A First For New York City…

A rent freeze

In a 7-2 vote on June 29, the New York City Rent Guidelines Board approved their first ever rent-freeze in the board’s 46-year history. The freeze will apply to one-year rent-stabilized leases, while rents on two-year leases will increase by 2 percent. The decision will affect the nearly one million units of rent-stabilized housing throughout the city.

 

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108 thoughts on “A First For New York City…

    • Can you think of renter friendly and protection policies besides giving landlord’s whatever they want?

      I am not opposed to the idea of having most people be renters but that means there needs to be protection for renters instead of having it be the worst of all possible worlds with non-resident landlords having the power and rights and the residents get nothing.

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      • I don’t know Saul, how many more slums are we talking about cranking out here? How many more loops in the queue around renters court are we adding? How many more new programs?

        If you were considering renting a unit in New York do you think this would make you more likely to rent it out or less? If you were choosing between building luxury housing or larger numbers of lower income housing do you think this would sway your decision in favor of lower income housing?

        I mean, just thought experimenting here, if the landlords could do “whatever they wanted” which I will charitably assume you mean to be “raise rents to market levels” then what would happen. I would expect there’d be a housing crisis and a lot of lower income earners would be forced out of the city… which would mean that businesses would have a hard time finding workers, which I’d presume would mean they’d have to pay workers higher and higher wages to either be able to afford housing or to be willing to commute. And them maybe there’d be a strong enough demand that the historic preservationists and neighborhood NIMBY’s would get overwhelmed and some serious housing would be built. That doesn’t sound like the end of the world to me.

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        • I don’t assume the rationality of the market and market actors that neo-liberals and libertarians tend to assume. I assume that people are primarily psychological and social, not economic.

          What is the market in New York anyone? Is the market universal through out the five boroughs or is East New York a distinct market from Gramarcy Park which is a distinct market from Boreum Hill? There are plenty of people who commute long distances to work in New York and I suspect that this can continue for a long time and that the landlords won’t care. What I suspect will happen is that you will see working-class New Yorkers and minorities kicked out, more college students roommate up. I honestly think that landlords would rather rent to four college grads than a working class family and nothing will change this. I don’t feel like enabling them very much.

          Landlords and business owners can be the biggest cry babies in the United States (and seemingly not in Europe). Every little regulation and promotion to protect health, welfare, and stability is like Mount Everest to them. Yet anything like single-payer health insurance is evil because it means more taxes on their yacht.

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            • So, , I’m assuming you’re lobbying regularly for high rise apartment building to be built right next to your home on the regular, right? I mean, as someone who doesn’t actually believe in tenants rights (since much like with unions, any actual use of their various rights in a way that makes things 1% less efficient makes neoliberals very upset), it’d be kind of odd if you decided to live somewhere it was functionally impossible to build the density-rich housing that is needed to help with housing prices.

              I mean, if we’re making moral judgements on poor people who wants to not have to move every year because there’s somebody richer moving into an area…

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                • Well, if you the member of the AMA, but worried about the availability of medical care, I’d hope you’d be lobbying for more medical schools to be built, even if it hurt your future earnings, much like I’m hoping North is lobbying for more high density housing in his area, even if it hurts his own personal property values.

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              • I don’t live in NYC Jesse, but I’d have no issue at all if someone built a high rise in my neighborhood (midrise condo just outside the Minneapolis Downtown core). More people would probably mean the local comic book shop would be doing better and we’d see some more restaurants and maybe a closer grocery store.

                I have no beef with private sector unions, let em form as much as their members want to form em. I also believe in tenants rights; if a landlord tries to break a lease or violate its terms they should get their asses sued off for damages plus penalties and they’d deserve every stab. I’m short on tears for someone being forced to move out of their apartment each year. Pay the higher rent or get a place with a longer term lease.

                What I’m baffled by is the contradictions of rent control. Liberals act like there’s some nefarious cabal of rich people floating out there that would swoop in and buy up the housing and that only rent control of all things is stopping them! The utter lunacy of this is jaw dropping. If a very wealthy person wants to own property in New York they go and buy property in New York. The only people rent control shuts out of that market are the poor, the immigrants and the unconnected.

                So yeah I do bridle at the spectacle of arch-liberals spending millions to screw over the poor, the immigrants and the unconnected while shrieking “outcomes don’t matter, it’s the intent that’s important” at the top of their lungs. For one thing it makes all the rest of us liberals look bad and helps out conservatives. For another thing; it screws over poor people.

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              • I can’t speak for North, but I’m quite outspoken about the need for denser development where I live (Berkeley). Thing is, against the weight of the Bay Area establishment, that doesn’t mean much.

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            • Are you implying that people who have lived in an area for years or decades gleefully and gracefully move for newcomers just because?

              The thing about people moving out is that there is a class war angle. I am sure plenty of people see me as a gentrifier. I might very well be one. But I can see why working-class people who called San Francisco or Brooklyn home for decades would be angry about needing to move out because of rich tech-bros.

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            • I am not as radical as others on this idea. I know people who would argue that 20-somethings should not move to SF or NYC if it means displacing original communities. Of course twenty somethings are going to want to take jobs in hot industries and/or desirable locations.

              What I don’t understand about your attitude is why you think people should be happy about being priced out because they don’t have and might never have (for a variety of reasons) the skills or ability to compete with 25 year olds making 6 figure salaries? Should people just go gracefully into the good night.

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              • I don’t think anyone should have to do anything joyously Saul and I have observed before that housing is hard. If you think that the costs and inequities of rent control are landing on six figure earning tech bros though I am going to have to ask you to show your work.

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      • Build more housing.

        Rent control doesn’t address the underlying problem here, which is the number of prospective renters outstripping the housing supply. All it does is screw over the people who aren’t already in a controlled unit in favor of those who are.

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        • We have been through this before. I am all for building more housing. I am cynical about what neo-liberals claim because it sounds a lot like trickle down economics.

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          • Yup, when it comes to housing, neoliberals sound a lot like Fox News hosts talking about any kind of regulation or rules, especially when it comes to the be sainted developers, who just want to build homes for the good of the community.

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              • I think this is being very unfair and uncharitable to the people skeptical about the housing market. A lot of them really do want to protect the poor, unconnected, or newcomers. They just don’t think that the neo-liberal solution does much of anything for the poor at least but they might concede it is fairer for the unconnected or newcomers as long as they have money.

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                • Lee, we flat out know that rent control not only stunts the market but produces problems that land disproportionately on the poor. This is not ambiguous or even seriously debated. Liberal environmentalism bemoans the irrationality of conservatives on the subject of AGW but the economic consensus on rent control is, if anything, even more settled and yet those two words still make arch-liberals heads whirl around.

                  Ignorance cannot be plead which leaves only the unholy alliance between the established beneficiaries of rent control: the uninformed poor, the NIMBY’s, the rent controlled unit holding nouveau-aristocracy and the liberal administrators who reap comfortable careers administering the ever multiplying layers of programs while telling themselves (earnestly, always earnestly) that they’re on the side of angels while the baristas that served them their latte’s commute for hours out to Newark.

                  I have no doubt our liberal intentions on this subject are genuine but so the fish what? I’ll do the incredibly indulgent act of quoting myself: But outcomes don’t matter, I guess, so long as our hearts are in the right places. The poor, the minorities and the unconnected can console themselves with our Liberal good intentions as they sleep under an overpass or commute four hours in and out of the city.

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                  • We know these things? We have data, mostly from the last few years, mostly from a few cities (e.g. Cambridge) that rent control does things like suppress property values, that in older systems mostly white people have benefited, and that it increases racial but not necessarily economic diversity. The lit review that will surely be cited (though almost certainly not read) in response to my request below will bear that out in its section on the empirical evidence.

                    Meanwhile, different systems in Germany and Scandinavia seem to do different things.

                    How do we know the things you mention. Where’s that data?

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                    • I offered a light overview below. Where, meanwhile, is the data that rent control as enacted by places like San Francisco and New York is neutral or helpful? What is the economic argument in favor of rent control? Who are it’s proponents? What papers or articles have they written?

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            • Protections against moving every year as an example which might be easy as a single twenty-something but is harder as you get older.

              I can see the Felix Salmon point that home-ownership might be bad policy or create bad policies but I think that to encourage renting, we are going to need to have policies that encourage long-term stability rentals.

              The American system seems to be that you rent until you can afford to own and people who can never afford to own are seen as secondary human beings and deserving of punishment because of our economic Calivinism.

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              • Gotcha.

                I can see the Felix Salmon point that home-ownership might be bad policy or create bad policies but I think that to encourage renting, we are going to need to have policies that encourage long-term stability rentals.

                Which pretty much takes me back to “New York City and San Francisco are nuts.” Because I don’t think “long-term stability rentals” are particularly a righteous thing when you’re renting property that someone else owns. Especially if you want to concern yourself with people wanting to lease out property to others.

                Which brings us to buying. Which is not going to be feasible for a lot of people without government help. Which leads us to the policies that Salmon complains about (along with a lot of people here).

                All of the solutions suck for somebody. Or lots of somebodies, all at once.

                And this is why I am so fixated on the cost-of-living issue. That’s the ultimate solution to this: Tampa! Or, if you prefer, Minneapolis!

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                • Except that if everyone caught on to
                  your idea, those areas will not have low costs of living ;)

                  I have a significant other here and am also trying to please my mom’s 40 plus year desire to have the family in the Bay Area. So it isn’t like I can up and leave without causing a lot of emotional pain to myself and others. These sorts of issues seem to fall on deaf ears. Is it radical American atomiczation?

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                  • Only if everyone moves to same place!

                    Of course for you to have moved to SF, there had to be (comparatively) affordable vacancies for you to inhabit. Technically, you’re on the transplant side of the SF ledger.

                    I think most people are sympathetic to wanting to live near family. But most of the time when people can’t, it’s not because of high rents in San Francisco, but no jobs in Toledo or limited opportunity in Gnat Falls, South Dakota. There’s only so much that can be asked of others to prevent any of the above from being the case.

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          • Nor has he answered my question or has anyone else.

            That’s not an excuse to mischaracterize what others are saying.

            What protections should renters have?

            Before I read your clarification to Will about what you meant, I was going to list a lot of protections that I thought the state should have for tenants. These would include such things like rules that landlords must notify prospective tenants of deficiencies in the property/building, must speedily repair major damages or malfunctions, must observe a lot of due process before evicting, must notify tenants, say, 2 or 3 months before the lease is due for renewal if the landlord wishes to raise the rent, and must ensure their property met certain safety and health standards. None of which, by the way, seems congruent with the claim that I wish to give landlords whatever they want. (Not that you were talking to me, but I agree with North in being skeptical of rent control.)

            Now that I know you meant protecting against having to move every year–and I agree that having to move every year is quite a hardship–I don’t know what would help against that. Rent control seems to help only those people who already have a place, but it seems to come with too many problems for me to endorse.

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        • I would expect to stop hearing stories about people having their rents suddenly jacked up by several hundred dollars or more and panicking at such a severe increase.

          An increase in renters is going to have to encourage more stability and long-term renting. Not the kind of renting that happens now which seems to consist of a lot of people moving every year.

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          • Even when more Americans rented, like during the 19th century, a lot renters had to move every year. The big moving day for working class people was May 1st because that was the traditional termination date of leases apparently.

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          • I would expect to stop hearing stories about people having their rents suddenly jacked up by several hundred dollars or more and panicking at such a severe increase.

            By my lights, these situations tend to occur at the end of the lease when the landlord gives notice that if a tenant wants to renew, the new rent is going to be substantially higher for the next lease period. You’ll hear these kinds of stories in high demand areas where tenants are at the mercy of market rates (Nashville comes to mind given the rent growth in recent years).

            I should also note that when what you describe above happens, you will see more supply come online (again, Nashville is my example) assuming the regulatory framework is such that it’s relatively pro-development and that there’s available development sites with little if any political hassle (which may not be the case in major urban areas like NY and SF).

            To your other point, landlords can’t increase the rents in the middle of a lease term unless there’s a specific provision for an increase, something I don’t think I’ve ever seen in a one-year lease.

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      • Wherever I’ve lived, rent can only be increased at the end of a lease, and leases are generally one year in duration. So rent goes up only once a year. You can go month-to-month after that, of course, but nowhere I’ve ever lived has ever required that. Quite the opposite: they would prefer you sign a new lease.

        Is that not the case in tight markets like SF and NYC?

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        • One year than month to month is typical. The horror stories I hear are about multiple rent raises a year in the month to month. I suppose the difference is that my landlords have never asked me to sign a new lease. I nave always gone one year and then month to month.

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          • I’ve had some ask, quite pointedly. Some have only “asked” by sliding something under the door or sending a letter. I’ve had some not say anything either way.

            But I’ve not run into a situation where the owner didn’t want to sign a new lease (except when they need you out by such-and-such date for whatever reason). My thought is that if you don’t want rent to go up… sign a new lease. Assuming you can.

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            • @will-truman

              I’ve lived in the same place for almost 4 years. The first year was a lease for 1 year then month to month. My landlord texted me and asked 30 days from the end of my lease, if I wanted to stay. I said yes. MTM then on. Same rate. 2 years later I asked for, and got, a rent decrease on the following arguments:

              My job had moved and I had a slightly longer commute.
              If I moved closer to work, I could get an equivalent place for 3-400 dollars less a month.
              I was a good tenant and paid the rent on time. Didn’t cause trouble or difficulty for the landlords.
              I asked if they’d cut the rent 300 bucks. We negotiated down to 200 dollars off.
              I’m now paying 400 dollars below market for the equivalent places in my
              area.

              Possible factors: my landlord is a guy who owns the house and not some corporation or REIT. I’m also a stable guy who’s an adult, not some 20-ish or 30-ish kid.

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  1. Yuck. Here we go with this argument again. I’ve tended in the past to stay out of these threads but let me jump in on this one.

    Rent control, indeed any kind of price controls with the possible exception of anti disaster gouging rules, are a terrible idea. Full Stop. I’m embarrassed when liberals propose and/or support them.

    That said, building upwards, which is the only real option in a location like NYC, and which many here are correctly pointing out would be the natural result of market pricing and lowered barriers to new construction, will not result in significantly more low-income housing. Builders will always target the high end of the market demand for the simple reason that it’s more profitable. Not only can they charge more for their product but it’s actually cheaper per square foot to build luxury than economy units. That’s because more individual units per floor translates into more walls, more doors, more kitchens, more closets, more toilets, etc. It’s true that luxury units will feature fancier furnishings, but the real factor at a premium, and the real feature that makes luxury units luxurious, is simple space.

    Housing prices have always, and will always, be a function of size, age, condition, and location. NYC is just NYC, it’s a very desirable location because it’s a vibrant, exciting city with a lot to offer and a lot of opportunity. Yay! And if new construction is destined to be larger, thus more luxurious, than existing stock, and historical trends would support that contention, then the only available avenue for “cheaper” lies in the direction of old and crappy, i.e., slums. Sorta sucks but that’s where the logic leads.

    “But Road,” you ask, “surely increasing the supply of housing has to decrease the price? Econ 101, supply and demand, and all that.”

    Yeah, sure, on the first level of analysis that’s absolutely true. Or at least it’s true to the extent that housing is a capital good. But what really drives the price of real estate in a market like NYC? It’s the price of land, literally the price people are willing to pay to live and work there as opposed to somewhere else. And that’s at least partly a function of population density. So if you increase the housing stock by increasing the housing density per acre, which is the only route available in a geographically constrained area, you also put upward pressure on land prices, which feeds into housing prices, and… you may or may not end up at a lower equilibrium. Housing and land prices are high in such a location at least partly because there’s a line of potential customers, figuratively out the door and around the block, waiting to get in. Supply can never realistically meet the demand because the very act of meeting demand creates more demand. Oh, there probably is an equilibrium out there somewhere, looking like a scene from Bladerunner, but we’re a long ways from achieving that.

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    • I’m generally in agreement Road, it’s probably accurate to say that it’d be a challenge to build (even upwards) enough that the housing cost for the very lowest income levels would drop. Let’s be real here, we’re long past the days when you could easily expect lowest income housing to naturally pop up on that very pricey small area. But at the very least more housing should slow the increase in housing prices if not stall it if you build enough. The counterexample to your point above is the question of what the wealthy do in a market where the new luxury housing doesn’t get built. They do not, I’d point out, go sip chardonnay in their villa on Martha’s vineyard and resign themselves to not having a home in New York. No, instead they simply acquire a couple low price or moderate price units in a reasonable area and then combine them to make themselves their own custom luxury unit (and also destroy a few lower income housing units in the process). This is massively common and no, zoning and permit barriers don’t stop them, they simply build them anyhow. The zoning and permit issues become extant only if they’re trying to sell the unit and get a mortgage on it which is not something the wealthy generally consider vital. At the very minimum allowing the building of luxury housing will slow/stop the wealthy from cannibalizing the existing lower income housing stocks in a desirable market. The annoying fact is that any policy that is tough/efficacious enough to make the wealthy not move in will also ruin a market for everyone else.

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    • As someone who used to work in the industry, I generally agree with this, with a few additional points.

      Housing is a really complicated and terrible market good, with massive government involvement at every phase, both in new housing and in increased density. Most obvious are roads. Are you building new suburbs? How are people going to get to the job-rich areas? Increasing density? What about traffic impacts? Do we now need a public transportation system? Is the existing commercial district adequate to meet the demand or do we need more supermarkets and malls? OMG, where is everyone going to park?

      Then there’s the rest of the utilities: water, sewer, natural gas, electricity. You can’t just expect your local utility provider to have the extra resources available on demand. This requires planning, PUC meetings and more complaints about higher taxes.

      And public services: more cops, firefighters, schools, school teachers, courthouses, jails, prisons. Who bears the burdens of the additional taxes? Can you create special taxing districts that allocate the additional burden solely on the new residents? And what happens if people don’t move in and the district fails? (Litigation.)

      And then there’s your goddamn constituents. People who feel strongly enough to show up at public meetings to protest increased density are likely people who could be politically active in the local community. If you aggravate enough of them, you will get primaried. And the development community isn’t nearly as free with their campaign dollars as they used to be.

      What is the long-term plan for the community? Does the current electorate still support the old plan? (How many people know the plan or vote based on it?) Who bears the cost of sub-market housing? Can the cost be hidden or shifted?

      So, yes, a lot of people say and do stupid things about housing. Fortunately, I can find plenty of libertarian/conservative stupidity to offset all the liberal stupidity.

      A quick mostly-fictional story: A ski town had a problem. During the high season rents were so high that their seasonal workers — bartenders, waiters and the like — couldn’t afford to live in town. But being a ski town, parking was difficult and the commute in from the nearest affordable town was worse. Getting people to work the early and late shifts was extremely difficult. So the business owners and property owners basically went to war. The business owners (mostly middle-class locals) wanted low-cost housing and/or housing set-asides in town, funded by property taxes. Landowners (mostly wealthy absentee) wanted none of that and expected the business owners to fund shuttles out of their own pocket, to be reflected in higher prices. Of course, not all the business owners bought into that idea, so the business owners willing to fund a public transportation system were faced with a significant free-rider problem.

      What’s the right course of action for the City Council? I submit that the answer is not obvious.

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    • That said, building upwards, which is the only real option in a location like NYC, and which many here are correctly pointing out would be the natural result of market pricing and lowered barriers to new construction, will not result in significantly more low-income housing.

      Real world example to this – The American Bible Society recently sold its headquarters building at 1685 Broadway, up by Columbus Circle. It’s a very desirable location in Manhattan. The buyer plans on demolishing the existing building and building a 300,000 square foot (I think) building with ground floor retail and condos.

      The buyer, an apartment REIT, paid $300 million for the site. Based on the 300,000 square feet that can be constructed on that site, that’s a price of $1,000 per square foot. That’s $1,000 per square foot effectively for the land. There are several other sales transactions that I’ve seen in that range. With development sites trading at those levels, there’s no way in hell affordable housing is going up.

      Granted, if the sites were purchased as rentals, the land values may drop substantially, but given where I think affordable housing may price on a per square foot basis (maybe $25 per square foot a year and I may be a bit high on that), think of where land prices need to be to make that work absent heavy subsidizing.

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  2. Rent control doesn’t work but the market based solution advocated by neo-liberals and libertarians leaves a lot to be desired as well. The historic solution to housing for the poor depended on how strong property rights were. In areas with strong property rights like the United States, Great Britain, or Canada the solution was to let landowners build substandard housing and stuff it to the gills with tenants. In areas with weak property rights like Brazil and Latin America, it was to let the poor build shanty towns as well. Most people recognize that the historical solutions are not exactly a good thing for a variety of reasons.

    Housing seems to be one of those goods like healthcare where the market is destined towards suboptimal outcomes without government intervening in the system and making it more fair. Either the government has to provide the healthcare or housing themselves or induce and demand market actors to build, rent, and sell decent housing to lower and middle income people. America would not have it’s famous suburbs without federally backed mortgages, other government subsidies to developers, and zoning regulations. A lot of the more pro-urban libertarians recognize this. Without building codes, the urban working classes and poor would still be living stuffed to the gills in substandard housing without much in the way of services or even simple light.

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    • To argue that we shouldn’t have prohibition is not to argue that drunkenness is not a problem, nor to argue that spousal abuse is not a problem, nor to argue that cirrhosis is not a problem.

      But the reduction in drunkenness, spousal abuse, and cirrhosis are not worth the social costs of the policy which include organized crime, bathtub gin, and contempt for the law among otherwise law-abiding citizens.

      Similarly, Rent Control isn’t helping folks anywhere *NEAR* to the degree that it was promised it would, its costs exceed its benefits, and it’s actively harming people.

      Ending the policy shouldn’t require me to give me a speech about what I’d do to help people instead. I’d like to help them by not enacting a policy that hurts them anymore. That ought to suffice.

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            • Dude, you *OPENED* with “Rent control doesn’t work but the market based solution advocated by neo-liberals and libertarians leaves a lot to be desired as well.”

              It doesn’t require us talking about the problems with the market based solutions advocated by neo-liberals and libertarians to end rent control.

              If you want to talk about making sure that buildings are built according to decent building codes, that’s awesome. Hey, watch this: “I agree that buildings need to be built according to decent building codes.”

              Would you like to talk about the importance of fire suppression?

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      • This isn’t exactly responsive because I’m not talking about rent control. What I was talking about was how the housing market traditionally delivered substandard housing to a lot of people even if they weren’t technically poor.

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        • If it’s a “Just because there is a problem doesn’t mean there is a solution” situation, and you really believe there is not only no solution, but nothing that can be done to improve the situation other than not enacting the policy you’re critiquing, okay, say that and we can debate it. Maybe it suffices.

          But not even doing that doesn’t suffice, no.

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          • We need to secure Afghanistan against harboring continued international terrorist threats; “the War in Afghanistan” is the sum total of our government’s current thinking about how to do that; in order to be persuasive to a person committed to the stated goal that “the War Afghanistan” should end, you need to present ideas about other/better ways to pursue that goal.

            Now, if the people we’re considering having this conversation don’t agree on the basic aims about what needs to happen re: Afghanistan, then, per my condition, this is not an apt analogy.

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    • But you’ve literally changed the subject. No one here is suggesting that building safety codes be done away with.

      Additionally you’re soft pedaling the rent control problem. Yes, housing in high demand areas is hard. So is climbing a mountain. Painting your hands green will not help you climb a mountain but it won’t significantly hinder you doing so either. Rent control is not like painting your hands green. Rent control is like locking your hands in manacles. If I point out “your manacles are actively impeding your efforts to climb the mountain” the response of “removing my manacles will not make climbing the mountain easy so I’m leaving them on” is nonsensical. Likewise the argument that removing rent control will not solve all housing problems is nonsensical. No removing rent control will not make the housing problems solved but it will at a minimum remove the problems caused by rent control and that’s far from nothing.

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      • Like subjects ever stay on point on an internet blog. There is a significant portion of libertarians who believe that rolling back on building codes is the best way to provide housing for the working class.

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        • Any of them that do are out of their libertarian minds; I don’t carry a brief for them so there’s little I can say on the subject. Nor am I aware that any of the libertarians present in these parts share those particular peccadilloes.

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  3. It is an object of economic faith, required to be admitted into certain economic religions, that rent control is an unqualified bad thing. Data and actual policies are unnecessary, as this is not a question of knowledge but one of faith.

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      • Point to some. Don’t just link, as it is all too common for folks here to link to research that doesn’t support their position, or contradicts it. So link, summarize, maybe even explain. Also, see if you can find some research that doesn’t paint it in the same thoroughly negative light. If you can’t, you don’t know the research.

        This is not just to you, but to anyone. Though since you made the claim about the research, I expect you to back it up.

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        • For evidence of my position, see this and every rent control discussion we’ve had on this site, which have all been heavy on the faith, with some theory, and very little if any data.

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          • I’ve found studies but they’re by CATO or the National Multifamily Housing Council and so I won’t even bother posting them.

            Here’s an article from the New York Times talking about what’s happening in San Fran. It’s an article, not a study, though.

            Here’s a fun article from 1991 (Opening sentence: “One of the new hit movies of the fall season, Pacific Heights, is a rent-control horror film, in which Michael Keaton plays a deranged but clever tenant bent on terrorizing his yuppie landlords.”) but who knows whether it’s still relevant, right?

            This article mentions studies, but doesn’t link to them or name them. What the hell, article.

            So I figured that looking for stuff that bolsters my viewpoint might be the wrong approach, I should look for stuff that argues that rent control benefits people. I found even less, though I did find a short film that is somewhat persuasive about how rent control is better than not having it, but it’s from 1987 and so if 1991 is off limits, 1987 would be even more so. If you’re inclined, watch it here.

            Now we can have this argument again next month.

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            • Hence my point: no one actually knows the data. They just have faith that, as one of your co-religionists put it, they are on the side of the “overwhelming conclusion of decades of research,” or as the competing religion would say, “Yeah, it creates issues for markets, but it helps tenants by and large.” They don’t know the data either.

              Surprisingly, as North can tell you from the review he just cited, the research is pretty limited, and the negative stuff almost all from old American systems without the sorts of mitigating policies (even many American) systems have.

              I have an idea: let’s keep a close eye in Berlin (I’m sure Autolukos knows why), and meet back here in, say, 5 years with our impressions. Between now and then, we’ll keep our professions of faith and worse, recitations of myopic theory, to ourselves. We may have London and some other major European cities to add to our informal study and review of the new literature, too.

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              • So it isn’t relevant that we’re talking about New York instead of Europe and that this comment thread is regarding a link that shows the New York rent control authorities shutting down one of said mitigating factors in favor of an old school rent control style freeze?

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                • It seems that we’re talking about “rent control.” Sure, it started with New York, but how many people here condemning rent control just mean in New York, and not San Fran, Berkeley, L.A., Jersey, etc.? How many don’t mean “rent control” generally, as though that were a monolithic thing? If you don’t, that’s awesome, but I suspect you’re in the minority here then (particularly given how much of this is a rehash of previous conversations on this blog about rent control in other places).

                  Anyway, some more favorable feelings about rent control (and note, I’m not taking a side, as I’m a.) not an expert on rent control, just like everyone else here, and b.) not sure “rent control” is sufficiently specified to take a side on):

                  Arnott 1995, which is what everyone who writes about rent control cites. Basically says what I’m saying (“rent control” is not “rent control”), with some explanations of both the history and current state (at the time) of rent control internationally.

                  1998 special issue of Regional Science and Urban Economics, in which you’ll find both theoretical and empirical arguments suggesting that “rent control,” in various forms, has pros and cons, with the former sometimes outweighing the latter. This includes a paper on rent control and homelessness that you may note the Jenkins review misrepresents.

                  Lind, 2001: A close look at different types, their pros and cons empirically, in both Europe and North America. This is the one to read when sorting out what “rent control” is.

                  Basically here’s the lay of the land: rent control sucks for owners pretty much any way you look at it. It sucks for renters in some ways – for example, under at least some types of rent control, owners tend to skimp on the upkeep, and they tend to look for short-term leasers when prices can only be raised with new leasers; of course, renters are inclined to stay in one place, so their mobility is decreased by rent control – and it is ambiguous in others (the Cambridge, MA and other data suggests that minority representation is higher with rent control, but it still mostly benefits white folk in the U.S.). It has mixed effects on areas, mixed, mostly negative effects on neighboring, non-rent controlled owners, mixed effects on homelessness, mostly negative effects on availability, and so on.

                  On the other hand, what follows rent control pretty much sucks for the people who were living there under it: huge increases in property values over a relatively short period, even without much in the way of improvements by owners, along with gentrification (and homogenization), and so on.

                  Some municipalities, states, even large countries, are still choosing rent control because they feel its pros for them outweigh its cons. This even though 90+% of economists, or whatever it is now, think rent control either really sucks or at least kinda sucks. Apparently the economists on the ground are of a more mixed opinion on the subject.

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                  • Honestly the majority of my venom is reserved for old generation “hard” rent control which you’ll see primarily in New York and San Francisco/LA and which pretty unambiguously blighted significant portions of the housing in those cities. Successive generations have softened rent control programs (primarily in response to the wreckage generated by the original programs) wherein the damage seems moderated somewhat though different parties argue respectively that the benefits are also moderated or that the damage is just tucked away. I have less vitriol for the newer programs since there’s less info available on them though my skepticism is high considering the historical pedigree of price controls in general and rent control in particular.
                    I would confine my protests to North America; Europe has an entirely different demographic and an entirely different housing ethos and I haven’t seen any reason to suggest that they aren’t apples to oranges.

                    Hard Rent control seems pretty much indefensible though good luck trying to get defenders to admit they’re defending it. Soft rent control is more ambiguous but in addition to the downsides you’ve mentioned you get owners becoming extremely choosy about who they rent to (articles abound about how trying to rent an apartment in California is like interviewing for a job) and a lot of potential rentable space getting furloughed instead of dealing with the hassles of renting. You also get the phenomena of builders generally opting to convert rentable space to condos or only building luxury condos or apartments to bypass the rent control band; this is a trend that dense desirable markets already promotes and that rent control further boosts.

                    There’s also the perplexing question of losers from rent control wherein rent control proponents seem to maintain the fiction that rent control somehow disadvantages the wealthy. Property owners, who often are wealthy granted, are indeed hit by rent control but wealthy residents or would be residents have the resources to bypass and go around rent control barriers and invariably do so*. Rent control’s costs, then, land on the poor, the poorly connected and the newly immigrated (all of whom have the lowest ability to bypass or navigate the barriers created by rent control).

                    And yeah, granted ending rent control will be hard on the people who have been enjoying its subsidies. The beneficiaries are noisy and passionate; the victims are powerless, uninformed and poorly represented. That is universal for any program of subsidy from rent control to defense spending to corporate welfare (though I suppose I repeat myself on the latter ones).

                    *My job involves underwriting with a particular eye to verifying that condominiums meet federal and national standards for financial solvency and legality. Whenever I work in the New York market I routinely review projects where affordable or controlled housing is being converted to high end housing through combination and amalgamation**; a phenomena that is almost entirely confined to the rent controlled markets of New York and LA.

                    **And we reject those for lending… whereupon the applicants who are wealthy simply pay out of pocket and do it anyhow. Rent control is definitly not keeping the rich who want to live in NY or LA out of those areas; it simply makes it so that when they move in they eliminate lower income housing in the process instead of simply adding their own.

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        • Off the cuff Chris; A survey of articles on EconLit regarding rent control finds that economists consistently and predominantly agree that rent control does more harm than good. The survey encompasses particular issues, such as housing availability, maintenance and housing quality, rental rates, political and administrative costs, and redistribution.

          Do you have any evidence to the contrary? Who are the economists in favor of rent control?

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          • See! Though I didn’t expect you to cite it.

            There aren’t many economists in the U.S. (though: http://www.amazon.com/The-Economics-Anti-Textbook-Critical-Microeconomics/dp/1842779397), but the Germans, who are scaling up, rather than scaling back, already fairly strong rent control, seem to like them. Same with the Scandinavians and Portuguese. Maybe it’s homogeneous populations (the economists version of “that’s because it’s not an ideal gas”)?

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            • Granted and if we were discussing a blanket rent freeze in Dusseldorf or Oslo I would willingly concede the point. We are, however, talking about New York specifically, about as far a local from Germany, Portugal and Scandinavia (demographically, geographically) as one can get.

              AFAIK the economic consensus from Krugman on is pretty uniformly against rent control and strong rent control in particular. Is support of rent control faith based or is there an economic body of data suggesting that rent control as it’s practiced in America in general or New York in particular is efficacious and benign?

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  4. I’m a bit humbled by your points here in this thread, because speaking perhaps only for myself, I have little real knowledge of the issue other than horror stories I’ve heard about NYC and ‘Frisco and something I read once that explained what Hayek thought about rent control in Vienna. It should come as no surprise to anyone that I’m no economist.

    So yeah, we, by which I mean a group of people who include me, should probably see how rent control works or doesn’t in other areas before making blanket assertions about what does and doesn’t work. I still think skepticism is healthy. (And to be fair, you’re not arguing that skepticism is unhealthy, you’re suggesting that people who see the issue as North and I do should extend the skepticism to our own positions.) I also believe that most policies, even very good policies and even policies I support, are going to end up hurting some people who shouldn’t be hurt, and that always needs to be acknowledged.

    But again, your points are good ones, especially as applied to amateurs like me. Like you, I don’t like it when others simply cite a study or worse, an article, that meets only the requirement that there be a cite and nothing more.

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    • Meh, I have no moral objection to rent control beyond the utilitarian complaint that I’ve seen no indication that it does more good than harm. I don’t particularly carry a brief for landlords beyond that I would prefer that there be more of them and that rent control seems to make less of them instead (and makes those that remain mightily finicky about who they rent to).
      After the old style rent control blighted the cities it hosted in for decades I would think the onus might be on the proponents of new softer more sophisticated rent stabilization schemes to prove that the new versions actually work rather than on those who turned out to be correct about the old schemes, especially when the old schemes are still in place and are being actively defended by the proponents of the new systems.

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    • Like I say above, I’m not taking a stance. I’m not an expert, and I mostly know about it through reading stuff on gentrification, which means even what I do know I know indirectly and through one lens. But the confidence with which people espouse their opinions on the subject (and this goes for many of the pro-rent control folks as well) without displaying any knowledge of the subject irks me, as the “economics says” religion is one of my least favorite ones.

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      • FWIW I have no moral qualms with rent control on the abstract level of principles. If there was evidence that it produced beneficial outcomes that exceeded its costs and harms I’d have no brief against it. With the old school versions I’d submit the verdict is in and it’s damning. With the newer modified programs the results are still being measured but it doesn’t look promising.

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  5. Like Francis I see the issue as complex.
    It isn’t a choice between government action or no government action; the government will be mssively involved regardless.
    what we have is something which is massively popular but in limited supply. So we have to decide how we want to ration it. Right now the default rationing is price so we have to decide if that is what gives us the best outcome.

    Which of course leads us to decide what we want as an outcome.
    One theory of course is an outcome of efficient allocation of capital and land, which is the result of a certain set of moral inuit ions and reasoning.

    Another, to which I hold, is that a just society has a compelling interest in providing a mix of different ages, classes, ethnicities within its borders.

    Rent control as its commonly practiced may or may not help reach this goal. But I suppose first there would have to be agreement that this is the goal we want.

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