We landlords have been using this term a lot lately with Portland City Council Members, State Representatives and our State Senators as they hack away at Landlord/Tenant issues they believe need alteration. What do we really mean?
In my opinion, many times government officials think they can ramrod changes down peoples pocketbooks without regard to human behavior. People move away from pain and toward pleasure. Pretty simple really. Landlord/Tenant Laws, Regulations, Management Agreements, Lease Agreements all involve complex language (words have actual meaning) to regulate human behavior for the benefit of both parties. These are entered into willingly. How is is possible for a government regulation changing the Agreement after the fact possibly going to have anything but unintended consequences?
The indisputable laws of Supply & Demand are hard at work right now in the Portland Metro Area causing rent growth to slow to something more reasonable. There is a lot of building happening (increasing Supply) that is increasing the competition (lowering Demand) and things tend to level off from there. Whenever the government thinks they know better than the results achieved from the profit motive of private enterprise, it’s a boondoggle. This always results from a lack of understanding of human behavior and will always have unintended consequences. How about approaching challenges with a few more incentives (moving toward pleasure) and many less penalties, regulations and controls (away from pain)?
You see, it’s really very simple. That’s what we mean by unintended consequences.