Why rent control hurts poor and middle class renters

You and I already know that rent control means fewer and worse housing options for the poor and middle class, but this is such a nice, clear video, I couldn’t resist sharing it anyway:

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  • lee

    Great explanation. I knew rent control was problematic, and I sensed why, but this is succinct, and well presented.
     
    BTW, this is also why I have a problem with Prop 13. As it is, what happens, is NO ONE MOVES, and a lot of the wealthier people put their houses in trust, so they house never is sold. And the property taxes stay insanely low. Look up the property taxes on certain properties in Tiburon and Belvedere, and look who OWNS those properties. You will find a LOT of properties owned by the O’Wealthie Family Trust or the Richstrom Revocable Trust, or the Bagomoney Irrevocable Trust, etc. And then if you look at the property taxes paid on it, it is still at a 30 year old rate. An interesting way to spend some time on the internet… 
     
    Admittedly, property taxes got out of hand in CA, when property values shot up. And I admit, it was unfair that Mom and Dad would have to sell a house just because they could no longer pay property taxes.  (Our house in Orange County which sold for $40,000 in 1965, was selling for $250,000 a little over ten years later, right around the time Prop 13 passed. BTW, it sold for $750,000 at the height of the housing frenzy a few years back, got reposessed and then was sold for about $625,000.)
     
    But the way Prop 13 winds up ACTUALLY working is similar to the way Rent Control Works. In the rest of the country, people move: As they age, as the family gets bigger, as the kids move out. (Unless they are living on the family homestead that has been in the family for generations.) Almost NONE of the people I wound up growing up with in Indiana live in the first house they bought after they got married. (Except the ones who went into farming… or who took over the family farm.)
     
    Taking a look at the neighborhood in Orange Country in which we lived when I was a kid, only ONE of the families that my parent were friends have moved. The rest of the houses are still owned by the same family. (My parents, if they were still alive would be 92 and 85. Their friends, if they are still alive, would be about the same age. I am not precisely sure if the parents or the kids now “own” these houses.) These were were tract houses built in the late 50’s, and were BARELY the next step up from “starter homes.” It was the first house my parents owned, and for most of their friends, it was their first house.
     
    In the rest of the country, this is a little odd. Except of course, among tenants of rent control apartments in NYC…
     
    It’s not just the BANANA’s in California, or the NIMBY’s that make for scarce housing, it’s Prop 13, too.

  • http://ymarsakar.wordpress.com Ymarsakar

    I know that it is designed to hurt humans. 

  • Robert Arvanitis

    Rent control is no different than hourly-pay control, or any other effort to set prices by non-economic means.
    Consider a child with a 103° fever.  The right thing is antipyretics, or even an ice bath.  The leftist solution is to renumber the thermometer so it reads “98.6°.”
    That is the essence of statist folly.

    • http://bookwormroom.com Bookworm

      Robert:  That is one of the best metaphors I’ve heard yet for Leftist market manipulation.

    • http://ymarsakar.wordpress.com Ymarsakar

      The Leftist solution would be to renumber the competition’s thermometer, so that when the second opinion is called in, the new doctor can be demonized for saying the child has a normal temperature. Then the Leftist can charge the house and the bank for lowering the fever.