Stockholm, Sweden: Wonk Time

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Stockholm, Sweden: Wonk Time

Trooping around central Stockholm, we found around ourselves surrounded by Eurobikes – but could not find a stand for the elusive City Bike we had just rented. Nor could we find wifi.

After zigzagging around a bit and noting every bikestand within a quarter mile of our hotel, AA began hunting for wifi while I stopped a fellow pedestrian.

“Oh, the funny looking bikes. I know exactly where they are. Just go straight and I think they are either on the left or the right.”

And with that helpful advice, AA finally found a signal and pulled up the City Bikes app.

Stockholm’s Housing Woes

Having finally tracked down our bikes, we headed over to our destination for the day, a free walking tour of the historic heart of Stockholm – the tiny island of Gamla Stan.

Every Stockholm travel guide will list Gamla Stan as one of the top destinations in the city. In it’s early years, the island was a third of its original size, overcrowded and built mainly of wood. Needless to say, like many medieval cities, fire was one of the primary scourges of life. On a few of the older buildings, you can still see the Phoenix emblem of the medieval fire insurance company – testament to this history. Residents who paid the company and had the plaque installed on their homes would be the first ones saved in the event of a fire. At least this is what our friends at Free Tour Stockholm told us.

Today, the housing woes of Stockholm are of a bit different, and less dangerous, nature.

As someone who works in housing, I couldn’t help chatting a bit about the housing market with our tour guide. According to him, the vast majority of rental buildings (both publicly and privately owned) in Stockholm are leased through a government managed system. Selected tenants are given extremely favorable rents and a secure lease, but the wait time can be up to 20 years.

Wonk Time

As is often the case these days, Sweden is used to justify a number of different policies. It has been both a cautionary tale for why rent regulation doesn’t work – and a case study for other countries to implement.

As with all debates, the truth probably lies somewhere in between – and getting to it requires the reader to engage in some critical thinking.

Some additional questions that came to my mind when I heard the argument that Sweden’s rent regulations lower housing production and raise rents in the unregulated market are:

  1. By how much does rent stabilization raise market rents rise? Most of us would probably consider it a fair trade to pay $10 more per month in the unregulated market in exchange for the opportunity to eventually sign a rent stabilized lease.
  2. How does housing production vary across time in the unregulated market? Perhaps other variables have a greater impact on housing production.
  3. What are the specific regulations we are talking about?

As one economist states: “regulation per se is neither good nor bad. What matters are the costs and benefits of specific regulations under specific market conditions.”

Even if rent regulation is in fact to blame for Stockholm’s situation (and there may be other variables that shoulder the responsibility), a different flavor (or even the same form) of rent regulation elsewhere may not produce the same result. Specific elements of a rent stabilization policy seem to mitigate price raises in the unregulated market over the long-term – elements such as whether new construction is covered under rent stabilization or rent is allowed to increase upon a vacancy. In fact, in weak or moderate markets, rent stabilized units may be renting at close to market rate – it’s only in hot markets that the prices diverge (this appeared to be the case in NYC the last time a profile of units was complete).

Back to Travel

I know this is all a bit off topic for those of you just looking for travel advice, so let me get back on track. We loved Stockholm, which is now one of our favorite cities (Reykjavik, you have a run for your money). Check out the videos of our Gamla Stan walking tour (a must do):

And the ride around the touristy (but beautiful) island of Djurgarden:

Oh and when AA took a break from biking up and down Stockholm, he ended up getting his hair cut by the father of Robin Safar. Even if you can’t find your City Bike, you can always find a story in Stockholm.

 

Erika

Erika

I was raised in a tight-knit Midwestern family with a strong commitment to service. An architect by training, I currently work in affordable housing finance. Prior to moving to NYC, I lived in Nicaragua for two years and have also spent time in West Africa and the Middle East. I started this blog as a way to catalog musings on travel and everyday life around the world.

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