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.
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.
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!
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.
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.
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.
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.
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.
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.
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.
As a renter in a nice neighborhood in Chicago, I can think of nothing better this city could do for me personally than to freeze my current rent for the next 20 years. I'd never move, chances are my income could be more than double in 2044 what it is today and yet the city would have seen fit to let me pay 2024 rent forever! What a great deal for me personally! I guess kids in HS or college today that might wanna live in this city someday should go to Texas, where they seem to understand free market economics.....
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!
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 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
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.
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
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.
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.
Do you have an
English version?
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!
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.
*¡ALWAYS FOLLOW THE MONEY!*
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.
So, my question is, what “lost profits” are landlord’s losing? Future profits? They gat 5% per year…..
If rent control is bad, then so is l
all the other measures: section 8, for example. Same effect.
Really wanted to listen but someones put annoying jingles over your voice
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.
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.
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.
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.
This should be a series (rent control, affordable housing, etc)…such an important topic right now
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.
How does a city encourage new housing?
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.
As a renter in a nice neighborhood in Chicago, I can think of nothing better this city could do for me personally than to freeze my current rent for the next 20 years. I'd never move, chances are my income could be more than double in 2044 what it is today and yet the city would have seen fit to let me pay 2024 rent forever! What a great deal for me personally!
I guess kids in HS or college today that might wanna live in this city someday should go to Texas, where they seem to understand free market economics.....
The video didn't say anything about rent freezes. What's your point?
@@Kevin-tr6jsrent freeze is rent control by another word.
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!
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 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
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.
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
Rent control = wage control
Rent control allows employers not pay a wage which allows the employed to have a home close to work.