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Re: Please End Rent Regulation

Posted by TenantNet on April 14, 1997 at 10:49:23:

In Reply to: Re: Please End Rent Regulation posted by David Kuhlke on April 14, 1997 at 07:03:51:

First, on this thread, please realize we moderate this bulletin board
unlike usenet, to ensure any discourse is rational (so far it has been).
We hope posters air their views (either way), but we draw the line
where the discourse degenerates into circular regurgitation of economic
maxims. Another round is fine, but the first one who starts talking
about "willing buyer and willing seller..."

: I tend to disagree. Giving landlords the same ammunition the airlines
: had before the late 70s is asking for constant increases in rent, as
: allowed by regulation.

You must realize -- and 99% of the people miss this, is that regulation does many
other things than control the level of rent increases. It guarantees automatic
lease renewal, stabilizing neighborhoods so people will settle into neighborhoods
knowing that landlords can't kick them out on a whim. The secondary effects of
this on the city is immeasurable. Some say it limits mobility, but that's
a strawman -- it is indeed intended to create stable long-term tenancies. Our best
neighborhoods are immune from speculative pressures. Regulation also requires owners
maintain their buildings and continue to provide services that you agreed to in your

: Were there all of a sudden decontrol or destabilization (read: deregulation)
: of rents in Manhattan, surely half the tenants in the city would be affected
: in the short term by sharp uplift in rents charged. But a fair market
: economy would then be able to perform its magic: the landlords with the
: highest rents would have a bunch of empty apartments on their hands,
: motivating them to lower their rents.

This is the high school theory -- draw the supply-demand curve and
watch it equalize. but any economist worth their salt will tell you
that theory is just theory and that the real world things are often different.
There is no free market in New York City even absent rent regulations.
Even without regulation, there is no competition. Other factors determine
this: zoning, finance, speculation, geography, vacancy rate. Rent Regulation
is not the answer is all areas (like the midwest where it is unnecessary)
as free markets do exist in those areas. Even if NYC it is not a COMPLETE
answer, but it does do several things. Most of all, it is an effort to
keep the broad middle class in the city, keeping the city alive. Many
other cities never took steps to keep the middle class; when they left you
got chaos. And contrary to some other tenant advocates, rent regulation
never was nor is now an attempt to provide housing for poor people. That's
what the landlords want people to think so they can then criticize it.
Unfortunately some of the more left-wing unthinking tenant advocates
don't understand this.

: If they are allowed to raise their tenants' rents by 6% per annum, they
: will do so, whether or not their building or their location warrants such
: a rise.

And if there is no regulation, they will raise rents however much they can.
In the periods of deregulation (last time 1971-74) that's exactly what
happened -- no market equalization -- no building on new units except
luxury units. It does not happen. You do know that any building built
after 1974 is exempt from rent regulation, so in 23 years, where are
all the new housing units? Other than luxury buildings, there is virtually
no new construction for middle-income people, precisely because the [free]
market does not really exist. There is a demand, so where are they? There
are many other factors at play.

: If they are forced to charge rents that are supported only by
: the amenities, the location, or the size or "view" an apartment offers,
: we will truly have a "fair" real estate rental market here, and the rents
: will be driven by what the market will bear.

Again, theory, but not in real life. I wish it were so. Taking away
regulation does not create a free market where there is none to begin

: The question then is, Will landlords forced into this new fair market
: become bankrupt on such a scale that the city or state might have to
: step in to support them? I say 'maybe/maybe not'.

That's a very important public policy concern -- as even short-term
drastic effects could have immeasurable adverse effects on the city.
Even if there was a fair market in which to transition, is the city
willing to destroy neighborhoods and its tax base to do so?

: The airlines were
: thrown into the same predicament, but the ones that survived did so
: through bankruptcy, spinoffs, closures, layoffs, and other means
: all financially troubled businesses must affect to stay alive.

But airlines are not necessary to live. Even telephones are not
absolutely necessary (although I would argue against that idea).
Housing is. In this society certain things are regulation and
even conservatives want this. Do you think we would heve the
transportation and communication infrastructure without some
sort of regulation? Even our economy is regulation with the
Fed setting interest rates. If one really wants to go back
to the free-for-all 1800's, then they should read "How the Other Half
Lives" on TenantNet.

: But deregulation does not spell the end of affordable rents in my
: opinion. It opens the door for true competition and market-based,
: customer-driven pricing to thrive. And I, for one, would gladly
: see that happen, no matter the short-term consequences.

If one is after a true free market, then look elsewhere as rent
regulation is just the whipping boy. Think it through and see
if that's the kind of city you really want.

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