Most fast food workers in California would get a $20 minimum wage next year — a nearly $5 per hour raise — under a deal announced Monday between labor unions and the industry that will avoid a costly referendum on the November 2024 ballot.
But like, how can they milk us for more than we're able to give?
Yeah, you can charge $100 billion for a studio apartment, but nobody is going to buy it.
The same logic is at play for raising rent. You can't raise it beyond what people can pay, or else you'll lose customers and make less money overall.
Not sure why this needs to be explained to you. You think they're refusing to charge $100 billion for a studio apartment out of the goodness of their hearts? Lol. No. It's market forces.
The real answer that no one is giving you is this:
Aggregate demand for housing in the area is through the roof, which is why prices are actually rising. If you move out because you can't pay, there will literally be hundreds, or more, people lined up who can - this incentivizes raising the price because the market can clearly handle it.
But like, how can they milk us for more than we’re able to give?
The logic of the market is that if there's anyone in the market that can afford it, whether or not you can't isn't their problem, it's yours.
This is one of the basic reasons why wide income inequality is a problem- when the going housing market rate is a measure of what the wealthy people in that market can bear, it creates serious problems for everyone else. For example, the median home in Seattle lists at $800k and that's not a measure of what the median earner can afford, it's a measure of what Blackrock is willing to pay to outbid folks earning in the $250k/yr range.
People will pay whatever it takes to not be homeless. If that means 75% of my paycheck is going to a shitty apartment, then i have to take on more debt to afford things like food. Landlords will continue to squeeze until something breaks.
People are debating you because you're operating under a different definition of "able to pay". Yes technically they can't get blood from a stone. If I make $100 dollars a month they can't charge me $101 for rent or I can't live there. But under the "30%" rule I shouldn't pay more than $30 in rent, the theory being that I need the additional $70 dollars a month for utilities, food, gas etc and in theory I still have some left over for savings, incidentals, etc.If all the landlords in my area are charging $50 in rent for a studio I can technically pay that, but somethings taking a hit in my budget and it probably won't be utilities (running water), food (got to eat), or gas (gotta get to work) so it'll be my savings, incidentals, etc funds. Now I have no savings and can't pay an emergency expense like a flat tire because that extra $20 a month I could have saved went to my rent because I could "technically pay it."
The way your comment is worded makes it sound like you probably think living check to check is a personal choice because someone didn't want to tug on their boot straps hard enough. Should the market adjust if people dont want to pay a certain amount in rent? In theory, yes. The reason rent is skewed away from the consumer in a traditional market adjustment is that people need a place to live. So theyll keep paying till they literally can't and become homeless. If we were talking about the cost of luxury items then the market adjustment would be much quicker because people can afford not to buy parrot petting poles but it's harder to just quit buying it when its food or rent and that makes it ripe for abuse.
The way your comment is worded makes it sound like you probably think living check to check is a personal choice because someone didn’t want to tug on their boot straps hard enough.
I have no idea where you guys are getting this from.
My point is simple, but I feel like the downvotes had their snowball effect and people who can't think for themselves are doing mental gymnastics to fit in with the crowd.
Holy shit dude. Literally everyone is telling you you're wrong, some nicer people are even taking time to politely explain why you're meeting so much resistance to your opinion. And you're just shoving your fingers in your ears and screaming NAH NAH NAH I can't hear you GROUPTHINK DOWNVOTES ME RIGHT YOU WRONG.
Its fucking exhausting trying to help people like you. Why anyone tries is beyond me. Enjoy your inability to think critically and assurance of your correctness. Don't fucking bother replying
Existing tenants priced out will choose not to renew their leases or default. That rids them of anyone not able.
Then they can set the rent as high as they'd like, because there's s no shortage of venture capitalist vampires that'll pay way over market for an apartment if they think they can make money off it. They'll pull perfectly good housing stock off the market so some shady LLC or foreign national can continue to treat real estate like securities, or even just sit on it, vacant.
My rent has gone up every year like clockwork whether I get a raise or not. Landlords have never needed an excuse to raise rent, stop treading water for them.
This is why I hate those arguments. Anytime we talk about raising wages, people complain about things getting more expensive. But what's the plan when an hours worth of work can only get you a gallon of milk? Because without wages going up, it's gonna get to that point. And then even high end paying jobs will still leave people in poverty. Like right now I'm making more money than I ever have. I make a little over $20 an hour. 5 years ago that sounded amazing. I also just moved in with an old roommate yesterday because me and my boyfriend can no longer afford our own place. We went form moving in to the apartment in 2020 with money being a little tight, but still having some extra for fun stuff, to the last few months I've been ending each month with $2-3 in my bank account.
But now we are supposed to be worried about price increases because of minimum going up? Now it's an issue?
They don't need an excuse. In the absence of some other limiting factor they will raise rent to what the market can bear, and it turns out that when it comes to something with as severe a supply constraint as land has, the market can bear an awful lot.
There's more going on in supply restriction than the scarcity of land. Zoning restrictions and things like weaponized environmental review play a massive role.
In a whopping 38% of San Francisco, a city known for its horrendous housing market, it is illegal to build anything other than single-family homes. Is it really so shocking that there's a supply issue when you have land use policies like this?
While I support on principle the rights of lower levels of government to do what they think is best, I will admit that in practice this often leads to outcomes that are frustrating and disappointing enough that I think we probably need some limits on that power.
Ultimately, local regulation of land use is a pretty classical Prisoner's Dilemma; by all local communities optimizing for their own blinded utility, they're creating a net worse situation for everyone involved, including themselves. It's really the textbook example of a case where a higher authority like a state government needs to come in and force everyone to actually collaborate.
If every community increases housing supply by a little bit, the effect on the local "character" is nearly unnoticeable but the housing market stays healthy. If they all refuse, the market melts down and we get the mess we have now (and parents have the comical audacity to then complain about how their kids can't afford to live in the same area).
When you raise wages the market can bear more. Say you're paying $1,000 a month and have just enough left over for necessities. You get a raise for $200 a month, now the landlady can raise rent $200 and you're left exactly the way you were before. She won't figure this out right away of course, she'll just keep playing with the rent until she hits a point where people are able to pay and she has a unit sitting vacant. Once that unit rents then she can start raising again
And the unit will rent as soon as someone–who previously couldn't afford rent–gets a raise that makes them able to afford it. Soon the rent for everyone goes up, and now someone's not able to afford it anymore and has to move out.
The end result is that one homeless person now has a home, one person who previously had a home is now homeless, everyone got shafted with higher rent, and everybody's available spending money remains the same.
This is why nothing ever changes and the poor will always be poor: the system just designed to suck all excess cash out and put it in the pockets of the investors (landlords, banks, BlackRock, etc). The problem is not wages, because the market will always adjust to eat the wages. The system screws you because it was designed to screw you, and the people who have the ability to fix it don't want to because they are the ones who benefit from it.
Even so, the problem is not capitalism, it's our specific form of radically unregulated capitalism, combined with intentional inflation, fiat currency, and laws that favor corporations over people. No doubt that list could be made quite a bit longer!
I'm not willing to abandon capitalism but this version of it has become corrupted.
No, not even close. Housing is a necessity. It's not a new iPhone. You can't just say "wow housing prices are way too high I guess I'll fuck off to the forest." This is already in the initial stages of systemic collapse. The lords will keep squeezing and raising prices, and more and more people are being left behind. You see this all over, notably in the rise of homelessness and tent-cities.
The core issue that causes high rents is significantly greater demand relative to supply. If 2000 people want to move to a city, but only 1000 units are available, then the richest 1000 get apartments and the rest don't. If you institute rent controls, you still only get 1000 people - perhaps more randomly selected - getting apartments, but you also destroy any incentive for additional housing supply to be created, or even maintained. At best, the people who already have apartments save money while it becomes nearly impossible for anyone to actually move, since moving means that you're giving up your controlled rent and will face a substantial increase. As this happens, housing stock tends to deteriorate because landlords have zero reason to actually maintain it, because what are you gonna do? Move, and watch your rent significantly increase? No, you'll stay and just deal with it. Meanwhile, the plucky 22 year old who wants to move to the city struggles immensely because there's essentially no supply. As the economist Assar Lindbeck - a socialist, I might add - put it: "In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing."
In situations like this, it's critically important to understand why rents are high, and there's more going on there than landlords being greedy. Everyone is greedy, and always has been. It's not as if landlords in 1970s New York City were just kinder and more generous people. Ultimately, they'll charge as much as the market will bear, and there are many more factors that go into that than greed. The fundamental issue is a lack of supply, and any solution that doesn't address that is little more than a band-aid. And that's not to say that the only solution here is massive deregulation and letting private developers run amok; public housing can absolutely play a role as well. But there's simply no getting around the fact that if you want to lower market rents, you must either increase supply (Tokyo is an example of city that has done this exceptionally well) or slash demand by making the city undesirable (1970s NYC is an unfortunate example of this). One of those options is obviously more desirable.
There are areas full of empty houses/apartments that still charge far more than what the median employees there could pay; which seems to defeat that logic.
The argument that there's no incentive to build housing under rent control seems to suggest the only reason you'd build housing is for year-over-year constant increases in profits - and that a simple constant revenue stream has no value at all. Even if large housing companies believed this, smaller competitors might not.
But those high rent areas… Okay I don't know first hand, but in my reading I've been led to believe that it's because companies like Black Rock come in and buy all the available properties, and whenever a property becomes available they buy it. They can then charge whatever they want and nobody has a choice because they bought all the available inventory, and they have deep enough pockets to outbid any competition. They don't care if a unit goes vacant because they're making it up on another unit. You can rent two units for $100, for rent one for $100 and leave the other one vacant; the revenue is the same but you're actually better off leaving one vacant because you don't have to pay for maintenance on it, and it's one less property you have to actively manage. They could actually save money by leaving units vacant.
Yeah. I would expect that the Montreal REM is going to help with housing prices as it extends subway like capacity to large parts of the region that don't have anything like that. That way, you can increase the area available for transit development.
California kind of has it state wide. Rent increases are capped at 5% + CPI up to 5% annually. Which means it's 5-10% annually depending on that years inflation. If you don't increase one year, you can't increase double the next year. The downside is this means a lot of places just automatically do the 5% increase every year and then there are also issues with people being evicted for "renovations" so that they can increase the rent more than the cap for new tenants.
It's better than no protections but it's still not great.
Price controls are really tricky because they vary. They would need to be set at a local level. But they also completely violate supply and demand logistics.
Lately I feel like maybe for-profit landlording shouldn't be allowed at all, but I'm not sure how that would work.
Some people totally can't afford to buy, or are only short timers, and need to rent. The people who provide that service including the maintenance are providing useful thing and deserve to get paid a fair wage. You can't pick on them and punish them.
It's the people who buy on speculation and then rent it out for more than their mortgage, so they're getting their investment income and their rent income both. And if you do this with enough houses you end up raking in huge amounts of money. That's when the giant investment funds get involved.
I think not allowing giant investment funds might be a good start. Maybe limiting the number of units.
Maybe a different tactic would work: for every three units you rent, you have to provide one unit of low income housing at a government set rate (which might be free) and standard of quality. At least that way if they're going to make a profit they have to give back.
Another option would be: you can charge whatever rent you want, but are only allowed to pay for necessary services such as property management and maintenance. Any excess income automatically goes into a government pool that is used to subsidize rent for those who can't afford it. It absolutely cannot be siphoned off into investment income. That means if you charge low rents you're going to rent all your properties and be able to vet the people renting them; if you charge very high rent you're going to have a lot of unrented properties, and the government will be able to put anyone they want in there–even people who might trash the place or turn it into a meth house. That incentivizes keeping rents as low as reasonably possible, I'm trying to make your tenants happy so that you don't end up with any vacancies.
Willingness has nothing to do with it. People need housing, it's a necessity not a luxury.
As for ability, have you noticed the housing market? Prices are already wildly in excess of what many Americans can afford at all.
The whole point is that anyone who puts in their 40-50 hrs a week should be able to live in safety and dignity. That's largely not possible on minimum wage right now.
You're here to argue, but you don't understand what you're arguing about. There is no value in trying to explain something to the unwilling when they're just going to spin in circles until they think they're right.
My guy, are you stupid of a shill working for some disinformation company? Have you ever heard of the 90's dotcom bubble? Have you ever heard of the Dutch Tulip mania?
Capitalism doesn't care about reality, only about maximizing apparent profits.
Prices go up according to whatever they can get. (Also, leaving it empty isn't necessarily bad for them either because they can often write it off, which is bullshit. They should have to pay extra for empty units.)
They're raising rent because corporations with massive cash piles are buying up housing and raising the rent dial. Because there's little downward pressure on house prices (cheap gov housing targeted at first time buyers, vacancy taxes, bans on short term rentals, grants for housing sold below market value, etc), there's little incentive to turn the dial the other way.
There are definitely exceptions, but they're just that: exceptions.
Overall, most things are priced according to what people are willing and able to pay. Apartment rent in this case is not an exception. As soon as people can pay more, landlords will charge more.
It's sad this needs to be spelled out for you, but that's probably why you're bad with money.
Do everyone a favor and look up inelastic demand before dying on this hill. Rent is a necessity, people need to pay for it. It's price is not as directly correlated to supply and demand as the price of luxury goods for example.
It's sad this needs to be spelled out for you, but that's probably why you're bad with money.
Nice trolling, I won't respond to this. Be better.
"No I REFUSE to educate myself!" he said while repeatedly demonstrating he has no clue what he's talking about. People like you should just vanish. You're the problem and you're too stupid to acknowledge it.
The real world doesn’t work according to basic economics, as basic economics generally assumes best case scenarios to dumb it down for the average person.
There are countries in Europe with cheaper rent than the US with 2-3x the minimum wage amount. The two are barely even related in the grand scheme of things.
There are countries in Europe with cheaper rent than the US with 2-3x the minimum wage amount.
Bullshit. Are you talking about 2-3x the FEDERAL minimum wage, or California's STATE minimum wage?
Please point to the European countries that have a minimum wage of $31/hour, which is twice the California state minimum wage. That's literally what engineers get paid, lol.
If you're talking FEDERAL minimum wage, then I'd point out that rent prices in California are some of the highest in the country. It's because people in California have more money to spend, so everything they buy is more expensive. It's a simple concept I've been saying since the beginning.
Man. The more replies I see, the clearer it becomes that the vast majority of people in this comment chain have no clue what they're talking about. They're just twisting their brains in knots to find ways to agree with the crowd because they can't think for themselves.
I said US, and Europe in reference to minimum wage. Why the fuck would you think I was possibly talking about the California minimum wage after mentioning a nation and a continent?
Because we're talking about California's minimum wage, and there aren't European nations that have 2-3x the US federal minimum wage with substantially lower rent than poor states in the US.
Also, I don't hold you above the sly rhetoric of comparing California's rent to European nation's while only considering the FEDERAL minimum wage. It goes hand-in-hand with the mental gymnastics ya'll are twisting yourself in to agree with the crowd.
Like that won't happen anyway regardless of any minimum wage levels… At least this way people will get less robbed over time. It should be an indexed linked raise as well.
I mean, that kinda proves the point. People will pay pretty much anything for necessary medicine.
Of course, the takeaway should be that market dynamics aren't really appropriate for medical costs, since that basis of what one is willing to pay doesn't really apply when the consequence is literal death.
They really don't even have econ 101 down though. Like the "willing and able" sentence they keep parroting ignores the difference between elastic and inelastic demand. The insulin statement above further shows they don't understand it.
They have high school economics down, but not anything more than that. They’re one of those “supply and demand” parrots who barely understand the concept but think they’re an expert
Oh goodie, another excuse for landlords to raise rent.
They raise the rent either way. If minimum wage was indexed to inflation since 1960’s it would be over 25 dollars.
20$ is still way too low. Workers produce more now than ever but get paid less than they did in the 60’s.
The excuse given is that automation has provided almost all of that increase so we should sociopathically not raise wages because we're sociopaths.
Another way to look at it is inflation's too high
How can they raise the rent beyond what people are able and willing to pay?
Because they don't give a shit. They'll milk us all dry till we're living 10 people in a 3 bedroom
But like, how can they milk us for more than we're able to give?
Yeah, you can charge $100 billion for a studio apartment, but nobody is going to buy it.
The same logic is at play for raising rent. You can't raise it beyond what people can pay, or else you'll lose customers and make less money overall.
Not sure why this needs to be explained to you. You think they're refusing to charge $100 billion for a studio apartment out of the goodness of their hearts? Lol. No. It's market forces.
The real answer that no one is giving you is this:
Aggregate demand for housing in the area is through the roof, which is why prices are actually rising. If you move out because you can't pay, there will literally be hundreds, or more, people lined up who can - this incentivizes raising the price because the market can clearly handle it.
The logic of the market is that if there's anyone in the market that can afford it, whether or not you can't isn't their problem, it's yours.
This is one of the basic reasons why wide income inequality is a problem- when the going housing market rate is a measure of what the wealthy people in that market can bear, it creates serious problems for everyone else. For example, the median home in Seattle lists at $800k and that's not a measure of what the median earner can afford, it's a measure of what Blackrock is willing to pay to outbid folks earning in the $250k/yr range.
I mean, I totally agree with what you're saying.
I don't think it should be this way, but it is.
Blame capitalism. Maximizing profit, by definition, is doing the least while charging the most.
That's a very simplistic view and ignores the effect of competition to prevent doing the least
Said effect doesn't exist, it's an illusion caused by small insular markets.
"Credit cards"
You still don't understand, lol.
Even if people were relying on credit cards to pay, there's still a limit that landlords would have to price around.
My god. This is why this generation sucks with money, lol. Most of you don't have a clue what's going on yet think you're being clever.
Ahh well.
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Millenia, actually.
Well… if you look at this comment chain you'll get an idea of how bad it is lol.
Yeah, I'm incredibly confused here. You are talking first week of Econ 101 stuff here and people somehow think your points are debatable? Jesus.
From the looks of it, you ONLY have the knowledge of said "first week of economy 101".
People will pay whatever it takes to not be homeless. If that means 75% of my paycheck is going to a shitty apartment, then i have to take on more debt to afford things like food. Landlords will continue to squeeze until something breaks.
People are debating you because you're operating under a different definition of "able to pay". Yes technically they can't get blood from a stone. If I make $100 dollars a month they can't charge me $101 for rent or I can't live there. But under the "30%" rule I shouldn't pay more than $30 in rent, the theory being that I need the additional $70 dollars a month for utilities, food, gas etc and in theory I still have some left over for savings, incidentals, etc.If all the landlords in my area are charging $50 in rent for a studio I can technically pay that, but somethings taking a hit in my budget and it probably won't be utilities (running water), food (got to eat), or gas (gotta get to work) so it'll be my savings, incidentals, etc funds. Now I have no savings and can't pay an emergency expense like a flat tire because that extra $20 a month I could have saved went to my rent because I could "technically pay it."
The way your comment is worded makes it sound like you probably think living check to check is a personal choice because someone didn't want to tug on their boot straps hard enough. Should the market adjust if people dont want to pay a certain amount in rent? In theory, yes. The reason rent is skewed away from the consumer in a traditional market adjustment is that people need a place to live. So theyll keep paying till they literally can't and become homeless. If we were talking about the cost of luxury items then the market adjustment would be much quicker because people can afford not to buy parrot petting poles but it's harder to just quit buying it when its food or rent and that makes it ripe for abuse.
I have no idea where you guys are getting this from.
My point is simple, but I feel like the downvotes had their snowball effect and people who can't think for themselves are doing mental gymnastics to fit in with the crowd.
Holy shit dude. Literally everyone is telling you you're wrong, some nicer people are even taking time to politely explain why you're meeting so much resistance to your opinion. And you're just shoving your fingers in your ears and screaming NAH NAH NAH I can't hear you GROUPTHINK DOWNVOTES ME RIGHT YOU WRONG.
Its fucking exhausting trying to help people like you. Why anyone tries is beyond me. Enjoy your inability to think critically and assurance of your correctness. Don't fucking bother replying
They don't?
Existing tenants priced out will choose not to renew their leases or default. That rids them of anyone not able.
Then they can set the rent as high as they'd like, because there's s no shortage of venture capitalist vampires that'll pay way over market for an apartment if they think they can make money off it. They'll pull perfectly good housing stock off the market so some shady LLC or foreign national can continue to treat real estate like securities, or even just sit on it, vacant.
My rent has gone up every year like clockwork whether I get a raise or not. Landlords have never needed an excuse to raise rent, stop treading water for them.
This is why I hate those arguments. Anytime we talk about raising wages, people complain about things getting more expensive. But what's the plan when an hours worth of work can only get you a gallon of milk? Because without wages going up, it's gonna get to that point. And then even high end paying jobs will still leave people in poverty. Like right now I'm making more money than I ever have. I make a little over $20 an hour. 5 years ago that sounded amazing. I also just moved in with an old roommate yesterday because me and my boyfriend can no longer afford our own place. We went form moving in to the apartment in 2020 with money being a little tight, but still having some extra for fun stuff, to the last few months I've been ending each month with $2-3 in my bank account.
But now we are supposed to be worried about price increases because of minimum going up? Now it's an issue?
They don't need an excuse. In the absence of some other limiting factor they will raise rent to what the market can bear, and it turns out that when it comes to something with as severe a supply constraint as land has, the market can bear an awful lot.
There's more going on in supply restriction than the scarcity of land. Zoning restrictions and things like weaponized environmental review play a massive role.
In a whopping 38% of San Francisco, a city known for its horrendous housing market, it is illegal to build anything other than single-family homes. Is it really so shocking that there's a supply issue when you have land use policies like this?
While I support on principle the rights of lower levels of government to do what they think is best, I will admit that in practice this often leads to outcomes that are frustrating and disappointing enough that I think we probably need some limits on that power.
Ultimately, local regulation of land use is a pretty classical Prisoner's Dilemma; by all local communities optimizing for their own blinded utility, they're creating a net worse situation for everyone involved, including themselves. It's really the textbook example of a case where a higher authority like a state government needs to come in and force everyone to actually collaborate.
If every community increases housing supply by a little bit, the effect on the local "character" is nearly unnoticeable but the housing market stays healthy. If they all refuse, the market melts down and we get the mess we have now (and parents have the comical audacity to then complain about how their kids can't afford to live in the same area).
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Yes…
When you raise wages the market can bear more. Say you're paying $1,000 a month and have just enough left over for necessities. You get a raise for $200 a month, now the landlady can raise rent $200 and you're left exactly the way you were before. She won't figure this out right away of course, she'll just keep playing with the rent until she hits a point where people are able to pay and she has a unit sitting vacant. Once that unit rents then she can start raising again
And the unit will rent as soon as someone–who previously couldn't afford rent–gets a raise that makes them able to afford it. Soon the rent for everyone goes up, and now someone's not able to afford it anymore and has to move out.
The end result is that one homeless person now has a home, one person who previously had a home is now homeless, everyone got shafted with higher rent, and everybody's available spending money remains the same.
This is why nothing ever changes and the poor will always be poor: the system just designed to suck all excess cash out and put it in the pockets of the investors (landlords, banks, BlackRock, etc). The problem is not wages, because the market will always adjust to eat the wages. The system screws you because it was designed to screw you, and the people who have the ability to fix it don't want to because they are the ones who benefit from it.
Even so, the problem is not capitalism, it's our specific form of radically unregulated capitalism, combined with intentional inflation, fiat currency, and laws that favor corporations over people. No doubt that list could be made quite a bit longer!
I'm not willing to abandon capitalism but this version of it has become corrupted.
This is literally what I've been saying from the very beginning. They charge what people are able and willing to pay.
No, not even close. Housing is a necessity. It's not a new iPhone. You can't just say "wow housing prices are way too high I guess I'll fuck off to the forest." This is already in the initial stages of systemic collapse. The lords will keep squeezing and raising prices, and more and more people are being left behind. You see this all over, notably in the rise of homelessness and tent-cities.
We need federal rent control. Being a landlord shouldnt provide more than minimum wage.
Minimum wage should also be raised. By like 4x.
Rent control being bad is one of the very few things that essentially all economists agree on.
https://www.kentclarkcenter.org/surveys/rent-control/
The core issue that causes high rents is significantly greater demand relative to supply. If 2000 people want to move to a city, but only 1000 units are available, then the richest 1000 get apartments and the rest don't. If you institute rent controls, you still only get 1000 people - perhaps more randomly selected - getting apartments, but you also destroy any incentive for additional housing supply to be created, or even maintained. At best, the people who already have apartments save money while it becomes nearly impossible for anyone to actually move, since moving means that you're giving up your controlled rent and will face a substantial increase. As this happens, housing stock tends to deteriorate because landlords have zero reason to actually maintain it, because what are you gonna do? Move, and watch your rent significantly increase? No, you'll stay and just deal with it. Meanwhile, the plucky 22 year old who wants to move to the city struggles immensely because there's essentially no supply. As the economist Assar Lindbeck - a socialist, I might add - put it: "In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing."
In situations like this, it's critically important to understand why rents are high, and there's more going on there than landlords being greedy. Everyone is greedy, and always has been. It's not as if landlords in 1970s New York City were just kinder and more generous people. Ultimately, they'll charge as much as the market will bear, and there are many more factors that go into that than greed. The fundamental issue is a lack of supply, and any solution that doesn't address that is little more than a band-aid. And that's not to say that the only solution here is massive deregulation and letting private developers run amok; public housing can absolutely play a role as well. But there's simply no getting around the fact that if you want to lower market rents, you must either increase supply (Tokyo is an example of city that has done this exceptionally well) or slash demand by making the city undesirable (1970s NYC is an unfortunate example of this). One of those options is obviously more desirable.
There are areas full of empty houses/apartments that still charge far more than what the median employees there could pay; which seems to defeat that logic.
The argument that there's no incentive to build housing under rent control seems to suggest the only reason you'd build housing is for year-over-year constant increases in profits - and that a simple constant revenue stream has no value at all. Even if large housing companies believed this, smaller competitors might not.
But those high rent areas… Okay I don't know first hand, but in my reading I've been led to believe that it's because companies like Black Rock come in and buy all the available properties, and whenever a property becomes available they buy it. They can then charge whatever they want and nobody has a choice because they bought all the available inventory, and they have deep enough pockets to outbid any competition. They don't care if a unit goes vacant because they're making it up on another unit. You can rent two units for $100, for rent one for $100 and leave the other one vacant; the revenue is the same but you're actually better off leaving one vacant because you don't have to pay for maintenance on it, and it's one less property you have to actively manage. They could actually save money by leaving units vacant.
Yeah. I would expect that the Montreal REM is going to help with housing prices as it extends subway like capacity to large parts of the region that don't have anything like that. That way, you can increase the area available for transit development.
California kind of has it state wide. Rent increases are capped at 5% + CPI up to 5% annually. Which means it's 5-10% annually depending on that years inflation. If you don't increase one year, you can't increase double the next year. The downside is this means a lot of places just automatically do the 5% increase every year and then there are also issues with people being evicted for "renovations" so that they can increase the rent more than the cap for new tenants.
It's better than no protections but it's still not great.
Price controls are really tricky because they vary. They would need to be set at a local level. But they also completely violate supply and demand logistics.
Lately I feel like maybe for-profit landlording shouldn't be allowed at all, but I'm not sure how that would work.
Some people totally can't afford to buy, or are only short timers, and need to rent. The people who provide that service including the maintenance are providing useful thing and deserve to get paid a fair wage. You can't pick on them and punish them.
It's the people who buy on speculation and then rent it out for more than their mortgage, so they're getting their investment income and their rent income both. And if you do this with enough houses you end up raking in huge amounts of money. That's when the giant investment funds get involved.
I think not allowing giant investment funds might be a good start. Maybe limiting the number of units.
Maybe a different tactic would work: for every three units you rent, you have to provide one unit of low income housing at a government set rate (which might be free) and standard of quality. At least that way if they're going to make a profit they have to give back.
Another option would be: you can charge whatever rent you want, but are only allowed to pay for necessary services such as property management and maintenance. Any excess income automatically goes into a government pool that is used to subsidize rent for those who can't afford it. It absolutely cannot be siphoned off into investment income. That means if you charge low rents you're going to rent all your properties and be able to vet the people renting them; if you charge very high rent you're going to have a lot of unrented properties, and the government will be able to put anyone they want in there–even people who might trash the place or turn it into a meth house. That incentivizes keeping rents as low as reasonably possible, I'm trying to make your tenants happy so that you don't end up with any vacancies.
That’s not how rent works.
Yeah. Prices don't go up according to what people are willing and able to pay.
My bad.
Willingness has nothing to do with it. People need housing, it's a necessity not a luxury.
As for ability, have you noticed the housing market? Prices are already wildly in excess of what many Americans can afford at all.
The whole point is that anyone who puts in their 40-50 hrs a week should be able to live in safety and dignity. That's largely not possible on minimum wage right now.
Hmm… Then how do people keep paying for it?
If you're selling a product people can't afford, how are you making money? Who is buying it?
You're here to argue, but you don't understand what you're arguing about. There is no value in trying to explain something to the unwilling when they're just going to spin in circles until they think they're right.
The homelessness crisis is out of control, so I'd say lots of people have given up trying to pay for something they cannot afford.
They aren’t continuing to pay for it. Why do you think the homelessness crisis is so bad in the highest CoL locations?
There’s always someone with more money, but there isn’t always housing for those that get priced out.
My guy, are you stupid of a shill working for some disinformation company? Have you ever heard of the 90's dotcom bubble? Have you ever heard of the Dutch Tulip mania? Capitalism doesn't care about reality, only about maximizing apparent profits.
Prices go up according to whatever they can get. (Also, leaving it empty isn't necessarily bad for them either because they can often write it off, which is bullshit. They should have to pay extra for empty units.)
Yeah, I was just saying the opposite of what is true so people can see how stupid it sounds.
They're raising rent because corporations with massive cash piles are buying up housing and raising the rent dial. Because there's little downward pressure on house prices (cheap gov housing targeted at first time buyers, vacancy taxes, bans on short term rentals, grants for housing sold below market value, etc), there's little incentive to turn the dial the other way.
Sigh.
I'm done spelling this out for ya'll.
Keep thinking prices aren't based around what people are willing and able to pay.
Sigh.
Your econ 101 understanding of markets will never encapsulate the complexity of the modern housing market.
Keep thinking prices are only based around what people are willing and able to pay.
Lol. Okay.
There are definitely exceptions, but they're just that: exceptions.
Overall, most things are priced according to what people are willing and able to pay. Apartment rent in this case is not an exception. As soon as people can pay more, landlords will charge more.
It's sad this needs to be spelled out for you, but that's probably why you're bad with money.
Do everyone a favor and look up inelastic demand before dying on this hill. Rent is a necessity, people need to pay for it. It's price is not as directly correlated to supply and demand as the price of luxury goods for example.
Nice trolling, I won't respond to this. Be better.
Oh boy, now he's telling me to look things up.
Lol. I'm not going to go down your rabbit holes. What I've said is common knowledge and basic economics.
The fact you can't understand that is a testament to why I won't take you seriously.
I wholeheartedly believe people like you are just doing mental gymnastics to agree with the crowd because you can't think for yourself.
Sorry.
"No I REFUSE to educate myself!" he said while repeatedly demonstrating he has no clue what he's talking about. People like you should just vanish. You're the problem and you're too stupid to acknowledge it.
That’s your whole problem.
BASIC economics
The real world doesn’t work according to basic economics, as basic economics generally assumes best case scenarios to dumb it down for the average person.
There are countries in Europe with cheaper rent than the US with 2-3x the minimum wage amount. The two are barely even related in the grand scheme of things.
Bullshit. Are you talking about 2-3x the FEDERAL minimum wage, or California's STATE minimum wage?
Please point to the European countries that have a minimum wage of $31/hour, which is twice the California state minimum wage. That's literally what engineers get paid, lol.
If you're talking FEDERAL minimum wage, then I'd point out that rent prices in California are some of the highest in the country. It's because people in California have more money to spend, so everything they buy is more expensive. It's a simple concept I've been saying since the beginning.
Man. The more replies I see, the clearer it becomes that the vast majority of people in this comment chain have no clue what they're talking about. They're just twisting their brains in knots to find ways to agree with the crowd because they can't think for themselves.
I said US, and Europe in reference to minimum wage. Why the fuck would you think I was possibly talking about the California minimum wage after mentioning a nation and a continent?
Because we're talking about California's minimum wage, and there aren't European nations that have 2-3x the US federal minimum wage with substantially lower rent than poor states in the US.
Also, I don't hold you above the sly rhetoric of comparing California's rent to European nation's while only considering the FEDERAL minimum wage. It goes hand-in-hand with the mental gymnastics ya'll are twisting yourself in to agree with the crowd.
Wouldn't be an issue if we wised up and made rentseeking illegal.
presumably the minimum price for everything would raise as well within a specific area (ie: the borders of CA). time will tell, I suppose.
Like that won't happen anyway regardless of any minimum wage levels… At least this way people will get less robbed over time. It should be an indexed linked raise as well.
I have some bad news for you. It’s been happening all year
I mean, it only happens if it can happen.
Products are priced according to what people are willing to pay, not what they cost to produce.
Edit: It's really sad how many people are replying to me who don't understand basic economics. I guess that's why they're so bad with money, lol.
Tell that to the people who are paying 1500 dollars for insulin.
I mean, that kinda proves the point. People will pay pretty much anything for necessary medicine.
Of course, the takeaway should be that market dynamics aren't really appropriate for medical costs, since that basis of what one is willing to pay doesn't really apply when the consequence is literal death.
Why is the price $1500 and not $999999999 billion?
Why is it $1500 instead of $1600?
Lol, downvoted for explaining basic economics to those who don't get it.
Stay in school.
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They really don't even have econ 101 down though. Like the "willing and able" sentence they keep parroting ignores the difference between elastic and inelastic demand. The insulin statement above further shows they don't understand it.
They have high school economics down, but not anything more than that. They’re one of those “supply and demand” parrots who barely understand the concept but think they’re an expert
Sorry man, you're just going along with the crowd even when they're wrong.
You know people who can't afford that $1500 just die, right? It isn't priced at what they can afford, they can't afford it.