New York City Sets Rents By Political Process. It Goes Badly.

From the NYT:  Rent Board Approves Higher Increases Than in ’12

nyc-rent-guidelines-board

No free market here, please

(Previous posts on rent control here and here.)

New York City’s nine-member Rent Guidelines Board annually sets the maximum rent increases permitted for some one million apartments.  The final vote occurs at a public hearing.  As expected, it turns into a circus.

Landlords cite higher operating costs, including utilities, real estate taxes, labor and insurance.

Tenants cite a stagnant economy and high unemployment rates.  This year three candidates for mayor showed up, arguing for a rent freeze.

Both sides argue rent levels are driving them out of the city.

One attendee gets it right:  “The whole thing is a sham, a charade”, he said.

It’s a self-perpetuating circle of destruction:  Landlords, fearing rent control, won’t build new housing, so rents stay high, which motivates voters and politicians to further entrench rent control.  The city’s housing market is trapped at an inferior equilibrium.

Resources are wasted on lobbying and everyone goes home unhappy.

This entry was posted in Economics, Geography, Housing, Rent Control and tagged , , , . Bookmark the permalink.

One Response to New York City Sets Rents By Political Process. It Goes Badly.

  1. Pingback: More Collateral Damage From NYC Rent Control | The Gentleman EconomistThe Gentleman Economist

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