It seems Big Media Matt and Atrios are kicking around rent control and not understanding the underlying issues.
Unlike them, I actually covered New York Real Estate and understand the issues fairly well. While they both argue that zoning plays a role in the way housing is restricted, they're missing some fundamental points. First of all, New York is space limited. New York City has a defined space and cannot grow. So there will always be a premuim to live within the city's boundaries. So, it doesn't matter how high you build, and there are outer borough buildings well over 20 stories, but where you build.
Second, rent control isn't for the poor. New York City has a large and well-mainted public housing stock, as well as housing for the poor. Not enough, but rent regulations do not largely concern the truly poor. Rent regulation provides for the stabilization of working and middle class neighborhoods. What is does is keep the middle class in the city.
New York's rent regulations cover rent control, which is an absolute minority of apartments, and rent stablizitation, which covers nearly 1m apartments. Stablization exists because there is a vacancy rate of less than 5 percent. All builders have to do is biuld enough buildings and the law ends. They don't do that because of the tax advantages. They get a significant tax break for running a stablilized building. There is a political choice here, one which encourages long-term residence over market rates. Many New York neighborhoods have grown, indifferent to rent regulations.
Part of the problem is that landlords tend to be bad businessmen in that they choose short term, immiedate profit, over long-term, stable profit. The last time rent control laws were threatened, landlords were planning to raise rents by hundreds of dollars. What happens then is simple: the middle class moves away. Social stability is not a small goal in urban areas, without it, comes crime.
There are rent controls all around New York City for the same reasons, to stablize neighborhoods. New York City's ethnic balance exists largely because of these laws. Instead of abandoning the city for the suburbs, neighborhoods have been revived, liked Central Harlem.
Anyone who thinks lifting rent controls will help the poor need only look to Boston, where the removals of rent controls have exploded rents and harmed the poor and especially the middle class. People were faced with moving farther away from downtown, the handicapped were finding it impossible to rent places. While landlords made money, they didn't really gain a new pool of tenants and drove away those who might have rented at stablized rates. The idea that rents will go down if there is no rent control is a comical. Landlords will let buildings go unrented before taking lower rents.
Also, let's not forget we're not talking about Detroit. New York will always demand a premium rent for some people. But the idea that rent laws limit space don't really affect the real situation in New York. In my experience, landlords lie about their numbers, and tenants violate their leases. But overall, without rent stabilization, you'd create Rio, a beautiful downtown Manhattan and miles of slums as the middle class fled.
posted by Steve @ 2:14:00 AM