The Rent is Too Damn High

In a short ebook that came out a few days ago (The Rent is Too Damn High) journalist Matt Yglesias advances the argument that widespread restrictions on housing supply in the United States have much higher costs than people realize.  I was predisposed toward this argument before I started the book, so it is hard for me to judge this book in a dispassionate way.  I’m thinking, “how do these arguments gain traction?” not “are these arguments true?”

Yglesias focused on how restrictions on housing drive prices up.  Probably in the interest of keeping the ebook short, Yglesias didn’t talk about the perverse effects of supply restrictions on the quality of housing.

In NYC, a combination of restrictions on new construction and rent result in very low apartment vacancy rates.  Vacancy rates for cheaper apartments will be particularly low.  This is a problem for apartment quality.  It would be interesting to see scatterplot of “volume of complaints about landlords” by vacancy rate across US cities.  Vacancy rates discipline the landlord; they keep him working for you.  The only way that landlords will consistently maintain their properties is if they are concerned that people might move out.  But when vacancy rates are extremely low, landlords don’t have to worry about that.  So they take longer to fix the heat when it breaks in the winter.  They don’t deal with the roach or rodent problem.  Etc.

I’m willing to bet there’s a lot of complaints about landlords in NYC relative to other parts of the country.  When I lived in NYC, bad landlords were often a subject of discussion.  But no one seemed to think much about why the landlords were bad.  It was just taken for granted that landlords tended to be an especially evil form of capitalist.  But when I lived in central Pennsylvania, I didn’t hear this, despite the fact that the landlord was also non-resident and managed many buildings across several states.  What makes landlords worse in NYC than in central PA or elsewhere is the combination of a low vacancy rate and rent stabilization laws.  Additional supply disciplines landlords.  Without it, the quality of housing for the vast majority of the renting population will be low.

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