The Argentine president, known for his free-market stance, repealed a law that had imposed restrictions on landlords and significantly reduced rental availability.
If the rent is no longer profitable, the landlord’s best interest is to sell the property. They are not compelled to maintain ownership of a building full of unprofitable people.
Unless of course they cannot sell it because others won’t buy it.
Unprofitable for Landlord A means unprofitable for Landlord B.
When property is profitable, housing construction becomes profitable. When housing construction is profitable, housing construction happens.
A free market is based on consent. When people want housing, that is the market force that makes housing worth creating. But only if consent is allowed to happen. Without it, there is no force that transmits one person’s yearning for housing into another’s motivation to construct it.
The government can of course force people to build housing, but the whole thing is less efficient than when everyone is involved in economic interactions they consented to.
If they can’t sell it because nobody will buy it, lower the price. Eventually the price will go low enough for the tenants to buy it themselves. It’s basic economics.
Now everyone involved consents, unlike when the rent is raised on tenants who have no recourse.
…Except that it’s entirely possible that the landlord decides that they’ll sit on the property rather than selling, if they would have to sell at a loss.
Freakonomics did an episode or few about rent control, and how it creates disincentives to building more housing. And, because people know that they won’t be able to find similar pricing if they move, people that want to move, or would move if they could, don’t. Copenhagen is another great example of a city with terrible supply because of the way rental prices are controlled. (Not that rent is controlled at all, but the way that it’s implemented.) Rent controls a la New York City seems like it’s a good solution, but it ends up working quite badly. You can create and manage other incentives to make sure there is enough housing for everyone, at prices people can afford, but rent control simply doesn’t do it.
Freakonomics did an episode or few about rent control, and how it creates disincentives to building more housing
It creates a huge issue. Since the rent is controlled, every new home built would be losing money as a rental. The poor still can’t afford the new home price but nothing else is brought into the market.
Normally, the new homes would rent for more, which would keep the lower-quality homes at a lower price.
IMO, the option that appears to be the most effective for controlling rent is to have housing that is publicly owned, and non-profit. When it’s done well–and it is done well in NYC, for instance–it creates affordable, high-density housing that’s decently maintained. Such housing remains affordable because there’s no profit motive involved in the building or maintenance. On the other hand, it can also be done badly, such as with all of the public housing projects that were built in the 60s and 70s in Chicago; then you have horrible, crime-filled slums that are owned by the city, but have zero maintenance.
Obvs. private industry hates public housing, because they can’t compete with it. But overall, it’s likely the most effective way to ensure adequate housing in urban areas.
I hate public housing because it typically declines in quality, and crimes spawn from that. I have not seen NYC and how they did it, but I have seen Cabrini Green, and that is what we need to avoid. It became a wasteland.
Cabrini Green, and the other housing projects in Chicago, seem to have been the exception rather than the rule. There are a fairly large number of housing projects in NYC, and most of them are quite decent, far better now than Cabrini Green and other CHA projects were at their best. Ultimately, the issue seems to be Chicago in particular, rather than housing projects in general. The decline in quality is almost always because of a lack of willingness to do basic maintenance. That was certainly one of the major issues that dragged Cabrini Green down; there were smoke stains on at least two of the buildings due to fires that had burned out apartments, and the city had just boarded those apartments up rather than renovating.
The CHA still has housing projects in Chicago, but they’re mostly mixed-income now, with a certain number of units allocated for housing choice vouchers (AKA section 8), with the remainder being market rate; the market-rate units end up covering the maintenance costs for all of the units. The ones I’m most familiar with were built across the street from Cabrini Green, right in the Gold Coast area, and, last I knew, were doing quite well. But, to bring it back around, those were started under Rahm Emmanuel, not one of the Daleys.
Cabrini Green, and the other housing projects in Chicago, seem to have been the exception rather than the rule.
Pruitt-Igoe enters the chat.
Glenny Drive
Father Panik
The large projects they built in the past always failed. The new model is smaller, spread in normal neighborhoods that seem to work much better.
It wasn’t a willingness to do it; it was a lack of money. The rent charged should cover all expenses. The average person think landlords just roll in cash but the truth it, it is expensive to maintain a property.
If the rent is no longer profitable, the landlord’s best interest is to sell the property. They are not compelled to maintain ownership of a building full of unprofitable people.
Unless of course they cannot sell it because others won’t buy it.
Unprofitable for Landlord A means unprofitable for Landlord B.
When property is profitable, housing construction becomes profitable. When housing construction is profitable, housing construction happens.
A free market is based on consent. When people want housing, that is the market force that makes housing worth creating. But only if consent is allowed to happen. Without it, there is no force that transmits one person’s yearning for housing into another’s motivation to construct it.
The government can of course force people to build housing, but the whole thing is less efficient than when everyone is involved in economic interactions they consented to.
If they can’t sell it because nobody will buy it, lower the price. Eventually the price will go low enough for the tenants to buy it themselves. It’s basic economics.
Now everyone involved consents, unlike when the rent is raised on tenants who have no recourse.
…Except that it’s entirely possible that the landlord decides that they’ll sit on the property rather than selling, if they would have to sell at a loss.
Freakonomics did an episode or few about rent control, and how it creates disincentives to building more housing. And, because people know that they won’t be able to find similar pricing if they move, people that want to move, or would move if they could, don’t. Copenhagen is another great example of a city with terrible supply because of the way rental prices are controlled. (Not that rent is controlled at all, but the way that it’s implemented.) Rent controls a la New York City seems like it’s a good solution, but it ends up working quite badly. You can create and manage other incentives to make sure there is enough housing for everyone, at prices people can afford, but rent control simply doesn’t do it.
It creates a huge issue. Since the rent is controlled, every new home built would be losing money as a rental. The poor still can’t afford the new home price but nothing else is brought into the market.
Normally, the new homes would rent for more, which would keep the lower-quality homes at a lower price.
IMO, the option that appears to be the most effective for controlling rent is to have housing that is publicly owned, and non-profit. When it’s done well–and it is done well in NYC, for instance–it creates affordable, high-density housing that’s decently maintained. Such housing remains affordable because there’s no profit motive involved in the building or maintenance. On the other hand, it can also be done badly, such as with all of the public housing projects that were built in the 60s and 70s in Chicago; then you have horrible, crime-filled slums that are owned by the city, but have zero maintenance.
Obvs. private industry hates public housing, because they can’t compete with it. But overall, it’s likely the most effective way to ensure adequate housing in urban areas.
I hate public housing because it typically declines in quality, and crimes spawn from that. I have not seen NYC and how they did it, but I have seen Cabrini Green, and that is what we need to avoid. It became a wasteland.
Cabrini Green, and the other housing projects in Chicago, seem to have been the exception rather than the rule. There are a fairly large number of housing projects in NYC, and most of them are quite decent, far better now than Cabrini Green and other CHA projects were at their best. Ultimately, the issue seems to be Chicago in particular, rather than housing projects in general. The decline in quality is almost always because of a lack of willingness to do basic maintenance. That was certainly one of the major issues that dragged Cabrini Green down; there were smoke stains on at least two of the buildings due to fires that had burned out apartments, and the city had just boarded those apartments up rather than renovating.
The CHA still has housing projects in Chicago, but they’re mostly mixed-income now, with a certain number of units allocated for housing choice vouchers (AKA section 8), with the remainder being market rate; the market-rate units end up covering the maintenance costs for all of the units. The ones I’m most familiar with were built across the street from Cabrini Green, right in the Gold Coast area, and, last I knew, were doing quite well. But, to bring it back around, those were started under Rahm Emmanuel, not one of the Daleys.
Pruitt-Igoe enters the chat.
Glenny Drive
Father Panik
The large projects they built in the past always failed. The new model is smaller, spread in normal neighborhoods that seem to work much better.
It wasn’t a willingness to do it; it was a lack of money. The rent charged should cover all expenses. The average person think landlords just roll in cash but the truth it, it is expensive to maintain a property.
They have recourse. They can move or pay the rent.