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Now that we have a new thread, in order to ensure that this thread continues to meet TL standards and follows the proper guidelines, we will be enforcing the rules in the OP more strictly. Be sure to give them a complete and thorough read before posting! NOTE: When providing a source, please provide a very brief summary on what it's about and what purpose it adds to the discussion. The supporting statement should clearly explain why the subject is relevant and needs to be discussed. Please follow this rule especially for tweets.
Your supporting statement should always come BEFORE you provide the source.If you have any questions, comments, concern, or feedback regarding the USPMT, then please use this thread: http://www.teamliquid.net/forum/website-feedback/510156-us-politics-thread |
This is the future TERFs asked for. I don't mean that in a smugly sarcastic way, I mean highschool meangirls that sexually harassed their peers are the ones clapping that it's almost completely lawful to sexually assault and harass people because they might be trans.
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On August 16 2025 22:42 RvB wrote:Show nested quote +On August 16 2025 18:34 Magic Powers wrote:On August 16 2025 18:09 RvB wrote:On August 16 2025 16:40 Magic Powers wrote:On August 16 2025 14:54 RvB wrote:On August 16 2025 07:13 Yurie wrote:
Isn't the problem with most mega cities the rules? All the best land is taken and it is VERY hard to buy, tear down and build something larger on a lot. Or even building something new in an area that doesn't have a building on it already.
So you end up with areas far out that are worth less, where you have to extend the public transport network and it thus becomes a mega project. And people don't want to live that far out of the city, meaning rent can't be high enough to finance the project. Perhaps letting the public transport network finance it as a total project might work, kind of how Japanese train networks are just enablers for their land ownership (a bit exaggerated).
This leaves you with a few options I can think of directly, likely there are more.
1- Assume that with the rules you have rents will never get high enough to fix the problem. This doesn't seem very nice to somebody living there since costs will keep climbing until rent is 50%+ of income. Thus a popular politician imposes rent control sooner or later.
2- Assume rent can climb high enough that it is worth it for people to add to the city housing. In that case doing nothing likely works out better.
3- Change the rules so the cost of a new project decreases and 2 becomes more likely.
4- Do it as the city, as you control the rules and have the problem you finance more housing until you hit the level you think is right for the city.
One factor is that a lot of construction in many countries is built for sale and not rent. That can offset high costs to a certain degree. But even that has a maximum it will support. It's both. Excessive zoning regulation and rent control increase rent. There's no real support for rent control amongst economists. See for example these polls. Some responses have comments as well. Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.
Strongly agree: 0%
Agree: 2%
Uncertain: 7%
Disagree: 49%
Strongly disagree: 32%
No opinion: 2%
Did not answer: 7%
Richard Thalers comment says it all: Disagree
Next questions: does the sun revolve around the earth. Question A:
Capping annual rent increases by corporate landlords at 5%, as proposed by President Biden, would make middle-income Americans substantially better off over the next ten years.
Strongly agree: 0%
Agree: 2%
Uncertain: 16%
Disagree: 58%
Strongly disagree: 16%
No opinion: 0%
Did not answer: 9%
Question B:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce the amount of available apartments for rent over the next ten years.
Strongly agree: 18%
Agree: 44%
Uncertain: 22%
Disagree: 4%
Strongly disagree: 2%
No opinion: 0%
Did not answer: 9%
Question C:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce US income inequality over the next ten years.
Strongly agree: 0%
Agree: 0%
Uncertain: 22%
Disagree: 53%
Strongly disagree: 13%
No opinion: 2%
Did not answer: 9% There is no consensus like that among economists. The overall benefit of rent control (in a vacuum) is inconclusive. 5. Conclusion
In this study, I examine a wide range of empirical studies on rent control published in referred journals between 1967 and 2023. I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. These unintended effects counteract the desired effect, thus, diminishing the net benefit of rent control. Therefore, the overall impact of rent control policy on the welfare of society is not clear.
Moreover, the analysis is further complicated by the fact that rent control is not adopted in a vacuum. Simultaneously, other housing policies — such as the protection of tenants from eviction, housing rationing, housing allowances, and stimulation of residential construction (Kholodilin 2017; Kholodilin 2020; Kholodilin et al., 2021) — are implemented. Further, banking, climate, and fiscal policies can also affect the results of rent control regulations. https://www.sciencedirect.com/science/article/pii/S1051137724000020Especially the second sentence is key: I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. The primary benefit is that of affordability in controlled housing. This finding is simply true and not in dispute. Drawbacks are: - Higher rent in uncontrolled housing If new housing is built for controlled rent, I don't see how this is an overall problem. I'll address this point a few more times. - Lower mobility This has pros and cons, and in a vacuum it would be an overall drawback. However, with good policy it becomes a non-issue. Families' needs can be met by continuously building new housing so they have incentive to move wherever they please. In Vienna this works just fine. Workers and the lower class have sufficient mobility. The middle class is fine, since they can afford more expensive housing. That's how things should work anyway. Goal accomplished. So this is a very simple problem with a very simple solution. - Reduced residential construction This reveals the stupidity of the simplistic claim that rent control is bad. Yes, in a vacuum it's bad. But good policy doesn't exist in a vacuum. Creation of new housing solves much if not the whole problem. So it's fairly obvious that nothing is obvious to the economists. If any economist claims that there's a clear consensus against rent control among their peers, they're lying. There is a consensus. I've just linked the polls to you. The study you quote has the same conclusions. I've you had actually read it you'd see that it cites no empirical literature on net welfare. The rest of your argument is basically that rent control is bad but if you build enough housing it's fine. You know what other problem more housing solves? Higher rents! Rent control is implemented to lower rents compared to the market price. The effects become worse the larger the difference between market rents and controlled rents. If you bring the market price more in line with controlled rents then the negative effects also become less. At the same time that also reduces the need for rent control in the first place. So yes, your conclusion that building more housing helps solve much of the issues of rent control is correct. It's also meaningless if we want to judge its effectiveness as a policy. More housing is generally a good idea, but it's especially good with rent control. The only part of the housing market that loses out is the private one, which becomes more expensive. I don't see why lower classes should care about that when there are enough homes they can move to at an affordable cost. That's what rent control does. It allows for the additional homes to be immediately affordable and to remain affordable. If the additional homes are privately owned, there is no rent control, and lower classes can't afford them. There are currently no known solutions for affordability other than rent control. It's literally one the best solutions out there. The fact that - in a vacuum - it introduces a problem is completely irrelevant. The main problem is solved with a continuous construction of homes, and other problems are solved with other policies. Many policies don't work in a vacuum but they do work in the right context. This is not a new revelation. No, the private part of the housing market is not the only one that loses out. As per your own source it reduces mobility and reduces housing quality. It's not even clear if renters benefit in the long term as they'll forgo better work opportunities if it does not raise their income enough to make the move out of a rent controlled appartment worth it. That will then mean forgoing additional promotions in the future. I can see how building more housing can solve some of the problems with mobility but you're introducing new ones at the same time. Since rent controlled housing has by definition a below market rate any renter would want one. So you either need to ration or build enough to house them all. Rationing means waiting lists with the state deciding who is lucky enough to live in rent controlled housing, building more subsidised housing is costly leaving less money for other spending. And then the state also needs to know where and what housing to build. The lower class should certainly care about rising prices in the private market. Poor people usually don't want to stay poor. As some of them escape poverty they'll have to compete in the same private housing market. The non-poor part of the population is also the part of the population that funds the welfare state. Without them there's no subsidised housing for the poor. There's a clear incentive to make sure they keep supporting said welfare state. Unnecessarily increasing their housing prices is not a good way to do that. That there is no other solution for affordability is completely false. The solution is to make it easier to build housing by reducing zoning constraints and decreasing housing subsidies that increase demand while doing nothing for supply like rent control and the mortgage interest rate deduction. Show nested quote +On August 16 2025 21:43 Magic Powers wrote:On August 16 2025 18:48 Gorsameth wrote:On August 16 2025 18:34 Magic Powers wrote:On August 16 2025 18:09 RvB wrote:On August 16 2025 16:40 Magic Powers wrote:On August 16 2025 14:54 RvB wrote:On August 16 2025 07:13 Yurie wrote:
Isn't the problem with most mega cities the rules? All the best land is taken and it is VERY hard to buy, tear down and build something larger on a lot. Or even building something new in an area that doesn't have a building on it already.
So you end up with areas far out that are worth less, where you have to extend the public transport network and it thus becomes a mega project. And people don't want to live that far out of the city, meaning rent can't be high enough to finance the project. Perhaps letting the public transport network finance it as a total project might work, kind of how Japanese train networks are just enablers for their land ownership (a bit exaggerated).
This leaves you with a few options I can think of directly, likely there are more.
1- Assume that with the rules you have rents will never get high enough to fix the problem. This doesn't seem very nice to somebody living there since costs will keep climbing until rent is 50%+ of income. Thus a popular politician imposes rent control sooner or later.
2- Assume rent can climb high enough that it is worth it for people to add to the city housing. In that case doing nothing likely works out better.
3- Change the rules so the cost of a new project decreases and 2 becomes more likely.
4- Do it as the city, as you control the rules and have the problem you finance more housing until you hit the level you think is right for the city.
One factor is that a lot of construction in many countries is built for sale and not rent. That can offset high costs to a certain degree. But even that has a maximum it will support. It's both. Excessive zoning regulation and rent control increase rent. There's no real support for rent control amongst economists. See for example these polls. Some responses have comments as well. Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.
Strongly agree: 0%
Agree: 2%
Uncertain: 7%
Disagree: 49%
Strongly disagree: 32%
No opinion: 2%
Did not answer: 7%
Richard Thalers comment says it all: Disagree
Next questions: does the sun revolve around the earth. Question A:
Capping annual rent increases by corporate landlords at 5%, as proposed by President Biden, would make middle-income Americans substantially better off over the next ten years.
Strongly agree: 0%
Agree: 2%
Uncertain: 16%
Disagree: 58%
Strongly disagree: 16%
No opinion: 0%
Did not answer: 9%
Question B:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce the amount of available apartments for rent over the next ten years.
Strongly agree: 18%
Agree: 44%
Uncertain: 22%
Disagree: 4%
Strongly disagree: 2%
No opinion: 0%
Did not answer: 9%
Question C:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce US income inequality over the next ten years.
Strongly agree: 0%
Agree: 0%
Uncertain: 22%
Disagree: 53%
Strongly disagree: 13%
No opinion: 2%
Did not answer: 9% There is no consensus like that among economists. The overall benefit of rent control (in a vacuum) is inconclusive. 5. Conclusion
In this study, I examine a wide range of empirical studies on rent control published in referred journals between 1967 and 2023. I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. These unintended effects counteract the desired effect, thus, diminishing the net benefit of rent control. Therefore, the overall impact of rent control policy on the welfare of society is not clear.
Moreover, the analysis is further complicated by the fact that rent control is not adopted in a vacuum. Simultaneously, other housing policies — such as the protection of tenants from eviction, housing rationing, housing allowances, and stimulation of residential construction (Kholodilin 2017; Kholodilin 2020; Kholodilin et al., 2021) — are implemented. Further, banking, climate, and fiscal policies can also affect the results of rent control regulations. https://www.sciencedirect.com/science/article/pii/S1051137724000020Especially the second sentence is key: I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. The primary benefit is that of affordability in controlled housing. This finding is simply true and not in dispute. Drawbacks are: - Higher rent in uncontrolled housing If new housing is built for controlled rent, I don't see how this is an overall problem. I'll address this point a few more times. - Lower mobility This has pros and cons, and in a vacuum it would be an overall drawback. However, with good policy it becomes a non-issue. Families' needs can be met by continuously building new housing so they have incentive to move wherever they please. In Vienna this works just fine. Workers and the lower class have sufficient mobility. The middle class is fine, since they can afford more expensive housing. That's how things should work anyway. Goal accomplished. So this is a very simple problem with a very simple solution. - Reduced residential construction This reveals the stupidity of the simplistic claim that rent control is bad. Yes, in a vacuum it's bad. But good policy doesn't exist in a vacuum. Creation of new housing solves much if not the whole problem. So it's fairly obvious that nothing is obvious to the economists. If any economist claims that there's a clear consensus against rent control among their peers, they're lying. There is a consensus. I've just linked the polls to you. The study you quote has the same conclusions. I've you had actually read it you'd see that it cites no empirical literature on net welfare. The rest of your argument is basically that rent control is bad but if you build enough housing it's fine. You know what other problem more housing solves? Higher rents! Rent control is implemented to lower rents compared to the market price. The effects become worse the larger the difference between market rents and controlled rents. If you bring the market price more in line with controlled rents then the negative effects also become less. At the same time that also reduces the need for rent control in the first place. So yes, your conclusion that building more housing helps solve much of the issues of rent control is correct. It's also meaningless if we want to judge its effectiveness as a policy. More housing is generally a good idea, but it's especially good with rent control. The only part of the housing market that loses out is the private one, which becomes more expensive. I don't see why lower classes should care about that when there are enough homes they can move to at an affordable cost. That's what rent control does. It allows for the additional homes to be immediately affordable and to remain affordable. If the additional homes are privately owned, there is no rent control, and lower classes can't afford them. There are currently no known solutions for affordability other than rent control. It's literally one the best solutions out there. The fact that - in a vacuum - it introduces a problem is completely irrelevant. The main problem is solved with a continuous construction of homes, and other problems are solved with other policies. Many policies don't work in a vacuum but they do work in the right context. This is not a new revelation. But then is the solution rent control or is it just market saturation? You say rent control works if there are so many houses on the market that anyone can find one. Wouldn't the normal housing market also self correct back into affordability if the market was flush with houses, naturally bringing prices down as supply exceeds demand? The problem in both cases is enticing companies to keep building houses when they make less profit off of them. That and not getting voted out of office by all the home owners who see the value of their house plummet. The latter might well be the entire core issue around the world, the haves (those who own homes) benefitting from ever increasing housing prices and not being willing to take a hit to help the have nots. Leaving housing construction to the free market drives up housing cost because it's a lot more profitable to raise rent than to build more homes, which also perversely orients the incentivize towards less construction and creates a feedback loop of rising rental cost. Building homes costs a large amount of money, it's more of a hassle due to construction guidelines, it's overall also a riskier investment, whereas raising rent for the next renter (even when including expensive refurbishment) costs much less money and carries much less risk. This can can even completely hyper-inflate the cost of homes depending on how greedy the owners are. And that's only the most obvious of the problems resulting from free market housing. There is a place for free market housing, but it can't serve the lower classes. People who argue that rent control is bad in the long run should research the impact of the free market in the long run. It's a lot worse. This makes no logical sense. The market value of a rental property is the discounted cash flow of the house. An increase in rent will increase that market value. It won't change the cost to build one. Increasing rents will then increase the incentive to build more housing since it'll push the market value above building costs (including the profit) at the margin. Often developers are not allowed to build these housing units though.
In NYC it costs around $350 USD per square foot to build one single apartment. A new apartment is around 700 square feet (65 m²). That means the construction of one apartment costs roughly 250 000 USD.
This is why raising rent is far more profitable than building new homes. The latter serves primarily the people, whereas landlords primarily benefit from increased rent and not from construction. They're happy to refurbish homes or remodel existing property. But they're not generally in the business of constructing new homes. This is especially true because construction of more homes = lower average rent, just as I explained. The incentive for homes to be built is almost exclusively in the hands of renters. You'll rarely see the point where additional construction for lower classes is beneficial for landlords. Lower classes don't have the assets to pay for expensive apartments and therefore there's very little profit to be made in construction. This is why the model of state-controlled construction exists to begin with. It's absolutely necessary so all the families have a place to live. Otherwise people would literally have to build their own homes because nobody else is going to do it for them. That's where the housing crisis stems from.
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350$/foot sounds comically low for NYC. Or you taling strictly construction? Because thats as useless a metric as it gets in most places that are desireable for many people to live (= cities).
Also... Landlords don't construct to later rent? You really sure about that? They for obvious reasons rarely do in cities but elsewhere?
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Isn't there building to sell? If you have a good location 250 000 to buy an apartment seems very reasonable in a large city. Which removes people from the renting market.
It is also much lower risk since if the lack of apartments is severe you sell it before the project even runs. If the lack is bad you easily sell it during the project and thus pay off any loans within a year.
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On August 17 2025 03:45 Magic Powers wrote:Show nested quote +On August 16 2025 22:42 RvB wrote:On August 16 2025 18:34 Magic Powers wrote:On August 16 2025 18:09 RvB wrote:On August 16 2025 16:40 Magic Powers wrote:On August 16 2025 14:54 RvB wrote:On August 16 2025 07:13 Yurie wrote:
Isn't the problem with most mega cities the rules? All the best land is taken and it is VERY hard to buy, tear down and build something larger on a lot. Or even building something new in an area that doesn't have a building on it already.
So you end up with areas far out that are worth less, where you have to extend the public transport network and it thus becomes a mega project. And people don't want to live that far out of the city, meaning rent can't be high enough to finance the project. Perhaps letting the public transport network finance it as a total project might work, kind of how Japanese train networks are just enablers for their land ownership (a bit exaggerated).
This leaves you with a few options I can think of directly, likely there are more.
1- Assume that with the rules you have rents will never get high enough to fix the problem. This doesn't seem very nice to somebody living there since costs will keep climbing until rent is 50%+ of income. Thus a popular politician imposes rent control sooner or later.
2- Assume rent can climb high enough that it is worth it for people to add to the city housing. In that case doing nothing likely works out better.
3- Change the rules so the cost of a new project decreases and 2 becomes more likely.
4- Do it as the city, as you control the rules and have the problem you finance more housing until you hit the level you think is right for the city.
One factor is that a lot of construction in many countries is built for sale and not rent. That can offset high costs to a certain degree. But even that has a maximum it will support. It's both. Excessive zoning regulation and rent control increase rent. There's no real support for rent control amongst economists. See for example these polls. Some responses have comments as well. Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.
Strongly agree: 0%
Agree: 2%
Uncertain: 7%
Disagree: 49%
Strongly disagree: 32%
No opinion: 2%
Did not answer: 7%
Richard Thalers comment says it all: Disagree
Next questions: does the sun revolve around the earth. Question A:
Capping annual rent increases by corporate landlords at 5%, as proposed by President Biden, would make middle-income Americans substantially better off over the next ten years.
Strongly agree: 0%
Agree: 2%
Uncertain: 16%
Disagree: 58%
Strongly disagree: 16%
No opinion: 0%
Did not answer: 9%
Question B:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce the amount of available apartments for rent over the next ten years.
Strongly agree: 18%
Agree: 44%
Uncertain: 22%
Disagree: 4%
Strongly disagree: 2%
No opinion: 0%
Did not answer: 9%
Question C:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce US income inequality over the next ten years.
Strongly agree: 0%
Agree: 0%
Uncertain: 22%
Disagree: 53%
Strongly disagree: 13%
No opinion: 2%
Did not answer: 9% There is no consensus like that among economists. The overall benefit of rent control (in a vacuum) is inconclusive. 5. Conclusion
In this study, I examine a wide range of empirical studies on rent control published in referred journals between 1967 and 2023. I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. These unintended effects counteract the desired effect, thus, diminishing the net benefit of rent control. Therefore, the overall impact of rent control policy on the welfare of society is not clear.
Moreover, the analysis is further complicated by the fact that rent control is not adopted in a vacuum. Simultaneously, other housing policies — such as the protection of tenants from eviction, housing rationing, housing allowances, and stimulation of residential construction (Kholodilin 2017; Kholodilin 2020; Kholodilin et al., 2021) — are implemented. Further, banking, climate, and fiscal policies can also affect the results of rent control regulations. https://www.sciencedirect.com/science/article/pii/S1051137724000020Especially the second sentence is key: I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. The primary benefit is that of affordability in controlled housing. This finding is simply true and not in dispute. Drawbacks are: - Higher rent in uncontrolled housing If new housing is built for controlled rent, I don't see how this is an overall problem. I'll address this point a few more times. - Lower mobility This has pros and cons, and in a vacuum it would be an overall drawback. However, with good policy it becomes a non-issue. Families' needs can be met by continuously building new housing so they have incentive to move wherever they please. In Vienna this works just fine. Workers and the lower class have sufficient mobility. The middle class is fine, since they can afford more expensive housing. That's how things should work anyway. Goal accomplished. So this is a very simple problem with a very simple solution. - Reduced residential construction This reveals the stupidity of the simplistic claim that rent control is bad. Yes, in a vacuum it's bad. But good policy doesn't exist in a vacuum. Creation of new housing solves much if not the whole problem. So it's fairly obvious that nothing is obvious to the economists. If any economist claims that there's a clear consensus against rent control among their peers, they're lying. There is a consensus. I've just linked the polls to you. The study you quote has the same conclusions. I've you had actually read it you'd see that it cites no empirical literature on net welfare. The rest of your argument is basically that rent control is bad but if you build enough housing it's fine. You know what other problem more housing solves? Higher rents! Rent control is implemented to lower rents compared to the market price. The effects become worse the larger the difference between market rents and controlled rents. If you bring the market price more in line with controlled rents then the negative effects also become less. At the same time that also reduces the need for rent control in the first place. So yes, your conclusion that building more housing helps solve much of the issues of rent control is correct. It's also meaningless if we want to judge its effectiveness as a policy. More housing is generally a good idea, but it's especially good with rent control. The only part of the housing market that loses out is the private one, which becomes more expensive. I don't see why lower classes should care about that when there are enough homes they can move to at an affordable cost. That's what rent control does. It allows for the additional homes to be immediately affordable and to remain affordable. If the additional homes are privately owned, there is no rent control, and lower classes can't afford them. There are currently no known solutions for affordability other than rent control. It's literally one the best solutions out there. The fact that - in a vacuum - it introduces a problem is completely irrelevant. The main problem is solved with a continuous construction of homes, and other problems are solved with other policies. Many policies don't work in a vacuum but they do work in the right context. This is not a new revelation. No, the private part of the housing market is not the only one that loses out. As per your own source it reduces mobility and reduces housing quality. It's not even clear if renters benefit in the long term as they'll forgo better work opportunities if it does not raise their income enough to make the move out of a rent controlled appartment worth it. That will then mean forgoing additional promotions in the future. I can see how building more housing can solve some of the problems with mobility but you're introducing new ones at the same time. Since rent controlled housing has by definition a below market rate any renter would want one. So you either need to ration or build enough to house them all. Rationing means waiting lists with the state deciding who is lucky enough to live in rent controlled housing, building more subsidised housing is costly leaving less money for other spending. And then the state also needs to know where and what housing to build. The lower class should certainly care about rising prices in the private market. Poor people usually don't want to stay poor. As some of them escape poverty they'll have to compete in the same private housing market. The non-poor part of the population is also the part of the population that funds the welfare state. Without them there's no subsidised housing for the poor. There's a clear incentive to make sure they keep supporting said welfare state. Unnecessarily increasing their housing prices is not a good way to do that. That there is no other solution for affordability is completely false. The solution is to make it easier to build housing by reducing zoning constraints and decreasing housing subsidies that increase demand while doing nothing for supply like rent control and the mortgage interest rate deduction. On August 16 2025 21:43 Magic Powers wrote:On August 16 2025 18:48 Gorsameth wrote:On August 16 2025 18:34 Magic Powers wrote:On August 16 2025 18:09 RvB wrote:On August 16 2025 16:40 Magic Powers wrote:On August 16 2025 14:54 RvB wrote:On August 16 2025 07:13 Yurie wrote:
Isn't the problem with most mega cities the rules? All the best land is taken and it is VERY hard to buy, tear down and build something larger on a lot. Or even building something new in an area that doesn't have a building on it already.
So you end up with areas far out that are worth less, where you have to extend the public transport network and it thus becomes a mega project. And people don't want to live that far out of the city, meaning rent can't be high enough to finance the project. Perhaps letting the public transport network finance it as a total project might work, kind of how Japanese train networks are just enablers for their land ownership (a bit exaggerated).
This leaves you with a few options I can think of directly, likely there are more.
1- Assume that with the rules you have rents will never get high enough to fix the problem. This doesn't seem very nice to somebody living there since costs will keep climbing until rent is 50%+ of income. Thus a popular politician imposes rent control sooner or later.
2- Assume rent can climb high enough that it is worth it for people to add to the city housing. In that case doing nothing likely works out better.
3- Change the rules so the cost of a new project decreases and 2 becomes more likely.
4- Do it as the city, as you control the rules and have the problem you finance more housing until you hit the level you think is right for the city.
One factor is that a lot of construction in many countries is built for sale and not rent. That can offset high costs to a certain degree. But even that has a maximum it will support. It's both. Excessive zoning regulation and rent control increase rent. There's no real support for rent control amongst economists. See for example these polls. Some responses have comments as well. Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.
Strongly agree: 0%
Agree: 2%
Uncertain: 7%
Disagree: 49%
Strongly disagree: 32%
No opinion: 2%
Did not answer: 7%
Richard Thalers comment says it all: Disagree
Next questions: does the sun revolve around the earth. Question A:
Capping annual rent increases by corporate landlords at 5%, as proposed by President Biden, would make middle-income Americans substantially better off over the next ten years.
Strongly agree: 0%
Agree: 2%
Uncertain: 16%
Disagree: 58%
Strongly disagree: 16%
No opinion: 0%
Did not answer: 9%
Question B:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce the amount of available apartments for rent over the next ten years.
Strongly agree: 18%
Agree: 44%
Uncertain: 22%
Disagree: 4%
Strongly disagree: 2%
No opinion: 0%
Did not answer: 9%
Question C:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce US income inequality over the next ten years.
Strongly agree: 0%
Agree: 0%
Uncertain: 22%
Disagree: 53%
Strongly disagree: 13%
No opinion: 2%
Did not answer: 9% There is no consensus like that among economists. The overall benefit of rent control (in a vacuum) is inconclusive. 5. Conclusion
In this study, I examine a wide range of empirical studies on rent control published in referred journals between 1967 and 2023. I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. These unintended effects counteract the desired effect, thus, diminishing the net benefit of rent control. Therefore, the overall impact of rent control policy on the welfare of society is not clear.
Moreover, the analysis is further complicated by the fact that rent control is not adopted in a vacuum. Simultaneously, other housing policies — such as the protection of tenants from eviction, housing rationing, housing allowances, and stimulation of residential construction (Kholodilin 2017; Kholodilin 2020; Kholodilin et al., 2021) — are implemented. Further, banking, climate, and fiscal policies can also affect the results of rent control regulations. https://www.sciencedirect.com/science/article/pii/S1051137724000020Especially the second sentence is key: I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. The primary benefit is that of affordability in controlled housing. This finding is simply true and not in dispute. Drawbacks are: - Higher rent in uncontrolled housing If new housing is built for controlled rent, I don't see how this is an overall problem. I'll address this point a few more times. - Lower mobility This has pros and cons, and in a vacuum it would be an overall drawback. However, with good policy it becomes a non-issue. Families' needs can be met by continuously building new housing so they have incentive to move wherever they please. In Vienna this works just fine. Workers and the lower class have sufficient mobility. The middle class is fine, since they can afford more expensive housing. That's how things should work anyway. Goal accomplished. So this is a very simple problem with a very simple solution. - Reduced residential construction This reveals the stupidity of the simplistic claim that rent control is bad. Yes, in a vacuum it's bad. But good policy doesn't exist in a vacuum. Creation of new housing solves much if not the whole problem. So it's fairly obvious that nothing is obvious to the economists. If any economist claims that there's a clear consensus against rent control among their peers, they're lying. There is a consensus. I've just linked the polls to you. The study you quote has the same conclusions. I've you had actually read it you'd see that it cites no empirical literature on net welfare. The rest of your argument is basically that rent control is bad but if you build enough housing it's fine. You know what other problem more housing solves? Higher rents! Rent control is implemented to lower rents compared to the market price. The effects become worse the larger the difference between market rents and controlled rents. If you bring the market price more in line with controlled rents then the negative effects also become less. At the same time that also reduces the need for rent control in the first place. So yes, your conclusion that building more housing helps solve much of the issues of rent control is correct. It's also meaningless if we want to judge its effectiveness as a policy. More housing is generally a good idea, but it's especially good with rent control. The only part of the housing market that loses out is the private one, which becomes more expensive. I don't see why lower classes should care about that when there are enough homes they can move to at an affordable cost. That's what rent control does. It allows for the additional homes to be immediately affordable and to remain affordable. If the additional homes are privately owned, there is no rent control, and lower classes can't afford them. There are currently no known solutions for affordability other than rent control. It's literally one the best solutions out there. The fact that - in a vacuum - it introduces a problem is completely irrelevant. The main problem is solved with a continuous construction of homes, and other problems are solved with other policies. Many policies don't work in a vacuum but they do work in the right context. This is not a new revelation. But then is the solution rent control or is it just market saturation? You say rent control works if there are so many houses on the market that anyone can find one. Wouldn't the normal housing market also self correct back into affordability if the market was flush with houses, naturally bringing prices down as supply exceeds demand? The problem in both cases is enticing companies to keep building houses when they make less profit off of them. That and not getting voted out of office by all the home owners who see the value of their house plummet. The latter might well be the entire core issue around the world, the haves (those who own homes) benefitting from ever increasing housing prices and not being willing to take a hit to help the have nots. Leaving housing construction to the free market drives up housing cost because it's a lot more profitable to raise rent than to build more homes, which also perversely orients the incentivize towards less construction and creates a feedback loop of rising rental cost. Building homes costs a large amount of money, it's more of a hassle due to construction guidelines, it's overall also a riskier investment, whereas raising rent for the next renter (even when including expensive refurbishment) costs much less money and carries much less risk. This can can even completely hyper-inflate the cost of homes depending on how greedy the owners are. And that's only the most obvious of the problems resulting from free market housing. There is a place for free market housing, but it can't serve the lower classes. People who argue that rent control is bad in the long run should research the impact of the free market in the long run. It's a lot worse. This makes no logical sense. The market value of a rental property is the discounted cash flow of the house. An increase in rent will increase that market value. It won't change the cost to build one. Increasing rents will then increase the incentive to build more housing since it'll push the market value above building costs (including the profit) at the margin. Often developers are not allowed to build these housing units though. In NYC it costs around $350 USD per square foot to build one single apartment. A new apartment is around 700 square feet (65 m²). That means the construction of one apartment costs roughly 250 000 USD. This is why raising rent is far more profitable than building new homes. The latter serves primarily the people, whereas landlords primarily benefit from increased rent and not from construction. They're happy to refurbish homes or remodel existing property. But they're not generally in the business of constructing new homes. This is especially true because construction of more homes = lower average rent, just as I explained. The incentive for homes to be built is almost exclusively in the hands of renters. You'll rarely see the point where additional construction for lower classes is beneficial for landlords. Lower classes don't have the assets to pay for expensive apartments and therefore there's very little profit to be made in construction. This is why the model of state-controlled construction exists to begin with. It's absolutely necessary so all the families have a place to live. Otherwise people would literally have to build their own homes because nobody else is going to do it for them. That's where the housing crisis stems from.
Landlords don't build housing. Developers do. Your observation that it's easier to raise prices than build new stuff would be true in any market. That's not the way to maximize profits. For instance, a monopolist won't just raise prices. They'll pick the price that leads to sales that maximize their profits. In the case of housing there's no monopoly and there can be new entrants into the market. Even if for current landlords raising the price might be best there can always be others that go to the developer to build the housing. As I explained in my last post an increase in rents will be an incentive for other landlords to enter the market. Unless it's illegal to build which it often is. Thats the real problem. It's not a coincidence that in cities where it's easiest to build rents rise least.
There's also little reason why private developers can't serve the lower end of the market. It's like saying that Primark can't exist because Gucci sells the clothes with a high margin. Even low margin products can become profitable. Unless clothes are rationed. Then producers would first produce the products with the highest margin and Primark would not exist. Sounds very similar to the housing market don't you think? Where one of the complaints is that we only see high margin housing built.
I think most of the arguments have been made so I'm going to take Acrofales advice and leave it at this.
|
On August 17 2025 16:28 RvB wrote:Show nested quote +On August 17 2025 03:45 Magic Powers wrote:On August 16 2025 22:42 RvB wrote:On August 16 2025 18:34 Magic Powers wrote:On August 16 2025 18:09 RvB wrote:On August 16 2025 16:40 Magic Powers wrote:On August 16 2025 14:54 RvB wrote:On August 16 2025 07:13 Yurie wrote:
Isn't the problem with most mega cities the rules? All the best land is taken and it is VERY hard to buy, tear down and build something larger on a lot. Or even building something new in an area that doesn't have a building on it already.
So you end up with areas far out that are worth less, where you have to extend the public transport network and it thus becomes a mega project. And people don't want to live that far out of the city, meaning rent can't be high enough to finance the project. Perhaps letting the public transport network finance it as a total project might work, kind of how Japanese train networks are just enablers for their land ownership (a bit exaggerated).
This leaves you with a few options I can think of directly, likely there are more.
1- Assume that with the rules you have rents will never get high enough to fix the problem. This doesn't seem very nice to somebody living there since costs will keep climbing until rent is 50%+ of income. Thus a popular politician imposes rent control sooner or later.
2- Assume rent can climb high enough that it is worth it for people to add to the city housing. In that case doing nothing likely works out better.
3- Change the rules so the cost of a new project decreases and 2 becomes more likely.
4- Do it as the city, as you control the rules and have the problem you finance more housing until you hit the level you think is right for the city.
One factor is that a lot of construction in many countries is built for sale and not rent. That can offset high costs to a certain degree. But even that has a maximum it will support. It's both. Excessive zoning regulation and rent control increase rent. There's no real support for rent control amongst economists. See for example these polls. Some responses have comments as well. Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.
Strongly agree: 0%
Agree: 2%
Uncertain: 7%
Disagree: 49%
Strongly disagree: 32%
No opinion: 2%
Did not answer: 7%
Richard Thalers comment says it all: Disagree
Next questions: does the sun revolve around the earth. Question A:
Capping annual rent increases by corporate landlords at 5%, as proposed by President Biden, would make middle-income Americans substantially better off over the next ten years.
Strongly agree: 0%
Agree: 2%
Uncertain: 16%
Disagree: 58%
Strongly disagree: 16%
No opinion: 0%
Did not answer: 9%
Question B:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce the amount of available apartments for rent over the next ten years.
Strongly agree: 18%
Agree: 44%
Uncertain: 22%
Disagree: 4%
Strongly disagree: 2%
No opinion: 0%
Did not answer: 9%
Question C:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce US income inequality over the next ten years.
Strongly agree: 0%
Agree: 0%
Uncertain: 22%
Disagree: 53%
Strongly disagree: 13%
No opinion: 2%
Did not answer: 9% There is no consensus like that among economists. The overall benefit of rent control (in a vacuum) is inconclusive. 5. Conclusion
In this study, I examine a wide range of empirical studies on rent control published in referred journals between 1967 and 2023. I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. These unintended effects counteract the desired effect, thus, diminishing the net benefit of rent control. Therefore, the overall impact of rent control policy on the welfare of society is not clear.
Moreover, the analysis is further complicated by the fact that rent control is not adopted in a vacuum. Simultaneously, other housing policies — such as the protection of tenants from eviction, housing rationing, housing allowances, and stimulation of residential construction (Kholodilin 2017; Kholodilin 2020; Kholodilin et al., 2021) — are implemented. Further, banking, climate, and fiscal policies can also affect the results of rent control regulations. https://www.sciencedirect.com/science/article/pii/S1051137724000020Especially the second sentence is key: I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. The primary benefit is that of affordability in controlled housing. This finding is simply true and not in dispute. Drawbacks are: - Higher rent in uncontrolled housing If new housing is built for controlled rent, I don't see how this is an overall problem. I'll address this point a few more times. - Lower mobility This has pros and cons, and in a vacuum it would be an overall drawback. However, with good policy it becomes a non-issue. Families' needs can be met by continuously building new housing so they have incentive to move wherever they please. In Vienna this works just fine. Workers and the lower class have sufficient mobility. The middle class is fine, since they can afford more expensive housing. That's how things should work anyway. Goal accomplished. So this is a very simple problem with a very simple solution. - Reduced residential construction This reveals the stupidity of the simplistic claim that rent control is bad. Yes, in a vacuum it's bad. But good policy doesn't exist in a vacuum. Creation of new housing solves much if not the whole problem. So it's fairly obvious that nothing is obvious to the economists. If any economist claims that there's a clear consensus against rent control among their peers, they're lying. There is a consensus. I've just linked the polls to you. The study you quote has the same conclusions. I've you had actually read it you'd see that it cites no empirical literature on net welfare. The rest of your argument is basically that rent control is bad but if you build enough housing it's fine. You know what other problem more housing solves? Higher rents! Rent control is implemented to lower rents compared to the market price. The effects become worse the larger the difference between market rents and controlled rents. If you bring the market price more in line with controlled rents then the negative effects also become less. At the same time that also reduces the need for rent control in the first place. So yes, your conclusion that building more housing helps solve much of the issues of rent control is correct. It's also meaningless if we want to judge its effectiveness as a policy. More housing is generally a good idea, but it's especially good with rent control. The only part of the housing market that loses out is the private one, which becomes more expensive. I don't see why lower classes should care about that when there are enough homes they can move to at an affordable cost. That's what rent control does. It allows for the additional homes to be immediately affordable and to remain affordable. If the additional homes are privately owned, there is no rent control, and lower classes can't afford them. There are currently no known solutions for affordability other than rent control. It's literally one the best solutions out there. The fact that - in a vacuum - it introduces a problem is completely irrelevant. The main problem is solved with a continuous construction of homes, and other problems are solved with other policies. Many policies don't work in a vacuum but they do work in the right context. This is not a new revelation. No, the private part of the housing market is not the only one that loses out. As per your own source it reduces mobility and reduces housing quality. It's not even clear if renters benefit in the long term as they'll forgo better work opportunities if it does not raise their income enough to make the move out of a rent controlled appartment worth it. That will then mean forgoing additional promotions in the future. I can see how building more housing can solve some of the problems with mobility but you're introducing new ones at the same time. Since rent controlled housing has by definition a below market rate any renter would want one. So you either need to ration or build enough to house them all. Rationing means waiting lists with the state deciding who is lucky enough to live in rent controlled housing, building more subsidised housing is costly leaving less money for other spending. And then the state also needs to know where and what housing to build. The lower class should certainly care about rising prices in the private market. Poor people usually don't want to stay poor. As some of them escape poverty they'll have to compete in the same private housing market. The non-poor part of the population is also the part of the population that funds the welfare state. Without them there's no subsidised housing for the poor. There's a clear incentive to make sure they keep supporting said welfare state. Unnecessarily increasing their housing prices is not a good way to do that. That there is no other solution for affordability is completely false. The solution is to make it easier to build housing by reducing zoning constraints and decreasing housing subsidies that increase demand while doing nothing for supply like rent control and the mortgage interest rate deduction. On August 16 2025 21:43 Magic Powers wrote:On August 16 2025 18:48 Gorsameth wrote:On August 16 2025 18:34 Magic Powers wrote:On August 16 2025 18:09 RvB wrote:On August 16 2025 16:40 Magic Powers wrote:On August 16 2025 14:54 RvB wrote:On August 16 2025 07:13 Yurie wrote:
Isn't the problem with most mega cities the rules? All the best land is taken and it is VERY hard to buy, tear down and build something larger on a lot. Or even building something new in an area that doesn't have a building on it already.
So you end up with areas far out that are worth less, where you have to extend the public transport network and it thus becomes a mega project. And people don't want to live that far out of the city, meaning rent can't be high enough to finance the project. Perhaps letting the public transport network finance it as a total project might work, kind of how Japanese train networks are just enablers for their land ownership (a bit exaggerated).
This leaves you with a few options I can think of directly, likely there are more.
1- Assume that with the rules you have rents will never get high enough to fix the problem. This doesn't seem very nice to somebody living there since costs will keep climbing until rent is 50%+ of income. Thus a popular politician imposes rent control sooner or later.
2- Assume rent can climb high enough that it is worth it for people to add to the city housing. In that case doing nothing likely works out better.
3- Change the rules so the cost of a new project decreases and 2 becomes more likely.
4- Do it as the city, as you control the rules and have the problem you finance more housing until you hit the level you think is right for the city.
One factor is that a lot of construction in many countries is built for sale and not rent. That can offset high costs to a certain degree. But even that has a maximum it will support. It's both. Excessive zoning regulation and rent control increase rent. There's no real support for rent control amongst economists. See for example these polls. Some responses have comments as well. Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.
Strongly agree: 0%
Agree: 2%
Uncertain: 7%
Disagree: 49%
Strongly disagree: 32%
No opinion: 2%
Did not answer: 7%
Richard Thalers comment says it all: Disagree
Next questions: does the sun revolve around the earth. Question A:
Capping annual rent increases by corporate landlords at 5%, as proposed by President Biden, would make middle-income Americans substantially better off over the next ten years.
Strongly agree: 0%
Agree: 2%
Uncertain: 16%
Disagree: 58%
Strongly disagree: 16%
No opinion: 0%
Did not answer: 9%
Question B:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce the amount of available apartments for rent over the next ten years.
Strongly agree: 18%
Agree: 44%
Uncertain: 22%
Disagree: 4%
Strongly disagree: 2%
No opinion: 0%
Did not answer: 9%
Question C:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce US income inequality over the next ten years.
Strongly agree: 0%
Agree: 0%
Uncertain: 22%
Disagree: 53%
Strongly disagree: 13%
No opinion: 2%
Did not answer: 9% There is no consensus like that among economists. The overall benefit of rent control (in a vacuum) is inconclusive. 5. Conclusion
In this study, I examine a wide range of empirical studies on rent control published in referred journals between 1967 and 2023. I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. These unintended effects counteract the desired effect, thus, diminishing the net benefit of rent control. Therefore, the overall impact of rent control policy on the welfare of society is not clear.
Moreover, the analysis is further complicated by the fact that rent control is not adopted in a vacuum. Simultaneously, other housing policies — such as the protection of tenants from eviction, housing rationing, housing allowances, and stimulation of residential construction (Kholodilin 2017; Kholodilin 2020; Kholodilin et al., 2021) — are implemented. Further, banking, climate, and fiscal policies can also affect the results of rent control regulations. https://www.sciencedirect.com/science/article/pii/S1051137724000020Especially the second sentence is key: I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. The primary benefit is that of affordability in controlled housing. This finding is simply true and not in dispute. Drawbacks are: - Higher rent in uncontrolled housing If new housing is built for controlled rent, I don't see how this is an overall problem. I'll address this point a few more times. - Lower mobility This has pros and cons, and in a vacuum it would be an overall drawback. However, with good policy it becomes a non-issue. Families' needs can be met by continuously building new housing so they have incentive to move wherever they please. In Vienna this works just fine. Workers and the lower class have sufficient mobility. The middle class is fine, since they can afford more expensive housing. That's how things should work anyway. Goal accomplished. So this is a very simple problem with a very simple solution. - Reduced residential construction This reveals the stupidity of the simplistic claim that rent control is bad. Yes, in a vacuum it's bad. But good policy doesn't exist in a vacuum. Creation of new housing solves much if not the whole problem. So it's fairly obvious that nothing is obvious to the economists. If any economist claims that there's a clear consensus against rent control among their peers, they're lying. There is a consensus. I've just linked the polls to you. The study you quote has the same conclusions. I've you had actually read it you'd see that it cites no empirical literature on net welfare. The rest of your argument is basically that rent control is bad but if you build enough housing it's fine. You know what other problem more housing solves? Higher rents! Rent control is implemented to lower rents compared to the market price. The effects become worse the larger the difference between market rents and controlled rents. If you bring the market price more in line with controlled rents then the negative effects also become less. At the same time that also reduces the need for rent control in the first place. So yes, your conclusion that building more housing helps solve much of the issues of rent control is correct. It's also meaningless if we want to judge its effectiveness as a policy. More housing is generally a good idea, but it's especially good with rent control. The only part of the housing market that loses out is the private one, which becomes more expensive. I don't see why lower classes should care about that when there are enough homes they can move to at an affordable cost. That's what rent control does. It allows for the additional homes to be immediately affordable and to remain affordable. If the additional homes are privately owned, there is no rent control, and lower classes can't afford them. There are currently no known solutions for affordability other than rent control. It's literally one the best solutions out there. The fact that - in a vacuum - it introduces a problem is completely irrelevant. The main problem is solved with a continuous construction of homes, and other problems are solved with other policies. Many policies don't work in a vacuum but they do work in the right context. This is not a new revelation. But then is the solution rent control or is it just market saturation? You say rent control works if there are so many houses on the market that anyone can find one. Wouldn't the normal housing market also self correct back into affordability if the market was flush with houses, naturally bringing prices down as supply exceeds demand? The problem in both cases is enticing companies to keep building houses when they make less profit off of them. That and not getting voted out of office by all the home owners who see the value of their house plummet. The latter might well be the entire core issue around the world, the haves (those who own homes) benefitting from ever increasing housing prices and not being willing to take a hit to help the have nots. Leaving housing construction to the free market drives up housing cost because it's a lot more profitable to raise rent than to build more homes, which also perversely orients the incentivize towards less construction and creates a feedback loop of rising rental cost. Building homes costs a large amount of money, it's more of a hassle due to construction guidelines, it's overall also a riskier investment, whereas raising rent for the next renter (even when including expensive refurbishment) costs much less money and carries much less risk. This can can even completely hyper-inflate the cost of homes depending on how greedy the owners are. And that's only the most obvious of the problems resulting from free market housing. There is a place for free market housing, but it can't serve the lower classes. People who argue that rent control is bad in the long run should research the impact of the free market in the long run. It's a lot worse. This makes no logical sense. The market value of a rental property is the discounted cash flow of the house. An increase in rent will increase that market value. It won't change the cost to build one. Increasing rents will then increase the incentive to build more housing since it'll push the market value above building costs (including the profit) at the margin. Often developers are not allowed to build these housing units though. In NYC it costs around $350 USD per square foot to build one single apartment. A new apartment is around 700 square feet (65 m²). That means the construction of one apartment costs roughly 250 000 USD. This is why raising rent is far more profitable than building new homes. The latter serves primarily the people, whereas landlords primarily benefit from increased rent and not from construction. They're happy to refurbish homes or remodel existing property. But they're not generally in the business of constructing new homes. This is especially true because construction of more homes = lower average rent, just as I explained. The incentive for homes to be built is almost exclusively in the hands of renters. You'll rarely see the point where additional construction for lower classes is beneficial for landlords. Lower classes don't have the assets to pay for expensive apartments and therefore there's very little profit to be made in construction. This is why the model of state-controlled construction exists to begin with. It's absolutely necessary so all the families have a place to live. Otherwise people would literally have to build their own homes because nobody else is going to do it for them. That's where the housing crisis stems from. Landlords don't build housing. Developers do. Your observation that it's easier to raise prices than build new stuff would be true in any market. That's not the way to maximize profits. For instance, a monopolist won't just raise prices. They'll pick the price that leads to sales that maximize their profits. In the case of housing there's no monopoly and there can be new entrants into the market. Even if for current landlords raising the price might be best there can always be others that go to the developer to build the housing. As I explained in my last post an increase in rents will be an incentive for other landlords to enter the market. Unless it's illegal to build which it often is. Thats the real problem. It's not a coincidence that in cities where it's easiest to build rents rise least. There's also little reason why private developers can't serve the lower end of the market. It's like saying that Primark can't exist because Gucci sells the clothes with a high margin. Even low margin products can become profitable. Unless clothes are rationed. Then producers would first produce the products with the highest margin and Primark would not exist. Sounds very similar to the housing market don't you think? Where one of the complaints is that we only see high margin housing built. I think most of the arguments have been made so I'm going to take Acrofales advice and leave it at this.
Construction companies don't profit very much from building homes for lower classes. For the sake of profit they prefer to build for rich people who can afford to invest into/buy their project. If a construction company wants to make any profit dealing with lower class people, the investment would have to come from rich people, because the lower classes don't have money to pay for construction, but upper classes do. Who's going to pay for that willingly? Nobody will. Only the city will do that through taxation. Lower classes need an affordable home to live in, preferably not too far from work/school. But they can't afford paying for the construction of these homes.
Can the middle class afford to pay for the construction of new homes? Perhaps to some degree. The middle class has bigger assets, I don't think all of them can invest hundreds of thousands into a new home, but many can. They can buy or rent homes - but if they buy, they do it for themselves, not for the lower classes.
On the other side you have landlords. They definitely profit from the rent for lower classes. They don't need rich customers, they can just raise the rent because there are plenty of middle class people capable of paying it. That's because renting and buying are very different things, as I explained above many middle class people can't afford to invest into construction, but they can afford higher rent. So that's exactly what they get, higher rent from greedy landlords. Therefore average rent increases also for the lower class, fewer homes become affordable, and more construction is required, which the lower class can't afford.
Therefore the city steps in and says we need to invest into more homes for the lower class. The city is responsible for that construction because nobody else would willfully do it for them.
Cue Mamdani who has figured out which exact set of policies to enact. Cuomo is clearly more interested in power and doesn't care much about the lower class.
Also, I find it kinda baffling that you're pushing back so hard against Mamdani's model, when it's a proven model here in Vienna for the last 100 years - and I'd assume it's also been working in a number of other cities, although I'd first have to research which ones those are.
Or maybe you do agree with his model, but choose not to communicate that?
|
On August 17 2025 17:25 Magic Powers wrote:Show nested quote +On August 17 2025 16:28 RvB wrote:On August 17 2025 03:45 Magic Powers wrote:On August 16 2025 22:42 RvB wrote:On August 16 2025 18:34 Magic Powers wrote:On August 16 2025 18:09 RvB wrote:On August 16 2025 16:40 Magic Powers wrote:On August 16 2025 14:54 RvB wrote:On August 16 2025 07:13 Yurie wrote:
Isn't the problem with most mega cities the rules? All the best land is taken and it is VERY hard to buy, tear down and build something larger on a lot. Or even building something new in an area that doesn't have a building on it already.
So you end up with areas far out that are worth less, where you have to extend the public transport network and it thus becomes a mega project. And people don't want to live that far out of the city, meaning rent can't be high enough to finance the project. Perhaps letting the public transport network finance it as a total project might work, kind of how Japanese train networks are just enablers for their land ownership (a bit exaggerated).
This leaves you with a few options I can think of directly, likely there are more.
1- Assume that with the rules you have rents will never get high enough to fix the problem. This doesn't seem very nice to somebody living there since costs will keep climbing until rent is 50%+ of income. Thus a popular politician imposes rent control sooner or later.
2- Assume rent can climb high enough that it is worth it for people to add to the city housing. In that case doing nothing likely works out better.
3- Change the rules so the cost of a new project decreases and 2 becomes more likely.
4- Do it as the city, as you control the rules and have the problem you finance more housing until you hit the level you think is right for the city.
One factor is that a lot of construction in many countries is built for sale and not rent. That can offset high costs to a certain degree. But even that has a maximum it will support. It's both. Excessive zoning regulation and rent control increase rent. There's no real support for rent control amongst economists. See for example these polls. Some responses have comments as well. Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.
Strongly agree: 0%
Agree: 2%
Uncertain: 7%
Disagree: 49%
Strongly disagree: 32%
No opinion: 2%
Did not answer: 7%
Richard Thalers comment says it all: Disagree
Next questions: does the sun revolve around the earth. Question A:
Capping annual rent increases by corporate landlords at 5%, as proposed by President Biden, would make middle-income Americans substantially better off over the next ten years.
Strongly agree: 0%
Agree: 2%
Uncertain: 16%
Disagree: 58%
Strongly disagree: 16%
No opinion: 0%
Did not answer: 9%
Question B:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce the amount of available apartments for rent over the next ten years.
Strongly agree: 18%
Agree: 44%
Uncertain: 22%
Disagree: 4%
Strongly disagree: 2%
No opinion: 0%
Did not answer: 9%
Question C:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce US income inequality over the next ten years.
Strongly agree: 0%
Agree: 0%
Uncertain: 22%
Disagree: 53%
Strongly disagree: 13%
No opinion: 2%
Did not answer: 9% There is no consensus like that among economists. The overall benefit of rent control (in a vacuum) is inconclusive. 5. Conclusion
In this study, I examine a wide range of empirical studies on rent control published in referred journals between 1967 and 2023. I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. These unintended effects counteract the desired effect, thus, diminishing the net benefit of rent control. Therefore, the overall impact of rent control policy on the welfare of society is not clear.
Moreover, the analysis is further complicated by the fact that rent control is not adopted in a vacuum. Simultaneously, other housing policies — such as the protection of tenants from eviction, housing rationing, housing allowances, and stimulation of residential construction (Kholodilin 2017; Kholodilin 2020; Kholodilin et al., 2021) — are implemented. Further, banking, climate, and fiscal policies can also affect the results of rent control regulations. https://www.sciencedirect.com/science/article/pii/S1051137724000020Especially the second sentence is key: I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. The primary benefit is that of affordability in controlled housing. This finding is simply true and not in dispute. Drawbacks are: - Higher rent in uncontrolled housing If new housing is built for controlled rent, I don't see how this is an overall problem. I'll address this point a few more times. - Lower mobility This has pros and cons, and in a vacuum it would be an overall drawback. However, with good policy it becomes a non-issue. Families' needs can be met by continuously building new housing so they have incentive to move wherever they please. In Vienna this works just fine. Workers and the lower class have sufficient mobility. The middle class is fine, since they can afford more expensive housing. That's how things should work anyway. Goal accomplished. So this is a very simple problem with a very simple solution. - Reduced residential construction This reveals the stupidity of the simplistic claim that rent control is bad. Yes, in a vacuum it's bad. But good policy doesn't exist in a vacuum. Creation of new housing solves much if not the whole problem. So it's fairly obvious that nothing is obvious to the economists. If any economist claims that there's a clear consensus against rent control among their peers, they're lying. There is a consensus. I've just linked the polls to you. The study you quote has the same conclusions. I've you had actually read it you'd see that it cites no empirical literature on net welfare. The rest of your argument is basically that rent control is bad but if you build enough housing it's fine. You know what other problem more housing solves? Higher rents! Rent control is implemented to lower rents compared to the market price. The effects become worse the larger the difference between market rents and controlled rents. If you bring the market price more in line with controlled rents then the negative effects also become less. At the same time that also reduces the need for rent control in the first place. So yes, your conclusion that building more housing helps solve much of the issues of rent control is correct. It's also meaningless if we want to judge its effectiveness as a policy. More housing is generally a good idea, but it's especially good with rent control. The only part of the housing market that loses out is the private one, which becomes more expensive. I don't see why lower classes should care about that when there are enough homes they can move to at an affordable cost. That's what rent control does. It allows for the additional homes to be immediately affordable and to remain affordable. If the additional homes are privately owned, there is no rent control, and lower classes can't afford them. There are currently no known solutions for affordability other than rent control. It's literally one the best solutions out there. The fact that - in a vacuum - it introduces a problem is completely irrelevant. The main problem is solved with a continuous construction of homes, and other problems are solved with other policies. Many policies don't work in a vacuum but they do work in the right context. This is not a new revelation. No, the private part of the housing market is not the only one that loses out. As per your own source it reduces mobility and reduces housing quality. It's not even clear if renters benefit in the long term as they'll forgo better work opportunities if it does not raise their income enough to make the move out of a rent controlled appartment worth it. That will then mean forgoing additional promotions in the future. I can see how building more housing can solve some of the problems with mobility but you're introducing new ones at the same time. Since rent controlled housing has by definition a below market rate any renter would want one. So you either need to ration or build enough to house them all. Rationing means waiting lists with the state deciding who is lucky enough to live in rent controlled housing, building more subsidised housing is costly leaving less money for other spending. And then the state also needs to know where and what housing to build. The lower class should certainly care about rising prices in the private market. Poor people usually don't want to stay poor. As some of them escape poverty they'll have to compete in the same private housing market. The non-poor part of the population is also the part of the population that funds the welfare state. Without them there's no subsidised housing for the poor. There's a clear incentive to make sure they keep supporting said welfare state. Unnecessarily increasing their housing prices is not a good way to do that. That there is no other solution for affordability is completely false. The solution is to make it easier to build housing by reducing zoning constraints and decreasing housing subsidies that increase demand while doing nothing for supply like rent control and the mortgage interest rate deduction. On August 16 2025 21:43 Magic Powers wrote:On August 16 2025 18:48 Gorsameth wrote:On August 16 2025 18:34 Magic Powers wrote:On August 16 2025 18:09 RvB wrote:On August 16 2025 16:40 Magic Powers wrote:On August 16 2025 14:54 RvB wrote:[quote] It's both. Excessive zoning regulation and rent control increase rent. There's no real support for rent control amongst economists. See for example these polls. Some responses have comments as well. [quote] Richard Thalers comment says it all: [quote] [quote] There is no consensus like that among economists. The overall benefit of rent control (in a vacuum) is inconclusive. 5. Conclusion
In this study, I examine a wide range of empirical studies on rent control published in referred journals between 1967 and 2023. I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. These unintended effects counteract the desired effect, thus, diminishing the net benefit of rent control. Therefore, the overall impact of rent control policy on the welfare of society is not clear.
Moreover, the analysis is further complicated by the fact that rent control is not adopted in a vacuum. Simultaneously, other housing policies — such as the protection of tenants from eviction, housing rationing, housing allowances, and stimulation of residential construction (Kholodilin 2017; Kholodilin 2020; Kholodilin et al., 2021) — are implemented. Further, banking, climate, and fiscal policies can also affect the results of rent control regulations. https://www.sciencedirect.com/science/article/pii/S1051137724000020Especially the second sentence is key: I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. The primary benefit is that of affordability in controlled housing. This finding is simply true and not in dispute. Drawbacks are: - Higher rent in uncontrolled housing If new housing is built for controlled rent, I don't see how this is an overall problem. I'll address this point a few more times. - Lower mobility This has pros and cons, and in a vacuum it would be an overall drawback. However, with good policy it becomes a non-issue. Families' needs can be met by continuously building new housing so they have incentive to move wherever they please. In Vienna this works just fine. Workers and the lower class have sufficient mobility. The middle class is fine, since they can afford more expensive housing. That's how things should work anyway. Goal accomplished. So this is a very simple problem with a very simple solution. - Reduced residential construction This reveals the stupidity of the simplistic claim that rent control is bad. Yes, in a vacuum it's bad. But good policy doesn't exist in a vacuum. Creation of new housing solves much if not the whole problem. So it's fairly obvious that nothing is obvious to the economists. If any economist claims that there's a clear consensus against rent control among their peers, they're lying. There is a consensus. I've just linked the polls to you. The study you quote has the same conclusions. I've you had actually read it you'd see that it cites no empirical literature on net welfare. The rest of your argument is basically that rent control is bad but if you build enough housing it's fine. You know what other problem more housing solves? Higher rents! Rent control is implemented to lower rents compared to the market price. The effects become worse the larger the difference between market rents and controlled rents. If you bring the market price more in line with controlled rents then the negative effects also become less. At the same time that also reduces the need for rent control in the first place. So yes, your conclusion that building more housing helps solve much of the issues of rent control is correct. It's also meaningless if we want to judge its effectiveness as a policy. More housing is generally a good idea, but it's especially good with rent control. The only part of the housing market that loses out is the private one, which becomes more expensive. I don't see why lower classes should care about that when there are enough homes they can move to at an affordable cost. That's what rent control does. It allows for the additional homes to be immediately affordable and to remain affordable. If the additional homes are privately owned, there is no rent control, and lower classes can't afford them. There are currently no known solutions for affordability other than rent control. It's literally one the best solutions out there. The fact that - in a vacuum - it introduces a problem is completely irrelevant. The main problem is solved with a continuous construction of homes, and other problems are solved with other policies. Many policies don't work in a vacuum but they do work in the right context. This is not a new revelation. But then is the solution rent control or is it just market saturation? You say rent control works if there are so many houses on the market that anyone can find one. Wouldn't the normal housing market also self correct back into affordability if the market was flush with houses, naturally bringing prices down as supply exceeds demand? The problem in both cases is enticing companies to keep building houses when they make less profit off of them. That and not getting voted out of office by all the home owners who see the value of their house plummet. The latter might well be the entire core issue around the world, the haves (those who own homes) benefitting from ever increasing housing prices and not being willing to take a hit to help the have nots. Leaving housing construction to the free market drives up housing cost because it's a lot more profitable to raise rent than to build more homes, which also perversely orients the incentivize towards less construction and creates a feedback loop of rising rental cost. Building homes costs a large amount of money, it's more of a hassle due to construction guidelines, it's overall also a riskier investment, whereas raising rent for the next renter (even when including expensive refurbishment) costs much less money and carries much less risk. This can can even completely hyper-inflate the cost of homes depending on how greedy the owners are. And that's only the most obvious of the problems resulting from free market housing. There is a place for free market housing, but it can't serve the lower classes. People who argue that rent control is bad in the long run should research the impact of the free market in the long run. It's a lot worse. This makes no logical sense. The market value of a rental property is the discounted cash flow of the house. An increase in rent will increase that market value. It won't change the cost to build one. Increasing rents will then increase the incentive to build more housing since it'll push the market value above building costs (including the profit) at the margin. Often developers are not allowed to build these housing units though. In NYC it costs around $350 USD per square foot to build one single apartment. A new apartment is around 700 square feet (65 m²). That means the construction of one apartment costs roughly 250 000 USD. This is why raising rent is far more profitable than building new homes. The latter serves primarily the people, whereas landlords primarily benefit from increased rent and not from construction. They're happy to refurbish homes or remodel existing property. But they're not generally in the business of constructing new homes. This is especially true because construction of more homes = lower average rent, just as I explained. The incentive for homes to be built is almost exclusively in the hands of renters. You'll rarely see the point where additional construction for lower classes is beneficial for landlords. Lower classes don't have the assets to pay for expensive apartments and therefore there's very little profit to be made in construction. This is why the model of state-controlled construction exists to begin with. It's absolutely necessary so all the families have a place to live. Otherwise people would literally have to build their own homes because nobody else is going to do it for them. That's where the housing crisis stems from. Landlords don't build housing. Developers do. Your observation that it's easier to raise prices than build new stuff would be true in any market. That's not the way to maximize profits. For instance, a monopolist won't just raise prices. They'll pick the price that leads to sales that maximize their profits. In the case of housing there's no monopoly and there can be new entrants into the market. Even if for current landlords raising the price might be best there can always be others that go to the developer to build the housing. As I explained in my last post an increase in rents will be an incentive for other landlords to enter the market. Unless it's illegal to build which it often is. Thats the real problem. It's not a coincidence that in cities where it's easiest to build rents rise least. There's also little reason why private developers can't serve the lower end of the market. It's like saying that Primark can't exist because Gucci sells the clothes with a high margin. Even low margin products can become profitable. Unless clothes are rationed. Then producers would first produce the products with the highest margin and Primark would not exist. Sounds very similar to the housing market don't you think? Where one of the complaints is that we only see high margin housing built. I think most of the arguments have been made so I'm going to take Acrofales advice and leave it at this. Construction companies don't profit very much from building homes for lower classes. For the sake of profit they prefer to build for rich people who can afford to invest into/buy their project. If a construction company wants to make any profit dealing with lower class people, the investment would have to come from rich people, because the lower classes don't have money to pay for construction, but upper classes do. Who's going to pay for that willingly? Nobody will. Only the city will do that through taxation. Lower classes need an affordable home to live in, preferably not too far from work/school. But they can't afford paying for the construction of these homes. Can the middle class afford to pay for the construction of new homes? Perhaps to some degree. The middle class has bigger assets, I don't think all of them can invest hundreds of thousands into a new home, but many can. They can buy or rent homes - but if they buy, they do it for themselves, not for the lower classes. On the other side you have landlords. They definitely profit from the rent for lower classes. They don't need rich customers, they can just raise the rent because there are plenty of middle class people capable of paying it. That's because renting and buying are very different things, as I explained above many middle class people can't afford to invest into construction, but they can afford higher rent. So that's exactly what they get, higher rent from greedy landlords. Therefore average rent increases also for the lower class, fewer homes become affordable, and more construction is required, which the lower class can't afford. Therefore the city steps in and says we need to invest into more homes for the lower class. The city is responsible for that construction because nobody else would willfully do it for them. Cue Mamdani who has figured out which exact set of policies to enact. Cuomo is clearly more interested in power and doesn't care much about the lower class. Also, I find it kinda baffling that you're pushing back so hard against Mamdani's model, when it's a proven model here in Vienna for the last 100 years - and I'd assume it's also been working in a number of other cities, although I'd first have to research which ones those are. Or maybe you do agree with his model, but choose not to communicate that?
I don't know why you keep bringing up Vienna's Rent Control, when the main thing that seems to be keeping house prices in Vienna is the extremely liberal approach to building. There's barely any zoning, and the government subsidizes a large number of small flats in large buildings. There's also strong tenant protection laws which encourage indefinite duration and rules on annual rent increases. That has nothing to do with rent control. Yes, they also have rent control, but plenty of economists have argued Vienna's housing market would still work without rent control. And some argue that Vienna's housing works *despite* its rent control, because the supply side is so well organized, and that rent control hampers it, but not enough to matter as long as there's continuous development happening.
Is attacking Mandani for living in a rent controlled flat idiotic? Yes. Obviously. His answer should be: I was lucky enough to find a rent controlled flat. The housing market in NYC is out of control and we can't all be millionaires like my opponent, Mr Cuomo. Yes, I was lucky and got a rent controlled flat, but my policy is to make housing affordable for all New Yorkers and here is how I'll do it!
Meanwhile if Cuomo were to attack him on the fact that rent control doesn't work and is a patch that makes things worse long-term, then maybe that's a weak part of his housing plan and maybe it is a necessary patch to tide things over until the longer-term aspects of the Vienna-inspired plan come into action, but the main part of that is to build far more houses. Whether that is possible in one of the densest cities in developed nations, I don't know. Vienna has roughly half of NYC's population density. For similar reasons, Vienna's approach would be hard to apply to Paris or Barcelona: the density means there is already not that much land left on which to build. So... just expand, you say. Just density surrounding towns. Like Guttenberg or Union City. Unfortunately that has *also* already been done and their densities are among the highest in the world. Just like Le Pre-Saint Gervais (Paris), or L'Hospitalet de Llobregat (Barcelona). There's nowhere to go but upwards. And you'll note that NYC already tried that one too!
The Vienna model is beautiful. I'm sure there are lessons even far denser cities can learn from it. But clearly just building more flats is not going to be the solution in places where the housing density is already twice as high as Vienna, so just adopting that model is not actually going to work for NYC.
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On August 17 2025 18:29 Acrofales wrote:Show nested quote +On August 17 2025 17:25 Magic Powers wrote:On August 17 2025 16:28 RvB wrote:On August 17 2025 03:45 Magic Powers wrote:On August 16 2025 22:42 RvB wrote:On August 16 2025 18:34 Magic Powers wrote:On August 16 2025 18:09 RvB wrote:On August 16 2025 16:40 Magic Powers wrote:On August 16 2025 14:54 RvB wrote:On August 16 2025 07:13 Yurie wrote:
Isn't the problem with most mega cities the rules? All the best land is taken and it is VERY hard to buy, tear down and build something larger on a lot. Or even building something new in an area that doesn't have a building on it already.
So you end up with areas far out that are worth less, where you have to extend the public transport network and it thus becomes a mega project. And people don't want to live that far out of the city, meaning rent can't be high enough to finance the project. Perhaps letting the public transport network finance it as a total project might work, kind of how Japanese train networks are just enablers for their land ownership (a bit exaggerated).
This leaves you with a few options I can think of directly, likely there are more.
1- Assume that with the rules you have rents will never get high enough to fix the problem. This doesn't seem very nice to somebody living there since costs will keep climbing until rent is 50%+ of income. Thus a popular politician imposes rent control sooner or later.
2- Assume rent can climb high enough that it is worth it for people to add to the city housing. In that case doing nothing likely works out better.
3- Change the rules so the cost of a new project decreases and 2 becomes more likely.
4- Do it as the city, as you control the rules and have the problem you finance more housing until you hit the level you think is right for the city.
One factor is that a lot of construction in many countries is built for sale and not rent. That can offset high costs to a certain degree. But even that has a maximum it will support. It's both. Excessive zoning regulation and rent control increase rent. There's no real support for rent control amongst economists. See for example these polls. Some responses have comments as well. Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.
Strongly agree: 0%
Agree: 2%
Uncertain: 7%
Disagree: 49%
Strongly disagree: 32%
No opinion: 2%
Did not answer: 7%
Richard Thalers comment says it all: Disagree
Next questions: does the sun revolve around the earth. Question A:
Capping annual rent increases by corporate landlords at 5%, as proposed by President Biden, would make middle-income Americans substantially better off over the next ten years.
Strongly agree: 0%
Agree: 2%
Uncertain: 16%
Disagree: 58%
Strongly disagree: 16%
No opinion: 0%
Did not answer: 9%
Question B:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce the amount of available apartments for rent over the next ten years.
Strongly agree: 18%
Agree: 44%
Uncertain: 22%
Disagree: 4%
Strongly disagree: 2%
No opinion: 0%
Did not answer: 9%
Question C:
Capping annual rent increases at 5%, as proposed by President Biden, would substantially reduce US income inequality over the next ten years.
Strongly agree: 0%
Agree: 0%
Uncertain: 22%
Disagree: 53%
Strongly disagree: 13%
No opinion: 2%
Did not answer: 9% There is no consensus like that among economists. The overall benefit of rent control (in a vacuum) is inconclusive. 5. Conclusion
In this study, I examine a wide range of empirical studies on rent control published in referred journals between 1967 and 2023. I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. These unintended effects counteract the desired effect, thus, diminishing the net benefit of rent control. Therefore, the overall impact of rent control policy on the welfare of society is not clear.
Moreover, the analysis is further complicated by the fact that rent control is not adopted in a vacuum. Simultaneously, other housing policies — such as the protection of tenants from eviction, housing rationing, housing allowances, and stimulation of residential construction (Kholodilin 2017; Kholodilin 2020; Kholodilin et al., 2021) — are implemented. Further, banking, climate, and fiscal policies can also affect the results of rent control regulations. https://www.sciencedirect.com/science/article/pii/S1051137724000020Especially the second sentence is key: I conclude that, although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. The primary benefit is that of affordability in controlled housing. This finding is simply true and not in dispute. Drawbacks are: - Higher rent in uncontrolled housing If new housing is built for controlled rent, I don't see how this is an overall problem. I'll address this point a few more times. - Lower mobility This has pros and cons, and in a vacuum it would be an overall drawback. However, with good policy it becomes a non-issue. Families' needs can be met by continuously building new housing so they have incentive to move wherever they please. In Vienna this works just fine. Workers and the lower class have sufficient mobility. The middle class is fine, since they can afford more expensive housing. That's how things should work anyway. Goal accomplished. So this is a very simple problem with a very simple solution. - Reduced residential construction This reveals the stupidity of the simplistic claim that rent control is bad. Yes, in a vacuum it's bad. But good policy doesn't exist in a vacuum. Creation of new housing solves much if not the whole problem. So it's fairly obvious that nothing is obvious to the economists. If any economist claims that there's a clear consensus against rent control among their peers, they're lying. There is a consensus. I've just linked the polls to you. The study you quote has the same conclusions. I've you had actually read it you'd see that it cites no empirical literature on net welfare. The rest of your argument is basically that rent control is bad but if you build enough housing it's fine. You know what other problem more housing solves? Higher rents! Rent control is implemented to lower rents compared to the market price. The effects become worse the larger the difference between market rents and controlled rents. If you bring the market price more in line with controlled rents then the negative effects also become less. At the same time that also reduces the need for rent control in the first place. So yes, your conclusion that building more housing helps solve much of the issues of rent control is correct. It's also meaningless if we want to judge its effectiveness as a policy. More housing is generally a good idea, but it's especially good with rent control. The only part of the housing market that loses out is the private one, which becomes more expensive. I don't see why lower classes should care about that when there are enough homes they can move to at an affordable cost. That's what rent control does. It allows for the additional homes to be immediately affordable and to remain affordable. If the additional homes are privately owned, there is no rent control, and lower classes can't afford them. There are currently no known solutions for affordability other than rent control. It's literally one the best solutions out there. The fact that - in a vacuum - it introduces a problem is completely irrelevant. The main problem is solved with a continuous construction of homes, and other problems are solved with other policies. Many policies don't work in a vacuum but they do work in the right context. This is not a new revelation. No, the private part of the housing market is not the only one that loses out. As per your own source it reduces mobility and reduces housing quality. It's not even clear if renters benefit in the long term as they'll forgo better work opportunities if it does not raise their income enough to make the move out of a rent controlled appartment worth it. That will then mean forgoing additional promotions in the future. I can see how building more housing can solve some of the problems with mobility but you're introducing new ones at the same time. Since rent controlled housing has by definition a below market rate any renter would want one. So you either need to ration or build enough to house them all. Rationing means waiting lists with the state deciding who is lucky enough to live in rent controlled housing, building more subsidised housing is costly leaving less money for other spending. And then the state also needs to know where and what housing to build. The lower class should certainly care about rising prices in the private market. Poor people usually don't want to stay poor. As some of them escape poverty they'll have to compete in the same private housing market. The non-poor part of the population is also the part of the population that funds the welfare state. Without them there's no subsidised housing for the poor. There's a clear incentive to make sure they keep supporting said welfare state. Unnecessarily increasing their housing prices is not a good way to do that. That there is no other solution for affordability is completely false. The solution is to make it easier to build housing by reducing zoning constraints and decreasing housing subsidies that increase demand while doing nothing for supply like rent control and the mortgage interest rate deduction. On August 16 2025 21:43 Magic Powers wrote:On August 16 2025 18:48 Gorsameth wrote:On August 16 2025 18:34 Magic Powers wrote:On August 16 2025 18:09 RvB wrote:On August 16 2025 16:40 Magic Powers wrote:[quote] There is no consensus like that among economists. The overall benefit of rent control (in a vacuum) is inconclusive. [quote] https://www.sciencedirect.com/science/article/pii/S1051137724000020Especially the second sentence is key: [quote] The primary benefit is that of affordability in controlled housing. This finding is simply true and not in dispute. Drawbacks are: - Higher rent in uncontrolled housing If new housing is built for controlled rent, I don't see how this is an overall problem. I'll address this point a few more times. - Lower mobility This has pros and cons, and in a vacuum it would be an overall drawback. However, with good policy it becomes a non-issue. Families' needs can be met by continuously building new housing so they have incentive to move wherever they please. In Vienna this works just fine. Workers and the lower class have sufficient mobility. The middle class is fine, since they can afford more expensive housing. That's how things should work anyway. Goal accomplished. So this is a very simple problem with a very simple solution. - Reduced residential construction This reveals the stupidity of the simplistic claim that rent control is bad. Yes, in a vacuum it's bad. But good policy doesn't exist in a vacuum. Creation of new housing solves much if not the whole problem. So it's fairly obvious that nothing is obvious to the economists. If any economist claims that there's a clear consensus against rent control among their peers, they're lying. There is a consensus. I've just linked the polls to you. The study you quote has the same conclusions. I've you had actually read it you'd see that it cites no empirical literature on net welfare. The rest of your argument is basically that rent control is bad but if you build enough housing it's fine. You know what other problem more housing solves? Higher rents! Rent control is implemented to lower rents compared to the market price. The effects become worse the larger the difference between market rents and controlled rents. If you bring the market price more in line with controlled rents then the negative effects also become less. At the same time that also reduces the need for rent control in the first place. So yes, your conclusion that building more housing helps solve much of the issues of rent control is correct. It's also meaningless if we want to judge its effectiveness as a policy. More housing is generally a good idea, but it's especially good with rent control. The only part of the housing market that loses out is the private one, which becomes more expensive. I don't see why lower classes should care about that when there are enough homes they can move to at an affordable cost. That's what rent control does. It allows for the additional homes to be immediately affordable and to remain affordable. If the additional homes are privately owned, there is no rent control, and lower classes can't afford them. There are currently no known solutions for affordability other than rent control. It's literally one the best solutions out there. The fact that - in a vacuum - it introduces a problem is completely irrelevant. The main problem is solved with a continuous construction of homes, and other problems are solved with other policies. Many policies don't work in a vacuum but they do work in the right context. This is not a new revelation. But then is the solution rent control or is it just market saturation? You say rent control works if there are so many houses on the market that anyone can find one. Wouldn't the normal housing market also self correct back into affordability if the market was flush with houses, naturally bringing prices down as supply exceeds demand? The problem in both cases is enticing companies to keep building houses when they make less profit off of them. That and not getting voted out of office by all the home owners who see the value of their house plummet. The latter might well be the entire core issue around the world, the haves (those who own homes) benefitting from ever increasing housing prices and not being willing to take a hit to help the have nots. Leaving housing construction to the free market drives up housing cost because it's a lot more profitable to raise rent than to build more homes, which also perversely orients the incentivize towards less construction and creates a feedback loop of rising rental cost. Building homes costs a large amount of money, it's more of a hassle due to construction guidelines, it's overall also a riskier investment, whereas raising rent for the next renter (even when including expensive refurbishment) costs much less money and carries much less risk. This can can even completely hyper-inflate the cost of homes depending on how greedy the owners are. And that's only the most obvious of the problems resulting from free market housing. There is a place for free market housing, but it can't serve the lower classes. People who argue that rent control is bad in the long run should research the impact of the free market in the long run. It's a lot worse. This makes no logical sense. The market value of a rental property is the discounted cash flow of the house. An increase in rent will increase that market value. It won't change the cost to build one. Increasing rents will then increase the incentive to build more housing since it'll push the market value above building costs (including the profit) at the margin. Often developers are not allowed to build these housing units though. In NYC it costs around $350 USD per square foot to build one single apartment. A new apartment is around 700 square feet (65 m²). That means the construction of one apartment costs roughly 250 000 USD. This is why raising rent is far more profitable than building new homes. The latter serves primarily the people, whereas landlords primarily benefit from increased rent and not from construction. They're happy to refurbish homes or remodel existing property. But they're not generally in the business of constructing new homes. This is especially true because construction of more homes = lower average rent, just as I explained. The incentive for homes to be built is almost exclusively in the hands of renters. You'll rarely see the point where additional construction for lower classes is beneficial for landlords. Lower classes don't have the assets to pay for expensive apartments and therefore there's very little profit to be made in construction. This is why the model of state-controlled construction exists to begin with. It's absolutely necessary so all the families have a place to live. Otherwise people would literally have to build their own homes because nobody else is going to do it for them. That's where the housing crisis stems from. Landlords don't build housing. Developers do. Your observation that it's easier to raise prices than build new stuff would be true in any market. That's not the way to maximize profits. For instance, a monopolist won't just raise prices. They'll pick the price that leads to sales that maximize their profits. In the case of housing there's no monopoly and there can be new entrants into the market. Even if for current landlords raising the price might be best there can always be others that go to the developer to build the housing. As I explained in my last post an increase in rents will be an incentive for other landlords to enter the market. Unless it's illegal to build which it often is. Thats the real problem. It's not a coincidence that in cities where it's easiest to build rents rise least. There's also little reason why private developers can't serve the lower end of the market. It's like saying that Primark can't exist because Gucci sells the clothes with a high margin. Even low margin products can become profitable. Unless clothes are rationed. Then producers would first produce the products with the highest margin and Primark would not exist. Sounds very similar to the housing market don't you think? Where one of the complaints is that we only see high margin housing built. I think most of the arguments have been made so I'm going to take Acrofales advice and leave it at this. Construction companies don't profit very much from building homes for lower classes. For the sake of profit they prefer to build for rich people who can afford to invest into/buy their project. If a construction company wants to make any profit dealing with lower class people, the investment would have to come from rich people, because the lower classes don't have money to pay for construction, but upper classes do. Who's going to pay for that willingly? Nobody will. Only the city will do that through taxation. Lower classes need an affordable home to live in, preferably not too far from work/school. But they can't afford paying for the construction of these homes. Can the middle class afford to pay for the construction of new homes? Perhaps to some degree. The middle class has bigger assets, I don't think all of them can invest hundreds of thousands into a new home, but many can. They can buy or rent homes - but if they buy, they do it for themselves, not for the lower classes. On the other side you have landlords. They definitely profit from the rent for lower classes. They don't need rich customers, they can just raise the rent because there are plenty of middle class people capable of paying it. That's because renting and buying are very different things, as I explained above many middle class people can't afford to invest into construction, but they can afford higher rent. So that's exactly what they get, higher rent from greedy landlords. Therefore average rent increases also for the lower class, fewer homes become affordable, and more construction is required, which the lower class can't afford. Therefore the city steps in and says we need to invest into more homes for the lower class. The city is responsible for that construction because nobody else would willfully do it for them. Cue Mamdani who has figured out which exact set of policies to enact. Cuomo is clearly more interested in power and doesn't care much about the lower class. Also, I find it kinda baffling that you're pushing back so hard against Mamdani's model, when it's a proven model here in Vienna for the last 100 years - and I'd assume it's also been working in a number of other cities, although I'd first have to research which ones those are. Or maybe you do agree with his model, but choose not to communicate that? I don't know why you keep bringing up Vienna's Rent Control, when the main thing that seems to be keeping house prices in Vienna is the extremely liberal approach to building. There's barely any zoning, and the government subsidizes a large number of small flats in large buildings. There's also strong tenant protection laws which encourage indefinite duration and rules on annual rent increases. That has nothing to do with rent control. Yes, they also have rent control, but plenty of economists have argued Vienna's housing market would still work without rent control. And some argue that Vienna's housing works *despite* its rent control, because the supply side is so well organized, and that rent control hampers it, but not enough to matter as long as there's continuous development happening. Is attacking Mandani for living in a rent controlled flat idiotic? Yes. Obviously. His answer should be: I was lucky enough to find a rent controlled flat. The housing market in NYC is out of control and we can't all be millionaires like my opponent, Mr Cuomo. Yes, I was lucky and got a rent controlled flat, but my policy is to make housing affordable for all New Yorkers and here is how I'll do it! Meanwhile if Cuomo were to attack him on the fact that rent control doesn't work and is a patch that makes things worse long-term, then maybe that's a weak part of his housing plan and maybe it is a necessary patch to tide things over until the longer-term aspects of the Vienna-inspired plan come into action, but the main part of that is to build far more houses. Whether that is possible in one of the densest cities in developed nations, I don't know. Vienna has roughly half of NYC's population density. For similar reasons, Vienna's approach would be hard to apply to Paris or Barcelona: the density means there is already not that much land left on which to build. So... just expand, you say. Just density surrounding towns. Like Guttenberg or Union City. Unfortunately that has *also* already been done and their densities are among the highest in the world. Just like Le Pre-Saint Gervais (Paris), or L'Hospitalet de Llobregat (Barcelona). There's nowhere to go but upwards. And you'll note that NYC already tried that one too! The Vienna model is beautiful. I'm sure there are lessons even far denser cities can learn from it. But clearly just building more flats is not going to be the solution in places where the housing density is already twice as high as Vienna, so just adopting that model is not actually going to work for NYC.
We have more than just rent control in Vienna, but it's a big part of the public housing model. Non-profit housing here is baked into society. We can't imagine life without it. Mamdani also wants more than just rent control and more housing construction (with a focus on low-income families). For example he proposes a guarantee for rewened leasing. Also subsidization of housing for families at risk of eviction. Increased taxation on corporations and the upper class (to fund the housing program).
That model is very similar to that of Vienna. Rent control is just part of the whole. Tenant protection is clearly another part of his proposal.
Would Vienna's model work without rent control? Maybe, but why take the gamble? It doesn't make sense to risk that. The model has worked for so long and it continues to work. There are only downsides to making such a radical change.
People who claim that rent control is not among the best policies never have a proposal for better policies. They don't seem to understand the model and to me their criticism looks baseless.
Saying it can work without rent control is like saying climbing a mountain can work without safety ropes. Yeah, sure it can. But what's the point? There are no downsides to safety ropes unless you use a shitty old worn out rope. Use a good well-made rope and you'll be doing perfectly fine.
I forgot to address the space issue: NYC has a lot of empty office space just sitting and waiting idly. This space should be used to create housing. NYC isn't going to run out of living space. Smart policies can remedy the issues. I don't see how the difference in population density makes Mamdani's proposal uninteresting or unworkable. The concept works regardless, it just requires an understanding of the distinct challenges in NYC.
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You don't need to point fingers at any housing market in "western industrialized" countries.
They are all shit.
Globaly the ultra-rich have taken 50% of the "Middleclass" assets and income oppurtunities since the 1970ties.
Reagan started the idea, Thatcher copied it.. and even Kohl forced "trickle down" on all of germany when it was recovering from the economic collapse of socialist GDR.
Rent is stable, if more people own real estate. But you can't hold or aquire assets like real estate, when the prices suddenly double in 5 years and wages don't - that's a bullride that throws financial lightweight people just off.
The middle class is bleeding off assets - banks and ultra-wealthy gobble them up to rent them back.
Suddenly meeting the demand for housing isn't as lucrative as keeping the supply low to increase the prices.
In germany completed housing units since 1950 on average were 1 per 100 households (400K to 40M) per year.
Covid exploded the GREEEEEED along supply chains, everyhting got more expensive, because scarcity was "believable" and markets were consolidated enough.. ownership of realestate consolidates in the top 20%.. and now we only build less than 0.5 new housingunits per 100 housholds.
Despite having an influx of 6 Million refugees from Afghanistan, Syria and Ukraine, who all need housing to start a new (temporary?) life in safety.
Boomers here rather live in their 200m² homes on 2000m² property for the yearly real-estate tax off 1500€ .. then pay 1500€ in Rent/mo for a smaller more modern 80m² appartment.
Which is understandable, at the same time, those boomers decided in 2008 (amidst the sub prime mortage crisis) to violently cut the developement of new building areas to "stabilize the prices" - Germany would have had 10% more area to build stuff, if they didn't get spooked.
But the bottom line is the same: If you don't tax the rich, the middle class will get priced out of assets, will have to rent the assets back, and pay more.
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And to make matters worse, Germany is in a way better situation, the middle class is bigger then in the USA, despite it falling from 65 % to 63 %.
As a contrast, USA is estimated to be around 50-52 %, and it's still shrinking. 50 % is the size of the middle class in the economically one of the worse off EU members, Bulgaria.
The asset owning class is eating away at the middle class and on top of that, in the USA they are now actively sucking up everything else by cutting social services and putting extra consumption taxes in the form of Tariffs. The post COVID greed-flation is a huge transfer of wealth that came at the heels of another one from the 2008 crises, it drives me insane that the media basically never mentions any of this and pushes "supply chains" and other bullshit explanations while posting updates on how Bezos, Musk and Zuckerberg 3-5 x-ed their already insane wealth.
And those fucks are just the tip of the iceberg.
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They clearly don't care about the safety of children:
"Notably, the report does not mention the leading causes of death for American children, which are firearms and motor vehicle accidents. Cancer, another top killer, is only mentioned in the context of pushing new AI technologies at the National Institutes of Health. Poisonings, another top killer, are also not mentioned explicitly.
While the importance of water quality is raised in the report, it's only in the context of fluoride and not of any other key contaminants, such as lead or PFAS."
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I loved in Sweden, where there was rent control, and I absolutely hated it. If the supply is lower than the demand and you force the rent down, first hand rental contracts became extremely valuable. You got into absurd situations where no one would ever let go of their contracts, and 2nd, 3rd and even up to 5th hand rental became normal. Each of these would add a little bit for themselves. Sure, the rent was great if you could get a contract, but that was outright impossible. Navigating and entering the rental market was extremely messy, and not very cheap.
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Now wait a minute. It's the "Make Our Children Healthy Again Strategy." It's not the keep every single child alive so they can die of heart disease, diabetes, and morbid obesity safely when they reach adulthood.
Article is pulling nonsense rhetorical tricks. Poisoning isn't mentioned "explicitly?" Poisoning in that sense is like when a kid drinks draino and dies. Nobody is for that. The report is how to stop people from ingesting things constantly that make them chronically unhealthy, in this case kids.
"Children" being shot by guns is largely not a health issue. It's a violence issue. They can be completely healthy up until the point they get shot. Unlike in the adult population, homicide is predominant with guns rather than suicide, under 18. Certainly suicide is a mental health issue and the report does touch on mental health.
But gun violence and car accidents - these are things that are not HHS's job. They can monitor/collect data on deaths but they can't police crime and they can't make roads safer and keep dangerous drivers off the road, like illegal immigrants who get issued CDLs in California and then cause the deaths of families when they make an illegal turn on the highway.
The point of making children healthy is they remain healthy adults. The job of HHS is not to make sure not a single child ever dies. The fact they're proposing things but haven't figured out a way to make sure nobody ever dies, this is misplaced idealism.
So moving past the fact that the report doesn't purport to have a way to stop anyone from ever being shot, drinking draino and dying by accident, or getting killed by a drunk driver in an accident - why not look at the actual things it advocates and see how controversial they are. Why are children unhealthy? Poor diet, chemical exposure, lack of physical activity and chronic stress, and overmedicalization.
Childhood obesity is awful, so that's probably diet and lack of physical activity. Are the generations not successively screen addicted? Who would disagree? So the proposals are promote better food and exercise programs. Seems fine. Chemical exposure - Pharmaceuticals in water, and microplastics. Overmedicalization - US medicates under 18 for mental health at least twice as much as the 2nd highest countries. This is 100% big pharma at work. There is nothing in the DNA of American children that makes them doubly mentally unhealthy as everyone else. Twice the drugs going out doesn't make you twice as healthy.
Water quality - Not "only in the context of fluoride."
Water Quality: EPA and USDA, along with other relevant federal partners, in collaboration with NIH/NIEHS will assess ongoing evaluations of water contaminants and update guidance and prioritizations of certain contaminants appropriately
Contaminants.
Plus a bunch of bureaucratic reworking, reorganizing and streamlining to make sure departments communicate with each other and aren't isolated.
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On August 19 2025 14:30 Slydie wrote:
I loved in Sweden, where there was rent control, and I absolutely hated it. If the supply is lower than the demand and you force the rent down, first hand rental contracts became extremely valuable. You got into absurd situations where no one would ever let go of their contracts, and 2nd, 3rd and even up to 5th hand rental became normal. Each of these would add a little bit for themselves. Sure, the rent was great if you could get a contract, but that was outright impossible. Navigating and entering the rental market was extremely messy, and not very cheap.
Sounds to me like construction of public homes didn't meet demand. Was that the case?
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United States43232 Posts
On August 19 2025 14:40 oBlade wrote:
Article is pulling nonsense rhetorical tricks. Poisoning isn't mentioned "explicitly?" Poisoning in that sense is like when a kid drinks draino and dies. Nobody is for that.
Fun fact, some fundamentalist Christian sects are for that. They call it Miracle Mineral Solution and they believe it cures everything.
https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/doj-press-releases-involving-fda-oci/leader-genesis-ii-church-health-and-healing-who-sold-toxic-bleach-fake-miracle-cure-covid-19-and
They’re popular with the RFK alternative health anti vax no COVID horse worm crowd.
I know that you’d like to believe that they’d draw the line at fighting fluoride, a mineral that has proven repeatedly to be a public health miracle. I’d like to believe that too. I’d like to dismiss out of hand the idea that these people need to be stopped from drinking bleach. But we don’t live in that world, we live in the world where RFK’s alternative science alternative medicine conspiracy Christian nutters are drinking bleach.
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On August 19 2025 16:01 Magic Powers wrote:Show nested quote +On August 19 2025 14:30 Slydie wrote:
I loved in Sweden, where there was rent control, and I absolutely hated it. If the supply is lower than the demand and you force the rent down, first hand rental contracts became extremely valuable. You got into absurd situations where no one would ever let go of their contracts, and 2nd, 3rd and even up to 5th hand rental became normal. Each of these would add a little bit for themselves. Sure, the rent was great if you could get a contract, but that was outright impossible. Navigating and entering the rental market was extremely messy, and not very cheap. Sounds to me like construction of public homes didn't meet demand. Was that the case?
Acrofales was making a similar point. Where would the new homes be built in a city already as dense as NYC?
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On August 19 2025 14:40 oBlade wrote:
Overmedicalization - US medicates under 18 for mental health at least twice as much as the 2nd highest countries. This is 100% big pharma at work. There is nothing in the DNA of American children that makes them doubly mentally unhealthy as everyone else. Twice the drugs going out doesn't make you twice as healthy.
Which medication(s) exactly are of concern if I may ask?
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On August 19 2025 17:32 Magic Powers wrote:Show nested quote +On August 19 2025 14:40 oBlade wrote:
Overmedicalization - US medicates under 18 for mental health at least twice as much as the 2nd highest countries. This is 100% big pharma at work. There is nothing in the DNA of American children that makes them doubly mentally unhealthy as everyone else. Twice the drugs going out doesn't make you twice as healthy. Which medication(s) exactly are of concern if I may ask?
In my experience, Americans medicate themselves at a rate significantly above average, not just children, they just don't see it because it's "normal". The amount of medicine adverts on TV is truly staggering and something that shocked me when I first arrived.
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EPT
