity of kid safety. Admittedly, a lot of them are more personal decisions that don't require regulations enforced on others.
> Is that factually accurate, or just a false impression that people get?
I don't feel safe as an adult living in downtown seattle due to the homeless population (this person's experience 100% matches mine [0]) and homeless people are going to naturally gravitate towards high density areas where there are more people to panhandle from.
Also, it's much riskier to commit a crime in a low density population where you can be recognized much more easily.
[0]: https://news.ycombinator.com/item?id=20422473
A downtown pedestrian street is perfectly safe for kids to hang out and play. Neighbors, older kids and shopkeepers keep an eye out without being in helicopter mode.
In the few cities I've been to that have banned vehicular traffic in downtown areas, you do see bunches of kids running around, as done for millennia.
Maybe their cities planning ideas might not scale?
And now we have someone arguing literally the opposite. Now it's the US that's apparently too dense.
We need a new word for this brand of snowflakey NIH syndrome, where unless you can't prove that [city/country] is exactly the same as [other city/country], there is nothing one could learn from them.
But also sure... I don't know why you would be so naive to think that scaling issues don't work both ways. Perhaps what works for Switzerland and it's one city over 250k people might not work for USA with it's eighty eight over different climates, areas, densities, geological formations. No, surely I'm just being hilarious :D
It's true that low-density SFH areas often seem more peaceful, but in practice cars there usually travel much faster than they do in higher-density neighborhoods, and it's speed that kills.
However, controlled for number of trips/distance, being a pedestrian in the US is generally quite dangerous compared to elsewhere.
> Incidents in Scarborough have accounted for more than 46 per cent (or 19 of 41) of pedestrian deaths this year, despite the eastern borough containing just 23 per cent of the city’s population and about 26 per cent of its road kilometrage.
https://www.thestar.com/news/gta/2018/12/07/toronto-appears-...
However, it seems like all the incidents are happening on the interconnection suburban roads, not the inner neighborhood roads.
Faint praise to be sure; walking and biking as a mode of transportation should be safe and encouraged.
Depends on what you mean by 'small suburban streets' I guess. If you mean in small suburbs, I would find that surprising, if you mean the street itself being very narrow then yeah maybe. But relatively few American suburbs have actually narrow streets. To most Americans, "there's only barely enough room for parked cars on both sides plus 2 lanes of moving traffic to pass each other" means it's narrow.
Random reference I just saw: so far this year Seattle has had 10 traffic fatalities, 4 of them on foot vs 5 with vehicles, despite walking being far less popular than driving in Seattle (which is not nearly as walk-friendly as NYC).
This is a generalization that finds its roots in "white flight", which was itself driven by racism and fear mongering and the side effects of redlining and mortgage discrimination. Suburbs as we know them today didn't exist a hundred years ago. And in fact, perpetuating this belief drives more folks with money/privilege/economic mobility away from cities, increasing economic hardship (and in turn, crime) in the areas they leave.
You invalidate your own point. The south side of Chicago is not a place many people would consider safe, and yet it has a huge amount of single family units. "this becomes unsafe in places with high density populations" really means "this becomes unsafe in places with lots of poor people" or "this becomes unsafe in places with lots of people who look different from me".
If socioeconomic status weren't so linked to race (good lord maybe this can happen in my lifetime), would people still want single family housing neighborhoods? I think the answer is yes. They have some real advantages over living in the city or in true rural localities.
> You invalidate your own point. The south side of Chicago is not a place many people would consider safe,
I'm not sure this invalidates my point, I just chose a poor example. Switch it to Jamaica Plain in Boston and I think my point holds.
If anything, these sort of car dominant neighborhoods make it more dangerous for kids to go around by themselves. Cars go much faster there.
> There are lots of poor neighborhoods that are single family housing
This entirely misses the point. The point isn't that every SFH-only neighborhood is affluent or even middle-class, it's that having all these SFH-only neighborhoods supports stratification. Such rules will block a poorer family from living in a richer area, whereas with more density-friendly zoning rules, they may choose to just live in a smaller home in a nicer neighborhood, thereby preventing severe segregation.
Is that the point? Is stratification what we are trying to prevent by removing single family home regulations? I don't think it will work.
You can't just say "I don't think it will work" without saying why. Allowing for smaller home forms would mean affordable options in desirable neighborhoods. Do you have a reason to believe poorer families would still universally avoid those options?
These types of regulations probably do make it more extreme. But I also question the base motive. Is de-stratisfying neighborhoods actually a worthwhile goal? I can certainly see some benefit- its nice to live in a diverse neighborhood. I wonder if that might happen anyways if we address the underlying issues instead- violence, schools, access to public works, probably others- rather than just throwing up our hands and giving up on these underserviced 'bad' neighborhoods.
> Is de-stratisfying neighborhoods actually a worthwhile goal?
Well, that depends on how you feel about social mobility and segregation, I suppose. If you support the rich and poor being kept separate from each other, if you want to keep social mobility low, then sure it makes sense to support these regulations.
> rather than just throwing up our hands and giving up on these underserviced 'bad' neighborhoods.
Giving up? In practice, the result is evening out of neighborhood quality and desirability, not some neighborhoods just being randomly abandoned.
That sounds really pleasant. I'd love to have that where I live.
> Well, that depends on how you feel about social mobility and segregation, I suppose. If you support the rich and poor being kept separate from each other, if you want to keep social mobility low
I think you're painting me into a corner here that doesn't need to exist. First, I don't see why social/economic mobility should be predicated on the non-existence of stratified neighborhoods. I think non-stratified neighborhoods are an excellent result of those things.
Second, trying to manufacture non-stratification by telling communities what type of housing they must allow feels a little hamfisted- and also a bit off target. I'd rather have government assistance housing that fits the neighborhood than a fucky landlord building shitty tenements.
> Second, trying to manufacture non-stratification by telling communities what type of housing they must allow feels a little hamfisted
I'm sorry, but this is COMICALLY absurd at this point.
Here we have communities that have used a relatively recent invention, zoning regulation, to force a historically unprecedented urban pattern of building onto the vast majority of residential land in the US, with the express intent of keeping out undesirables. As the libertarians like to put it, at the point of a gun.
And you're saying the ones who want to loosen regulations, to return to more environmentally friendly, historically common urban building patterns, patterns that would not shut out the poor, are the ones "hamfistedly manufacturing" something?
I'm sorry, I'm having trouble believing that you're not being deliberately disingenuous at this point. It's like calling the removal of Jim Crow laws "hamfisted, manufactured non-segregation".
And then the minorities wind up living in, yep, other apartments. That’s a lateral move at best.
Fix the social or economic factors that preclude house ownership for minorities, instead of bringing everyone down.
Neither California nor Oregon have the the spatial constraints somewhere like NYC does.
Both states and their cities have implement policies which only make sense when you've run out of land and the ability to develop relatively unregulated.
Government intervention except for at the last possible moment almost always has negative long term second order effects.
However, San Francisco in particular has worse spatial constraints than NYC. That city has “run out of land.”
So I guess my addendum and corelary is that once you do hit that "last possible moment" the action needs to be decisive and absolute. NYC did a pretty good job of it.
Map of landfill (green): https://qph.fs.quoracdn.net/main-qimg-d7f66b45593b76f812792e...
My comment is mostly targeted at the idea that there aren't spatial constraints. SF proper is thoroughly developed. The land is accounted for. We can nitpick over specific plots, but there isn't new land to start developing. People who move here want to live in SF or close enough to public transit, and most of those places are developed too, even if they are suburban. There is no BART in Tracy, etc. so people aren't moving to the undeveloped land there.
Salesforce tower is fine, for instance, and it’s much taller.
Also, if you don’t mind sharing, are you a civil engineer? Just asking because my friends who work as engineers in construction do not share your opinions.
Landlords File Federal Lawsuit Challenging New York's Rent Control Laws - https://www.law.com/newyorklawjournal/2019/07/16/landlords-f...
It’s a lot easier to be generous to people who “could be their child/relative”. You see the same thing in the justice system.
https://core.ac.uk/download/pdf/47159874.pdf
Also don't forget their is currently an ONGOING war in the Ukraine over divisions between those who are ethnically Russian and those are ethnically Ukranian.
I'm not preaching diversity as a virtue in itself but the idea that places like Eastern Europe are some kind of ethnic utopia where you can leave your doors unlocked and kids play on the streets just because everybody is white is just absurd.
Communism. It's pretty much same reason in whole Eastern Europe. Some countries managed to recover faster for various reasons whether it was more useful industry which was pretty much centrally planned in whole Soviet block from Moscow, so some countries where more industrially orientated and other remained pretty much agriculture only.
Second important reason is geographical location, especially presence of wealthy neighbors - compare Czechia with Germany and Austria as neighbors to Romania whose economically best performing neighbor is Hungary (which is economically worse off than Czechia itself).
My team has two people who came from Romania. My company's site here has many more. I know a bunch of them. Your statement is absurd. I've had more than one Romanian literally tell me he doesn't hang out with that other Romanian because of the ethnic differences between them.
(Not hostility, just a lack of common culture).
Also see account vwdhx.
If you ban me for pointing this out, then I really am done here.
I wonder how many rent-controlled residents in SF/NYC would accept a $100k buyout that would convert the apt to market rate. Has anyone seen a study of the spreads between market/rent-controlled, by city/zip/census tract? I’d love to see that.
Special privileges are anathema to equality under the law. When applied to government employees, it can start to get very bad quickly.
NYC has a possibility for something like this, but only in the context of condo conversion. Although there's always stories floating around about people that didn't take it and are living for $250/mo in some fancy condo building my sense is that generally an arrangement is reached.
Those who already have a home are given an ownership right to that status, while those without a home are being permanently excluded.
That's how great cities are made!
[1] https://www.google.com/amp/s/la.curbed.com/platform/amp/2018...
Looking around I've realized that rent control has me paying significantly less than market and that even if I downsized I'd probably end up paying $1000/month extra if I moved. After realizing this I'm unlikely to move until/unless I decide to leave LA.
I'm happy I'm getting a good deal but it doesn't feel very efficient for the housing market over all.
I was reading a bit about renting as a business (plus I have 1 house in Bay Area I rent) and there is so-called rule of 1%, which means for cash flow to be positive you should rent your house for at least 1% of its market price. But it is just not the case in the SF area, you can get 0.3-0.4% at best. House with 1M price can be rented for 4K, which can’t even cover mortgage + tax, I’m not talking about repairs. Based on rule it should be 10k to make it interesting for the investors (buy and rent to make some profit). The only reason I didn’t sell it is the hope that prices will go up in x years, but right now I technically subsidizing people living there + waiting on possible rent increase in couple years. With rent control in place I would’ve been pressured to sell or live there myself. And as I moved out for an interesting opportunity, in a different market I would’ve just stayed in Bay Area. Which will not lead to drop in prices, But to decrease of available housing.
In supply/demand problem, the only way to decrease price is by increasing supply, not caping the price.
And the reason I would’ve stayed in Bay Area is cause I can’t afford to rent a place for a true market price. I’m right now paying 5k for the house which is around 1.5M (should be 15k, right?), which is mind blowing. The only reason it is possible is that the owner bought it long time ago and had the opportunity to pay it off. Buying it right now would require 300k in cash + 5.7k mortgage + 1.5k for taxes. + maintenance
So, to me, market rent control already there. And it is already on the verge of what financially feasible.
Maybe the market is telling you that SF house prices are wildly overvalued. Maybe the best move is not to wait for ever higher prices, but sell now.
People seem to be programmed to buy high and sell low, making the old truism to do the opposite very difficult in practice. Your description isn't uncommon, but is very characteristic of the physiology of a top.
Housing price in SF are tied to valuation of tech companies. Valuation goes up, house prices go up.
I actually think houses in Bay Area are cheap.
Total profit = (Rental cashflow + appreciation) - (Maintenance + other costs)
If you predict appreciation to be high, it may offset low net cashflow or even negative net cashflow. Especially if you use leverage (loans), and have appreciation of 5%+/year.
In Austin it's similar (maybe not as extreme): a $300,000 house may rent for $1,500/mo which probably doesn't even cover the mortgage. But 5%/year is $1250/mo. AND there are more than a few tax advantages to barely making money renting (or losing) but selling at a profit later. I am not an accountant or landlord, but I have run the math and it seems to make sense.
And this article makes it seem like California hasn’t done anything which is complete bullshit. They fail to mention the massive ADU initiative that effectively doubled the amount of housing in residential areas. Making things better for the developer and the landlord which will be a thousand times more effective than anything else. Even commercial developments use these ADUs.
In other words, these are people looking for a free lunch and thinking they have the power to get it by legislating it into existence.
Only, there is no such thing as a free lunch. It will be paid for. And the ones paying for it will be the people providing the housing, so there will likely be less housing.
I wonder why these same people who are so concerned about this don't just go out and build affordable housing instead of forcing their ideas on other people?
https://www.strongtowns.org/the-growth-ponzi-scheme
Briefly, most cities are unsustainable in their current configurations due to an unaffordable maintenance cost structure. But they can fake it by adding people/businesses and thereby growing the tax base.
This scheme leads to a growth at any cost attitude resulting in market distortions. Throw in some help from a central bank hellbent on levitating the US stock market by shoveling money into the credit system, and you end up in a bad place.
Portland has decided to stop sprawl by investing in density-increasing infrastructure such as rail lines.
Ironically, the result has been to send property prices through the roof, leaving an overhang of unused land in its wake. Owners of these properties look around them to see high density developments everywhere. What's the value of their own land? It will of course be turned into and equally-high value development, so the price is set accordingly.
Nothing is left in the middle.
https://www.strongtowns.org/journal/2016/10/23/portland-hous...
What's the solution? The author of Strong Towns puts it this way:
> What if along all these rail corridors and at all of these rail stops, instead of being able to build an eight-story condo unit, all a developer was allowed to build was the next increment of intensity? For most of that area, that would mean single family homes. In that case, what would happen to land prices? They would drop. They would crater, in fact. This would free up an incredible amount of land for cheap, affordable development while also taking a substantial amount of pressure off of the existing single-family neighborhoods.
> I'm not advocating for single family homes. I'm advocating for incremental development. Portland (and Austin and San Marcos and...) are trying to skip increments. They are trying to have a toned body without proper diet and exercise. ...
https://www.strongtowns.org/journal/2016/10/30/spiking-a-ris...
If want cheaper rent, I'd have to move into a rat nest, if I want a house, I'd pay more renting than I would for a mortgage. A couple blocks down a new apartment building was built and is charging $2000+ for 1 bedroom apartments... Every house that's come up within my range is in bad shape, bad location, or gets sold so fast I don't even have a chance to view it. So, yes, the housing situation is tight.
That all makes me think that the allowing denser zoning is a good thing. I'm not willing to live in that dense of a location, but for those that are, it should help.
The part I'm not sure of is the rent control. Maybe someone here has read up on this enough to know the answers, I'll look for them myself soon.
So, my rent shouldn't go up by more than 7% if I renew my lease, that seems good. But what about fees? One of the annoyances the new management company tacked onto the lease is fees for utilities. I'm fairly neutral on them, but if they can be used to increase rent past the 7% limit, I know they will be.
Also, say I leave my apartment. If my rent was, say, 1000/month, how much will it be for the person moving in after me? Can it go up by more than 7%? If so, doesn't that incentivize landlords to increase rents by much much more than 7% for for new tenants?
Wouldn't that make it a LOT harder for people who need to move?
Also, wouldn't there be another way landlords could bypass this by just making life difficult for tenants so that they move out more often, thus letting the landlord increase rents more frequently?
Personally, from what I've seen under this new management company, they've been trying to push out the old tenants who started renting before they took over. That will make it easier for them to implement policies that are obviously hostile for tenants who don't know that things could be better. (For example, if I remember correctly, they sent a message about no longer offering lock out service. Even though the manager is on site, you have to call a lock smith. The old managers would get back in, you might pay a fee, but you'd get in.) So I could see this particular company trying that method of increasing rents more frequently.
[0]: http://www.igmchicago.org/surveys/rent-control