bad news nys (by Small potatoes [NY]) Nov 11, 2022 11:49 PM|
bad news nys (by Deanna [TX]) Nov 12, 2022 12:32 AM
bad news nys (by Richard [MI]) Nov 12, 2022 6:29 AM
bad news nys (by Dan McGuire [NY]) Nov 12, 2022 8:11 AM
bad news nys (by Richard [MI]) Nov 12, 2022 8:17 AM
bad news nys (by Allym [NJ]) Nov 12, 2022 8:28 AM
bad news nys (by Moshe [CA]) Nov 12, 2022 12:35 PM
bad news nys (by Deanna [TX]) Nov 12, 2022 12:50 PM
bad news nys (by 6x6 [TN]) Nov 12, 2022 1:07 PM
bad news nys (by 6x6 [TN]) Nov 12, 2022 1:16 PM
bad news nys (by Ken [NY]) Nov 12, 2022 1:31 PM
bad news nys (by Moshe [CA]) Nov 12, 2022 2:31 PM
bad news nys (by Mapleaf18 [NY]) Nov 12, 2022 2:39 PM
bad news nys (by Robin [WI]) Nov 12, 2022 4:25 PM
bad news nys (by Moshe [CA]) Nov 12, 2022 4:38 PM
bad news nys (by Robert,OntarioCanada [ON]) Nov 12, 2022 8:35 PM
bad news nys (by MAT [PA]) Nov 12, 2022 9:02 PM
bad news nys (by MikeA [TX]) Nov 12, 2022 9:49 PM
bad news nys (by 6x6 [TN]) Nov 12, 2022 10:04 PM
bad news nys (by Barb [MO]) Nov 12, 2022 10:44 PM
bad news nys (by Mapleaf18 [NY]) Nov 13, 2022 6:26 AM
bad news nys (by Robert,OntarioCanada [ON]) Nov 13, 2022 11:43 AM
bad news nys (by Ray-N-Pa [PA]) Nov 13, 2022 10:45 PM
bad news nys (by Robert,OntarioCanada [ON]) Nov 14, 2022 12:44 AM
bad news nys (by Mapleaf18 [NY]) Nov 14, 2022 2:25 AM
bad news nys (by S i d [MO]) Nov 14, 2022 11:21 AM
bad news nys (by WMH [NC]) Nov 14, 2022 1:48 PM
bad news nys (by Moshe [CA]) Nov 14, 2022 3:05 PM
bad news nys (by Ken [NY]) Nov 14, 2022 4:23 PM
bad news nys (by Moshe [CA]) Nov 14, 2022 4:39 PM
bad news nys (by MikeA [TX]) Nov 14, 2022 6:08 PM
bad news nys (by 6x6 [TN]) Nov 14, 2022 6:51 PM
bad news nys (by Moshe [CA]) Nov 14, 2022 6:58 PM
bad news nys (by 6x6 [TN]) Nov 14, 2022 7:42 PM
bad news nys (by MikeA [TX]) Nov 14, 2022 8:04 PM
bad news nys (by S i d [MO]) Nov 15, 2022 8:10 AM
bad news nys (by MikeA [TX]) Nov 15, 2022 10:16 AM
bad news nys (by Robin [FL]) Nov 15, 2022 2:54 PM
bad news nys (by 6x6 [TN]) Nov 15, 2022 5:58 PM
bad news nys (by GKARL [PA]) Nov 15, 2022 6:56 PM
bad news nys (by MikeA [TX]) Nov 16, 2022 2:14 PM
bad news nys (by Small potatoes [NY]) Posted on: Nov 11, 2022 11:49 PM
thought someone might have picked this up before me
Kingston NY implements 15% rent reduction for 6 unit and larger buildings, although the article below says it applies to all leases as of Aug 2022. here is a synopsis :
KINGSTON – For the first time in state history, the new Kingston Rent Guidelines Board has approved a 15 percent rent reduction for over 1,200 apartments across 64 rent-stabilized buildings.
The rent reduction will apply to all new one- and two-year leases that commence between August 1, 2022 and September 30, 2023.
All landlords from eligible ETPA buildings are now required to offer those leases to tenants.
The board also voted to create a three-year lookback period for fair market rent appeals that will allow tenants a one-time challenge to their base rent, to which all future adjustments will be applied.
The board vote was six to three with the negative votes coming from two tenant representatives and a public representative.
The rent reductions came months after the effort was organized by tenants, For the Many, and other grassroots groups, including Citizen Action, Mid-Hudson Valle DSA, and Housing Justice for All. --172.58.xxx.xxx
bad news nys (by Deanna [TX]) Posted on: Nov 12, 2022 12:32 AM
I wasn't familiar with Kingston, so I had to look it up. It's about 100 miles north of NYC, population 24,000?
So, one in 20 inhabitants of Kingston, NY lives in one of these 64 buildings?
Looking at another article--
"In July, after successful organizing by For the Many and other allies, Kingston declared a housing emergency to opt into the Emergency Tenant Protection Act (ETPA). This created the first Rent Guidelines Board in the state north of Rockland County. The Board governs rents for all buildings of six or more units built before 1974. This includes some of the largest apartment complexes in Kingston, including Stony Run, Fairview Gardens, Dutch Village and Spring Brook Village.
"In October, For the Many launched its Reduce Kingston’s Rents campaign, calling on the Board to enact a historic rent reduction and adopt a long look-back period. A reduction is necessary to counteract outrageous rent gouging by landlords. From 2016 to 2020, Ulster County rents rose by 27% for a one-bedroom apartment and 48% for a two-bedroom. Rents have only shot up further during the pandemic; Zillow data shows that the average Kingston rent has doubled since 2015. More information can be found in this fact sheet.
"At both public hearings held by the Board, tenants and their allies turned out overwhelmingly in support of a rent reduction. At the Oct. 25 hearing, 22 of the 29 speakers were tenants or their allies. At the Nov. 5 hearing, more than fifty speakers called for a rent reduction, with just two landlords testifying in opposition.
"One of these landlords admitted to owning no ETPA buildings, and the other was Rich Lanzarone, executive director of the Hudson Valley Property Owners Association. Not only did he say hearing about the struggles of tenants makes him want to “puke,” but he also inexplicably cited the Magna Carta as a legal precedent. Lanzarone is also the lead plaintiff in a nonsensical lawsuit attempting to strike down the entire Board; a requested temporary restraining order has already been denied by a judge.
"Many tenants who testified in favor of a rent reduction at the hearings were Stony Run residents. Their apartment complex is the largest ETPA-eligible one in Kingston, and was bought last year by real estate investment firm Aker Companies. Despite promising “very very minimal” rent increases, Aker has raised rents by as much as 67%, levied arbitrary fees, and neglected basic maintenance. This led Stony Run tenants — with the support of For the Many — to form a tenant union. Last Friday, members of its organizing committee traveled to Beacon to deliver a list of demands to Aker’s office.
bad news nys (by Richard [MI]) Posted on: Nov 12, 2022 6:29 AM
So the inmates are running the asylum!
Next they will demand rent be zero 00 because they need the money more than the greedy landlords.
I've noticed that the term "greedy" is pretty much used by these groups every time they say the word landlord, like it is one word. --75.7.xx.xx
bad news nys (by Dan McGuire [NY]) Posted on: Nov 12, 2022 8:11 AM
From NY and most rental control is in NY City. Long Island is driven by the mark. I do section 8 rentals. I also purchased a mobile home park, but refused in NYS. Mobile home parks has a 3 percent cap on increases unless you can justify the increases with improvement and go to 6 percent. I refuse to purchase a park invest into it and increase lot rents 3 percent or $9.00 for every $300 of lot rent. I do consider myself conservative when it comes to finances , but social liberal. As such, I will help those in need who are doing the right thing. However, the government can absorb my risk and pay my bills and decide on rent increases. As such, I invested in Ohio instead. --107.127.xx.xx
bad news nys (by Richard [MI]) Posted on: Nov 12, 2022 8:17 AM
I just saw a video on YT that said they have done the same thing in Orlando.
If this continues, many landlords will just sell and invest elsewhere. --75.7.xx.xx
bad news nys (by Allym [NJ]) Posted on: Nov 12, 2022 8:28 AM
My town mostly D, installed a rent cap twenty years ago at four percent. However, last week they announced that buildings with twenty or more units can raise rents up to six percent. The realtors around here own those buildings and run the town with contributions to politicos I believe. --71.188.xx.xxx
bad news nys (by Moshe [CA]) Posted on: Nov 12, 2022 12:35 PM
Unfortunately, there isn't a single posting above that addresses the actual problem.
Rents are too high. They are out of the reach of too many tenants. Thats not a political statement, but an actual problem that government faces and has to solve. Had landlords limited their rent increases to match population incomes, the result might have been different, but now landlords are faced with rent controls, tenant protection laws and even rent reduction laws as seen here. Landlords cut their own throats by insisting on rent increases beyond what is feasible. Rents are limited by the ability of tenants to pay. When that equilibrium is shattered, government HAS to step in, and they are doing that, and whats more, these laws will remain long after any free-market effects to restore equilibrium.
bad news nys (by Deanna [TX]) Posted on: Nov 12, 2022 12:50 PM
If I decided to rent all of my properties at $10,000/month, then I would have 100% vacancy. And I would have to look at whether I wanted 100% vacancy, or if I wanted to have rent more in line with the going rate.
Suppose my 2/1 went for $400-$450/month in 2010. Now, those 2/1's are going for $650-$700. rents have gone up by about 2/3rds in 12 years... but at the same time, it's also only a $200-$300 raise in terms of actual dollars.
I agree that rents are unrealistic in a lot of markets, and that wages are still stuck where they were 20 years ago, whereas the cost-of-everything has continued to rise. But asking for rent that isn't feasible is a self-correcting problem. Either people pay it, which means that it's feasible, or people laugh at you, and you sit empty. If enough people laugh at you, you turn into a ghost town, because there's nothing there to keep them there. --137.118.xx.xxx
bad news nys (by 6x6 [TN]) Posted on: Nov 12, 2022 1:07 PM
Moshe, Do you not think or realize that these rent increases could be the result of the government "helping" by allowing tenants to not pay rent?
Maybe it is the tenants who have brought this on themselves?
How is it even reasonable that the government should be able to say how much rent can be increased, especially given the high inflation that has caused the cost of the investor to increase at a much higher rate?
Somethings just don't make since and never will.
Be very careful who you vote for as it might make a difference. --73.113.xxx.xxx
bad news nys (by 6x6 [TN]) Posted on: Nov 12, 2022 1:16 PM
Would it make sense that now rents will be even higher after a vacancy as to make up for the discount on rent?
Are tenants just creating an even bigger problem for themselves?
Maybe if they are so dissatisfied with how renting is, they should learn how to budget their money, be responsible and pay their bills ON TIME, and then they will have enough money and credit to buy their own home, NO????
6x6, you silly rabbit, you know that people are not going to be responsible.
bad news nys (by Ken [NY]) Posted on: Nov 12, 2022 1:31 PM
Moshe,did you raise your rents also or are your rents 60% of what they should be? 6x6 Moshe is not a capitalist,he is a socialist,therefore the hppocritic behaviors --74.77.xx.xx
bad news nys (by Moshe [CA]) Posted on: Nov 12, 2022 2:31 PM
You have made a serious error in assumption in your analysis, based on your confidence that the free market will solve all problems.
You assume that people who are (what the housing advocates call) rent-burdened will not pay for excessive rental prices, and prefer to leave your units vacant. But people need to live somewhere, and if they cannot find what they want at the price that they need, they have to exercise one of their limited choices. So what do they do?
This is not 1946, when the world changed. These people now have representation and they vote. There are politicians sensitive to their needs, as well as politicians who will help renters to get relief in exchange for expecting them to vote for their benefactor. So we have anti-landlord legislation, which is now spreading over the whole country AND WILL STAY LONG AFTER the free market restores enough units to satisfy demand. And, of course, the "free-market" isn't actually free, it is heavily influenced by profit-stakeholders who want things their way, so demand may never be satisfied.
In 2010, my rents were $1700 for a 2/2, now at $3000 (nearly double). YES, I have moderated my rents to avoid this situation, but without help from other landlords. So I am stuck with rent controls and other restrictions on my freedom to act, because of greedy landlords, who also complain but fail to act.
People in a prosperous society have disposable income. If rents are too high, people give up other things, including health care, food, clothing, school fees, car insurance, etc. Living in one's car is a last resort. It brings rise in crime, theft, domestic abuse, rent and other credit delinquencies, all of which are serious problems to which government must respond. So they did, and the effects of that crisis will remain, long after the crisis no longer exists. Landlords have had VERY GOOD years recently. and that makes them good targets for politicians in need of solutions to society's problems.
bad news nys (by Mapleaf18 [NY]) Posted on: Nov 12, 2022 2:39 PM
The longer your explanation of your stance is, the less valid it becomes. --64.246.xxx.xx
bad news nys (by Robin [WI]) Posted on: Nov 12, 2022 4:25 PM
The reason rents have gone up is because the price of a house has gone up, as well as labor and materials. I would be happy to provide housing at 2016 prices if my expenses were still at 2016 levels.
The price of everything has gone up. Why are housing providers being singled out? --104.230.xxx.xxx
bad news nys (by Moshe [CA]) Posted on: Nov 12, 2022 4:38 PM
1. Which came first? Covid or Eviction Moratoriums or huge rent increases of the last few years?
2. "How is it even reasonable that the government should be able to say how much rent can be increased, "
Government has responsibility to "promote the general welfare", Don'cha Know? They have broad powers to accomplish that, including price controls. So its "even reasonable" to say that.
3. " high inflation that has caused the cost of the investor to increase at a much higher rate".
"Much" higher rate? Much higher rate than what?
Rates are not the same as amounts. I find that, even with my rents held constant, that my overall expenses have not risen above my profit limitations. Most rental property investments were purchased years ago, and as time goes by, mortgage payments are lower due to inflation, profit margins increase because of amortization, and I find that actual costs of operation do not increase as much as rental rates.
Additionally, as investments, profit will be commensurate with risk, so risks are part of the investment environment.
4. "Somethings just don't make since and never will."
I agree. To some people, some things just don't make sense and never will.
5. "Would it make sense that now rents will be even higher after a vacancy as to make up for the discount on rent?"
NO. I can't make sense of what you say at all. What discount? Whats to be "made up"?
6. Not everyone is "responsible". My tenants are. Why don't you choose tenants like mine? Maybe yours don't have any money. Does that mean that they should be discarded (like slugs)? Promoting the GENERAL welfare is a tough job. You should try it sometime. It means satisfying a whole lot of interests while at the same time satisfying a whole lot of people who want the opposite PLUS moving the country forward to build better circumstances for society. It ain't easy.
I don't think that Ken knows what a Capitalist and a Socialist are, so how does he know what I am?
bad news nys (by Robert,OntarioCanada [ON]) Posted on: Nov 12, 2022 8:35 PM
The basis of rent control is not to control rents but bankrupt private sector rental housing providers. What about a 15 per cent reduction in property taxes then pass the savings onto tenants. This should be challlenged as this is not constitutional where they would not do that to a grocery store or any other business. What people do not see is the extreme left wing tenancy advocates do not believe in private sector ownership of rental units. One time at the Residentail Tenancy Commission a tenant was getting a 45 rent increase where the tenant was furious where he found out the KW housing authority is not under rent control some sort alphabet non sense like RGI. As a group that should be taken to court as this violates ones right to earn a living. If it has to go to supreme court then so it be. In Berlin the LL took the government to the higher court where the extremist lost. --68.69.xxx.xxx
bad news nys (by MAT [PA]) Posted on: Nov 12, 2022 9:02 PM
I think we can all agree that housing affordability is an issue. I fail to see why those who rent property are disproportianately burdened with funding this societal issue, though. While it may be popular in the short term, it will only exacerbate the problem in the long term. Lower returns lead to lower supply. --173.49.xx.xx
bad news nys (by MikeA [TX]) Posted on: Nov 12, 2022 9:49 PM
So if you identify the problem as rents are too high and then look at the political solution implemented you have to ask yourself what the owners of these properties will do as a result. Here's what I predict:
1) Units will be converted from rental properties into condo's. Since financially, it is now not profitable to have these as rentals then alternatives will become more valuable. Converting into condo's has always been 2nd choice for investors. Net result, less units available that are cheap.
2) With less income owners will delay maintenance. Over time these units will become slums. Net result, legislated cheap housing that is undesirable to most tenants.
3) At some point they will be torn down and replaced with new units that don't have to follow these rules. Net result, less units available that are cheap when those investment dollars could have ben directed to new development.
4) Investors will be concerned that local government will change the rules to make future investments unprofitable after they have committed to the project. Net result, investors will look elsewhere in more politically favorable locations to build new units. This community will wither and die.
These policies are very short sighted, the politicians are not looking out for their communities best interest, they are simply buying votes. I do agree with Moshe that these policies will last long after the free market would have stabilized the situation. If these politicians would look past the end of their nose they would see that working with investors to address the issues is much more productive than running them off. There are many examples of this nationwide mostly in Red states where investment zones have been created to address housing shortages. But by not doing that they are repeating the same failures that have been tried in the past and failed. --209.205.xxx.xx
bad news nys (by 6x6 [TN]) Posted on: Nov 12, 2022 10:04 PM
thank you Moshe for replying.
Are you saying that your cost of materials, labor, insurance, taxes, among other things, have not gone up more than 6%. Mine sure have. And then LL's are supposed to give a 15% reduction in rent?
What about as others have mentioned, they are not asking the grocery stores, gas stations, cable providers and other businesses to do this? Why not? Why just LL's?
I also agree that rents are insanely high, but so has everything else went in that direction.
Where is the government putting price control on other things? --73.113.xxx.xxx
bad news nys (by Barb [MO]) Posted on: Nov 12, 2022 10:44 PM
I’m with Robin about this issue.
In 2011, I built a brand new duplex for $115K. Each unit is 700 sq Ft. I spent more, comparatively, in 2018 on the 8-plex, but once you factor in inflation, not horribly more.
Since then, materials and labor have shot way up. I compared prices for water heaters in 2018 and 2020 with what we pay now, for the same thing.
Pricing is up, and those higher prices are here to stay. --149.76.xxx.xx
bad news nys (by Mapleaf18 [NY]) Posted on: Nov 13, 2022 6:26 AM
Wage/price controls never work. In fact they backfire. I believe former U.S. president Richard Nixon found this out. And we never did go back on the gold standard.
Methinks the current regime will try this again with the same results (appears to help early on but ultimately makes this worse).
Gov't over spending and debt caused most of this. --64.246.xxx.xx
bad news nys (by Robert,OntarioCanada [ON]) Posted on: Nov 13, 2022 11:43 AM
There two ways to destroy one bomb or nuke or bring in a rent control system then prevents repairs, renovations. As reapairs, renovations are deferred the cost goes up even more which is passed onto tenants with higher then ever rents. The focus is incomes where those who need help get subsidy to pay rent while the better off tenants pay market rent. Why is it the Community Housing Authority not under rent control as the government knows this will not work. In order to minimize climate change a considerable investment has to made to upgrade apartment complexes to dratmatically reduce energy consumption. It was tryed in Berlin where the higher court brought that down. As socialist failed to expropriate rental housing. Hate groups are not going to resolved affordability problems. What it is happening in this country provincies with free market rent are building and converting other structures into rental housing as builders find it worthwhile to build all types of rental housing where provincies that are hostile to private rental housing have supply problems. If there is more immigration here then where are people going to live not in the houses the radical hate groups own. The cost of building energy efficient is high along witth meeting the multi residential building codes where building a apartment complex costs more then building a condominium comples. Stupity is where the extreme leftists never learn. There is going to be a chaep rental housing in Russia as the loss life with the insane war. Look at the bigger picture where good paying jobs along with tax revenues go up along safe affordable housing not substandard slums. In the last provincial electrion the leftist Liberals and the Socialist democratic Party lost the electrion big time where the leader of Liberal Party did not even the riding. Now there is Progressive Conservative provincial government here in Ontario with a majority where can pass legiislation without any say from the oppposition parties. If one adds up 0.01 per cent of populaiton the radical hate groups will not generate votes. I remember the time when there was Socialist Democratic Government in Ontario that brougnt in penalites for repairs, renovations for rental housing where one day 20,000 workers many who were tenants lost jobs then next election did not vote for Socialist Democratic Government. Socialist Democratic Governments last one term here where voted out next election. --68.69.xxx.xxx
bad news nys (by Ray-N-Pa [PA]) Posted on: Nov 13, 2022 10:45 PM
Controlling the rental rates isn't going to incentivize the building of new apartments. It does the opposite.
bad news nys (by Robert,OntarioCanada [ON]) Posted on: Nov 14, 2022 12:44 AM
In Calgary Alberta there is no rent control where new rental construction of all types is going up. A progressive Conservative government supports job growth and the economy. The spin off effects of new rental construction benefits everyone not the nutcase hate groups. If a apartment complex would be turned over to them it would like a Cinderella story where in six months everything would turn to ruin. A lot people think this is a country that is completely hostile to private rental housing investment where every province has different landlord and tenant act where the provinces with rent control and a hostile environment there is significantly less new rental housing construction where in Ontario it is condominums. If one invests in bank certificate no new money is put in where a apartment complex everything has life expectancy like a roof, boilers, plumbing, windows, structural. I do not what type education the hate groups have but they are completely obvious to reality. In the province of Alberta the Socialist Democratic government lasted four years then was voted out. Where even when the socialist were in power they did not bring in rent control. Next election it maybe possible that a Conservative government is voted in at the federal level as the carbon tax is unpopular. --68.69.xxx.xxx
bad news nys (by Mapleaf18 [NY]) Posted on: Nov 14, 2022 2:25 AM
Again, the political ideologues, constantly searching for utopia and having never actually run a business in the real world are at the helm. Say goodbye to small business. ESG is partnering big corp with big tech and big gov't to rule over the serfs similar to the CCP. An unholy manage et trois. --64.246.xxx.xx
bad news nys (by S i d [MO]) Posted on: Nov 14, 2022 11:21 AM
Good article by Rebecca Diamond, Associate Professor of Economics at Stanford Graduate School of Business.
"Steadily rising housing rents in many of the US’s large, productive cities have reignited the discussion whether to expand or enact rent control provisions. Under pressure to fight rising rents, state lawmakers in Illinois, Oregon, and California are considering repealing laws that limit cities’ abilities to pass or expand rent control. While rules and regulations of rent control vary from place to place, most rent control consists of caps on price increases within the duration of a tenancy, and sometimes beyond the duration of a tenancy, as well as restrictions on eviction.
New research examining how rent control affects tenants and housing markets offers insight into how rent control affects markets. While rent control appears to help current tenants in the short run, in the long run it decreases affordability, fuels gentrification, and creates negative spillovers on the surrounding neighborhood.
A substantial body of economic research has used theoretical arguments to highlight the potential negative efficiency consequences to keeping rents below market rates, going back to Friedman and Stigler (1946). They argued that a cap on rents would lead landlords to sell their rental properties to owner occupants so that landlords could still earn the market price for their real estate. Rent control can also lead to "mis-match" between tenants and rental units. Once a tenant has secured a rent-controlled apartment, he may not choose to move in the future and give up his rent control, even if his housing needs change (Suen 1980, Glaeser and Luttmer 2003, Sims 2011, Bulow and Klemperer 2012). This mis-allocation can lead to empty-nest households living in family-sized apartments and young families crammed into small studios, clearly an inefficient allocation. Similarly, if rental rates are below market rates, renters may choose to consume excessive quantities of housing (Olsen 1972, Gyourko and Linneman 1989). Rent control can also lead to decay of the rental housing stock; landlords may not invest in maintenance because they can’t recoup these investment by raising rents. (Downs 1988, Sims 2007).
Of course, rent control also offered potential benefits for tenants. For example, rent control provides insurance against rent increases, potentially limiting displacement. Affordable housing advocates argue that these insurance benefits are valuable to tenants. For instance, if long-term tenants have developed neighborhood-specific capital, such as a network of friends and family, proximity to a job, or children enrolled in local schools, then tenants face large risks from rent appreciation. In contrast, individuals who have little connection to any specific area can easily insure themselves against local rental price appreciation by moving to a cheaper location. Those invested in the local community are not able to use this type of "self-insurance" as easily, since they must give up some or all of their neighborhood specific capital. Rent control can provide these tenants with this type of insurance.
Until recently, there was little data or natural experiments with which to assess the importance of these competing arguments, and to assess how rent controls affects tenants, landlords, or the broader housing market. But newly-available housing-market data spanning periods of dramatic change in rent control laws in Cambridge, MA and in San Francisco, CA have allowed economists to examine these questions empirically. While these studies do find support for the idea that existing tenants benefit from the insurance provided by rent control, they also find the overall cost of providing that insurance is very large.
From December 1970 through 1994, all rental units in Cambridge built prior to 1969 were regulated by a rent control ordinance that placed strict caps on rent increases and tightly restricted the removal of units from the rental stock. The legislative intent of the rent control ordinance was to provide affordable rental housing, and at the eve of rent control’s elimination in 1994, controlled units typically rented at 40-plus percent below the price of nearby non-controlled properties. In November 1994, the Massachusetts electorate passed a referendum to eliminate rent control by a narrow 51–49 percent margin, with nearly 60 percent of Cambridge residents voting to retain the rent control ordinance. This law change directly impacted properties previously subject to rent control, enabling landlords to begin to charge market rents.
Autor, Palmer, and Pathak (2014) (APP), studies the impact of this unexpected change and find that newly decontrolled properties’ market values increased by 45 percent. In addition to these direct effects of rent decontrol, APP find removing rent control has substantial indirect effects on neighboring properties, boosting their values too. Post-decontrol price appreciation was significantly greater at properties that had a larger fraction of formerly controlled neighbors: residential properties at the 75th percentile of rent control exposure gained approximately 13 percent more in property value following decontrol than did properties at the 25th percentile of exposure. This differential appreciation of properties in rent control–intensive locations was equally pronounced among decontrolled and never-controlled units, suggesting that the effect of rent control had been to reduce the whole neighborhood’s desirability.
The economic magnitude of the effect of rent control removal on the value of Cambridge’s housing stock is large, boosting property values by $2.0 billion between 1994 and 2004. Of this total effect, only $300 million is accounted for by the direct effect of decontrol on formerly controlled units, while $1.7 billion is due to the indirect effect. These estimates imply that more than half of the capitalized cost of rent control was borne by owners of never-controlled properties. Rent controlled properties create substantial negative externalities on the nearby housing market, lowering the amenity value of these neighborhoods and making them less desirable places to live. In short, the policy imposed $2.0 billion in costs to local property owners, but only $300 million of that cost was transferred to renters in rent-controlled apartments.
Diamond, McQuade, and Qian (2018) (DMQ) examine the consequences of an expansion of rent control on renters, landlords, and the housing market that resulted from a unique 1994 local San Francisco ballot initiative. In 1979, San Francisco imposed rent control on all standing buildings with five or more apartments. Rent control in San Francisco consists of regulated rent increases, linked to the CPI, within a tenancy, but no price regulation between tenants. New construction was exempt from rent control, since legislators did not want to discourage new development. Smaller multi-family buildings were exempt from this 1979 law change since they were viewed as more “mom and pop” ventures, and did not have market power over rents.
This exemption was lifted by a 1994 San Francisco ballot initiative. Proponents of the initiative argued that small multi-family housing was now primarily owned by large businesses and should face the same rent control of large multi-family housing. Since the initial 1979 rent control law only impacted properties built from 1979 and earlier, the removal of the small multi-family exemption also only affected properties built 1979 and earlier. This led to a differential expansion in rent control in 1994 based on whether the small multi-family housing was built prior to or post 1980—a policy experiment where otherwise similar housing was treated differently by the law.
To examine rent control’s effects on tenant migration and neighborhood choices, DMQ examine panel data that provides address-level migration decisions and housing characteristics for the majority of adults living in San Francisco in the early 1990s. This allows them to define a treatment group of renters who lived in small multi-family apartment buildings built prior to 1980 and a control group of renters living in small multi-family housing built between 1980 and 1990. Their data allows them to follow each of these groups over time up until the present, regardless of where they migrate.
Between five and ten years after the law change, the beneficiaries of rent control are 19 percent less likely to have moved to a new address, relative to the control group’s migration rate. Further, impact on the likelihood of remaining in San Francisco as whole was the same, indicating a large share of the renters that rent control caused to remain at their 1994 address would have left San Francisco had they not been covered by rent control.
These effects are significantly stronger among older households and among households that have already spent a number of years at their address prior to treatment. This is consistent with the fact that both of these populations are likely to be less mobile. Renters who don’t need to move very often are more likely to find it worthwhile to remain in their rent controlled apartment for a long time, enabling them to accrue larger rent savings. Finally, DMQ find these effects are especially large for racial minorities, likely indicating that minorities faced greater displacement pressures in San Francisco than whites.
While expansion of rent control did prevent some displacement among tenants living in San Francisco in 1994, the landlords of these properties responded to mitigate their rental losses in a number of ways. In practice, landlords have a few possible ways of removing tenants. First, landlords could move into the property themselves, known as move-in eviction. Second, the Ellis Act allows landlords to evict tenants if they intend to remove the property from the rental market, for instance, in order to convert the units to condos. Finally, landlords are legally allowed to offer their tenants monetary compensation for leaving. In practice, these transfer payments from landlords are common and can be quite large.
DMQ find that rent-controlled buildings were 8 percentage points more likely to convert to a condo than buildings in the control group. Consistent with these findings, they find that rent control led to a 15 percentage point decline in the number of renters living in treated buildings and a 25 percentage point reduction in the number of renters living in rent-controlled units, relative to 1994 levels. This large reduction in rental housing supply was driven by converting existing structures to owner-occupied condominium housing and by replacing existing structures with new construction.
This 15 percentage point reduction in the rental supply of small multi-family housing likely led to rent increases in the long-run, consistent with standard economic theory. In this sense, rent control operated as a transfer between the future renters of San Francisco (who would pay these higher rents due to lower supply) to the renters living in San Francisco in 1994 (who benefited directly from lower rents). Furthermore, since many of the existing rental properties were converted to higher-end, owner-occupied condominium housing and new construction rentals, the passage of rent control ultimately led to a housing stock that caters to higher income individuals. DMQ find that this high-end housing, developed in response to rent control, attracted residents with at least 18 percent higher income. Taking all of these points together, it appears rent control has actually contributed to the gentrification of San Francisco, the exact opposite of the policy’s intended goal. Indeed, by simultaneously bringing in higher income residents and preventing displacement of minorities, rent control has contributed to widening income inequality of the city.
It may seem surprising that the expansion of rent control in San Francisco led to an upgraded housing stock, catering to high-income tastes, while the removal of rent control in Cambridge also lead to upgrading and value appreciation. To reconcile these effects, it is useful to think about which types of landlords would respond to a rent control expansion versus a rent control removal. In the case of rent control expansion, some landlords will choose to recoup some of their losses by converting to condo or redeveloping their building to exempt it from rent control. However, other landlords may choose to accept the rent control regulation, and no longer perform maintenance on the building and allow it to decay. In the rent control expansion case, one would see an increase in condo conversions and upgrades, driven by the landlords that chose to respond in this way. However, when rent control is removed, the landlords who own the rent controlled buildings are the ones who didn’t choose to convert to condo or redevelop in response to the initial passage of rent control. Indeed, one would expect this subset of landlords to choose to upgrade and invest in their properties once the rent control regulation is removed.
Rent control appears to help affordability in the short run for current tenants, but in the long-run decreases affordability, fuels gentrification, and creates negative externalities on the surrounding neighborhood. These results highlight that forcing landlords to provide insurance to tenants against rent increases can ultimately be counterproductive. If society desires to provide social insurance against rent increases, it may be less distortionary to offer this subsidy in the form of a government subsidy or tax credit. This would remove landlords' incentives to decrease the housing supply and could provide households with the insurance they desire. A point of future research would be to design an optimal social insurance program to insure renters against large rent increases."
bad news nys (by WMH [NC]) Posted on: Nov 14, 2022 1:48 PM
Moshe, how did "greedy landlords" force you to double your prices?
We have landlords here that are asking $1k or more MORE than we do, but we know our customer base. I want to keep my units full with GOOD tenants who can easily afford the rent - not desperate people who take what they can get all the while on the lookout for something more affordable... --50.82.xxx.xxx
bad news nys (by Moshe [CA]) Posted on: Nov 14, 2022 3:05 PM
I never said that "greedy landlords" FORCE ME to double my prices.
First, I mentioned that MY rents are $3000, used to be $1700 in 2010. Thats:
a. ALMOST double, not double (thats 76.5%) over 12 years
b. Going price for my 2/2s is $3500. That would be doubled plus 5.9%)
c. What I said was "YES, I have moderated my rents to avoid this situation, but without help from other landlords. So I am stuck with rent controls and other restrictions on my freedom to act, because of greedy landlords, who also complain but fail to act."
d. Over the last 12 years, only the last few years have seen intolerable rent increases. I used to be content with simple $100/month increases (standard in CA) for continuing tenants, but only the last few years have seen g-Landlords raising by such exorbitant amounts, never thinking that there would be political consequences.
I moderate my rents. Other landlords are insistent on squeezing that last cent of profit, without thinking that the government would step in to control prices from beng excessive. So those of us who moderated our prices, are STUCK with what the g-word landlords have wrought: rent controls, tenant protections, rent-reduction laws, landlord disrepute, all because of the g-landlords whose greed outpaced their good sense in understanding how actions bring reactions, and sometimes the reactions are worse than the actions.
Evidently, you are desperate to find some kind of contradiction in my thinking. You failed to accurately read what I said. You might want to improve your reading skills. I can suggest: How To Read a Book, by Mortimer Adler, if you can find a copy.
bad news nys (by Ken [NY]) Posted on: Nov 14, 2022 4:23 PM
Which landlords are greedy? the ones who have owned for a long time and have no mortgage left and could have left there rents low? how about the guy who just bought a place and his mortgage is so expensive that he had to jack up the rents just to cover his payments? did you have to do that when you initially bought your place? --74.77.xx.xx
bad news nys (by Moshe [CA]) Posted on: Nov 14, 2022 4:39 PM
"how about the guy who just bought a place and his mortgage is so expensive that he had to jack up the rents just to cover his payments? did you have to do that when you initially bought your place?"
He bought an INVESTMENT, didn't he, and investments have risks. If they didn't have any risk, they wouldn't really be "investments".
Additionally, if he just bought, he should have realized the direction of the economy and the laws, and should have known what was coming. And, he STILL should have realized that excessive price increases would cause political interference.
He should have had a plan for asymptotically bringing rents up when he bought, to cover expenses and then profit. Trying to do it all at once is greed.
bad news nys (by MikeA [TX]) Posted on: Nov 14, 2022 6:08 PM
Greed because he is trying to make ends meet? I haven't read that definition in any valid dictionaries, can you provide empirical evidence of your assertion.
Perhaps a definition from Merriam-Webster would help.
Greed: a selfish and excessive desire for more of something (such as money) than is needed.
So in this case the investor did not require more of something than was needed, he had a desire to cover expenses so he didn't loose the property.
On the other hand, as you stated above, "If rents are too high, people give up other things, including health care, food, clothing, school fees, car insurance, etc". So, looking at the definition of greed, they didn't need lower rent, the had an excessive desire for it because they didn't want to give up something else. I would add to your list many other things that are not necessities that tenants didn't want to give up but alas that would derail the conversation further.
Bottom line, a review of the definition disproves your assertion for the landlord Ken was pointing out. It does though, in fact, prove that the tenants in this case are the ones who are greedy.
bad news nys (by 6x6 [TN]) Posted on: Nov 14, 2022 6:51 PM
Thank you Sid for sharing that.
Good points, Ken and MikeA --73.113.xxx.xxx
bad news nys (by Moshe [CA]) Posted on: Nov 14, 2022 6:58 PM
Do you really think so, bottom line?
The intention of a large, financed purchase of an investment is not meant to be recovered all at once. If it were, then every speculator would jump into such purchaser for immediate profit, and the opportunities would be quickly gone and he price would go up beyond imagination.
"Greed: a selfish and excessive desire for MORE of something (such as money) THAN IS NEEDED."
As in any such investment, financing provides for multiple years of growth, the investor shouldn't have expected to recoup his investment plus expenses plus profit, (especially large profit) immediately; that why it was an investment and not a buy low-sell high opportunity. He's not in danger of losing the property, unless his planning was particularly poor. The word EXCESSIVE is germane to your definition.
You opine that tenants who need to give up "excessive desire for it [lower rents] because they didn't want to give up something else. But the modern world has standards, today. The world (especially US) can afford to not have people starve, for people to have housing, education, health care etc, and thats what the government is doing. Thats part of the changes since 1946.
Do you really think that you have shown the conclusion that tenants are the ones who are greedy? You're assuming that there are no NEEDY tenants. Of course, there are tenants who don't pay rent in today's environment, because their lawyer has told them that they can avoid it. But there are too many tenants who don't have enough disposable income or none-at-all, and today's standards for the world REQUIRES that we respect the world-wide standards which, even third world countries today uphold (with contributions).
bad news nys (by 6x6 [TN]) Posted on: Nov 14, 2022 7:42 PM
So, if tenants have high speed internet, the latest cell phone, eat out every night, watch cable with pay per view channels, on their extra large screen TV, and I do the complete opposite of this, then the tenants are greedy and not the LL? However, that doesn't apply because the modern world has standards, today?
So, the greed only works one way. Got it. --73.113.xxx.xxx
bad news nys (by MikeA [TX]) Posted on: Nov 14, 2022 8:04 PM
Now you are qualifying tenants as "NEEDY". If you believe the majority of tenants and organizations that pushed this legislation are NEEDY then I have a bridge in the desert to sell you. This has nothing to do with NEEDY, they are already taken care of with programs such as Section 8. This has everything to do with eliminating Capitalism and replace it with Socialism. If you don't believe me, here's some research on the organizations that pushed through this legislation. In their eyes, anyone with money is the enemy. By definition that is greed.
Mid-Hudson Valle DSA
DSA stands for Democratic Socialists of America. Here's a few quotes from their web page
“They have money. They have control. We have power.”
"Aims to challenge capitalist power by electing socialists to office"
"you can use those skills you worked so hard for to survive in capitalism for their true purpose of destroying capitalism."
Citizen Action state on their web site:
"We are battling against the forces of capitalism"
"We work to elect progressive candidates to office"
Housing justice for all states:
"We are fighting for housing for people, not for profit. Social housing is protected from the private market, democratically controlled by residents, and is the only housing that is capable of solving the homelessness crisis."
bad news nys (by S i d [MO]) Posted on: Nov 15, 2022 8:10 AM
WMH, if you want your views taken seriously, start quoting Standford professors. They say the same things that we uneducated, unsophisticated, mere mortal rubes say, but they've got letters behind their names. I'm not sure what that should matter, but maybe when you spend 7-10 years in a class room and $100,000 - $200,000 on tuition, it makes your information "correcter".
bad news nys (by MikeA [TX]) Posted on: Nov 15, 2022 10:16 AM
By the way Moshe, it is a well documented fact that 19% of Americans receive some form of Government welfare. Are there some cracks where individuals are being missed, maybe, but I find it hard to believe that there is more than 1 in 5 Americans that are truly in need with basic necessities. This number is SIGNIFICANTLY higher that most developed countries. For example in Switzerland it is 3.2%, Japan 1.7%.
The progressives are trying to redefine need to include wants. Look at the post a few months back on "Living wage" you will find that by definition this is just under the median income as defined by "Middle income" or "Middle class". Yet it is being sold as meeting the NEEDS of people. Perhaps a review of the definition of NEED is in order. --209.205.xxx.xx
bad news nys (by Robin [FL]) Posted on: Nov 15, 2022 2:54 PM
bad news nys (by Richard [MI]) Posted on: Nov 12, 2022 8:17 AM
I just saw a video on YT that said they have done the same thing in Orlando.
If this continues, many landlords will just sell and invest elsewhere.
Richard - it is true that the Orange County, FL voters voted FOR a rent cap (no surprise as this is the bluest area of the entire state and will never be turned red). The morning after the election, I heard on the local TV news station that the referendum was challenged in court before the election. So the election result will not be certified.
Even if the election were to stand, by Florida law, the rent control would only be good for one year.
Here is a link to an article (hopefully this works!):
www (dot) globest (dot) com /2022/11/11/ voters-approve-rent-control-in-florida-county/?slreturn=20221015144609
bad news nys (by 6x6 [TN]) Posted on: Nov 15, 2022 5:58 PM
MikeA, let me help clarify the definition of "need" in todays world by the general public.
I need the latest cell phone
I need the biggest tv
I need the largest house
I need a new car with all the bells and whistles
I need to have more kids than I can afford
I need to eat out every meal
I need the most expensive meal on the menu.
I need a lot more things than some people think
Then I need the government to pay for it and forgive my debt
bad news nys (by GKARL [PA]) Posted on: Nov 15, 2022 6:56 PM
I think there are two strategic planning points here for me: 1) Look into triple net commercial 2) Invest in higher end areas where tenants are less likely to need assistance. Outside of Philadelphia, I'm unaware of any movement here in PA --209.122.xx.xxx
bad news nys (by MikeA [TX]) Posted on: Nov 16, 2022 2:14 PM
I hate it when facts get in the way of a good opinion. --107.77.xxx.xx