The missing element in this excellent report is zoning. I live in San Francisco, where most of the city is zoned for single-family homes. In contrast, my hometown of Minneapolis's zoning allows 4-plexes in every neighborhood, which has allowed housing stocks to increase modestly, stabilizing rents without resorting to the mega apartment complex that many neighborhoods resist. It's a win-win all around.
How does this channel not have more subscribers? The Freakonomics Radio content is so interesting and educational. Been listening to it for the past 6 years.
Why is the discussion on rent and housing NEVER feature the topics of building regulation, zoning, fees associated with new construction, and NIMBY. California isn’t short millions of homes because of rent control. It’s all the red tape. The costs. The when and where. And then the almighty ability of one Karen or Chad to complain.
Yeah, most advocates of rent control also advocate the ordinances and codes that make housing prohibitively expensive to begin with! They flat out ignore the elephant in the room that's supply and demand.
I agree with the title of program, but I find that many of the arguments against rent control presented are specious or weak. For me there are two major arguments: Degradation of the housing stock because with depressed rents and a shortage of places for tenants to move into, Landlords are de-incentivised to do necessary repairs. The second is that landlords will seek to boost initial rents as much as possible when tenants do move out - causing jagged & steep jumps.
Perhaps it's time for another episode, this time on the economics of being a landlord. It could be based around an analysis of the costs, benefits and risks. Ideally from two perspectives, the small landlord (less than 10 properties) and the large landlords.
Roughing it out: if the population is growing, then housing units have to increase, or (and this was not considered in the piece) the number of people per unit has to increase. If housing units are to increase, then building units has to be made easier; if unit density is to increase, then existing infrastructure must be improved (and societal acceptance encouraged). I look forward to an episode exploring efforts to enact either option.
As landlords, we actually look forward to most rent control as it has the perverse effect of setting a lower bound in the rent increases that is higher than most of our market rate rent increases. Where we would normally aim to raise rents by 1-3% a year to keep up with inflation, the 5% rent increase cap just points to the target increase for all landlords. Since we know if we don’t raise rent to the max cap, we can’t catch up, and we know most landlords are worried about catching up on rent, we can freely raise rents by 5% via a state mandated monopoly. Without actually coordinating with each other, we can naturally infer the exact same solution. Now, 5% doesn’t sound much different than 3%, but compounded over a decade and landlords are really sitting pretty. Hence, I always say, bahrrring it!
The video got around to it kind of late, but anti-development policies in various forms are one of the biggest culprits. Rent control is arguably just one of them. Zoning, use-restrictions, historical societies, and so many other ways have been found to implement it, but alot of it comes down to incumbent owners and tenants not wanting change. And so the housing stock atrophies. It gets worse, scarcer, and demand climbs. Rental aid, if means tested to only be eligible to the truly needy, is a way to help some folks, but such programs need to stay small to avoid creating a demand boom.
They talk about limiting supply and correlate that to "affordable" housing. Yes, more supply gives competition technically but in a market like S.F. having no "affordable" supply is a very realistic possibility without regulation.
"Landlords will list the rentals for sale" so increasing housing supply and thus helping to alleviate the price of purchasable housing? Wouldn't that also have impacts to lowering rents because then more supply will open up for purchase for folks currently renting opening up rental inventory? I get that's a theoretical look, but am I wrong in the chain of logic?
I'm so confused as to why there's all this sympathy towards the landlord's greed. If you cap rental increases, they should invest in many smaller dwellings instead of downsizing the amount they own. Without a cap, you get landlords who keep turning affordable housing into luxury housing. We need more houses. Not houses with marble countertops and bidets.
From an economics perspective home owners have an incentive to keep property prices high, and they're the ones who vote in the people responsible for zoning rules which prevent developments which could lower prices.. Higher property prices mean landlords need higher rents to cover their costs. So we end up with gold plated taps and marble bathrooms to justify the higher rents.
His roommate was from Germany both of them left NYC when they graduated. New tenant/graduated student replace them and then landlord can keep raising the rent.
Building more units does not help drive down costs. In Missoula, that is how they are approaching it. The landlords just automatically jack the price up to match what is already in the market, which is already not affordable to most. And the market is stuck because all the landlords collectively refuse to drop rents even though they have empty units. They just make the difference up in the higher rents. Most research only looks at this issue through a singular lense. But to understand it truly and to find a solution that will work, you have to look at the following: freezing property taxes, freezing rents, freezing profit gouging prices, raising salaries. But that won't happen because then what platforms would politicians run on?
I can see rent control work for the landlords if the renters are all foreign graduate students. My brother was renting in NYC for 2 years while attending Columbia business school.
This is why i went back to the farm, i used to live in a big city and make 6 figures and all i did was sit in traffic, pay way to much tax and way to much rent and have no space. I dont really understand the appeal of living in a city i much prefer living on the farm and now the city is an hour flight away and tge housing cost is literally 10x lower.
I have a similar view. I am Canadian and we have proportionally even more issues with housing affordability than the USA. I grew up on a farm and have a job in a city. I purchased a house in a mid/small-sized city (bit over 100,000 people) that is on the more affordable end of Canadian municipalities. I could earn 40-50% more doing a similar job in a large city like Vancouver or Toronto but my commute would increase from 10-15 minutes to well over an hour and a comparable house would cost nearly five times as much!
Rent control may not work, however purpose built rental owners have gamed the system using collaborative AI software to maximize rental rates and hold rentals off the market. Artificially increasing rents while lowering occupancy rates. In essence this makes large providers of rentals acting as a cartel. It's not a fair market system when one side is allowed to game the market. Eventually high rents will cause a net loss in population as renters choose to locate outside of the core areas and that will raise vacancy rates in the core. Cartels only work when the members sharing the AI system don't cheat. But the economic incentive to cheat is high to obtain a fully occupied building when 5 to 10 percent of the units in your building are vacant. And then the Cartel collapses, rents drop and apartment building values fall. In summary, a market with rent controls has historically not been good for development. But a market where there is no rent control but the rental market is being gamed is worse as short term gains may be followed by a period of market instability and possibly a collapse in apartment and by extension condominium values. Rent controls for owners are a case of hate me now - but love me later.
Rent control is a slippery slope...if your have rent cap increases or controls, then you must cap increases on taxes, insurance and other expenses and/or the mortgage from the lender must also adjust or it does not make economic sense. You could have 20% increases in a single year in taxes, insurance, etc., yet have the constraints of a 5% rent increase and not be able to satisfy the mortgage payment. Additionally, I would love to see and analysis of corporate landlords in single family rental housing and the corresponding effects on the market! Do they increase housing prices? Increase rents? Etc., Etc.
I got a suggestion here me out , some people might not like it but it is just a simple solution , move to an area you can afford , live with your parents or family members that would help you out save enough to you are able to buy your own property... seriously when people start leaving places landlords would start either losing money or lower thier prices
The reason landlords are not a part of public discussion about rents is because you can’t bribe city officials in public it’s purely a behind closed doors transaction
If you think you own your property try building on or significantly altering it without the governments permission. Most democracies today are a blend of capitalism and socialism....and thats how it should be.
I see a lot of discussion about the effects of one policy or another, but no one is mentioning the moral absolute involved. The property belongs to the landlord; he has the right to manage it in any way he wishes. Government has no right to interfere.
The missing element in this excellent report is zoning. I live in San Francisco, where most of the city is zoned for single-family homes. In contrast, my hometown of Minneapolis's zoning allows 4-plexes in every neighborhood, which has allowed housing stocks to increase modestly, stabilizing rents without resorting to the mega apartment complex that many neighborhoods resist. It's a win-win all around.
How does this channel not have more subscribers? The Freakonomics Radio content is so interesting and educational. Been listening to it for the past 6 years.
Why is the discussion on rent and housing NEVER feature the topics of building regulation, zoning, fees associated with new construction, and NIMBY. California isn’t short millions of homes because of rent control. It’s all the red tape. The costs. The when and where. And then the almighty ability of one Karen or Chad to complain.
Yeah, most advocates of rent control also advocate the ordinances and codes that make housing prohibitively expensive to begin with! They flat out ignore the elephant in the room that's supply and demand.
@@Libertaro-i2u You get it.
I agree with the title of program, but I find that many of the arguments against rent control presented are specious or weak. For me there are two major arguments: Degradation of the housing stock because with depressed rents and a shortage of places for tenants to move into, Landlords are de-incentivised to do necessary repairs. The second is that landlords will seek to boost initial rents as much as possible when tenants do move out - causing jagged & steep jumps.
So, my question is, what “lost profits” are landlord’s losing? Future profits? They gat 5% per year…..
Perhaps it's time for another episode, this time on the economics of being a landlord. It could be based around an analysis of the costs, benefits and risks. Ideally from two perspectives, the small landlord (less than 10 properties) and the large landlords.
Roughing it out: if the population is growing, then housing units have to increase, or (and this was not considered in the piece) the number of people per unit has to increase. If housing units are to increase, then building units has to be made easier; if unit density is to increase, then existing infrastructure must be improved (and societal acceptance encouraged). I look forward to an episode exploring efforts to enact either option.
People love high rent and high house values. Those who don’t are in the minority. Minority of voters specifically
@@ken90017 I understand the preference of high house prices, but I've never heard of people liking high rent prices.
@@josephpostma1787 high rent pushes higher property values
As landlords, we actually look forward to most rent control as it has the perverse effect of setting a lower bound in the rent increases that is higher than most of our market rate rent increases.
Where we would normally aim to raise rents by 1-3% a year to keep up with inflation, the 5% rent increase cap just points to the target increase for all landlords. Since we know if we don’t raise rent to the max cap, we can’t catch up, and we know most landlords are worried about catching up on rent, we can freely raise rents by 5% via a state mandated monopoly. Without actually coordinating with each other, we can naturally infer the exact same solution. Now, 5% doesn’t sound much different than 3%, but compounded over a decade and landlords are really sitting pretty.
Hence, I always say, bahrrring it!
This should be a series (rent control, affordable housing, etc)…such an important topic right now
The video got around to it kind of late, but anti-development policies in various forms are one of the biggest culprits. Rent control is arguably just one of them. Zoning, use-restrictions, historical societies, and so many other ways have been found to implement it, but alot of it comes down to incumbent owners and tenants not wanting change. And so the housing stock atrophies. It gets worse, scarcer, and demand climbs.
Rental aid, if means tested to only be eligible to the truly needy, is a way to help some folks, but such programs need to stay small to avoid creating a demand boom.
*¡ALWAYS FOLLOW THE MONEY!*
They talk about limiting supply and correlate that to "affordable" housing. Yes, more supply gives competition technically but in a market like S.F. having no "affordable" supply is a very realistic possibility without regulation.
"Landlords will list the rentals for sale" so increasing housing supply and thus helping to alleviate the price of purchasable housing? Wouldn't that also have impacts to lowering rents because then more supply will open up for purchase for folks currently renting opening up rental inventory? I get that's a theoretical look, but am I wrong in the chain of logic?
I'm so confused as to why there's all this sympathy towards the landlord's greed. If you cap rental increases, they should invest in many smaller dwellings instead of downsizing the amount they own. Without a cap, you get landlords who keep turning affordable housing into luxury housing. We need more houses. Not houses with marble countertops and bidets.
From an economics perspective home owners have an incentive to keep property prices high, and they're the ones who vote in the people responsible for zoning rules which prevent developments which could lower prices.. Higher property prices mean landlords need higher rents to cover their costs. So we end up with gold plated taps and marble bathrooms to justify the higher rents.
His roommate was from Germany both of them left NYC when they graduated. New tenant/graduated student replace them and then landlord can keep raising the rent.
5% a year cap on only the richest (most property) landlords seems pretty reasonable.
Building more units does not help drive down costs. In Missoula, that is how they are approaching it. The landlords just automatically jack the price up to match what is already in the market, which is already not affordable to most. And the market is stuck because all the landlords collectively refuse to drop rents even though they have empty units. They just make the difference up in the higher rents. Most research only looks at this issue through a singular lense. But to understand it truly and to find a solution that will work, you have to look at the following: freezing property taxes, freezing rents, freezing profit gouging prices, raising salaries.
But that won't happen because then what platforms would politicians run on?
I can see rent control work for the landlords if the renters are all foreign graduate students. My brother was renting in NYC for 2 years while attending Columbia business school.
How does a city encourage new housing?
This is why i went back to the farm, i used to live in a big city and make 6 figures and all i did was sit in traffic, pay way to much tax and way to much rent and have no space. I dont really understand the appeal of living in a city i much prefer living on the farm and now the city is an hour flight away and tge housing cost is literally 10x lower.
I have a similar view. I am Canadian and we have proportionally even more issues with housing affordability than the USA. I grew up on a farm and have a job in a city. I purchased a house in a mid/small-sized city (bit over 100,000 people) that is on the more affordable end of Canadian municipalities. I could earn 40-50% more doing a similar job in a large city like Vancouver or Toronto but my commute would increase from 10-15 minutes to well over an hour and a comparable house would cost nearly five times as much!
If rent control is bad, then so is l
all the other measures: section 8, for example. Same effect.
I was really hoping for more wonky details about what rent control actually IS.
It’s any policy that seeks to limit the increase of rent. There are so many ways that can take form
It's government-sponsored theft of a landlord's rightful profits.
It worked for Monica and Rachel. Oh yes it did.
Do you have an
English version?
Rent control may not work, however purpose built rental owners have gamed the system using collaborative AI software to maximize rental rates and hold rentals off the market. Artificially increasing rents while lowering occupancy rates. In essence this makes large providers of rentals acting as a cartel. It's not a fair market system when one side is allowed to game the market.
Eventually high rents will cause a net loss in population as renters choose to locate outside of the core areas and that will raise vacancy rates in the core. Cartels only work when the members sharing the AI system don't cheat. But the economic incentive to cheat is high to obtain a fully occupied building when 5 to 10 percent of the units in your building are vacant. And then the Cartel collapses, rents drop and apartment building values fall.
In summary, a market with rent controls has historically not been good for development. But a market where there is no rent control but the rental market is being gamed is worse as short term gains may be followed by a period of market instability and possibly a collapse in apartment and by extension condominium values.
Rent controls for owners are a case of hate me now - but love me later.
Really wanted to listen but someones put annoying jingles over your voice
Rent control is a slippery slope...if your have rent cap increases or controls, then you must cap increases on taxes, insurance and other expenses and/or the mortgage from the lender must also adjust or it does not make economic sense. You could have 20% increases in a single year in taxes, insurance, etc., yet have the constraints of a 5% rent increase and not be able to satisfy the mortgage payment.
Additionally, I would love to see and analysis of corporate landlords in single family rental housing and the corresponding effects on the market! Do they increase housing prices? Increase rents? Etc., Etc.
I got a suggestion here me out , some people might not like it but it is just a simple solution , move to an area you can afford , live with your parents or family members that would help you out save enough to you are able to buy your own property... seriously when people start leaving places landlords would start either losing money or lower thier prices
The reason landlords are not a part of public discussion about rents is because you can’t bribe city officials in public it’s purely a behind closed doors transaction
Capitalism - charge what ever you want for your product. Communism - rent control.
If you think you own your property try building on or significantly altering it without the governments permission. Most democracies today are a blend of capitalism and socialism....and thats how it should be.
@@AtomicSaunders Any element of socialism is evil.
Rent control = wage control
Rent control allows employers not pay a wage which allows the employed to have a home close to work.
I see a lot of discussion about the effects of one policy or another, but no one is mentioning the moral absolute involved. The property belongs to the landlord; he has the right to manage it in any way he wishes. Government has no right to interfere.