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California Approves Statewide Rent Control

nytimes.com

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Re: California Approves Statewide Rent Control

#131

Post by wahern »

Rent control is about housing security for existing tenants. Even a perennial 7% increase can be better than discovering your rent will jump 300% next month.

But rent control in the absence of housing supply increases will undoubtedly exacerbate the problem, and at a steady 7% inflation would also slowly price out existing tenants.

Many parts of California already had rent control that was based on building age. Theoretically this could have been the best of both worlds--improved housing security for the majority of existing tenants, but an incentive for new construction, which would be excluded from rent control. Of course, the price of housing security would be marginally higher rent prices up front, but in the real world that's a reasonable tradeoff. Security and predictability are at the top of most people's hierarchy of needs, whether they admit that or not, and regardless of whether they'd willing pay for it. (Healthcare being a great of example of people predictably making irrational decisions, requiring government intervention to mitigate the consequences.)

Unfortunately, new construction in California is extremely costly for entirely unrelated reasons. I think most developers in California would have bargained statewide rent control for development as-of-right. That California permitted rent control again without doing anything substantive about lowering the costs of development is inexcusable. I'm sure lawmakers told themselves that they were buying the acquiescence of NIMBYs and local control advocates regarding future development as-of-right legislation, but they're just lying to themselves.

Re: California Approves Statewide Rent Control

#132

Post by refurb »

ahelwer wrote: post #57
mc32 wrote: post #47

Earlier quoted context omitted.

So how is housing going to get built? Are you suggesting that the state have a monopoly on buildings and housing? What process do we use to begin the expropriations and confiscations?

Start small. People can own one, maybe two housing units (everyone loves a good cabin). Get rid of REITs. Expand building of public housing; don't means-test it, it's available to everyone. Means-testing is how you get impoverished housing projects. Universal public goods have a habit of sticking around and getting funded.

Where do you plan on raising the funds to actually build housing?

Unless it’s economically attractive to invest in real estate, the money won’t flow into housing.

Sure you could have the govt do it, but based on their track record I don’t assume it’ll be done very efficiently.

Re: California Approves Statewide Rent Control

#133

Post by raldi »

This is a misleading headline.

The problem with rent control is that it allows many well-off individuals to collect ever-growing rent subsidies, to the point where after 10 or 15 years their rent is a joke compared to what their (often less-fortunate) neighbors are paying.

This bill does not have that flaw. Crucially, it sets the maximum allowable rent increase to be well above, not below, the historic long-term rent curve. Over time, in the long run, rents will approach market-rate. And that makes all the difference.

Re: California Approves Statewide Rent Control

#134

Post by tolmasky »

decebalus1 wrote: post #94
bhauer wrote: post #21

I am a landlord in Oregon, but not California. The curious, although ultimately predictable, outcome of the new rent control measure in Oregon is that while I have historically had an arrangement with my property management to be restrained in annual rent increases, they are now advising a default annual increase of the maximum allowed (7 percent before inflation). This is because larger adjustments cannot be made if…

> The real solution to a housing problem is to incentivize and facilitate the building of more housing. You need to have some degree of control. I live in a suburb close to a tech hub in WA. They built a lot of housing in the past 3 years. And I mean a lot. At least a couple of hundred of apartments on the market every year, after raising 3-4 buildings at the same time, in a town of 20k people. One would think that t…

Losing an entire year of 1.2K rent breaks even with 1.7K rent after roughly 3.3 years, breaks even (1.7(x-12)=1.2x, x = 40 months). And that’s if the new tenants stay with no churn and you don’t play the same game forcing them out for another year. Had they just raised your rent $200, the break even point becomes almost 6 years. I don’t understand your landlords at all.

With regard to the story before it, it sounds like they actually lowered rent to about $1600 (2 months free is a 17% reduction, which is pretty hefty. Sure, you’re betting on them staying after, but it switches to month to month usually after a year so it’s risky).

Re: California Approves Statewide Rent Control

#135

Post by sologoub »

Meanwhile in the booming Seattle: https://www.seattletimes.com/business/real-estate/amid-build...

> “I’ve been renting in Seattle since 2014, and this is the first time where I felt like I have negotiating power,” said Kjerstin Wood, who went apartment hunting with her partner last weekend and got bombarded with offers like free parking that she plans to use to play landlords off one another. “For the most part, everyone we’ve met with has been very eager to get us to apply right then and there.”

> The trend is likely to continue: The apartment-construction surge that began earlier this decade is continuing at the same brisk pace, outpacing demand for rentals even as the city’s population booms.

And a 2017(!) article talking about vacancy rate in Downtown LA that has seen a huge building boom (no not nearly enough to really depress prices, but enough to stave off the meteoric rise): https://www.scpr.org/news/2017/09/15/75615/in-high-vacancy-d...

Re: California Approves Statewide Rent Control

#136

Post by raldi »

pitaj wrote: post #19
tmh79 wrote: post #4

The real solution here is to build more housing, as high prices are a market signal of a shortage. While I support more unit creation more than I support rent control, in the current crises we need both. What I still can't get over is how much of CA land use politics is pure generational warfare, the olds vs the millennials, and it seems that the millennials are finally starting to win some fights.

Rent control deters the building of more housing. It's literally part of the problem.

This bill specifically exempts new housing from its controls.

Re: California Approves Statewide Rent Control

#137

Post by munk-a »

dsfyu404ed wrote: post #123
munk-a wrote: post #82

Earlier quoted context omitted.

Sorry, to clarify... Are you saying that because we have public transit no one can own cars anymore? The generous way to read the post above is an arrangement where property ownership can be both public and private - possibly where rental units are majority state owned and private ownership is more concentrated in actual residents.

>Sorry, to clarify... Are you saying that because we have public transit no one can own cars anymore? You joke but many people here would support just that.

Eeeeh, in the long run I think it'll just become unnecessary to own a personal car for most people if self-driving car fleets become a thing - I dunno... it might be a luxury like owning your own boat, if you're vacationing on a lake you can always rent one so why pay to maintain something you very rarely need... more apt might be to consider it equivalent to owning your own train car.

At any rate I don't think personal property ownership should be made illegal, it could just be made to cost - taxi companies are taxed for running a fleet of vehicles and charging people to ride on them, that sort of mass property ownership could be similarly taxed.

Re: California Approves Statewide Rent Control

#138

Post by phil248 »

I'm shocked at the ideological fervor here and the fact that virtually no one seems to have looked at the details of the actual bill. This is nothing like the rent control ordinance in SF that has caused $3000 units to get stuck at $500 rents. That will never happen under this law. The allowable increases are so much higher than "normal" rent control laws that any given unit will catch up to market rates in a matter of years, at most. Whereas the laws we love to hate result in units getting stuck far below market for decades or even generations.

The difference with this law is that a 20% rent hike will take 3-4 years to be implemented instead of 30 or 60 days. That difference, while not enough to allow all families to remain in place, will allow families time to adjust or move within a reasonable time frame.

This law is different. If you want to complain about rent control in SF or NYC or elsewhere, have at it, but know that most of your complaints do not apply to this law.

Re: California Approves Statewide Rent Control

#139

Post by baby »

munk-a wrote: post #82
mc32 wrote: post #47

Earlier quoted context omitted.

So how is housing going to get built? Are you suggesting that the state have a monopoly on buildings and housing? What process do we use to begin the expropriations and confiscations?

Sorry, to clarify... Are you saying that because we have public transit no one can own cars anymore? The generous way to read the post above is an arrangement where property ownership can be both public and private - possibly where rental units are majority state owned and private ownership is more concentrated in actual residents.

I think everyone can agree that the private car culture destroyed any hope for good public transport in the US.

Re: California Approves Statewide Rent Control

#140

Post by pmikesell »

gregs1986 wrote: post #68
bhauer wrote: post #21

I am a landlord in Oregon, but not California. The curious, although ultimately predictable, outcome of the new rent control measure in Oregon is that while I have historically had an arrangement with my property management to be restrained in annual rent increases, they are now advising a default annual increase of the maximum allowed (7 percent before inflation). This is because larger adjustments cannot be made if…

Landlords who choose to increase rents at the maximum rate permitted each year do so at the risk that they will be undercut by competing property owners who do not do so. Given this, I think that your property management company is offering you bad advice. Most landlords already increase rents at the maximum rate that the market will bear. Capping annual increases at 7% just ensures that in a year when the market wou…

>>> If you made a viable investment in a property and are currently renting it out, wouldn't rent increases just need to equal inflation in order for you to maintain the same level of profitability?

Not necessarily - taxes on property owners don't follow inflation. They may go up greatly compared with inflation.

>>> I hardly see why maximizing profits should be seen as a necessity---especially when it comes at the cost of pushing people out onto the streets.

Because if don't allow it to be profitable people won't do it. Particularly in California it can be quite risky the rent out a property. It's an extremely tenant friendly location, so much so that evictions for major infractions can take several months, or in some cases years.

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