As a person living in New York who thinks rent stabilization has been largely more successful than not at achieving its goals, I disagree.
Since I was downvoted for stating things that are factually observed:
https://web.stanford.edu/~diamondr/DMQ.pdf
https://www.bloomberg.com/opinion/articles/2018-01-18/yup-re...
https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent...
https://www.economist.com/the-economist-explains/2015/08/30/...
http://iea.org.uk/sites/default/files/publications/files/Ver...
No, it's not. Rent stabilization is, purportedly, about ensuring that poor or low-income residents specifically aren't pushed out of neighborhoods or New York City entirely due to gentrification and rising rents.
In terms of making housing affordable for those people, rent stabilization is incredibly ineffective.
Their intent has always been to protect existing residents.
Not poor or low income, necessarily, in fact for the most part the original idea was to protect the middle class, not so much the poor. Which should be unsurprising if you have any basic concept of who wields political power in cities.
The key distinction is between people who are already there and people who aren't. Your assumption is a very common one but it's a misconception, and the difference is pretty crucial. It's not that hard to figure out: having massive rent increases possible upon vacancy, as well as almost no means testing (only in one special case) are two of the several obvious tells.
I'm well aware of the history of rent regulation in New York City, and this is flat-out incorrect.
> Not poor or low income, necessarily, in fact for the most part the original idea was to protect the middle class, not so much the poor. Which should be unsurprising if you have any basic concept of who wields political power in cities.
Rent stabilization, in its current form, is a handout to the upper-middle class, couched in rhetoric about helping the "poor" and "working class".
> It's not that hard to figure out: having massive rent increases possible upon vacancy, as well as almost no means testing (only in one special case) are two of the several obvious tells.
This is... not how the rent stabilization law in New York City works.
Or said another way, if you have strong ties to the city and/or are a longtime resident of the neighborhood you win, if you don't you lose.
This has literally nothing to do with who ends up in a rent stabilized apartment.
In fact, new residents are more likely to end up in rent stabilized apartments than existing residents, so rent stabilization has the exact opposite effect of what you're describing it does.
Citation needed on that one.
It has utterly failed in actually dealing with housing
It’s effective at that until landlords abuse the loopholes, which you have to keep closing through legislative whack-a-mole.
This is absolutely false. They just understand, by economics, and history, that it has failed. The best way to decrease rents is to make housing more affordable through supply. Unfortunately it sometimes takes time for supply to catch-up and you get price surges...but you also have special interests, especially in the US (aka real estate firms) that lobby zoning boards to limit development and drive up prices for their own benefit.
This is not even a partisan issue, economists on both ends of the spectrum are in near complete agreement that rent controls are damaging.
To whom?
Rent controls redistribute the value capture from gentrifying neighborhoods away from landlords and towards longtime residents. That's what they're intended to do, and they do that.
What seems to always end up happening is that new residents subsidize the rent controlled ones, which creates this weird lock-in dynamic because people can't afford to move into equivalent housing literally next door. Rent control also gives landlords an incentive to encourage older residents to move. Sometimes they do this with big payouts to people that are willing to leave (I know someone that got offered $10k to leave his current place, but I've heard of payments as high as $50k). Less scrupulous landlords try to accomplish the same thing by letting the living conditions deteriorate to the bare minimum level that code enforcement will tolerate (or lower than the bare minimum, because they know that certain groups of people such as undocumented immigrants are reluctant to contact the authorities).
Not really.
It's landlords that subsidize rent controlled tenants.
The system is redistributive. The value that would have gone to landlords in an increasing rent environment goes to the tenant instead.
Theoretically it can distort the market, provide disincentives to building housing, etc etc. But those are second order effects, and situational, and often very arguable.
In economics terms the subsidy flows from property owner to tenant.
Are there any studies showing the extent to which that is true? I would be curious to see what fraction of the rent control is paid for by landlords vs new tenants. My intuition would be that rent control reduces the supply of market-value housing, which would lead to prices increasing even more (even before you take into account a landlord wanting to compensate for the money they're not making from rent controlled apartments).
There are actually plenty of studies that show that it's not true. Some of them are linked elsewhere in this thread. Your intuition is, in fact, correct and supported by a vast body of empirical research.
This is one of the least-controversial topics among economists. It's very difficult to find a topic on which there's more academic consensus than rent control and its effects. But people dig their heels in and refuse to acknowledge it, even when there's copious research behind it.
As Paul Krugman put it, "So now you know why [people say] economists are useless: when they actually do understand something, people don't want to hear about it."
Consensus changes. Right now many neoliberal market-fundamentalist theories are not holding up well in the context of history.
Several things that are taken as gospel by economists, such as free trade is always good, or that low unemployment is too dangerous because it causes inflation, appear now in retrospect to have caused a lot of misery for the middle and lower classes.
So do I.
> Consensus changes.
Sometimes, it does. In this case, it hasn't. The consensus on this topic is strong.
The fact that it hurts people who might want to move into the neighborhood, or from a rent-control/rent-stabilized apartment to a different one in the same neighborhood or the same building, is not really a goal that rent control is targeting.
Does it work at housing everyone? No, which is why we say it hurts the macro goal of providing affordable housing for all. Does it work at locking people into the apartments that they have, at prices they can afford, so that they won't be forced to move? Yes. Rent control has never really pretended to be anything else.
You could also phrase that as making it hard for people to move in, making it hard for young families to stay in their neighborhood when their housing needs increase, making it hard for older people to downsize. It's really benefitting the residents who are lucky enough to already be in an apartment of the size they need, at the cost of everybody else.
That's not correct. It's a redistribution from landlords to tenants.
It's at least possible that there are also dynamic effects on the larger market, of course, but it's intentionally misleading to act like the "tax" is on people that aren't a party to the transaction. The cost/money that would have been captured by the landlord is instead captured by the tenant. The core of the mechanic is pretty straightforward.
The landlords are taxed; you're not wrong. But they're not the ones most hurt by these policies.
Like it's just "proven" not to work, as if there's some kind of objective science that exists independently of values and assumptions.
Rent stabilization is intended to keep permanent residents of the apartments in question from being forced to move by rent increases. It does exactly that thing.
https://web.stanford.edu/~diamondr/DMQ.pdf
https://www.economist.com/the-economist-explains/2015/08/30/...
and plenty more throughout.