Mon, 23 Apr 2007

NYC Rent Control

There's an AP article out today which I quote below:

Survey Reveals Holes in City's Real Estate Market

NEW YORK, NY (1010 WINS) -- Even in a city where a closet-sized apartment can fetch a mint in rent, where so-so condos sell for over $1 million, and where real estate speculators salivate over the very air, there is property that lays fallow.

An informal survey released Saturday revealed there are at least 505 undeveloped lots in Manhattan, and another 1,723 that appear to be vacant, Manhattan Borough President Scott M. Stringer said.

``These results show that, contrary to popular belief, there are thousands of properties lying vacant in this borough,'' Stringer said. ``Now the task is to find out why and to do everything we can to make them productive properties.''

Stringer said there is enough space on these lots to create nearly 24,000 housing units that could help meet the city's future population growth.

According to the survey, 50 percent of the vacant properties are privately owned. More than 71 percent were found north of 96th Street, a traditional dividing line between the poorer neighborhoods of Upper Manhattan, and the ultra-wealthy Upper East and Upper West sides.

At least $104.8 million in property taxes is lost annually the survey found, Stringer said.

The article doesn't attempt any explanation at why so much property is going unused. A moment's economic analysis, however, will tell you that it can only be caused by rent control. No sane property owner will bother to build a building if he cannot make a profit. The specter of rent control looms over every potential landlord in NYC, whether their property is afflicted or not. As long as people in NYC think rent control is a good thing, any building might be subjected to rent control, even if some are currently exempted. See Walter Block for more information.

This is yet another example of how price floors and price ceilings cause surplusses and shortages respectively. When the government fixes prices, you get the same bad effects as when any other monopoly fixes prices. I don't understand why people see private monopolies as good, and public monopolies as bad. I suppose their theory is that they control their government, but, really, when was the last time you wrote to your legislator asking him to do something, and he actually did what you asked? Usually I get a letter back explaining how my legislator will be doing the exact opposite.

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