Ben dives into the economics behind rent control and its adverse effect on our communities.
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This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
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It feels like America's major cities are falling apart and that's because in large part they are.
rising. Rents are driving up homelessness in counties across the states when rents go up ten scholar
once again, I would like to thank you for raising what
an enormously important issue. Not just there is national housing crisis. Under my plan we will establish a national rang, control standing there's only one problem of rank and drop. It is a giant value. The giant failure is rooted in very simple. I the lie that landlord
are capable of extracting extraordinary rent from tenets of sheer great. That's, not true landlord. Can't discharge charge, you any amount that must charge you because you will move you
Just keep living there and paying extraordinary rents it. There's an apartment. Building across the street are lower
for the same property as rents. Rise developers also typically seek to develop more rental unit. It supply advance. If I can charge a lot
money for rent, and I myself will build another building or retrofit no building or convert condos into apartments or develop proponent will do the same thing.
as the demand rises, supply will rise to meet landlords, aren't any different from grocery store owners. They can only charge what the market will bear. They have to compete with the other landlords
the big problem is rent control drives scarcity. What you end up doing is removing the prophet incentive for people to come in and build new apartment supply. Drugs, rents rise in all the non rent, controlled environment, as even Liberal Brookings Institutes as well run control appears to help current tendency in the short run. In the long run, it actually decreases affordability, jewels, gentrification and created negative spillovers on surrounding neighbourhood. Nobody built new apartments soldiers
then government will subsidize affordable housing. Ok, you subsidized
horrible housing. What do you think happens that well nobody
to live next to the affordable housing, so they leave, but on the tax base decreases. So then you have to
raise the tax on everybody was left, but then more people leave and then the tax base decreases again. This hey drive people to California,
Cambridge Massachusetts unleashed its rents after decades of rain control. The result was a massive uptake and property values. As Brookings noted, rent control properties
great substantial, negative externalities on the nearby housing market, lowering the amenity value of these neighborhoods and making them less desirable places to live when you get rid of the profit margin for landlords, landlords have no interest in increasing their costs,
They stopped in many cases, even doing basic maintenance on their buildings. All this very often makes the apartments
pretend it because it turns out when landlords don't care about. The condition of the buildings because they lose money taken there are the problems. Well, tenants are the ones who suffer
run control leads people to stick around and apartments. They don't need just because they're getting a deal. So let's say that you have family afore, the Internet Control Department and you kids, each have their own bedroom well overtime. Your kids go to college. Without you, gonna get rid of that parliament.
Now, normally, you might get rid of the apartment because the rent would be so high while you keep paying for extra bedrooms that you are not using, but because rent control
Artificially lowers the price that your pain for the apartment, people keep sticking around. The giant departments are being occupied by fewer people.
Need the giant apartment and the next family that has several kids can actually get into the apartment cause you're still here. This only strains
Why even more
into one study over one fifth of all rent.
Well, departments in your city are occupied by tenant, who have the wrong number of rooms but size their family. There are two ways that the left tries to handle the problem.
Of rents being July. One is that they will pass laws that
developers from building more units because they don't have
want their own property values you drop, and then it will
subsidize government owned, affordable housing? This leads to this vast income gap between the people can afford to Lebanon.
And if people can live in a city and there's nobody in between,
The second way they found is with rent control.
You want to know why San Francisco is now all high tech, entrepreneurs and homeless people read control is a big part of that story. Getting California demo
are actually trying to unleash rent control across major cities last year they put it on the ballot.
Position. Twenty one will allow cities and counties to expand rent control throughout California, which limits even californians. We're done enough to vote for it in New York City
Council considered a rent control proposal that would heavily restrict landlords ability to move rents in response to market economies. Broadly agree on the stupidity of rent control. Everybody
mean everybody from town a soul. To prevent understands that run. Control is an idiotic idea, but run
frolic raising the minimum wage is a bad idea that never dies. It's always easy
on greedy landlord. It always lot tougher to recognise the getting rid of land. Words doesn't make rent free. It just means that nobody builds apartment buildings anymore, and there are no more apartments available to run it
actually wanted to make housing more affordable. There's some things they could do. The easiest thing would be removed development regulations. In fact, the cities that have some the worst rents issues are the most heavily regulated sittings place like Seattle, make it incredibly difficult to build new housing, LOS Angeles increased
The difficult San Francisco has been raided. The most overregulated city in terms of real estate in America Allay is an italian
riverside is in the top ten. Is it any wonder? You see a hundred and fifty thousand homeless people in California these days in the aftermath of covered
Firefox. Unless mincing look for like a year, we just blew out the red
We trust that you don't have to pay a red and it worked out just fine. That
we worked so long as people. On the other hand, no, they will eventually get the rent, otherwise nobody builds new housing unit. I have friends who have stopped.
into the residential real estate market, specifically because they are afraid that the government is going to start for giving mortgages and the government is going to start forgiving rent once that happens now,
developer in their right mind would put money into this process.
the american people are catching on. Bernie is not
was out of ignorance. Bernie is doing this because he actively believes that Utopia is right around the corner, so long as he ignores basic realities. We have introduced in sweeping housing proposal. There is no connection between
he is proposing in solving the problem. Rent
full itself is a bad
rural policy; it makes no sense. It reduces the ability to build new housing unit. So I think the lesson that I learned is: if you have the guts to tell the truth,
and people will respond and other policies
run. Control has failed everywhere. It's been tried from
What city to San Francisco.
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Transcript generated on 2021-07-18.