Seattle rent control: how would you like to join a 10 year waiting list for an apt.?

[Axulus]

Dear Seattle,

I am writing to you because I heard that you are looking at rent control.

Seattle, you need to ask your citizens this: How would citizens like it if they walked into a rental agency and the agent told them to register and come back in 10 years?

I’m not joking. The image above is a scan of a booklet sent to a rental applicant by Stockholm City Council’s rental housing service. See those numbers on the map? That’s the waiting time for an apartment in years. Yes, years. Look at the inner city – people are waiting for 10-20 years to get a rental apartment, and around 7-8 years in my suburbs. (Red keys = new apartments, green keys = existing apartments).

Stockholm City Council now has an official housing queue, where 1 day waiting = 1 point. To get an apartment you need both money for the rent and enough points to be the first in line. Recently an apartment in inner Stockholm became available. In just 5 days, 2000 people had applied for the apartment. The person who got the apartment had been waiting in the official housing queue since 1989!

http://www.smartgrowthseattle.org/letter-stockholm-rent-control/

Read a comprehensive view on rent controls here:

http://econjwatch.org/articles/rent-control-do-economists-agree

 

[Togo]

Has this happened in other US urban areas that have adopted rent control?

Is this better or worse then not being able to get such an apartment at all? Such as the situation in London, where a centrally located apartment costs several times more than most jobs pay?

 

[Frikki]

What has this to do with rent control?

 

[untermensche]

The form of slavery known as rent is an old trap invented by the rich a long time ago.

Unfortunately we are still plagued by so many of these traps.

Maybe a system of freedom that is more than the freedom of the rich to enslave and entrap in various ways will one day arise in human affairs.

 

[Draconis]

I don't think that's worse than waiting till you earn enough money to rent somewhere a sensible distance from work.

As for the old canard about rent controls forcing landlords to take property off the market: how are things like maintenance costs and perhaps a mortgage to be funded by an empty house? OK they could sell the property: no big problem there, it will make house owning more affordable.

 

[Togo]

Isn't rent seeking the textbook example of the kind of economic activity we want to avoid?

 

[Trausti]

Luckily, Washington State law prohibits rent control. So no matter how much the lefty loonies in Seattle want it; ain't gonna happen. Word.

 

[Derec]

Price controls lead to increased shortages of a product, be it apartments, gasoline or toilet paper.

 

[ksen]

I agree with Axulus that what we really need is a big push for affordable housing.

 

[crispy]

Price controls lead to increased shortages of a product, be it apartments, gasoline or toilet paper.

Yeah, if the apartments werent that cheap there'd be less people wanting to live in them, thus ending the shortage. Plus, new apartments would be build on all the unused land in stockholm, because it would now be an affordable investment.

 

[Togo]

Price controls lead to increased shortages of a product, be it apartments, gasoline or toilet paper.

Is a shortage of expensive apartments a bad thing? Particularly since expensive apartments are generally made out of cheap apartments?

 

[Loren Pechtel]

Has this happened in other US urban areas that have adopted rent control?

Is this better or worse then not being able to get such an apartment at all? Such as the situation in London, where a centrally located apartment costs several times more than most jobs pay?

I don't think anyplace in the US has been stupid enough to do it as badly as they did.

However, consider my parents' experience with rent control: You could only get "furnished" apartments because the rent control applied only to the apartments, not the furnishings. You would be charged a totally outrageous price for a few sticks of crap and get a lease that would not be renewed. The landlords made up the difference between controlled rates and market rates on that crap--and since they had to buy that crap the cost was even higher than if there wasn't rent control.

- - - Updated - - -

What has this to do with rent control?

When you have rent control there is no incentive to build new apartments. Demand exceeds supply, the only way that can be resolved is by waiting.

- - - Updated - - -

I don't think that's worse than waiting till you earn enough money to rent somewhere a sensible distance from work.

As for the old canard about rent controls forcing landlords to take property off the market: how are things like maintenance costs and perhaps a mortgage to be funded by an empty house? OK they could sell the property: no big problem there, it will make house owning more affordable.

If it's below their operating costs they'll take it off the market.

If it's merely below their total costs it will remain on the market until they go bankrupt or until the land becomes more valuable for other uses.

The important point, though, is that there will be no new construction. The city can't grow because there's no place to move to.

 

[fromderinside]

The important point, though, is that there will be no new construction. The city can't grow because there's no place to move to.

Check out development around third street promenade in Communist Santa Monica friend.

 

[cycomiko]

I don't think the city council will actually go with the rent control option over the Mayor's plan.
http://www.seattletimes.com/seattle-news/politics/2-council-members-to-offer-alternate-housing-affordability-proposals/

 

[Derec]

Is a shortage of expensive apartments a bad thing?

Price control causes shortage of all apartments precisely because you can't make them expensive.

Particularly since expensive apartments are generally made out of cheap apartments?

What do you mean?

 

[bilby]

Popular locations cannot have enough high standard accommodation to go around.

There are only a handful of options:

1) No (or very few) building codes, (with or without rent controls) - lots of apartments get built; anyone can afford one; many are deadly fire-traps and highly unpleasant to live in. Poor people get to live in slums. Rich people get whatever they want.
2) Strong building codes, rent controls - few apartments get built; anyone can afford one; they are nice to live in; but you have to wait decades to get one, no matter who you are. Poor people get to live on the streets for years, but then they get a nice place to live. Rich people get exactly the same as poor people, despite being rich.
3) Strong building codes, no rent controls - few apartments get built; only the rich can afford one. They are lovely, and you can move in tomorrow, as long as you have deep enough pockets. Poor people get to live on the streets forever. Rich people get whatever they want.

Obviously, rich people like option 3; and poor people prefer options 1 and 2, with the balance being struck dependent on how awful the slums are in option 1, vs how long they have to live on the streets in option 2. City officials and law enforcement don't like people living on the streets, so they prefer option 2 over option 1; but obviously those city officials who are also rich also have a selfish interest pushing them towards option 3.

Rich people HATE option 2, because being rich is pointless if poor people are going to get treated almost as well as you are yourself.

 

[credoconsolans]

Quote Originally Posted by Loren Pechtel View Post

The important point, though, is that there will be no new construction. The city can't grow because there's no place to move to.

I understand this in places like Stockholm, but in the US? We build suburbs for this very reason.

 

[bilby]

Quote Originally Posted by Loren Pechtel View Post

The important point, though, is that there will be no new construction. The city can't grow because there's no place to move to.

I understand this in places like Stockholm, but in the US? We build suburbs for this very reason.

Sweden has more land per person than the USA.

Suburbs don't solve the problem, if people want to be in the city. And people do want to be in the city - as shown by the massively higher prices for land in the city vs the suburbs.

New York city is in a worse position than Stockholm, when it comes to putting people in suburbs as a solution; It works in small towns in sparsely populated areas, but that's not what either Stockholm or NYC are.

 

[RavenSky]

Popular locations cannot have enough high standard accommodation to go around.

There are only a handful of options:

1) No (or very few) building codes, (with or without rent controls) - lots of apartments get built; anyone can afford one; many are deadly fire-traps and highly unpleasant to live in. Poor people get to live in slums. Rich people get whatever they want.
2) Strong building codes, rent controls - few apartments get built; anyone can afford one; they are nice to live in; but you have to wait decades to get one, no matter who you are. Poor people get to live on the streets for years, but then they get a nice place to live. Rich people get exactly the same as poor people, despite being rich.
3) Strong building codes, no rent controls - few apartments get built; only the rich can afford one. They are lovely, and you can move in tomorrow, as long as you have deep enough pockets. Poor people get to live on the streets forever. Rich people get whatever they want.

Obviously, rich people like option 3; and poor people prefer options 1 and 2, with the balance being struck dependent on how awful the slums are in option 1, vs how long they have to live on the streets in option 2. City officials and law enforcement don't like people living on the streets, so they prefer option 2 over option 1; but obviously those city officials who are also rich also have a selfish interest pushing them towards option 3.

Rich people HATE option 2, because being rich is pointless if poor people are going to get treated almost as well as you are yourself.

This reminds me of the mixed-income luxury/affordable housing projects built in New York.

Private developers have taken advantage of various programs to construct more than 100 mixed-income buildings like the Chelsea Park over the past two decades, mostly in Manhattan and gentrified parts of Brooklyn. In these buildings, the majority of apartments are market rate, with set-asides, typically 20 percent, for low- and moderate-income New Yorkers. In return for including these units, developers can receive lucrative tax abatements, permission to construct larger buildings and bond financing.

Most of the time it works fine in spite of the occasional door being slammed in your face by a freaked out rich neighbor.

But given half a chance, this is what the luxury developers do instead:

At some mixed-income developments, however, the affordable apartments and the market-rate units are in separate buildings. And then there is the so-called poor door, a separate entrance for nonmarket-rate tenants. That setup has come under fire in recent months, and the city says it is working to revamp a 2009 change in the zoning regulations that allowed 40 Riverside Boulevard, for example, to have the separate entrances.

Mr. Amico's home, the Westminster, on West 20th Street. Credit Richard Perry/The New York Times
“It reminds you of who you are,” said Daisy Fermin, 34, of her living situation in the affordable low-rise component of the high-rise Edge in Williamsburg, Brooklyn. Her building, at 34 North Sixth Street, has neither a doorman nor amenities, and its small lobby is painted an institutional green, with just a few wilting houseplants and an ATM machine. It is a far cry from its sister building, a market-rate luxury tower just a few doors down, where residents enjoy unimpeded views of the water, numerous amenities and a soaring lobby with a fireplace, glossy tiles and a concierge. Douglaston Development, which declined to comment, constructed both buildings as part of a mixed-income project.

 

[Axulus]

3) Strong building codes, no rent controls - few apartments get built;

[citation needed]

I'll present you one concrete counterexample: Tokyo - strong building codes (to make them earthquake resistent, for example), tons of apartments, high urban density, no rent controls, largest metro population area in the world.

I want to see the empirical research you are basing this assessment off of as I can think of many other examples.