Real Estate in New York City: Without rent control, would anyone outside of the top 1% be left in Manhattan?
Trey Clark, Founder, http://www.RealtyShares.com
Rent Control actually increases market rents by removing at-market rental stock from a given city/area.
I live in San Francisco, where roughly 80% of the rental units are subject to rent control. Rents here have spiked approximately 15% in the last 18 months.
Here’s the dynamic: people with below market rents stay in those apartments, because they don’t want to pay market rates. Thus those units tend to stay out off the market. When demand increases, as has happened here in the last 18 months due to increased start-up hiring, there is a reduced inventory of units to absorb that demand. Market rents spike.
The same holds for Manhattan, though I’m not sure as large a share of the apartment stock is rent controlled/regulated. If rent control was removed, market rents would drop, though average rent paid would likely go up (no more renters paying below rents far below market).
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Like most Gooferment actions, it has intended and Unintended Consequences!
The use of force or fraud is always immoral, as well as ineffective and inefficient.
It enriches the politicians and bureaucrats who can extract “tribute” and must be “kowtowed” to. Graft, kickbacks, corruption, bribery, and extortion are all the direct observable effects of “rent control”!
It’s ineffective because it actually raises the rents that poor people must pay.
It’s inefficient because it incentivizes the wrong behavior. Old pensioners “lock up” large apartments that they don’t “need” and have to heat ’n’ cool the larger space
Anytime the Gooferment institutes “price controls”, the Free Market is distorted.
The Free Market’s “invisible hand” allows the maximum happiness and minimum unhappiness without the use of force or fraud.
The Free Market allows peaceful exchanges that benefit everyone.
Seems so simple.
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