Decades ago, in an effort to keep housing “affordable”, the city of New York imposed rent control. No existing rental unit could increase its price, absent jumping throught a Byzantine series of bureaucratic hoops.
The “market” responded to the bureaucratic muddling – at first, creatively. The rent control stayed with the the renter. When the renter died or moved, the rental rate could move with the market. But the “ownership” of the rental could be passed down through any semblance of the original renters families – so children, nephews and nieces, stepchildren, further-order descendants, and utterly phony descendants – a fraud that was almost never investigated. Also, renters (and their descendants) could, and did, sublet, and even subdivide, apartments, renting the spaces out at much better than market rates and making a tidy profit on the deal. People are pretty creative when it comes to skirting rules, and New York City government is equally thud-witted and uncreative at creating the rules people skirt. It became almost
The second-order consequences were less salutary. While rents were frozen, utilities and property taxes were not – so landlords got squeezed hard. Landlords with sufficient means sold their properties to “co-ops”, or went condo, or found the few available loopholes – and there were very few, since the powers that be (and are) in New York treated landlords as a populist enemy to be demonized for political gain. The less affluent landlords fell behind on taxes. Squeezed by the city to pay up, repairs sufferend. Eventually these landlords stopped repairing their properties in less desirable areas, which quickly became even less desirable; vast swathes of Brooklyn, the Bronx, Queens and Harlem fell into deep blight, with block after block of apartments abandoned…
…in a city with an “affordable housing crisis” where even in the 1980s, it was impossible to find a place to live for under $2,000 a month in 1985 dollars (which is $4,500 to 5,000 today).
Of course, all that blight begat crime. By the late ’70s, much of New York was a shooting gallery, wit over 2,000 dead per year.
Of course, there is a lot of money in New York, and a lot of people want to be there, so the real estate didn’t sit idle for too long – begetting the third-order consequences: developers moved in, took over the blighted, abandoned real estate, and built it back up. Of course, given New York’s regulatory “zeal” and astronomical taxes, it wasn’t just any developers. It was the ones with enough money to do the building, to navigate the bureaucracy (read “Money”) and pay the taxes (read – “keep the money coming”). The up-front costs were high – and the rest was even higher.
So after decades of “rent control”, one can not live in a decent place on Manhattan with an income of less than $500,000 a year.
I write this to highlight the path that the Minneapolis City Council – known among those in the know as “the dumbest city council between Chicago and Los Angeles” – is drooling to drive Minneapolis down.
Neo-populist progressive economicallly-illiterate stupidity – a barrel that, in Minneapolis, has no bottom.
