by John Stossel
Rents have reached record highs.
But have no fear, renters! In the Minnesota cities of St. Paul and Minneapolis, progressives persuaded people to vote for rent control.
That’ll punish those greedy landlords!
Except, profits are what persuade builders to build things. When profits are high, other builders build. That’s what creates more housing and, eventually, lower rents.
Put limits on prices — and those greedy landlords find other places to build.
Whenever rent control is imposed, the supply of rental housing declines. Lots of studies show that.
But the activists don’t want to hear it.
“We don’t need more studies! We don’t need to collect more data! We need action now!” says Claire Bergren of Home to Stay, Minneapolis, in my new video.
St. Paul’s rent control is uniquely strict. Most cities exempt new construction; not St. Paul. They imposed it on future apartments.
“This is such a step backwards,” says Salim Furth, economist at the Mercatus Center. “The market is going to shrink, and quality is going to fall.”
After all, if you are a builder, “Why would you enter a market where it seems like the government is actively trying to hurt you?” asks Furth.
St. Paul developers can simply move just a few blocks over to twin city Minneapolis. Minneapolis also voted to allow rent control. But they haven’t yet imposed it.
That’s a reason builders still build in Minneapolis. Building permits rose 65% there last winter, while in St. Paul, they fell 61%.
St. Paul mayor Melvin Carter, who voted for rent control, has suddenly had second thoughts. Now he’s realized, “Turning off our supply of new housing would be disastrous.”
Have the other progressive politicians learned from St. Paul’s mistake? No. They live in a fairy world. They never learn.
“I want us to follow (St. Paul’s) lead,” says Minneapolis City Council Member Aisha Chughtai, the rare rent control supporter who would talk to me.
She claimed that rent control won’t dry up the supply of housing.
“In other cities, we have continued to see development,” Chughtai says.
“What cities?” I ask.
“San Francisco,” she says.
What? San Francisco!?
What an absurd example. San Francisco is famous for its housing crisis.
“Builders still build in Minneapolis,” I tell her. “But you’re not going to get apartments by pushing this.”
Here she pauses for a full 17 seconds — an eternity in a video interview — before answering, “I’m going to maintain that guaranteeing housing for people and making sure that they can stay in their homes matters more than anything else.”
That may be work for insiders like her. Renters will be able to stay in run-down apartments forever. But newcomers will have no chance.
“I live in the only town in Maryland that has rent control,” says Furth. “We’ve had it since the ’70s. We have not built a single multifamily building since that law was passed.”
Chughtai is a socialist. That helps explain why she doesn’t understand how houses, apartments, and most everything else get built.
I asked the city councilwoman where socialism has worked (it hasn’t).
After another long pause, she answers, “I’m doing a just fine job of representing my community.”
She isn’t.
The late economist Walter Williams explained, “Short of aerial bombardment, the best way to destroy a city is through rent controls.”
Rent control once destroyed much of my town, New York City. Landlords, who couldn’t raise rents enough to make a profit, stopped making repairs. Then many burned down their own buildings to collect insurance. Between 1970 and 1980, much of the Bronx ended up losing 97% of their buildings to fire and abandonment.
Under rent control, says Furth, “Landlords just don’t reinvest.”
Today, rents are up, and that’s hard. But in the long run, rent controls will only make the problem worse.
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Not importing tens of thousands of Somalis to Minnesota might help the lack of available housing also.
add to that the millions of illegals crossing the southern border on a regular basis.
And preventing evictions sure helped the rental situation. In Australia, 20% of the homes sold are ex-rentals, while only 10% of the homes bought are intended for renting out. So the availability of rental homes is drying up. Fast.
The stupid left politicians also passed laws making it very difficult to evict people for any reason. So even if the home isn’t being sold, they are being pulled off the rental market and left vacant in large numbers. Why would a landlord rent out a house when they can’t evict, they can’t raise rents, etc? They prefer to simply collect capital gains. And by reducing the supply of rental homes, the price of for sale homes keeps rising because of demand. Why rent with risk when capital gains are risk free.
The politicians are sputtering and spitting because their grand plans have had the reverse of the intended effect. So they are now starting to propose taxing empty houses at increased rates. That will simply result in other bad consequences, and the death spiral will continue.
The stupidity of these fuckwits literally knows no bounds.
Besides rent control, why would anyone want to live in an area where there are only two seasons, summer & winter – August and the rest of the year.
wait ’till they impose weight control
“Except, profits are what persuade builders to build things. When profits are high, other builders build. That’s what creates more housing and, eventually, lower rents.”
I don’t believe this is true anymore. Government is the biggest hurdle to plentiful living quarters.
Well, yeah, rent control is government too but, I meant from a regulations on land, building, safety regs, red tape yadda yadda yadda kind of way.
Too many people. Could the depop theory be for real?
And the section 8 subsidies cause rents to remain high.
Yup. In Monterey, the rental prices are set by the military at the high end (they pay whatever the ask is) and section 8 sets the floor so there are no cheap rentals.
Maybe rent controls ‘don’t work’ but something must be done. Rents for a crappy apartment are the equivalent of a mortgage payment. This is entirely out of hand.
Stossel is Exhibit #1 to bring out whenever someone is vapidly arguing for Libertarianism as the one true political doctrine (if only lolbertarians could agree amongst themselves on what it actually is..)
The specific reason that you still have McJobs being offered to Americans in the $10/hr range in 2022, (just as in the year 1990 -with much lower cost of living and housing expenses), is because of those like Stossel.
A true implementation of such transnational Libertarianism would require – first – that all Americans must have the same reciprocal right to at-will out migration, as a condition. This would still be a really bad deal for those Americans with families who could not migrate to low cost emigre enclaves, and no other nation would agree to this, because globalist Lolbertarians like Stossel dont care about their interests.
Stossel is not stupid, he is just misleading. He is fully aware that the illegal making 10 bucks an hour with a family is getting subsidized with food stamps, afwdc, housing vouchers, free schooling in their native language charged to state or local taxpayers. The federal expenses are all fungible in that SS/Medicare has no actual trust fund and money is merely printed to cover costs.
Among those things is MS-13, ponzi scams, tribalism, and Libertarianism.. which attempts to make betraying your fellow citizens a virtue as long as you dont outlaw private gold ownership.
I challenge Stossel and all other moronic Lolbertarian pretenders to place a help wanted ad for an assistant at a nominal salary. The condition is.. they cannot refuse anyone employment, access to their workspace / office, and they can never fire any of these employees who only speak a version of Hunnic spoken by 30 people living in yurts on Stossel’s lawn.
This is the exact suicidal labor importation policy that this scoundrel wishes to force upon americans. Stossels’ own ungrateful family are apparently a really good example of why you need to be very selective about allowing in foreigners who dont respect your culture or value national unity.
Donald Trump is no longer president exactly because he followed Jared, whose own family came to a fully built USA in modern times, and was making TV appearances promising Dreamer amnesty right before the election, and how happy they would be with his coming amnesty.. He had already tried this multiple times at the advice of Jared and / or Ivanka. People like me stayed home.
The Boxing slogan is “never let it go to the judges.” Trump alienated his prime supporters and It went to the judges…
Almost anything can be good in moderation. Eating a cup of ice cream is not harmful. eating a tub of ice cream that you found melted in the alley is not a good idea. Same with immigration.
In the end, all things must come to an end, and no nation can exist with eternal in-migration.
Not only is Stossel wrong, as usual, this is a nation destroying policy of misery inflicted on legitimate citizens.
https://townhall.com/columnists/johnstossel/2015/08/12/immigration-is-great-n2037508
The cost of rent controls is fewer rental units.
The real cause of rising rents have a lot to do with rising property tax and water costs. Apartments today are charging extra for what used to be “free ” heat and hot water.my rent has gone up a hundred dollars a month for the last two leases. Also we pay for water and energy or heat and hot water.next the will charge us for garbage hauling.Also contributing to this is an Exodus of scum from Chicago to NW Indiana driving up demand.