Rent control returns to New York

The bills announced on Tuesday night by the Democratic leaders of the State Senate and the Assembly would abolish rules that let building owners deregulate apartments and close loopholes that permit them to raise rents.

The legislation would directly impact almost one million rent-regulated apartments in New York City, which account for more than 40 percent of the city’s rental stock, and allow other municipalities statewide beyond New York City and its suburbs to adopt their own regulations…

The rent regulation package, which is expected to be approved before the end of the week, is perhaps the most resonant symbol of the change in power in Albany since Democrats took complete control in November.

Republicans had dominated the State Senate for most of the last century and formed a close alliance with the New York City real estate industry, which donated heavily to Republican senators.

The elections in November not only brought Democrats to power in the State Senate, but also saw the rise of progressive lawmakers who fiercely opposed real estate interests.

Here is the full NYT story.  Perhaps someday I will write a book or essay called The Great Forgetting


'Republicans had dominated the State Senate for most of the last century and formed a close alliance with the New York City real estate industry, which donated heavily to Republican senators.'

Rare that this web site so clearly highlights the clear relationship between politics and donations, at least when it involves the rich getting richer.

One trusts that those real estate developers received value for their money, from an orthodox public choice perspective.

It's frustrating to see that even on a blog like MR, there are so many commentators who seriously seem to believe rent control is a good thing.

It raises the question of how far the many good arguments of people like TC even penetrate his own readers. Maybe they don’t penetrate at all? People only want to hear what they’ve always believed in anyway?

The benefits of not having rent control is supposed to be that this lets landlord's raise prices and this gives incentives to developers to build more apartments. Supply is raised and rents end up falling. Doesn't seem like rents have been falling much in NYC despite adding a lot of supply. Building tonnes of high-end luxury apartments does not end up trickling down to lower rents generally.
I can go through the entire theoretical argument but if a policy doesn't show real material benefits people will stop supporting it. That some Chicago economist proved something mathematically in an econ journal article from the 1970s doesn't really change this.

Rent Control might not help things have bad side effects, but arguments don't penetrate - results do and those have been lacking.

The tight development restrictions found in SF and NYC guarantee that development cannot keep pace with demand and prevent rising prices. Blaming the lack of rent control for failure to solve problems caused by development restrictions is absurd.

Do note, though, that in NYC, the changes apply to existing rent-controlled and rent-stabilized units only -- making it much harder for them ever to be converted to market-rate units. Newly constructed units (and those built after 1974) still won't be affected. But for how long? If you were a developer deciding between building apartments or condos, would you take the risk that, in this 'progressive' political climate, rent-controls won't be applied to your building at some not-too-distant date?

No I understand why deregulated rent prices didn't lead to lower rents in SF and NYC. I don't blame the deregulation itself for that. But that's the point you can't really go around advocating for policies that won't deliver material benefits due to other factors and then getting hissy when support for those policies doesn't hold up.
It likely won't matter much overall either way in NYC and SF if there is rent control or not. With rent control some people living in rent controlled buildings will benefit, at the margin developers may build fewer apartments but whatever they were doing before now wasn't helping to reduce prices much either. There's always the counter-factual that it will be even worse with rent control but, as I say, what is the "great forgetting"? If people really felt they benefited they wouldn't forget.

Even if development-friendly policies had been adopted too, rents and home prices might still be higher than many people think they 'should' be and we'd still have claims that these policies had 'failed to deliver' and 'didn't hold up'. If a majority of voters come to reject the basic effects of supply and demand, we're well and truly f**ked anyway.

For some value of 'we'. Not living in or anywhere near SF or NYC, I really don't have any skin in the game. My message to 'progressives' supporting these policies is -- you voted and got what you wanted, now enjoy getting it good and hard (as Mencken put it). And for non-progressives stuck there? Sorry folks, but I recommend foot-voting (there's a big, beautiful country out there).

I don't think the policy changes will have much effect either way. Sorry but the benefits of living in NYC/SF are so great that even all the bad progressive policies can't drive people away.

"...even all the bad progressive policies can't drive people away"

We'll see. More than half of Californians want to leave the state -- including 63% of millennials.

Blah blah blah but they don't leave, everyone complains but then they take a look at Ohio.

Not really taking a side here but I will say that lately I've heard about how some of these new fancy developments were having a hard time attracting renters. There's a chance the supply/demand was reaching it's logical conclusion.

The only other thing I'll say is if this slows growth a bit, maybe that buys some time for infrastructure to catch up since the city has been on a trajectory of adding more housing and people but the subways/roads/whatever have struggled to keep up...and the increased tax base hasn't exactly led to improvements....

You might be right if the supply of Saudi princes and chinese millionaires for buying luxury apartments is starting to be tapped out then you could finally begin to see supply up-ticking in lower priced markets. That was always the idea that if you let the developers build luxury apartments eventually the supply would trickle down but with such a long lag-time its not hard to see why the policy doesn't gain strong support.

But real talk, I don't think it was in reference to that level of luxury housing, just more run of the mill nice 'gentrification' buildings.

Thesodpoodledemographicgot deplatformed

The sod poodle baseball team!

There is no lag, the effect is immediate. Luxury people move into the luxury apartments and leave the older homes to lower-income people.

Not if the Luxury Apartment was formerly a lower-income apartment.
There may be a phenomenon wherein landlords renovate to convert lower-teir housing into luxury apartments or condos and then leave them unrented or sell them to people (chinese millionaires) that leave them unoccupied (because they are just looking for a place to park assets).
That could result in a reduction in rental stock.

I blame tenants rights laws however, for making it unprofitable to actually rent those apartments out, because of the risk of being unable to remove the tenant when the owner wants to occupy the apartment themself, for instance. Said Chinese millionaires might want a vacation spot in SF, and they aren't going to rent it out the rest of the year if they can't actually use it as a vacation spot. Or they might have heard about the hassles of having tenants and don't want ot take the risk.

"...everyone complains but then they take a look at Ohio."

But they don't move to Ohio. They mostly move to other west coast, southwest, and mountain-west states. There's a whole lot of 'not-California' out there to choose from.

Have you ever heard of hysteresis? Resistance to change or movement. It describes reaction to an input of some kind; nothing happens, then it all happens suddenly and quickly.

This is why not remembering is foolish. Much of the social landscape that we see today with social divisions stem from the collapse of cities in the 60's and 70's. People left cities, walled communities were built. It was a generation where division based on social standing was cemented then perpetuated. Many cities were fixed by first improved policing, by dismantling the social housing structures and making them the economic centers.

You can take a working system and milk it for 5-10 years without any apparent consequences. Then you pay for it all at once. These politicians are blithering idiots.

I would posit that a rent that is affordable by a working class person would not even pay the property taxes, fees and government imposed expenses of operation, not even counting the massive regulatory expenses involved in development and construction.

What are the benefits of living in NYC/SF ?
I'm not exactly sure, personally. I mean, sure, New York has theater productions and lots of walkable neighborhoods with nice coffee shops, but lots of other places have that stuff. What can you get in New York that you can't get anywhere else?

Both cities are very important as hubs for high-paying industries. Humans will always congregate together for that, no matter what the 'internet means everyone can be remote' people say.

So people want to leave but can't for their careers. Many do leave when they retire.

They are less and less important. Tech including biotech is discovering greener cheaper pastures in places like Austin. Bank jobs are trickling out of NYC.

If you want to make it in finance or tech or theater or most other industries, you need to be 'in the mix', able to see people face to face in your industry, to meet them out socially, to run into them at the gym. This matters, and it's proven by public choice. That's how most of humanity operates, we are social animals. Some humans are not wired this way, but they are a small minority. Agglomeration effects are not less and less important.

That's what conferences are for. You really don't need overrated overpriced 'holes like SF or NYC for that.

That's exactly why the overpricing persists, and always will, as long as those places are industry hubs. Conferences are not enough. You have to swim in the water with all the other important fish in your industry. Agglomeration is a real thing. Your hatred of those cities is clouding your reason.

1) That's not the reason. The reason is entirely constriction of development by local government.

2) No you really don't have to swim with the fish in your industry. This is all just clique poseur nonsense. Boston and other parts of MA have these hubs too

3) I only hate those two cities because they suck

Why so angry?

1. That's a factor, but it means nothing if people don't want to live there. And they do. Lots and lots of them. Demand is a thing too, just like supply.

2. Boston and NoVA are also pretty expensive. There are always exceptions, but if you want to make it in finance or tech or media, you will not go far living in Iowa.

3. Whatever the reason, it's clouding yours.

Calgary and Houston are brimming with people moving in for different industries. They aren't expensive because you can build there.

They're also way better places to live because of lower taxes and the lack of human waste in the streets (pertinent to SF). I'm not the one with clouded reasoning. It's probably the person who give the kneejerk defense of NYC and SF.

Just answering a question about why NYC and SF are desired locations. You're very triggered by this for some reason.

But Silicon Valley is not actually "in" San Francisco. It's closer to San Jose. There are lots of places you can live within commute distance from the Google headquarters that are not in SF.
In the tech industry there also also lots of other areas where the tech industry concentrates, outside of SF and NYC. Northern Virginia has a huge tech corridor running along the Dulles highway, including many headquarters and regional offices.
You don't "have" to be in SF or NYC to make it in technology.

Finance, maybe. I don't know since I'm not in finance. But you really don't have to be in SF at all, even if you want to be in the top echelons of technology. You could just live in San Jose.

Doesn't change the point. You asked what do you get living in NYC or SF/Bay Area, and I told you. You get to swim in the same water as the people who matter in certain industries. You and Cytotoxic are saying you personally don't see any reason to live there. But millions of others have very good reasons to.

SF here stands for the whole Bay Area. There are parts of SV just as expensive like Palo Alto. The bigshots will always agglomerate in the most expensive parts, and the rest will live as close as they can afford.

" You get to swim in the same water as the people who matter in certain industries."

IOW, you get nothing but networking effects. LinkedIn does that better cheaper.

I guess those cities will be emptying out soon.

NYC is starting to. Tens of thousands left on net last year.

Probably be pretty empty in a few years.

The novelty of living in NYC. Other than that, beats me. If I have to live in one of these overblown mega-megalopolises I'd rather live in Singapore or HK or what the AIFC will probably become.

Fat paychecks. The stimulation of the city is great, but people really come to NY and SF to make their fortune, which isn't really possible in Kansas City or Cleveland.

How long is the process in New York from concept to occupation for a residential complex? How much of that time is construction?

Rent control isn't going to help. The best scenario is cheaper rent in a building that is falling apart.

Remember Tyler asking why it matters that infrastructure projects take way to long and are vastly over budget? This is why. You pay for these things in your rent. That is another way to keep your rent down, don't build bridges and subways, and let the existing ones fall apart.

The forgetting won't last. It won't be a matter of not paying higher rent, it will be not being able to find somewhere to rent at the regulated prices. The effects will be quick. Revenues to the city will drop and immediately be reflected by policing levels, which will show up quickly in increased crime rates.

Remember the discussion about the Laffer effect? I said that the cost of regulation is never mentioned in these discussions as a tax that has an equivalent effect. You will see this in New York. Quickly and very dramatically. There won't be money for social housing.

Oh for the days when the most serious problem New York had to deal with was loosies?

We have a more serious problem now which is how hard it is to find loosies. No bueno.

New York has not been "adding a lot of supply." NYC has been authorizing about 2.4 housing units per 1000 residents recently, compared with 11 in Austin, TX.

NYC housing stock grew by about 8% between 2000 and the end of 2016, but the number of jobs in the city grew by more than 16%.

Hope this is in the right place as a reply to 'who seriously seem to believe rent control is a good thing.'

I have basically no opinoion about rent control at all, but there is no question that both NYC landlords and NYC tenants do, and they hold different positions. Which is what public choice economics tends to focus on - how does the political process benefit different groups, and in what way are politicians merely tools of various interest groups, as compared to guided by any principles other than power seeking? (Or rent seeking, as the case may be.)

Is there a human right to live in an inexpensive NYC apartment? What's wrong with 100% of rentals in NYC being high end luxury apts? If every single janitor quits and moves out of NYC upstate, whouldn't investment banks increase janitor's salary until they would be able to rent there again?

They would increase it until he is willing to spend 2-3 hours commuting per day.

"One trusts that those real estate developers received value for their money, from an orthodox public choice perspective."

The good news is that citizens also received value for the real estate interest' money! The generous real estate people donated their money in the public interest. The public benefited from more renting choices, better products and price competition.

If the rent control passes, a small collection of unelected bureaucrats and their chums will be the main beneficiaries. Prices may be held back a little, but probably not much. Of course, real estate holders will be screwed because the future value of their property will take an immediate hit, and renters will be screwed because what's the point in investing a property of declining value?

But no doubt, community activists, with their long experience in real estate and investment management are the people we want making the decisions.

I'm a big ol' commie who can't stand most of the libertarian bullshit on this site, and even I'm opposed to rent control.

At best, it works to preserve some of the "character" of a neighbourhood or city. But it does this by subsidizing the lifestyles of the "old families" of the area -- people who have been in city multiple generations and who have extensive social connections. Many of these people are wealthy and don't need the subsidy, making this a regressive policy. But some of these families are not wealthy and would have to move on without the subsidy. So you get old Jewish retirees and their artist kids living in big lofts in Soho and the UWS in Manhattan, for instance, who otherwise would have to relinquish their choice real estate to investment bankers or the artist children of wealthier families.

Seems like a very small (and mostly speculative) benefit for a tremendous price.

Nicely put.

They really think they are liberating citizens from rapacious landlords when they are in fact liberating citizens from finding rental units in NYC.

What is it with New York City? It has one of the most dynamic private sectors of any city in the world. But its public sector is a cesspool of unrivaled greed, graft and incompetence that would put any Third World city to shame. It can't even lay subway track straight. NYC's public sector achieved the astonishing fear of laying three miles of subway track at $3.5 billion per mile -- that is seven times the average anywhere else on earth. How much of that do you imagine went to digging tunnels and laying track and how much to payoffs for unions and other assorted parasites?

Now the same people are at it again. They are making sure that no private investor will build rental units in the city for the foreseeable future. The biggest losers will be today's schoolkids/future renters who will find that there are no rentals available for love or money -- unless you are a trust fund baby or have a parent or good friend in a rent-controlled unit.

But wait, isn't this all of this about a fair deal for renters? Schoolkids can't or won't vote, but NYC's tenants of rent-controlled apartments are well-organized and they vote. And they are perfectly happy to accept bribes from pols -- in fact, they insist on it. In plain English, they fence stolen property.

They should be taxed on the difference between the rent they pay and the fair market rental of their apartment. If that isn't unearned income, then nothing is.

And these same people would remake America in the image of NYC!

Rent control is an incredibly stupid socialist policy that is self defeating. THAT is why Republicans oppose it and Democrats embrace it. NOT because of donations. DUH!

So let us just change one term - 'Deficit financing is an incredibly stupid socialist policy that is self defeating. THAT is why Republicans oppose it and Democrats embrace it.'

So, what is your explanation for why the Republicans embraced increasing the federal deficit while providing tax cuts for the rich?

Deficit financing in general is fine though...

"'Deficit financing is an incredibly stupid socialist policy"

There's nothing socialist about deficit financing.

"Tax cuts for the rich"
Two points:
1. You cannot cut taxes across the board without benefitting the rich. The rich pay most of the taxes.
2. Sadly, for the left/socialist/communist, higher taxes stifle the economy which directly stifles the jobs of the middle class and poor. Higher taxes is a terribly failed policy that only appeals to the left. Lower taxes do indeed benefit the rich, the middle class, the poor, everyone. But the left cannot get past the fact that it benefits the rich so they would rather commit economic suicide than allow the rich to benefit.

Are you saying that people donate to politicians that advocate for their property rights? With money?!!! Oh, the scandal!

Can you share your controversial views on the wetness of water?

Thanks, Trump.
- An NYC landlord

Hard to tell just how sarcastic that thanks may be, considering that it is quite likely the Democrats won control due to Trump's preceding election.

This passed in a unified/one-party Democrat NY State Legislature, girls.

Take that ignorant, dumb, immoral, unpatriotic Trump supporters!

Not only the glorious November 2016 election Trump triumph. Trump's tax bill cut/limited New Yorkers SALT IRS Form 1040 deductions,. That raised my effective (on AGI) tax rate one percent. Behavioral economics causes me to remain in NY while Wyoming beckons.

Republicans win control .. democracy!

Democrats win control .. one party rule!

From your lips to God's ear.

Not me. Other commenters above wrote as if an dem assembly and a GOP senate were a bad thing. I made a statement of fact.

Today, in America, is Flag Day.

More importantly, from the movie, "The Sand Pebbles" Lt. Collins' Flag Day Speech...

"I want all honors rendered smartly.

"At home in America, when today reaches them it will be Flag Day. For us who wear the uniform every day is Flag Day.

"It is said that there will be no more wars. We must pretend to believe that. But when war comes, it is we who will take the first shock, and buy time with our lives. It is we who keep the Faith...

"We serve the Flag. The trade we all follow is the give and take of death. It is for that purpose that the people of America maintain us. [...]"

I would like to give thanks to Albany for passing this bill. This is wonderful news.

Why is it the great forgetting though? All the deregulation and increasing the supply of luxury apartments didn't do anything to make housing more affordable. The policy failed, Tyler you're really the one who does a lot of forgetting, I can easily go through this blog and see all kinds of things you recommended/supported earlier that you seem to have forgotten in the meantime.

One should never confuse forgetfulness with opportunism.

You state that the increased supply of luxury apartments didn't do anything to make housing more affordable. The "didn't do anything" part is a joke. You give zero consideration to what would have been if crackpot controls from prior decades been continued.

Simply put, the positive, yet infantile market-based changes enacted by the (now-defunct) NY GOP are now being drown in the bathtub by the Ctrl-left.

If NY City wants a true experiment in rent control and deregulation, they should enact a Houston-style building and zoning scheme within a dozen square block area. Give NYC its own 'charter city' within a city. But the city's left will never allow it.

Well yeah, the "marginal" small-steps approach of Tyler is going to be doomed to failure in many situations. He shouldn't act so surprised.

"All the deregulation and increasing the supply of luxury apartments didn't do anything to make housing more affordable. "

Of course increasing supply (by any amount) made housing more affordable than it would have been otherwise. But deregulation? Of NYC housing development? What!? There are serious failures in NYC development policies, but being overly laissez-faire is certainly not one of them.

"Of course increasing supply (by any amount) made housing more affordable than it would have been otherwise"
Yeah increasing supply for a given demand lowers prices, but how much of this supply ended up getting snapped up as investment properties to be left sitting empty and how much actually made it to the market is a question. It could easily be that the actual increased supply was tiny and so the effects were near imperceptible.

"There are serious failures in NYC development policies, but being overly laissez-faire is certainly not one of them."
But that's the entire point - the "Marginal Revolution" approach to policy is totally doomed to fail because the majority of people feel no benefit from these small changes that don't comprehensively solve the issue and then you get backsliding. Tyler shouldn't be surprised and shouldn't whine about a "great forgetting".

"...but how much of this supply ended up getting snapped up as investment properties to be left sitting empty and how much actually made it to the market is a question"

If you mean, how many foreign nationals bought NYC properties as pied-à-terre units, I don't know, but that is and has long been part of the demand side. That is part of the NYC real estate market, not something on the side off the books.

"It could easily be that the actual increased supply was tiny and so the effects were near imperceptible."

If so few units are being built that the effects on supply and on prices are negligible, then that is the problem right there.

"do anything to make housing more affordable"

??? Wait till you see the outcome of rent control. Housing will be more "affordable". There just won't be very much of it. But fortunately, with the rules for car camping relaxed, you'll be able to get a nice re-towed RV.

Where did the "rich people" live before they got their new luxury apartments? Nowhere? Who moved into their old apartment? And who moved into that person's old apartment?

It's a lot easier to operate a mouth than a brain.

I would question your assumption that people are LIVING in many of the luxury apartments that get built.

Lines at the gas stations in the 1970s....

In your view the price control on gas was irrelevant ?

Not the same thing. There are many factors restricting
Housing supply in NYC not just the rent controls.

not the same thing because reasons

There are all kinds of zoning and land-use restrictions in NYC that go beyond simply how much you can charge for rent. Having or not having rent control isn't going to change the incentives in providing lower rent apartments without dealing with all these other issues.

"I would question your assumption that people are LIVING in many of the luxury apartments that get built."

We'll be staying in an "extra" apartment in Manhattan in a couple weeks. I'm pretty sure it is empty most of the time.

Well, yeah. Nobody wants to own rent-controlled housing stock. Why would they?

There is a lot of back and forth here but I do think that Lord-Admiral of the Pyrenees makes a good point when he states that a Marginal change to the rent control laws didn't evoke a change significant enough to be obvious. Between the effects of an enormous housing stock, high property evaluations and relatively long periods between property transitions; Rent control changes will take decades to become obvious.

Minor deregulation of rental prices without deregulation of building restrictions and labor supply isn't going to have a major impact on prices.

What makes you think that existing NYC landlords have the least interest in the deregulation of building restrictions, and why would existing NYC landlords have even the slightest interest in having rental prices go down? It isn't as if the current landlords are actually without options if some rent control regulation returns.

"What makes you think that existing NYC landlords have the least interest in the deregulation of building restrictions"

The new rent-control restrictions apply only to existing landlords, and they have a strong interest in, say, being able to convert vacant units to market-rate and being able to charge enough rent to make maintaining and rehabbing old buildings economical. This batch of changes has nothing to do with new development.

'being able to convert vacant units to market-rate '

That would not seem to be new construction, to be honest. Maybe I was unclear - why would existing landlords want a lot of new buildings going up?

While some landlords are developers and would like to see an easier development environment, there are plenty of landlords who are not developers and would seem to benefit from a restricted supply of housing. The incidence and effects of existing landlords who may want to restrict supply seems under discussed in the popular literature.

That is secondary to the issue I was addressing, namely, whether limited deregulation failed because it didn't produce a significant reduction in rental prices across the board.

But reversing course with more rent control just compounds the problem--unless you are like former Rep. Charlie Rangel, who managed to occupy 4 rent-controlled apartments.

"Perhaps someday I will write a book or essay called The Great Forgetting…"

Good luck.

"When he moved to San Francisco ( Milton Friedman ) in the 1970s, the city was debating rent control, he recalled. So he wrote a letter to The Chronicle saying, "Anybody who has examined the evidence about the effects of rent control, and still votes for it, is either a knave or a fool."
What happened? "They immediately passed it," he laughed."

Turns out he was wrong though.

San Francisco now leads the world in billionaires per capita. I'd rather be "a knave or a fool" with a couple billion in the bank than go broke listening to too many economists. Millennials if you want rent control then vote for it. It's your life. You don't need anybody's approval.

"San Francisco now leads the world in billionaires per capita."

It also leads the nation in schemes like renting bunk beds to millennials at $1200/month.

SFs housing restrictions definitely didn't cause the success of Silicon Valley, but they definitely HAVE caused the insane housing cost increases.

Rent control is theft. Doesn't the Holy Constitution ban that sort of thing?

I get that you libertards and cuckservatives hate rent control but your stupid policies failed to bring cheaper housing that's why this is coming. Even the commies in China take care of their people better than the elite knob polishers here.

Our policies weren't implemented you moron. You don't even know what they are. Go drool on the short bus with the rest of your kind.

If you do write a book called The Great Forgetting, it should be about Henry George, the most widely read economist and author in general of the 19th century, and someone who almost became mayor of NYC. George is largely unknown today, but he's more relevant than ever today with sky high rents and rent seeking by landlords.

Real estate is the one ugly thing that no system of government or school of economics has ever figured out. Henry George is probably the closest but without any real world societies that run on his principles it is hard to see how land taxes will actually play out. Singapore on the other hand seems to address this well with government run housing for roughly 80% of its stock. The old slogan of the city-state was "socialism that works" and the people there seem to be happy with it.

'and the people there seem to be happy with it'

Or else, basically.

Or else what?

You get slapped around with their small Asian dicks of course.

You are aware of how Singapore is run, right? Take that 80% ownership of housing by the government, for example. Or this - 'Kirsten Han, a Singaporean activist and journalist also consulted by the committee, expressed concern that broad terms such as “fake news” were open to abuse by authoritarian governments. Reporters Without Borders ranked Singapore 151st out of 180 in its 2018 Press Freedom Index: three places below Russia.

Reporters Without Borders said Singaporean media censorship was rife, and that “red lines imposed by the authorities … apply to an ever-wider range of issues and public figures. As in many southeast Asian countries, governmental plans to legislate against ‘fake news’ are seen as a threat to the freedom to inform.”'

Singapore is an interesting place - but its government is thoroughly in charge of the citizenry. And it has no problems dealing with apparently unhappy people such as Chee Soon Juan - 'Chee has been arrested and jailed several times for his political activities, mainly for making speeches and staging public demonstrations without a police permit. He has also been found guilty of defamation on multiple occasions for comments he has made about members of Singapore's governing People's Action Party (PAP). He was previously barred from standing in parliamentary elections because he was declared bankrupt in 2006 after failing to pay damages from a lawsuit owed to two former prime ministers, Lee Kuan Yew and Goh Chok Tong. However, on 24 September 2012, Chee announced that he had raised the sum of $30,000 needed to pay Lee and Goh. His bankruptcy has since been discharged, which has allowed him to contest the 2015 Singaporean general election. '

Are people getting kicked out of their government owned housing? My understanding is that the Singapore government does a very good job of respecting the property rights of its 99 year leaseholders.

We have "fake news" protests in America and lots of important truths are censored under the rubric of "fake news" are censored by media gatekeepers. Many truths that are called "fake news" here are allowed in Singapore on account of them being true facts. You can talk about HBD without repercussion in Singapore, you can't in America. Etc.

I'm aware of Singapores censorship laws but don't find them particularly onerous compared to America, especially when you consider the broader censorship environment (which includes private actors). Actually, Singapore making demagoguery and libel punishable offenses seems to improve quality of debate and allow for more diversity of substantial viewpoints than is the case in America. Censorship is bad when it impacts signal, not when it impacts noise. I know you don't believe sorting those is possible but the people who run Singapore manage it pretty well.

The PAP does a really good job of running Singapore. While it's certainly hard to libel the PAP, it's not like any criticism of them is illegal. The PAP admits failures and changes course all the time. It holds and wins free elections.

I think that the people running Singapore are able to handle calm constructive criticism based on a careful weighing of the evidence. They don't seem to suppress that sort of feedback. They do sometimes crack down on loonies and trouble makers who don't have a solid case for their actions or who libel others without merit. I doubt its perfect, but the ruling class in Singapore has a way better handle on reality then the ruling class here.

'Are people getting kicked out of their government owned housing?'

Not that I am aware of, and unfortunately, the IHT disappeard years ago. However, my memory is how the IHT detailed how various housing policies were influenced by how a district voted - unsurprisingly, those districts that voted properly were rewarded. No need to be blunt, after all.

'the people running Singapore are able to handle calm constructive criticism based on a careful weighing of the evidence'

THe IHT, which lost a case in Singapore, would disagree. Only the criticism that the government tolerates is allowed.

The largest problem with rent control is that no investor want to build new apartments that will be affected by the law. Better to build larger and expensive ones that are out of the reach of the law.

The issue with NYC is the ~20% poverty rate. 1.5+ million people are below the poverty and quite probably face significant challenges to pay the rent. Around 600K are supported by the NYC Housing Authority either by public housing or rent subsidies. That leaves ~1 million poor people out hanging out to dry.

But.....wait a min, with ~20% poverty rate, who wants to live in NYC? Why the population is growing? Why people don't leave for a better place?

"Better to build larger and expensive ones that are out of the reach of the law. "

But that's what they build anyway. Tyler shouldn't be upset - he calls it the great forgetting - what did people forget exactly? They forgot how some Chicago economist proved mathematically that rent control is bad back in the 1970s? I think Tyler forgot that policies have to show positive results in the real world for people to keep supporting them and not just look nice in a journal.

"...not just look nice in a journal." Also, not just look nice in a book with laws =)

The storm Sandy on 2012 caused a major disruption in the housing market. Around 9% of the housing units in the city were damaged. Imagine what happens to rental prices in any city when a significant fraction of the housing units is not available for rent for a few years.

Then comes land subsidence and sea level increase. Existing housing will be wiped again during the next storm. Sea level protection for single-family housing units is not economically feasible. If the poor matter, they should relocate or be relocated to higher ground. Rent control won't stop the sea.

Sea levels rising? Is this more of this global warming nonsense?

Even if the hypothesis that try to explain global warming are nonsense, sea level is rising ~2.5 mm/year an inch per decade. Non-cohesive material shorelines (sand, peat, silt) can retreat horizontally (erode) by half a meter per year due to the minuscule vertical sea level.

Seek for higher ground is always an option, the experience in NY after Sandy

The NY sea level rose a foot the century before GW, and no one noticed. Not sure why the next foot would be any different.

The US Army Corps of Engineers noticed

I'll go make some popcorn, comments about army engineers being libtards will be great =)

"army engineers being libtards" ??

" In response to these storms, the US Army Corps of Engineers (Corps) is investigating measures to manage future flood risk in ways that support the long-term resilience and sustainability of the coastal ecosystem and surrounding communities, "

So they are doing their jobs. They didn't just notice the rise, or even confirm one, just preparing for further rise. Good for them. Still doesn't refute what I said. The sea level around NY has risen the same amount in the century preceding GW as they expect it will in the future. Just saying - no particularly noticed in the past, so why will the same rise be a greater issue in the future?

So what? We'll engineer solutions as we have always done e.g. the food gates on the river Thames or the dikes in Holland.

We should not pretend GW is not real and present, to mollify the shallow end of the comment pool.

Come on in Anon, get your ankles wet.

Shallow end? I'll have you know I'm an Oxford graduate.

Trolling or decayed?

Support widespread adoption of modern, safe nuclear power and I will take your GW doomsday predictions more seriously. Otherwise, I assume you don't really believe in the gravity of the issue.

Whether you believe in AGW or not, it's a simple fact that sea levels are rising. The why is debatable, but that fact is not. Nothing to do with support for nuclear power. Sea levels are rising.

Sure. Sea levels have been rising for the last 20,000 years.

And where exactly are the real world results of socialism? USSR, N Korea, Venezuela? Yet somehow people in NY don't need results to keep supporting those policies that don't even pencil out on paper. shrug, I think you need a new operating theory.

Actually that's a point I wanted to make. Tyler's marginal revolution of small steps to a better world appears to have totally failed. Socialism wasn't anywhere in mainstream conversation 10 years ago but now it is. Instead of the small, technocratic steps towards the "better world" that Tyler envisions, he's going to be forced to go round-and-round in circles re-fighting old battles over old issues he though were dead and buried years ago. Socialism, rent controls, I would say the marginal revolution is failing to gain real traction.

yeah. and making theft illegal hasn't stopped it! time for some new rules M'lord.

Oh it's not even there. Tyler's at the point in his marginal revolution where he hasn't even been able to convince people that theft is a bad thing.

The reason micro-libertarian and various clever-economist policies aren't being followed is because voters and politicians basically pursue policies that fit with their moral beliefs. Which are generally altruist-collectivist these days. The lefties are secular altruist-collectivists, and the Repubs are altruist-nationalist-religionists. Tyler Cowen should have known this is how it would turn out, as he read Ayn Rand's Atlas Shrugged. But economist intellectuals prefer to argue on a utilitarian ethics basis rather than taking an ethical stand in favor of egoism and individual rights, which would leave them much less popular. So we end up with bad policy, bad politics, and creep toward collectivist oblivion.

There's a big reason for this: Bush's devaluation of the USD back in the early '00s. This was a massively destructive event that set us up for the financial crisis and worse.

Good comment. Also tenants rights laws that prevent eviction. Landlords don't want to build low-cost housing because if they can't ever get rid of a bad tenant they lose a lot of money.
Of course in a market that is very expensive and tightly constrained any new construction is going to be biased towards the high end.

"Why the population is growing? Why people don't leave for a better place?"

It isn't and they are. Tens of thousands of people left NYC last year. What an overrated hole.

I agree. One of New York's major exports seems to be promotional material for New York.

And more people than that arrived in NYC last year. So it goes. You hate NYC, facts show that millions disagree.

No they didn't. Last year and the year before that were net negative.

Also: argumentum ad populum. There are millions of dumb people. Many of them apparently live in NYC.

....term for assuming everyone different from you is stupid, but you're doing that. So much for individual choice.

I'm really not. Woosh and wow you're dumb.

Why so triggered?

Next they will declare NYC "Liberated Area" and abolish private property (which anyway is theft). The real, hardcore communists in Beijing must be amused.

In my low country community, airbnb has caused long-term rental rates to increase, and to increase by a significant amount, because the supply of long-terms rentals has been reduced, and reduced by a significant amount, because so many of the old and new housing units are converted to short-term rentals. Since the economic recovery, many more housing units have been constructed, but many end up as short-term rentals through airbnb. Moreover, airbnb not only has caused long-term rental rates to increase, airbnb has caused housing prices to increase because many buyers expect to be able to rent the unit short-term through airbnb. This community, like NYC, is vacation destination, so airbnb may affect it more than other communities. From time to time the local governing political body in the community will put short-term rentals on the agenda, residents will appear and complain about short-term rentals (they violate zoning and public lodging ordinances), nothing will happen, the developers and builders will keep developing and building, the roads will become impassable due to the increase in the volume of traffic, and life will go on.

Maybe the new law in NY will be the kind of "disruption" Cowen usually favors that will increase the supply of affordable long-term residential rental units and reverse the pattern of ever increasing asset prices and rental rates that favor capital over labor. If the owners of the rent-controlled housing units in NY object, they can always relocate down here in the South where owners of capital are still revered (well, they do make the rules), labor is something performed by somebody else (including immigrants), and everybody knows his place.

"Maybe the new law in NY will be the kind of "disruption" Cowen usually favors that will increase the supply of affordable long-term residential rental units"

That would buck all empirical evidence. And no it isn't Airbnb's fault that your local government constricts housing supply with zoning laws and rental supply constricted with rent control.

rayward, you can't simultaneously complain that your community leans on you to know your place and complain that the community is being overrun by people who don't know their place.

Oh yes he can. He does it all the time.

"In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause — it is seen. The others unfold in succession — they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference — the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, — at the risk of a small present evil."

That Which is Seen, and That Which is Not Seen

Frédéric Bastiat, 1850

What is seen is that those in apartments have their rents frozen. What is not seen immediately is that landlords defer maintenance and choose not to build new apartments.

How sad that so many of the commenters here are ignorant of Bastiat's insights, or worse still, choose to ignore them.

In the real world I think the "unseen" bad thing happens anyway with or without rent control. That's the point.

Rent control is a substantial net negative

The majority of economics professors voted for this measure, so it must be a good idea. Or else economics makes you stupid. Or universities make you stupid, more plausibly.

Has anyone voted on anything yet? Are there any economists in the New York State Legislature?

The smart money says if adopted the vast majority voting for this legislation will be in their mundane lives (1) lawyers, (2) schoolteachers, (3) social workers, (4) miscellaneous white-collar public employees, miscellaneous white-collar employees in the philanthropic sector, and (6) legislators with no other occupation.

The overwhelming majority of academic economists vote Democratic. So it's silly and childish of them to complain when the Democrats they elected do what Democrats are elected to do.

10 years from now there will be a greatly increased volume of moaning about the insane rents and poor quality of accommodation in NYC and That Something Must Be Done.

The tide today is towards Socialism and interventionism. It will not be stopped by good ideas this time because a couple of generations now have been told to trust their feelings.

Are tou feeling sad about that, snowflake?

Clearly I and; I’m a tremendous Cuck!

American politics is truly bankrupt. From Republicans pursuing mercantilism to Democrats pushing rent control there is no end to the poverty of ideas in America. Though of course Tyler, ever the conservative, approved of trade wars and tarriffs.

What's next America, forced bussing?

Tyler does not approve tariffs IIRC

Same effect as Prop 13 on movement of people or real estate distortions, but you never hear Prop 13 discussed.

Good point. How many of those supporting rent control in CA also want Prop 13 repealed?

It is interesting because the poor benefit from rent control, and real estate wealthy owners who purchased years ago benefit from a tax cap which forces new owners to pay higher taxes. Both are distortions, but one attracts conservatives and the other repels conservatives. Neither are good ideas.

Except taxation involves coercing property owners to give up a portion of their property to feed the voracious government beast.

The vast majority of the benefits of rent control go to the upper class and upper middle class. Even Mother Jones acknowledges cui bono from rent control. Remember, rent controlled leases are inheritable and transferrable to relatives tax free.

Agreed, both are destructive policies.

The problem is there’s no solution within the Overton window of acceptable policies. The obvious policy is to eliminate red tape with zoning reform, enviro reg reform, and rental unit requirements. NYC is so expensive and burdensome to build in, the profitability is skewed towards luxury apartments because anything else wouldn’t be worth the risk. Meanwhile Queens could be built up but it’s illegal due to zoning laws.

The most effective redistributive policy would be zoning reform and to rationalize construction and enviro regulations.

Which is why it will never happen.

Well, it looks like the wealthy benefit from both rent control and Prop 13. (The article that covered this, by the way, used aggregate statistics by area, and not individual household income and rent control by household, fyi.)

What does that tell you.

Color me surprised that McMike/anon/shrug/bear’s new alter ego supports policies designed to gentrify cities. We don’t want any of (((those))) people here anyways.

Carry on my Aryan brother!!

*also not surprising to see our former GMU employee turned Fatherland Fanboi expressing his subtle approval. (OK) hand gesture flashed proudly.

Want a job in my dick sucking factory?

Absolutely! I’ll start tomorrow!

Only if I’m allowed 2 at a time ;)

Dammit. That means even more of them will leave New York to move near me.

The Great Forgetting is partly the fault of economists, actually. Instead of constantly pounding basic but severe regulatory and policy failures over the last 20 years, the field of economics has become more about data mining, going for prestigious publications, explaining stock and bond prices, and commenting on topics du jour.

Not to mention muddying the waters with politically motivated research on clear-cut issues like rent control, minimum wage, etc.

Maybe there should be some way for people that occupy rent controlled apartments to monetize the value of said apartments.
I propose a bill allowing tenants to sublet their apartments on AirBnB, or elsewhere, or to sell their occupancy rights to new tenants.
At this point, it's almost like the owners don't actually own their own property, and the tenants do, but the tenants can't legally transfer their rights to the property. This could be remedied by making the law just start treating the tenants like the owners they actually are. Fuck it, why not at this point?

I'm not entirely not serious about this.
Let's say you could get $20K for selling the occupancy right to your shitty run down rent controlled apartment. But you could get $50K for it if you renovate. So now there's an incentive for the current occupants to keep up the maintainance of their own apartments. On could even imagine arranging some sort of kickbacks to the owner if the owner of the building invests in upgrading the heat and AC. By allowing tenants to monetize the value of the real estate they occupy, you basically create sort of a second-tier free market. If they're renting it out short term, the short-term renters don't have tenants rights or rent control applied to them. If they rent it out long-term the new occupant basically "buys" the apartment - he pays up front the market price for it, minus some consideration for paying monthly rent to the nominal "owner".

I think a better idea is a shadowy parallel system of crypto-deposits and other hidden agreements to bypass rent control.

In any event, NY is diving into hell much faster than Cali. Heck Newsom doesn't even seem that terrible so far.

Oh and the blame does rest on Trump and the Trumptards. The 2018 wave was massive and had huge turnout. It's just the beginning of what's coming.

From very anecdotal evidence I have heard that some people who have secured rent controlled units have managed to monetize them through means like sub-letting or air-bnb. I believe there are some landlords who also will take cash payments to preference one applicant over another. That would mean that the cost of the market rent" has just been front loaded in some amount.

The main lesson men learn from history is that men don't learn from history.

The next book after the Great Forgetting is the Great Relearning.

I think we could model this as an OLG model in which generations only learn from personal experience; there is no intergenerational transmission of wisdom. That produces cycles in policies, where everything old is new again.

Major case study is Bernie Sanders. This year is the 30 year anniversary of the fall of the Berlin Wall and Iron Curtain. So long ago that those under the age of 45 years have no memory of the events or consequences. And so younger people are cheering a Democrat candidate who visited and praised Communist regimes and still refuses to criticize them. They don't know any better. The world will need to experience the USSR all over again.

You left out the best parts of the new bill, restricting the amount landlords can recoup for building and individual apartment repairs (from a NY Senate press release):

Reforms Rent Increases for Major Capital Improvements (MCIs):

-Lowers the rent increase cap from six percent to two percent in New York City and from 15 percent to two percent in other counties.
-Provides the same protections of the two percent cap going forward on MCI rent increases attributable to MCIs that became effective within the prior seven years.
-Lowers increases further by lengthening the MCI formula's amortization period.
-Eliminates MCI increases after 30 years instead of allowing them to remain in effect permanently.
-Significantly tightens the rules governing what spending may qualify for MCI increases and tightens enforcement of those rules by requiring that 25 percent of MCIs be inspected and audited.
-Reforms Rent Increases for Individual Apartment Improvements (IAIs):

Caps the amount of IAI spending at $15,000 over a 15-year period and allows owners to make up to three IAIs during that time.
-Makes IAI increases temporary for 30 years rather than permanent and requires owners to clear any hazardous violations in the apartment before collecting an increase.

Caps the amount of IAI spending at $15,000 over a 15-year period

Thou Shalt Not Renovate Thy Kitchens! (maybe a bathroom, once in a while, but only the sink.)

Reality will always remind you when you have forgotten something important.

I think this cyclical pattern of rent control/deregulation should be analysed more carefully. Prices go up, rents go up, young people cannot buy so they rent. Then they impose rent control. Prices go down. Young people can afford houses. They demand deregulation. Etc.

Not sure there's a "prices go down" part in the real world, at least not from rent control. It's supply that adjusts, not prices.

>close loopholes that permit them to raise rents.

Ah, yes. If you charge what you want for your goods or services, you are "using a loophole." Loopholes are obviously shady, and Thank God the Dems are tenacious about closing them, to the cheers of the NYT!!

Sharia Law prevents borrowers from paying enough interest to would-be lenders to convince those lenders to lend to the borrowers. Sharia finance enables financing by turning loan and interest payments, regulated by Sharia law, into lease payments: instead of a bank lending money to a business to buy a machine, the bank buys the machine and leases it to the business.

Social Justice Religious Law prevents tenants from paying enough rent to landlords to convince those landlords to maintain and offer apartments for rent. Do those laws typically also outlaw sales and repurchase agreements? If not, why don't landlords: (1) sell the apartments to tenants with an agreement to repurchase at the end of 1 year at some predetermined price; and (2) lend the money to the tenants for the initial sale of the apartment, the loan to be repaid with monthly mortgage payments and a principal repayment at the end of 1 year following the repurchase by the landlord? That turns lease payments, regulated by Social Justice Religious Law, into loan and interest payments.

As soon as we get rid of property zoning, then let's get rid of rent controls.

But remember the rules in Libertarian Land: Rent control is bad, bad, bad! Never!

Property zoning needs undefined reforms at an undefined future date.

Supply and demand does not seem to be working for NYC real estate.
Although this is for commercial real estate and not housing,
when you walk the streets of Manhattan there are lots of empty
storefronts that have been that way for many, many years.
Why don't the landlords accept lower rents? Supposedly they
are holding out for a high rent, but how can they do that
for 10 years? Is there some tax law or other factor that
I'm missing? What are the odds the oversupply of luxury
apartments will result in reducing their rents?

I think I'm goin' to buy some rent controlled property and sponsor this website so that when controls are lifted I will make a killing.

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