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Rent control is a response to higher rents which is a response to higher demand relative to supply for housing. Compounding this problem is that in dense areas, it is more profitable to build Class A housing than lower Class housing*. The answer to rising rents is to reduce inequality (to reduce the allure of appealing to Class A renters) or increase subsidies for lower Class housing and to reduce property values to make building Class B and C properties more profitable. Two things that are never going to happen politically: higher taxes specifically on the wealthy and lower property values. Further, the desire for ever and explosively appreciating housing is partially a result of 30+ years of stagnant wages. If people could afford to retire and do the things they wanted without gambling on housing, they wouldn't be so concerned with house prices and booms (like 1950-1980, give or take). So, we have all the problems one would expect for living in the second gilded age and we should probably fix that first. * Excerpt from LA Times that reflects my experience in LA: quote:Although he predicts that rent growth at the top end might flatten out, the new buildings won't translate into more affordable rents for the broad middle of the market.
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Oct 22, 2014 20:39
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LemonDrizzle posted:This is kind of meaningless. If you have a situation where demand outstrips supply, any increase in supply is going to be helpful and will always be taken up by those with the most money to spend unless you have a seller who hates money and profit involved somewhere. Also, the difference in construction cost between a typical 'luxury' apartment and an 'affordable' one is negligible - the luxury is mainly about nice interior decoration rather than anything structural in most cases. That stuff only adds a few (tens of) thousands to the price of the place - hardly a big issue if prices are out of the average guy's reach by a few hundreds of thousands. It's not meaningless. First off, we are talking renting, not buying. Further, as long as the profit margins on building Class A apartments is larger than building lower Class apartments, builders will continue to chase Class A renters. At some point, the market for Class A might saturate and filter down to the lower Classes, but the over supply has to be large enough to reduce the profit margin from Class A apartments to at or below the level of lower Class apartments. In the meantime you have a two-tier rental market, where building more luxury apartments probably won't increase the availability of lower Class apartments. In the long run, you may be right, but in the short run we need places to rent that don't cost 50% of a paycheck. MickeyFinn fucked around with this message at 02:52 on Oct 23, 2014 |
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Oct 23, 2014 01:57
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