Comments on: Ending rent control may not lower prices for non-regulated units

By: Harry Mann

Harry Mann — Thu, 04 Jun 2015 10:16:00 +0000

Wait, you mean to tell me that if someone has been renting a unit under rent control for twenty or more years, and you decide to end rent control, the rental payment may actually increase rather than decline? I find that inconceivable and highly unconscionable. Rents rise because the government generates inflation through the manufacture of money. Mayors then try to remedy the issue to the best of they can through rent control measures and the like. How about we simply try to get the government to stop manufacturing so much money, because the less it is worth the more of it people seem to want and need.

By: topnotchsiding.net

topnotchsiding.net — Tue, 25 Feb 2014 01:18:00 +0000

… [Trackback]

[…] There you will find 6814 more Infos: marketurbanism.com/2012/06/22/ending-rent-control-may-not-lower-prices-for-non-regulated-units/ […]

By: goodenough

goodenough — Wed, 04 Jul 2012 12:10:00 +0000

Either we are talking about housing from a real estate investor’s perspective, or as a resource for its users. When we conflate the two we can not have a meaningful discussion. In Cambridge, deregulation had the desired effect – removing rent control caused real estate values to inflate for all, yielding tremendous gains for speculators and lucky homeowners. These are the investors. Since the negative impact is harder to measure, particularly the impact on those ‘missing’ or excluded by this market shift, we are unlikely to see a assessment from the user’s perspective anytime soon. What happens when housing costs for all rise? How do employers feel about the wage pressure this generates, or the fact that it scares off young talent? How do people who live in (as opposed to absentee landlords) neighborhoods feel about the socioeconomic changes that stem from rising housing costs?

By: Brian F. Kelcey

Brian F. Kelcey — Tue, 03 Jul 2012 15:37:00 +0000

I’m sure I’m not the only one thinking:

“isn’t it a little strange to judge the broad-based impact of eliminating rent control on the market by slicing out the one period in US realty history that virtually everyone agrees was the foundation of a speculative bubble?”
Just a thought.

By: John McDonnell

John McDonnell — Sat, 23 Jun 2012 19:08:00 +0000

I think it’s important to recognize that there is more value in a Manhattan apartment than its floorspace. The LES has crazy amenities now that never existed when it was full of junkies. Increased rents reflect a huge increase in the value people place on living there, although of course I think that they should also allow massive increases in the quantity of housing available to bring those prices down and allow more people to enjoy that value.

But yeah sorry if I sounded contentious! Nice talking this stuff through I agree, it definitely made me think about things more.

By: aka_Scoop

aka_Scoop — Sat, 23 Jun 2012 18:48:00 +0000

How can you live in Manhattan and say that? People who, by any objective standard, are very rich will move into hovels because they are not quite rich enough to be in places that are both nice and in Manhattan. They live in places that the manager of a Taco Bell in Dallas would laugh at. Much of the LES that used to accomodate winos and squatters now commands $5000 a month (sans too many renovations) because the neighborhood is now rich.

As for your original point, I agreed with the main thrust, that it’s certainly possible that rising prices in one neighborhood of metro-Boston would lead to lower prices elsewhere. I was only taking issue with the one point, a point that you apparently were not even trying to make. So apparently much of this was for nothing, but I enjoyed thinking through some of the issues a bit. Cheers.

By: John McDonnell

John McDonnell — Sat, 23 Jun 2012 18:24:00 +0000

I agree with your scenario in general but I disagree that rich people would just move into crappy apartments that poor people used to live in and pay more rent for the same thing and have no problem with that.

Also the point I was originally trying to make was that this might have been specific to Cambridge. Rich people moving to Cambridge might have eased rent pressure elsewhere in the metro, but to see if that happened the authors would have needed to take a metro-wide perspective.

By: aka_Scoop

aka_Scoop — Sat, 23 Jun 2012 18:19:00 +0000

1. I did think you were arguing that it’s good when housing prices increase absent any change in quality, that rising prices of fixed assets somehow indicates value is magically being created. Most Americans believe it devoutly. Most financial reporters believe it devoutly. I’m sorry I lumped you in with them.

2. “How could rental deregulation cause that to happen?” I don’t really know. As far as I know, it has long been taken as indisputably true that eliminating rent control will (obviously) increase rents in controlled buildings but also decrease rents for those in uncontrolled buildings and spur enough new construction that overall costs fall, meaning overall benefit. (There should also be quality improvements in the mix because rent controls basically destroy any incentive to basic maintenance let alone improvement.) End assumed result to killing rent control: better quality, lower prices, more housing. But this study seems to question this (unless the place was so dumpy that ALL the improvement went into better quality.)

Here’s a scenario I find quasi-plausible, but I have no idea if it’s the case here: Zoning laws are enacted in a desirable city, restricting construction of new housing supply. Housing prices (both rental and purchase) rise. Renters get angry. Lawmakers enact rent controls on many but not all rental properties. Over the decades, prices diverge substantially. Controlled buildings are cheap enough that reasonably undesirable people can afford them, which limits the value of non-controlled buildings. Rent control is eliminated. Higher prices in the formerly rent controlled buildings for the poor out, making the neighborhood nicer, pushing up prices in never-controlled buildings. All without any improvements other than in the human population. (Eventually, the richer neighbors would demand nicer stuff and start improving, but that would be high prices creating improvements, not improvements creating higher prices.)