the argument for raising rents as much as possible

I'm essentially against rent regulation. I believe it creates a two tiered market whereby the lucky lottery winners get below market rates and those not fortunate enough pay more. Furthermore regulating rents is a disincentive for property managers in keeping a building up to best standards. The only legitatimate regulation I could see is protection for the extreme elderly who can't easily move.

I'll point to an in the news example. You have Stuyvesant Town offering what in many cases are below market rates. It is not unheard of for residents in the project to have second homes. The place could be better run and maintained as well, but since the law limits rents the incentive is to keep costs low.

"He also sites...."

He loses all credibility with that cpelling.

stevejhx, that's not Robert - that was my oversight and is now fixed - I clearly got it up too quickly on the site this morning :)

if by "the argument for raising rents as much as possible" you mean "have a free market", then I support the idea 1000%

wow - i'm surprised - i would have thought there would be many more renters opposing Knakal's argument .. interesting

Only renters who would oppose would be beneficiaries of rent guidelines.

I think his basic argument is sound - that rent stabilization is not, or is at best an extremely inefficient, housing subsidy program. It is interesting that the liberals who support the system don't realize that the RS system, in a substantial number of cases, is a huge boon to the well off. One would think that they would support weeding out the wealthy who benefit from this system, and replacing it with something that is progressive. And yet they don't, which honestly confuses me.

the people who live in the best buildings with 3 br overlooking central park and paying $1K a month, would be complaining about this. they would also be complaining that they haven't had their apartment painted and the ll expense and that the super doesn't want to fix the faucet they keep breaking.

I'm a renter, and I oppose his argument.

And yes, I'm a beneficiary of rent guidelines, but not because my rental is RC/RS -- I don't rent. Your assumption is based on your narrow view that everyone's as narrowly self-centered as you are.

I'm a beneficiary because the guidelines keep a stable tax-paying middle-class in NY even when government policies provide incentives to move elsewhere. That's exactly why we had a city worth gentrifying, while cities without sustained rent regulations -- Detroit, Phlly, Baltimore, Newark, Cleveland, etc. etc. etc. -- are dead or fatally wounded.

Knakal's argument is basically that rents should be raised as much as possible because the weasly dodges that Big Landlord came up with failed their legal tests.

Sorry, I meant to start out with "I'm not a renter". But the point is that many free-market renters realize it's not an us vs. them thing, and that the argument that free-market rent would be lower if there were no rent regs is clearly bullshit, as demonstrated in all the other most expensive cities in the world.

it's the big boys rule. You're gonna buy a rent controlled property, the seller thinks rents go up 3%, buyer thinks i can get 4% and squeeze costs 30%.... when it don't happen well that's capitalism... what does this have to do with tenants and if tenants own 3 homes and 4 RR... well it's the gov't policy makers/enforcers fault... like that Rangel dude.....

Massey Knakel... what a self serving tool. When things are ho-hum, NOBODY trades and he gets NO commission.... simple as that.

Let's take up a collection for him, if it'll shut him up until things get going. How much do you think he needs to get by for the next 10 years?

C'mon, to each according to his needs.

10K for hairclub for men.. ; )

No offense to the follicalary challenged ..... Look I'm heading there.... (not really)...

stop the subsidizing.

jasieg16, you're in luck! No subsidizing, just price-capping.

w67, just cover 80% of your head with a rug. Don't let a borker find the area for you, though.

Julialarge. I agree. No subsidizes for hairplug!

"I'm a beneficiary because the guidelines keep a stable tax-paying middle-class in NY even when government policies provide incentives to move elsewhere. That's exactly why we had a city worth gentrifying, while cities without sustained rent regulations -- Detroit, Phlly, Baltimore, Newark, Cleveland, etc. etc. etc. -- are dead or fatally wounded."

If you think rent stabilization is the difference between New York and Detroit/Philly/Newark... then, wow, you've already lost the argument in my eyes.

on the remaining 20% balance a tray, with sidecars of course.

Btw, WITH rent stabilization, NYC went through a TON of exactly the thing you claim it saved us from.... we had white flight, we had destabilized neighborhoods, we had plenty of incentive to move elsewhere. We had abandoned buildings on top of it! (BECAUSE of rent stabilization). We were the biggest manufacturer anywhere, and pretty much LOST IT COMPLETELY (which is EXACTLY what killed those other towns)!

"I'm a beneficiary because the guidelines keep a stable tax-paying middle-class in NY even when government policies provide incentives to move elsewhere

Tis noble to be a beneficiary. Thank the lord for entitlements and those that benefit.

RS, reading comp much? ah owns, is not a DIRECT beneficiary.

"then, wow, you've already lost the argument in my eyes." ... because you prefer to re-post the same party-line nonsense again and again.

So let's get some of them out of the way:

1. rent regulations cause housing shortages and high prices. No, the rent regulations were enacted because PRIOR to that point, the free market caused housing shortages and high prices.

2. it's not "fair". It's not fair that for the same apartment one floor up or down, one person bought for 10 times what someone else paid in a different year.

3. white flight -- wrong, New Yorkers moving to the burbs generally did so for much more positive reasons than those who did so in other cities, and generally remained connected to those cities. I've heard people on the mainland say they're from New York, and when I ask where they say "so and so New Jersey"; I've heard people on the mainland say they're from Michigan and when I raise my palm and ask where they say "just outside Detroit"

4. unfair to landlords -- maybe those who bought before WWII.

5. getting back to my thesis, make a list of those cities that kept rent regs well beyond WWII, and another of those that dropped them really quickly. It's mind-blowing, and even splits those in such close proximity that they're the same metro. NY rebounds, free-market Newark fails. Santa Monica rebounds, free-market LA fails. On and on.

6. abandoned buildings. Most of the abandoned residential buildings in NY were in areas where they tore out the public transportation, or where the prevailing rents were so low (e.g. South Bronx) that they didn't garner even the rent levels permitted under rent regulations. That's why -- follow closely -- they were ABANDONED, as in no tenants.

Don't confuse the ceteris paribus assumptions of economics modeling, and the resultant outcomes, with real life.

Oh, and I forgot: the residential areas that truly got hit hardest in NY were those with 1-3 family houses throughout Brooklyn and the Bronx, and parts of Queens (like Jamaica) -- not covered by rent regs at all.

HUH?

Rent regulations were enacted long ago for problems we no longer face. Only reason we have them now is it helps politicians get re-elected.

Alan You impress me. I've heard you say "remember your audience and keep it stupid" but this time you really took it to a higher level. Good stuff. One sidecar for you.

Why cant everyone have a below market rent? I don't think Alan Hart is being equitable.
And if everyone can't have such an apartment who decides and based on what?

1. rent regulations cause housing shortages and high prices. No, the rent regulations were enacted because PRIOR to that point, the free market caused housing shortages and high prices.

Disagree - I don't know that we know one way or the other conclusively. Yes, the rent regulations were enacted due to housing shortages, but people have argued convincingly either way as to whether it has caused housing shortages. Rent regulations have caused the deterioration of some housing stock, as LLs try to vacate by making it miserable for everyone (only in cases, obviously, where rent-regulated rents <<< market rents).

2. it's not "fair". It's not fair that for the same apartment one floor up or down, one person bought for 10 times what someone else paid in a different year.

Yup. Laws aren't about fair.

3. white flight -- wrong, New Yorkers moving to the burbs generally did so for much more positive reasons than those who did so in other cities, and generally remained connected to those cities. I've heard people on the mainland say they're from New York, and when I ask where they say "so and so New Jersey"; I've heard people on the mainland say they're from Michigan and when I raise my palm and ask where they say "just outside Detroit"

I agree - I don't have statistical evidence but anecdotally seems to be the case. Certainly on my block, low rents caused some people never to marry or procreate or move - which kept the block relatively safe with low turnover.

4. unfair to landlords -- maybe those who bought before WWII.

Agree - rent-regulated housing has a market and most LLs today bought in knowing full well what the #s are.

5. getting back to my thesis, make a list of those cities that kept rent regs well beyond WWII, and another of those that dropped them really quickly. It's mind-blowing, and even splits those in such close proximity that they're the same metro. NY rebounds, free-market Newark fails. Santa Monica rebounds, free-market LA fails. On and on.

Don't know one way or the other.

6. abandoned buildings. Most of the abandoned residential buildings in NY were in areas where they tore out the public transportation, or where the prevailing rents were so low (e.g. South Bronx) that they didn't garner even the rent levels permitted under rent regulations. That's why -- follow closely -- they were ABANDONED, as in no tenants.

Most, yes. But if you troll through NYT archives and news articles, large #s of buildings were abandoned - maybe not by pop. because they tended to be small bldgs.

Don't confuse the ceteris paribus assumptions of economics modeling, and the resultant outcomes, with real life.

Didn't know they taught Latin at Stuy.

riversider.. a complete fool... think of life cycles..... when you are a babe, you get net tax credits, when middle age, pay into taxes, older take out... now think generationally.... don't take a snapshot of NYC with $1MM studios, think back when the warriors roamed the bronx.... bitch about "unfair" after having ridden the NYC RE bubble to the top... f u moron.

Of course they taught Latin at Stuy. Great for pre-med types, so I assume they still do.

Riversider, rent regs were never about equity. They were never (until 1997) supposed to be income-tested. You (and many a radical ideological economist) present that as an assumption, only to shoot it down as a failure. But you might as well say that rent-regs were supposed to foster the speaking of Esperanto, and failed at that so ipso facto it's a failure. (nyc10023 demands Latin.)

riversider.. my fu was uncalled for... just a little jonzyed from ss400k... my bad

complete fool stands...

Post sounded like babble. The life cycle argument misses the point completely.

Of course alan makes his baseless arguments again. He loves handouts.

I guess Boston just went to hell in the 15 years since they got rid of rent control. Wow, Houston is such a slum without rent controls.

Rent controls and stabilizations increase overall rents, lead to inequalities, and stifle upkeep and creation of new units. People who love a free ride love rent stabilization.

Boston and Houston are highly susceptible to implosion, as its renters are rootless. And I suspect if you go to Houston, you'll find an imploding center and a ceaselessly sprawling "better" new periphery ... that's how those cities are. Stay there.

"Rent controls and stabilizations increase overall rents, lead to inequalities, and stifle upkeep and creation of new units."
... this is your ideological perspective -- really a collection of bumper stickers more than a perspective -- with no basis in fact (even anecdotal) at all, plus misspelling. All third-world countries have massive inequalities, and no rent controls...

http://www.econlog.econlib.org/library/Enc/PriceControls.html

The appeal of price controls is understandable. Even though they fail to protect many consumers and hurt others, controls hold out the promise of protecting groups that are particularly hard-pressed to meet price increases. Thus, the prohibition against usury—charging high interest on loans—was intended to protect someone forced to borrow out of desperation; the maximum price for bread was supposed to protect the poor, who depended on bread to survive; and rent controls were supposed to protect those who were renting when the demand for apartments exceeded the supply, and landlords were preparing to “gouge” their tenants.

Despite the frequent use of price controls, however, and despite their appeal, economists are generally opposed to them, except perhaps for very brief periods during emergencies. In a survey published in 1992, 76.3 percent of the economists surveyed agreed with the statement: “A ceiling on rents reduces the quality and quantity of housing available.” A further 16.6 percent agreed with qualifications, and only 6.5 percent disagreed. The results were similar when the economists were asked about general controls: only 8.4 percent agreed with the statement: “Wage-price controls are a useful policy option in the control of inflation.” An additional 17.7 percent agreed with qualifications, but a sizable majority, 73.9 percent, disagreed (Alston et al. 1992, p. 204).

The reason most economists are skeptical about price controls is that they distort the allocation of resources. To paraphrase a remark by Milton Friedman, economists may not know much, but they do know how to produce a shortage or surplus. Price ceilings, which prevent prices from exceeding a certain maximum, cause shortages. Price floors, which prohibit prices below a certain minimum, cause surpluses, at least for a time. Suppose that the supply and demand for wheat flour are balanced at the current price, and that the government then fixes a lower maximum price. The supply of flour will decrease, but the demand for it will increase. The result will be excess demand and empty shelves. Although some consumers will be lucky enough to purchase flour at the lower price, others will be forced to do without.

Because controls prevent the price system from rationing the available supply, some other mechanism must take its place. A queue, once a familiar sight in the controlled economies of Eastern Europe, is one possibility. When the United States set maximum prices for gasoline in 1973 and 1979, dealers sold gas on a first-come-first-served basis, and drivers had to wait in long lines to buy gasoline, receiving in the process a taste of life in the Soviet Union. The true price of gasoline, which included both the cash paid and the time spent waiting in line, was often higher than it would have been if the price had not been controlled. In 1979, for example, the United States fixed the price of gasoline at about $1.00 per gallon. If the market price had been $1.20, a driver who bought ten gallons would apparently have saved $.20 per gallon, or $2.00. But if the driver had to wait in line for thirty minutes to buy gasoline, and if her time was worth $8.00 per hour, the real cost to her was $10.00 for the gas and $4.00 for the time, an overall cost of $1.40 per gallon. Some gasoline, of course, was held for friends, longtime customers, the politically well connected, and those who were willing to pay a little cash on the side.

The incentives to evade controls are ever present, and the forms that evasion can take are limitless. The precise form depends on the nature of the good or service, the organization of the industry, the degree of government enforcement, and so on. One of the simplest forms of evasion is quality deterioration. In the United States during World War II, fat was added to hamburger, candy bars were made smaller and of inferior ingredients, and landlords reduced their maintenance of rent-controlled apartments. The government can attack quality deterioration by issuing specific product standards (hamburger must contain so much lean meat, apartments must be painted once a year, and so on) and by government oversight and enforcement. But this means that the bureaucracy controlling prices tends to get bigger, more intrusive, and more expensive.

the gasoline example cited above is a complete fabrication of what actually happened at that time.

as to the myth that RS somehow contributes to higher overall prices, as AH has already so eloquently pointed out, there is no real world evidence to support this.

I got a chuckle over alan's ridiculous claim that white flight in NY was different than white flight in other places because it was done for "positive reasons." HA! Talk about spinning. And he really thinks that anyone intelligent will take him seriously?

Hey LICC, just wanted to let you know I'm curious to hear from you on the "Buying now beats renting" thread"...

Hi nada. Sure, I'll go look for it.

LICcomm, I'm no fan of the burbs, but you are at least minimally intelligent enough to understand that a decision to move from the city to its suburbs can be made for other reasons -- even on the unconscious level -- than racism, aren't you?

"Positive" means things like more greenscapes, bigger backyards, the easy movement of cars, while "negative" is expressed as the neighborhood is "turning", the city is filthy and disgusting and I wouldn't raise children there, the heavy metals in Long Island City will kill us all one day.

Riversider, this is a typical article regarding economists' studies and views, and it deals with a very much non-real world, and makes no attempt to model the behavior of the actual policies put into place. Specifically, rent controls (at least those of long-standing duration) only apply to older construction.

I hope you'll agree that their models will show a positive correlation between high rents and the likelihood of more construction of rentals. Thus, anything that causes rents to be high also causes increased construction.

Those same people who argue that rent controls cause higher rents are implicitly arguing that rent controls spur more construction, which should lead to a surplus, which should automatically trigger the end of the rent controls (that's how the law is written in NY). We know that hasn't happened, so perhaps we need to look elsewhere for the answers, or we'll be very disappointed if we eradicated rent controls.

Rent control/stabilization removes apts from the free market (where the RC/RS rents < market). This means higher market rents, which should cause investors to build more housing to take advantage of the higher rent. But this hasn't happened to the extent required to close the gap between RC/RS rents & market rents. The reasons for this are myriad and have nothing to do with rent regulation, because rent regulation does not apply to new construction (unless they receive tax breaks).

One can make an argument that RC/RS has stabilized NYC neighborhoods and prevented white flight, etc. This has certainly happened on my block (as previously stated).

My main concern with RC/RS apts is the types of landlords they attract, and how those LLs extract profit to the great detriment of housing stock.

For the record, I have not benefited from rent regulation, other than having longstanding neighbors who probably kept the neighborhood safe in the 60s-80s.

Tell them it's not really working out, and you'll have to let them go.

alan, this is simple. Some people leave for the suburbs for the different environment. Others leave because of conditions in the city. In the 1970s, huge amounts of people fled NYC because of the high crime and bad infrastructure. Your free-ride rent stabilizations didn't stop it. You like revisionist history, but we need to keep things factual.

You also don't understand the economics. RS keeps market-rate rents artificially high based on the demand.

LICC - this is the crux of the argument which you are missing. It's 2-pronged. Yes, rent reg. increases market rent (in some areas). But the free market hasn't stepped in to take care of the high rents by making it attractive enough to developers (nothing to do with rent reg.). It's not rent reg. alone that creates high free market rents.

And thirdly, it is very hard (in my neighborhood) to see what the effect is if you removed all rent-reg. apts. Most bldgs are co-op. Very few rent-reg units left. And contrary to what people think, most of those units are small efficiency apts in walkups. Not classic 9s in dman bldgs.

"I'm a beneficiary because the guidelines keep a stable tax-paying middle-class in NY even when government policies provide incentives to move elsewhere. That's exactly why we had a city worth gentrifying, while cities without sustained rent regulations -- Detroit, Phlly, Baltimore, Newark, Cleveland, etc. etc. etc. -- are dead or fatally wounded."

Bullshit.

Detroit, Philly, Baltimore, Newark, Cleveland, and etc. did NOT lose their middle class tax base because of out-of-control gentrification -- that's just absurd. They lost their middle class because their economies tanked.

alanhart

So let's get some of them out of the way:

1. rent regulations cause housing shortages and high prices. No, the rent regulations were enacted because PRIOR to that point, the free market caused housing shortages and high prices.

No, rent regulations were put in as an 'emergency measure' to address the inflation in rents due to lack of construction during WWII. Last I checked, WWII ended about 65 yrs ago. In other words, necessary gov't regulation of resources during WWII caused the housing shortages, not the free market. There hasn't been a free market in NYC rentals since then.

No, housing shortages had been around for at least a couple of decades prior to WWII ... government took other measures to address the issue, like a massive subway construction program to open up "new" areas to fairly dense residential construction (the Independent line to parts of Queens and Brooklyn). You're right about the immediate prompt for the national rent-control program, and I can't speak to the shortages prior to WWII in other cities.

Matt, those cities bled to their own suburbs (part and parcel of the same economy) well before their metro-areas tanked ... same goes for Pittsburgh. Just think of Detroit -- the city died in the 50s/60s, while the car industry didn't really start dying until the mid-late 70s. I never cited out-of-control gentrification, but the exact opposite, unless you're talking about the gentrification of the countryside.

First sentence in my last post refers to NYC.