Comment on Argentina got rid of rent control. Housing supply skyrocketed
Wilzax@lemmy.world 2 months agoIf 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.
intensely_human@lemm.ee 2 months ago
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.
Wilzax@lemmy.world 2 months ago
If they can’t sell it because nobody will buy it, lower the price. It’s basic economics.
HelixDab2@lemm.ee 2 months ago
…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.
wintermute_oregon@lemm.ee 2 months ago
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.
wintermute_oregon@lemm.ee 2 months ago
They have recourse. They can move or pay the rent.