Path: utzoo!utgpu!water!watmath!looking!brad
From: brad@looking.UUCP (Brad Templeton)
Newsgroups: can.politics
Subject: Re: rent review
Message-ID: <1437@looking.UUCP>
Date: 27 Feb 88 20:56:11 GMT
References: <1988Feb24.140628.28040@jarvis.csri.toronto.edu> <1433@looking.UUCP> <1988Feb26.225840.21116@jarvis.csri.toronto.edu>
Reply-To: brad@looking.UUCP (Brad Templeton)
Distribution: ont
Organization: Looking Glass Software Ltd.
Lines: 56

In article <1988Feb26.225840.21116@jarvis.csri.toronto.edu> eem@csri.toronto.edu (Evangelos Milios) writes:
>True, but a new profitable place is far too expensive for the average person.
>So thank God there are controlled apartments around, which are by no means
>cheap, but almost within reach of the average person.
>>
>So why are people crazy about buying their own home? Because rents are too
>expensive, even with rent control. That drives house prices up, and 
>that in turn drives rents up for new houses or old houses that enter the 
>market for the first time.
>I am in favor of rent control. Without it, in a .01% vacancy rate, only the
>sky is the limit of what greedy landlords may ask for rent.

I'm not sure what's to blame for the situation in Toronto, but the statement
that "without rent control, and .1% vacancy rate, the sky's the limit on rents"
is actually the reverse of the truth.

The .1% vacancy rate is *caused* by the rent control.  You think there would
be such a low rate in a free market?  Of course not.  A free market would not
have two distinct classes of appartments for places that are otherwise the same
in quality.  Instead prices would move together.  The rent controlled places,
which are artificially low for the few who can get them, would go up.  The
currently non-controlled places would go down.

The average would remain about the same, and probably drop.  With a free
market, a low vacancy rate is a signal to BUILD.  In particular, to build for
rental.   Instead we have a viscious cycle.  Artificial low rents in half the
market drive builders to make condos and houses instead of appartments.
Artificially high rents drive up consumer demand for owned real estate.
Natural limits on owned real estate drive up prices.  High real estate
prices drive up rents.

It's all very confusing, and there are more factors involved.  Rent review
throws everything out of balance.

>The only solution I see is for the city or the province to support more co-op
>housing projects, so that people who cannot afford to buy can still get decent
>housing at reasonable prices outside the "free market" economy.

I've never lived in a co-op housing project, but I've talked to people who
have.  Usually these co-op projects produce substandard housing, because
there's nobody in charge that has their livelyhood at stake.  There's either
a committee or a bureaucrat.  One hears regularly of non-profit housing with
higher rents than similar privately owned housing.

But at least that only hurts the people who live in the co-op project.  If
the project is somehow a success, and somehow produces cheap housing
(usually through subsidies, it seems) then you get more artificially cheap
housing which discourages private builders from entering the rental market,
and all the above factors come into effect to hurt everybody.

I dunno.  Sometimes I think some people want us to all end up working for
the state, living in state owned homes and eating state grown food.
	a) The project works
>Evangelos E. Milios
-- 
Brad Templeton, Looking Glass Software Ltd. - Waterloo, Ontario 519/884-7473