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California Approves Statewide Rent Control

nytimes.com

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Re: California Approves Statewide Rent Control

#171

Post by nerfhammer »

baby wrote: post #119
fuzzieozzie wrote: post #115

This rent control is a result of populism - plain and simple. Rent control works for those already renting - and that is about it! Everyone else suffers: those moving to the area, the landlords and those wanting to build more.

Rent control is a thing world wide. It’s not populism. It’s the same concept as free healthcare or free education. It’s here to ensure people can still find affordable places to live. You can’t make everything an investment if you want a healthy society.

It will not help you find an affordable place to live, it will help those who already have existing leases hold on to them forever. Rent control does not create an abundance of housing, it just creates a constituency of people that gets a better deal than those who don't.

Re: California Approves Statewide Rent Control

#172

Post by pitaj »

52-6F-62 wrote: post #95
pitaj wrote: post #35

Earlier quoted context omitted.

At the cost of further disincentives to actually building more housing. What a great idea. Every field of economics agrees that rent control causes harm to the people it's supposed to help.

In a vacuum, yes. Just as much as on paper 0.1+0.2=0.3 but in most floating point implementations it doesn’t. In application Toronto has seen the opposite effect to what you describe. We hear this argument over and over as we just had our rent control stripped, but it’s counter to the experience. Here’s one write-up: https://urbantoronto.ca/news/2018/11/people-why-universal-re...

Your article says this:

> So far, empirical evidence shows that rent control has not crippled the purpose-built rental market.

But the economic concensus is exactly the opposite.

https://www.economist.com/the-economist-explains/2015/08/30/...

https://www.nytimes.com/2018/10/12/business/economy/rent-con...

https://www.businessinsider.com/does-rent-control-work-no-it...

https://www.bloomberg.com/opinion/articles/2018-01-18/yup-re...

https://www.nytimes.com/1989/05/30/opinion/how-rent-control-...

Re: California Approves Statewide Rent Control

#173

Post by BurningFrog »

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…

If the marked could bear annual 7% increases, why didn't you make them before?

What will probably happen is that you'll have a hard time filling your property after 1-2 years at the latest, and everything goes back to normal.

Re: California Approves Statewide Rent Control

#174

Post by phil248 »

pitaj wrote: post #62
tmh79 wrote: post #46

Earlier quoted context omitted.

do you have any clue about this specific measure? Its limited to buildings that are 15 years old or older, and it limits rent increases to 8% annually, which in practice is about 1 - 3% of all lease agreements in CA, a very small amount. Commercial construction loans are based on the 15 year revenue generating potential of the proposed building, this law was created specifically with that in mind so as not to interfe…

> do you have any clue about this specific measure? Any price control inevitably has negative consequences in the market. This is practically a law of economics. > Its limited to buildings that are 15 years old or older, and it limits rent increases to 8% annually, which in practice is about 1 - 3% of all lease agreements in CA, a very small amount. If it with have such minimal effect why even have it? > Commercial c…

This is simply about spreading out massive rent hikes over the course of a few years instead of a few months. It gives families time to adapt or move. The allowable increases under this law are very high.

It may not seem justified to you, but to a low income family in a rapidly gentrifying area, it means everything.

Re: California Approves Statewide Rent Control

#175

Post by gnaritas »

tolmasky wrote: post #98
joshAg wrote: post #73

Earlier quoted context omitted.

The entire point of the law is to prevent you from being able to make those larger adjustments, though. How often do you replace tenants? And what's your occupancy rate? If you're in a situation where you can reliably raise rent 7% YoY indefinitely without decreasing your occupancy rate, then you were severely underpriced for the market (and you should probably fire that management company for pricing you that absurd…

What in your second paragraph doesn’t apply without rent control? In other words, what makes 7% the magic number? Your entire argument seems based on market forces (if you raise too much, your tenant leaves and if there’s no wealthy people to replace them, you're stuck). How is this not the case without rent control? Do wealthy tenants somehow appear without rent control?

Growth; markets can grow faster than 7% a year, this slows that down so people aren't losing their homes because suddenly their market gets more popular.

Re: California Approves Statewide Rent Control

#176

Post by joshAg »

tolmasky wrote: post #98
joshAg wrote: post #73

Earlier quoted context omitted.

The entire point of the law is to prevent you from being able to make those larger adjustments, though. How often do you replace tenants? And what's your occupancy rate? If you're in a situation where you can reliably raise rent 7% YoY indefinitely without decreasing your occupancy rate, then you were severely underpriced for the market (and you should probably fire that management company for pricing you that absurd…

What in your second paragraph doesn’t apply without rent control? In other words, what makes 7% the magic number? Your entire argument seems based on market forces (if you raise too much, your tenant leaves and if there’s no wealthy people to replace them, you're stuck). How is this not the case without rent control? Do wealthy tenants somehow appear without rent control?

Nothing. The parent comment was arguing that because the law now says that rent couldn't increase by more than 7% they were now being advised to increase rent by that much every year (ostensibly because they are now planning to do this), and my response is that it's absurd to claim that anything in the law will change things so that you could make that sort of increase now if you couldn't already make that increase before the law existed.

Re: California Approves Statewide Rent Control

#177

Post by jimmaswell »

pmikesell wrote: post #140
gregs1986 wrote: post #68

Earlier quoted context omitted.

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 co…

Maybe more people selling property instead of collecting money forever for winning the land lottery 50 years ago it is a good thing.

Re: California Approves Statewide Rent Control

#178

Post by phil248 »

ProfessorLayton wrote: post #100
cryptoz wrote: post #45

Earlier quoted context omitted.

Can you explain what you mean? I don't follow. Rent control is a bandaid that provides a level of stability to the lower classes. They can live without daily anxiety of being rudely defacto 'evicted' by radical, surprise rent increases. This enables a society to continue to grow and function at a somewhat more sustainable pace, letting cities and counties grow without intense boom-bust and crash cycles, with a more s…

Rent control does indeed make the housing shortage worse in the following ways: - It makes it so new renters subsidize the old ones, raising prices for newly vacant places, defeating the purpose of controlling costs. It also doesn't offer tons of protection from boom/bust cycles, as mainly those riding the boom will be able to afford absurd prices in highly regulated places like SF — Where a 1br can fetch 3.7k/mo (!!…

Luckily for all of us, this law will not create a new class of rent control prisoners/devotees because the allowable increases are too high.

Re: California Approves Statewide Rent Control

#179

Post by phil248 »

Litmus2336 wrote: post #106
cryptoz wrote: post #75

Earlier quoted context omitted.

I was under the impression that some rents can be increased during the lease. I do not think it is only a renewal event, by law. > Rent control deters the creation of new housing. I keep seeing this repeated but I don't understand. Why does rent control deter creation of new housing? > This reduce in supply raises the price But you've glossed over why supply is reduced. I don't see any reason that supply would be red…

https://www.google.com/url?sa=t&source=web&rct=j&url=https:/... I believe you might be thinking of month-to-month, which is not a traditional lease. On all fixed term leases over a month rent cannot be changed during the term of the lease.

Which is an oddly elaborate way of saying that rent increases in California can happen annually.

Re: California Approves Statewide Rent Control

#180

Post by joshAg »

mc32 wrote: post #87
joshAg wrote: post #73

Earlier quoted context omitted.

The entire point of the law is to prevent you from being able to make those larger adjustments, though. How often do you replace tenants? And what's your occupancy rate? If you're in a situation where you can reliably raise rent 7% YoY indefinitely without decreasing your occupancy rate, then you were severely underpriced for the market (and you should probably fire that management company for pricing you that absurd…

I think your argument is contradicting itself at least partially because you say if an LL (landlord/landlady) was already getting market price, they’d price themselves out of the market so the 7% cap is more than enough... so in essence you’re saying the market will tell the LL not to raise the rent... which then means you’re relying on market forces... but you’re saying despite that you need a YoY cap... so somethin…

No no that's not my argument here at all. I'm not making any argument about whether the cap is enough or needed. The parent comment was arguing that because the law now says that rent couldn't increase by more than 7% they were now being advised to increase rent by that much every year (ostensibly because they are now planning to do this), and my response is that it's absurd to claim that anything in the law will change things so that you could make that sort of increase now if you couldn't already make that increase before the law existed.
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