Potential math illiteracy aside, is this such a terrible policy? This seems to me like a nice compromise that provides some stability to the renter while still allowing the landlord to raise the rent substantially over several years.

Downsides that come to mind (but that don't seem too serious):

* It incentivizes landlords to keep empty apartments on the market longer before lowering rents to the true market price.

* It might encourage landlords to regularly raise prices more than they otherwise would, lest they forego the limited opportunity.

I'm normally much more free-market oriented, but I ask with the understanding of how much work and expense is involved in suddenly needing to find a new apartment. Just patching the holes in the drywall can take a full day. Then there's credit check fees, truck rental fees, pet fees, admin fees, move-in fees, new couch because the old one doesn't fit in the new living room fees...

> encourage landlords to regularly raise prices more than they otherwise would, lest they forego the limited opportunity.

if they raise the price too much, they will not get tenants as long as there's competition between landlords. So all this is basically just another way of saying there's not enough supply for the demand. So policies should target the supply problem directly, such as subsidies for new buildings, or tax incentives, etc.

I don't mind this as 7% per year seems like a reasonable safety measure to me. The issue is they need to make it much easier, cheaper, and faster to build more housing along with it. Portland is probably particularly bad about this, as I see plenty of new apartments and rowhouses going up in Hillsboro and Beaverton. Still, these units aren't what I'd consider affordable.

I think we need to seriously reconsider the effect some building requirements and property taxes have on housing prices. It may not be ideal but very small apartments with shared commons and no parking for a few hundred dollars a month would be better than living in an RV or on the streets. This is a pretty common setup in Japan, not to mention college and military dorms. This isn't even that different from having roommates.

For the most part, our high housing prices are purely a matter of supply and demand. If you own a piece of land, and you want to build housing, you're not allowed to build as much as you want. NEARLY EVERY building proposed builds to the maximum currently allowed on that land.

The market wants to supply more housing. We don't let it, based on laws that originally were created to keep black people out of neighborhoods. Those laws continue to be very effective at that goal.

> The market wants to supply more housing. We don't let it, based on laws that originally were created to keep black people out of neighborhoods. Those laws continue to be very effective at that goal.

Why does this continue to be such a problem in deep blue areas?

Go on, mate. I think we both know why that's the case. Poor people and rich people make poor neighbours for each other. Maybe you can afford the house, but you can't afford the car, the motorcycle, the road bike that costs more than your annual daycare.

That is a pleasant breeding ground for justification for crime.

So there's the anti-poor angle that rich deep-blue neighbourhoods take and that ends up being racially discriminatory because of the underlying demographics.

> So there's the anti-poor angle that rich deep-blue neighbourhoods take and that ends up being racially discriminatory because of the underlying demographics.

That makes sense, but that just raises the question of why racial demographics are so regressive in those areas.

I genuinely asked because I don't know much about the inner workings of progressive coastal areas. It seems like if nearly all of the politicians and most of the population are committed to very progressive racial policies, you would expect to see... I don't know what exactly, but not this. I'd like to understand why things went so wrong.

Are there any US cities that are good examples wrt to racial demographics? Something that we could learn from?

They are committed to these policies in the abstract but any time there are winners and losers for a policy, the losers will fight harder than anything.

Second and third order effects are also hard to control through publicly popular policy.

And I am not aware of any significantly sized US areas that don't have race-discrepancies in educational attainment. American society has very strong positive feedback loops and I think the strong economies of the coastal paradises amplify that. Take any uneven distribution of wealth and it will get worse in that environment.

It's a problem everywhere in the US; all cities have these policies, but the coastal cities have much higher demand.

The reason you don't see prices spike in inland cities is that they can expand outwards, and they don't have much economic opportunity. Cities on the coasts can only expand in one direction - and because of international trade, they have more economic opportunity, so more demand.

There were limits like this already in place in Germany. Rent could only be increased every 12 months, and for Berlin, I believe, no more than 15% total in 3 years.

It didn’t help much. Landlords could circumvent it in many ways: by offering contracts to new renters that automatically increase each year, which then isn’t bound to the limits. For existing tenants they could do bullshit renovations that trigger a modernization clause, also killing the limit. Or put an Ikea couch in the apartment, then renting it as furnished, again circumventing some of the rent limits. Sure you could sue, but in many cases people were just happy to finally find something and ate up the higher prices.

Although I’m positively affected by the latest rent control laws in Berlin, I’m also not totally sure what to make of it. But I wanted to let you know that this is by far not the first law that was passed to try to curb price increase.

There are market dynamics at play in both places. If the rents are increasing by double digit percentages within a couple years then that means that demand is rapidly outstripping supply. There's really only two options here: Reduce demand by banning people from moving to the city, or increase supply by building a lot more housing. #1 is illegal in the US and likely illegal in Germany too, so #2 it has to be.

Those policies often work through gradual tightening, rather than a sudden change. So it might start with a 7% + CPI cap, then a few years later they'll change it to 5%, then remove the CPI, and so on. Sometimes the cap is allowed to be changed by a simple committee vote or determined by a "Rent Board," which is easier than passing a new law. That way the initial law can get passed without too much opposition.

More likely, someone did figure it out and convinced the legislature and public because they know they will react with emotion instead of math

In my experience, people don't have experience outside of their local bubble, so you can easily recycle policies from another city or slightly tweak them

Thats what they really mean by land of opportunity

When something is baked into the law like that landlords will raise the rent. Renting in San Diego my last two places never had a rent increase (I lived in each for about 4 years per).

I don't quite understand how you're framing this.

Oregon figured out a level of increase that would be too disruptive for its appetite, and had the legislature cap the rate to below that level.

On average over the past five years, that cap would not have been reached, though it may have been reached in any one of those years.

Is this a self own or mistake of some kind? Are you inferring that landlords will now raise rents more than they would have in the uncapped situation?

If rent increases are capped at 7% per year, landlords will have an incentive to increase it at the max, because that gives them more flexibility the next year.

For example, let's say the free market would raise rents 5% this year, and 8% next year. A cap of 7% means the rent will rise 7% this year, as the landlord won't want to have caps permanently reduce future rents.

This is a weird argument. Would this still happen if rent increases were capped at 10%/year, what about 50%/year? At some point no one is going to rent at the rates you're asking and you're going to have to stop.

It all comes down to business risk. For example, with all the trillions being printed and stuffed into the economy, I'd be afraid of a return to 20% inflation like in the 70's. If my rates were capped at 7%/year, you can bet I'd raise it now by 7% just so I don't get caught next year with 20% inflation and only a 7% rate increase.

Yes, right now, I'd risk fewer tenants with 7%, but balance that against what might happen next year when I'd be full and still lose money because of the cap that year.

They already had an incentive to increase it at the max, because it's more money in their pocket.

For this to be true, they would have to either (1) under present conditions, not be raising the rent to maximize profit or (2) under the scenario, raise the rent past maximum profit

Neither of those seem likely to me.

Landlords in a free market will usually act to maximise longer term profit not rent. Increasing rent in the short term by too much (even if the resultant rent is below market) only to see a tenant leaving soon afterwards can be a net loss due to void periods and the costs of finding a new tenant etc. Eventually the gap to market rent may grow to the point where the risk is worth it and then an increase makes sense.

In the presence of a cap this strategy becomes riskier so it forces landlords to think about a shorter term horizon.

There's also a signalling effect of the cap which may mean tenant reactions to an increase at the cap are different.

> They already had an incentive to increase it at the max, because it's more money in their pocket.

They'll set it based on supply & demand. But caps increase the business risk to the landlord, and therefore increases the price as risk always translates to an increased price.

And if landlord increases the rate too much renters will find cheaper place to live. In long run system balances itself.

Caps add risk to the landlords, and risk always increases prices. It'll balance, sure, but at a higher price.

No, what grandparent is saying is state politicians and most Americans in general are unable to do simple math. Compound interest? Forget about it!

They're implying that the problem of rents going up 30% in 5 years was not solved by limiting rent increases to 7% a year.

I think the parent's point is that since price increases are capped, landlords cannot increase beyond a certain point in a single bumper year. To compensate, they may increase rents beyond what they would otherwise to be able to maintain a similar average increase. Citation is needed, of course.