Can confirm via my own experiences. Had a job in a SV firm, and paid just barely enough to try and get on the housing ladder. Four years and a 40-60% price increase later, and I got laid off without managing to successfully buy a home.
Since the layoffs, I’ve taken a sizable paycut (~$75k TC) to make ends meet with whatever I could find, but kept a pulse on the market in case things turned around. Locally, rents have gone down by ~$100-$500 a month (depending on when you renew) with one to two months free rent, while home prices have finally stopped rising. Homes are staying on markets longer, and bidding wars have dried up. I get about one to three price cut messages a day from Redfin, though nothing in my area or price range post salary cut.
Unfortunately, I don’t expect this trend to continue. My landlord just introduced a new RealPage-alike to keep rents high, local developers have put a hold on new housing construction as resources get consumed for AI datacenters, and the same old red tape blocks meaningful progress in addressing availability gaps. The only real bright spot is that renters are pushing for statewide rent caps and controls with better progress than ever before, so there might be some relief in sight next election.
It’s bad out there, ya’ll.
Rent control is not a great solution long term since it reduces the incentive to build more housing which is the only real fix. It ends up making the problem worse. I could see in times of economic downturns, a temporary rent control that automatically expires to help people figure out their situation short term (moving is expensive).
Populist rent control is an excellent motivator to get counter-parties to the table to discuss productive alternatives in a market where no outside pressure currently exists.
There is no silver bullet solution. Rent control can be a big part of that solution, but what’s ultimately needed are a combination of policies that disincentivize the hoarding of housing as an asset class, promote home ownership itself for stability and community rather than fiscal nest egg, mandate denser housing in areas served by mass transit, tax land properly by removing caps on yearly increases, protect renters from unnecessary evictions (lack of renewals, no-fault evictions, etc), removing zoning laws on residential and commercial space (essentially reducing zoning laws to industrial vs non-industrial) to speed up approvals for construction, and get the government more active in meeting the needs of its populace through public housing programs (like Singapore does).
It’s highly complex and nuanced. I’ve long since stopped entertaining smug clapbacks from armchair economists who aren’t involved in the boots-on-the-ground issues at hand.
This is the economist theoretical consensus justification though in real life tbh I dunno if I've noticed any real difference when looking at housing development patterns across Canada where there are many jurisdictions with rent control, many without, and many with some sort of blend (ie. no rent control on new builds).
If there is some incentive toward development in non-rent control jurisdictions I suspect it's strongly dominated by other factors.
(ie. Montreal probably has the most restrictive rent control in Canada but it's also seeing the strongest apartment development growth)
This comment just indicates the difficulty of making accurate conclusions based on casual analysis like you're doing.
there is actually great causal research on rent control, why would you think there isn't? it's the "credibility revolution" and someone has won a nobel prize for it.
rent control causes limited mobility (read: displacement out of town) by 20 percent; it causes reduced rental housing supply by 15 percent:
https://www.aeaweb.org/articles?id=10.1257/aer.20181289
rent control causes reduced property values:
https://economics.mit.edu/sites/default/files/publications/h...
sure the NYTimes doesn't talk about this stuff at all, but podcasts do, and not like, niche podcasts, this is on freakonomics, econtalk, etc.
here's an episode of freakonomics where they talk about the exact issue you are commenting on, that people struggle with causation and correlation:
Did you write an entire comment by misreading "casual", the word I used, with "causal"? Otherwise, I have no idea how your reply relates to mine, as I didn't make any claims about the existence of such research.
People are able to move around, to some degree, so housing prices are a function of supply across most of the nation. Or at least the desirable portions.
Rent control on the other hand has mostly local effects.
Which means, rent control can push prices down and keep them down. There is indeed a supply reduction, and prices on average will go up—but not in the rent controlled area.
It’s still a poor idea, but it requires centralised planning to avoid.
I've kept hearing for a couple of years that Canada has an outrageous housing shortage, though?
If house prices and rent being this much higher than they were in, say, 2000, relative to wages, wasn’t enough to trigger an enormous housing construction boom, I don’t think further-increasing rent or house prices are likely to do much good. Something about that “signal” is already badly malfunctioning.
The pricing signal malfunctions when homeowners and landowners control land use to such a degree that regulatory constriction stops housing. Usually this is zoning as the primary blocker, but there can be other blockers too.
One of the problems with rent control is that it pushes the class politics so that renters with housing act more like landowners than they do new tenants, and they conspire to also block housing, because people are change averse, even if they don't mind the change afterwards. This hurts any tenant that needs to move due to things such as becoming an adult, finding a new job, starting a family, getting a divorce or ending a relationship, etc.
Rent control is great as a tenant protection to prevent evictions via rent increases, but it is only a short term protection for tenants otherwise, and can hurt tenants greatly if there's not enough building.
The lack of construction is mostly to do with most major US cities just not allowing enough construction. You can see the contrast with the handful of places like Austin that do allow construction, where rents have consistently dropped year-to-year even though the population has increased significantly.
This. It’s NIMBY politics at the local level. Go to your county/city board meetings and ask for plans.
> Rent control is not a great solution long term since it reduces the incentive to build more housing which is the only real fix.
In California (and SF in particular) rent control applies to housing older than 15 years and owned by corporate entities.
How does rent control applied as it is in California disincentivize building? I would think that building would be incentivized by rent control because newer housing stock would be exempt from rent control.
I find that rent control is a good idea in theory, but leads to a lot of deadweight loss. As a former renter, what I really wanted was a predictable cap on rent increases. For folks who are long-term renters, without controls and predictability, their only option would be to move every few years, which is incredibly disruptive.
From my understanding, European countries tend to have restrictions on what lease renewals can look like and with declining home ownership (and ownership being priced out for many), I think we should look at European models for real solutions to our housing crisis.
This is an important distinction. Most "rent control" laws are intended to be "rent stabilization" not outright price fixing. Their goal is to prevent insane swings in rent happening too quickly, which disrupts families and local economies (and even infrastructure development).
But the worst/most aggressively laws are always used as the examples, skewing the conversation to edge cases and ignoring the fact that these laws can and do take hundreds of different forms.
RealPage is gaming rents against tenants. It’s artificial rent inflation by algorithms. I agree on rent control. But unless realpage is controlled and regulated rent control is the only option.
In SF rent control only applies to buildings that are like 40-50+ years old. Yet people still complain as if it stops new housing. If you combine this with the idea that rent control raises prices for everyone else, you'd think people would be knocking down the doors to build: artificially high rents for decades.
Rent control absolutely causes a reduction in supply: there's a reason rent controlled buildings have apartments in poor condition that owners do not renovate (so a reduction in quality supplied) and many are held off market or converted to owner occupancy through condos and TICs (so a reduction in quantity supplied). Not to mention the units underused by long term tenants who maintain them as secondary residences.
If the price without collusion is $X and the monopoly pricing behavior raises it to $(X+1), you can cap it at $X without causing any problems.
You're making quite a few assumptions
And for some hard data, here's a meta-study on the subject: https://www.sciencedirect.com/science/article/pii/S105113772...
> [A]ccording to the studies examined here, as a rule, rent control leads to higher rents for uncontrolled dwellings. The imposition of rent ceilings amplifies the shortage of housing. Therefore, the waiting queues become longer and would-be tenants must spend more time looking for a dwelling. If they are impatient or have no place to stay (e.g., in the houses of their friends or relatives) while looking for their own dwelling, they turn to the segment that is not subject to regulations. The demand for unregulated housing increases and so do the rents.
> Rent control is not a great solution long term since it reduces the incentive to build more
It is exceptionally rare for new construction to be subject to rent control laws, unless they utilize special tax breaks or government subsidies. It does nothing more than slightly inconvenience the investor class, who usually aren't thinking past 15-20 years anyway, when rent control laws might theoretically impact their investment.
You say rents are going down... but you want rent control? That's one way to ensure rents will never, ever go down. Every landlord will charge the statutory maximum.
Vancouver has rent control and rents are going down.
Though I think the likely dynamic that you're seeing here is rent growth of new build apartments is stalling and reversing, and on renewal with new tenants rents are being revised downward as there is more competition.
https://www.ctvnews.ca/vancouver/article/rent-prices-falling...
I expect that amongst apartments with long term tenants rents are still creeping upward. But that's fine. The point of rent control is to smooth out volatility. Rents can still go up, but the goal is to avoid sudden 150% increases etc.
> The point of rent control is to smooth out volatility. Rents can still go up, but the goal is to avoid sudden 150% increases etc.
Is it? I mostly see rent control maximum increases below the inflation rate, suggesting a different goal (appealing to voters?). If it were just to eliminate extreme volatility I think we'd see more 5/10/20% increases and less 1/2/3% increases.
As opposed to the status quo where rents never ever go down and landlords charge the literal maximum?
>RealPage
This monopolistic pricing is a massive part of the issue. Hopefully the case the DOJ brought against them is progressing well. They've essentially created a cartel of landlords trying to squeeze you for every single penny.
> Hopefully the case the DOJ brought against them is progressing well
They reached a settlement with the DOJ last week [0].
0: https://www.realpage.com/news/realpage-reaches-settlement-wi...
The case concluded with a settlement that RealPage would no longer share data between competitive landlords.
https://www.justice.gov/opa/pr/justice-department-requires-r...
As opposed to now, where they charge the maximum they can get away with, while also colluding with each other to raise prices? Yes.
> My landlord just introduced a new RealPage-alike to keep rents high
You should get in touch with your state AG, and point to the precedent for this being considered illegal.
RealPage just settled with the feds, and that settlement only includes data collection to determine if its collusion in the future
So I would say anyone in the present is out of luck here
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You are mistaking your own opinion for a generalized truth.
If you're currently renting, and expect to keep renting for a long time, state-wide control does seem in your interests?
It might ultimately depress new construction and certainly isn't good for landlords, but makes sense to me a renter would want rent control.
Unless you expect to be renting in literally the same physical house, state-wide rent control isn't in your interests.
No, because rent control isn't portable and most people's housing needs change over time. The person who can hold onto a house for 20 years straight is the outlier.
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You work in tech and are somehow convinced working on a blockchain app is a good thing? We should make employees pass a basic economics test!