Most fast food workers in California would get a $20 minimum wage next year — a nearly $5 per hour raise — under a deal announced Monday between labor unions and the industry that will avoid a costly referendum on the November 2024 ballot.
The core issue that causes high rents is significantly greater demand relative to supply. If 2000 people want to move to a city, but only 1000 units are available, then the richest 1000 get apartments and the rest don’t. If you institute rent controls, you still only get 1000 people - perhaps more randomly selected - getting apartments, but you also destroy any incentive for additional housing supply to be created, or even maintained. At best, the people who already have apartments save money while it becomes nearly impossible for anyone to actually move, since moving means that you’re giving up your controlled rent and will face a substantial increase. As this happens, housing stock tends to deteriorate because landlords have zero reason to actually maintain it, because what are you gonna do? Move, and watch your rent significantly increase? No, you’ll stay and just deal with it. Meanwhile, the plucky 22 year old who wants to move to the city struggles immensely because there’s essentially no supply. As the economist Assar Lindbeck - a socialist, I might add - put it: “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”
In situations like this, it’s critically important to understand why rents are high, and there’s more going on there than landlords being greedy. Everyone is greedy, and always has been. It’s not as if landlords in 1970s New York City were just kinder and more generous people. Ultimately, they’ll charge as much as the market will bear, and there are many more factors that go into that than greed. The fundamental issue is a lack of supply, and any solution that doesn’t address that is little more than a band-aid. And that’s not to say that the only solution here is massive deregulation and letting private developers run amok; public housing can absolutely play a role as well. But there’s simply no getting around the fact that if you want to lower market rents, you must either increase supply (Tokyo is an example of city that has done this exceptionally well) or slash demand by making the city undesirable (1970s NYC is an unfortunate example of this). One of those options is obviously more desirable.
There are areas full of empty houses/apartments that still charge far more than what the median employees there could pay; which seems to defeat that logic.
The argument that there’s no incentive to build housing under rent control seems to suggest the only reason you’d build housing is for year-over-year constant increases in profits - and that a simple constant revenue stream has no value at all. Even if large housing companies believed this, smaller competitors might not.
But those high rent areas… Okay I don’t know first hand, but in my reading I’ve been led to believe that it’s because companies like Black Rock come in and buy all the available properties, and whenever a property becomes available they buy it. They can then charge whatever they want and nobody has a choice because they bought all the available inventory, and they have deep enough pockets to outbid any competition. They don’t care if a unit goes vacant because they’re making it up on another unit. You can rent two units for $100, for rent one for $100 and leave the other one vacant; the revenue is the same but you’re actually better off leaving one vacant because you don’t have to pay for maintenance on it, and it’s one less property you have to actively manage. They could actually save money by leaving units vacant.
Yeah. I would expect that the Montreal REM is going to help with housing prices as it extends subway like capacity to large parts of the region that don’t have anything like that. That way, you can increase the area available for transit development.
Rent control being bad is one of the very few things that essentially all economists agree on.
https://www.kentclarkcenter.org/surveys/rent-control/
The core issue that causes high rents is significantly greater demand relative to supply. If 2000 people want to move to a city, but only 1000 units are available, then the richest 1000 get apartments and the rest don’t. If you institute rent controls, you still only get 1000 people - perhaps more randomly selected - getting apartments, but you also destroy any incentive for additional housing supply to be created, or even maintained. At best, the people who already have apartments save money while it becomes nearly impossible for anyone to actually move, since moving means that you’re giving up your controlled rent and will face a substantial increase. As this happens, housing stock tends to deteriorate because landlords have zero reason to actually maintain it, because what are you gonna do? Move, and watch your rent significantly increase? No, you’ll stay and just deal with it. Meanwhile, the plucky 22 year old who wants to move to the city struggles immensely because there’s essentially no supply. As the economist Assar Lindbeck - a socialist, I might add - put it: “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”
In situations like this, it’s critically important to understand why rents are high, and there’s more going on there than landlords being greedy. Everyone is greedy, and always has been. It’s not as if landlords in 1970s New York City were just kinder and more generous people. Ultimately, they’ll charge as much as the market will bear, and there are many more factors that go into that than greed. The fundamental issue is a lack of supply, and any solution that doesn’t address that is little more than a band-aid. And that’s not to say that the only solution here is massive deregulation and letting private developers run amok; public housing can absolutely play a role as well. But there’s simply no getting around the fact that if you want to lower market rents, you must either increase supply (Tokyo is an example of city that has done this exceptionally well) or slash demand by making the city undesirable (1970s NYC is an unfortunate example of this). One of those options is obviously more desirable.
There are areas full of empty houses/apartments that still charge far more than what the median employees there could pay; which seems to defeat that logic.
The argument that there’s no incentive to build housing under rent control seems to suggest the only reason you’d build housing is for year-over-year constant increases in profits - and that a simple constant revenue stream has no value at all. Even if large housing companies believed this, smaller competitors might not.
But those high rent areas… Okay I don’t know first hand, but in my reading I’ve been led to believe that it’s because companies like Black Rock come in and buy all the available properties, and whenever a property becomes available they buy it. They can then charge whatever they want and nobody has a choice because they bought all the available inventory, and they have deep enough pockets to outbid any competition. They don’t care if a unit goes vacant because they’re making it up on another unit. You can rent two units for $100, for rent one for $100 and leave the other one vacant; the revenue is the same but you’re actually better off leaving one vacant because you don’t have to pay for maintenance on it, and it’s one less property you have to actively manage. They could actually save money by leaving units vacant.
Yeah. I would expect that the Montreal REM is going to help with housing prices as it extends subway like capacity to large parts of the region that don’t have anything like that. That way, you can increase the area available for transit development.