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Comment by smil | Hacker News Reader

It is the same in Stockholm, or worse even. Because of rent control, nobody builds rental apartments because it isn't profitable. Most rental apartments have been sold due to unprofitability and have been turned into owners apartments. The few rental apartments that still exist are rent controlled and you pay with a different type of capital to get those -- social capital. Or you can spend 15 years of your life in the housing queue. There literally is no rental market, rental agencies don't exist.

As a result, Sweden has the world's largest housing bubble and by some measures the highest private debt of any country.

You can not find a more segregated, class-based society in the developed world.

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> Because of rent control, nobody builds rental apartments because it isn't profitable.

I'd like to understand this better.

I live in a city of a quarter-million people in a US state that no one in tech cares about. There's no rent control here. I pay $400 plus utilities for a 1000-square-foot apartment in a decent location. Clearly my landlord is making a profit off of this and similar apartments at $400 a month. But I'm often told that, if my apartment was in New York, he'd be taking a loss even at $2000 a month. Why is that?

The only difference that has occurred to me so far is the initial cost of the land in a dense city, which could potentially be enough to tie up many years of profits. But that's still just a one-time cost. What am I missing?

Yearly property taxes.

> But I'm often told that, if my apartment was in New York, he'd be taking a loss even at $2000 a month. Why is that

One explanation is the huge upfront investment. The median apartment goes for $900k in NYC these days [1]. According to google's mortgage calculator[2], a 30 year mortgage for $900k will mean a monthly payment of $4.2k.

That means somebody buying an apartment on mortgage will have to rent it for $4.2k a month just to break even.

Then there's also opportunity cost. If there are people willing to pay X for something, you are technically losing a lot of money by selling/renting for less than X.

[1] http://www.nytimes.com/2015/01/18/realestate/what-750000-buy...

[2] https://www.google.com/webhp?sourceid=chrome-instant&ion=1&e...

Fun fact: The average mortgage repayment time in Sweden is 120 years.

A landlord has to cover several things out of your rent: interest on the underlying mortgage, property taxes, maintenance.

Note that landlords rarely buy the underlying property in cash. It's an extremely inefficient use of capital. Having a mortgage allows you to increase your leverage.

I recall running into a pensioner at Akkurat on my last visit. He was complaining about his 350 euro rent controlled apartment in Gamla Stan. I just shook my head - one the low rent; two he was drinking and eating at Akkurat which isn't the cheapest place.

Even if this person was not rich as measured by capital, he is somehow privileged in other ways. Like running in the right social circles and knowing the people who hand out these rental contracts. Typically, people in media, the culture sector, and politics, know each other and do each other these kind of favors. It's how corruption works in a society where power and influence have been consolidated over decades.

Me, I moved to China.

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