California Approves Statewide Rent Control • Hacker News Board

Re: California Approves Statewide Rent Control

#211

Post by SamReidHughes » Thu, Sep 12, 2019, 1:37 AM UTC

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…

> Any price control inevitably has negative consequences in the market.

And what is the magnitude of the consequences of this law? That’s what matters. It’s very small.

Re: California Approves Statewide Rent Control

#212

Post by pishpash » Thu, Sep 12, 2019, 1:38 AM UTC

joshAg wrote: post #176

tolmasky wrote: post #98

Earlier quoted context omitted.

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 b…

The thing that would be different is the game theoretic situation where every landlord feels compelled to do that so the market rate increases by 7% per annum.

Re: California Approves Statewide Rent Control

#213

Post by 1123581321 » Thu, Sep 12, 2019, 1:39 AM UTC

c22 wrote: post #111

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?

You don't need to confiscate anything. We have an abundance of housing stock (nationwide, many more existing homes than families to fill them). If you make it impossible to be a private landlord then these properties will decrease in value until most citizens can afford to buy a house. Public housing will only be necessary for a small percentage of outliers. New housing will be built to be sold at a modest profit and…

Using the law to destroy the value of someone’s asset until they abandon it is confiscation, just indirectly.

Re: California Approves Statewide Rent Control

#214

Post by tomc1985 » Thu, Sep 12, 2019, 1:39 AM UTC

joshAg wrote: post #73

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 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…

This makes me curious... is it the property management company or the landlord that sets the rental price? I recently rented a house and tried to haggle with the PM but they refused to budge on price but were willing to negotiate on other factors (like lease term and property rules), which made me wonder if the PM's hands were tied re: price.

Re: California Approves Statewide Rent Control

#215

Post by olliej » Thu, Sep 12, 2019, 1:39 AM UTC

pitaj wrote: post #147

olliej wrote: post #97

Earlier quoted context omitted.

Obviously, but part of that is having your property taxed at those market rates, businesses and landlords got together to pass an amendment to the CA constitution that prohibits any part of CA from increasing the assessed value of your property at more than 2%. You can't have it both ways: saying you should have free reign in determining the value of your property, while also claiming the government can't tax you acc…

I don't want it both ways. In fact a land value tax could replace property tax in a revenue neutral fashion, and would incentivize development of property and density, rather than disincentivize those like property tax does.

How do you distinguish land value from property value - especially given that the resource and service usage is not determined mostly by the amount of land, but rather the property on that land.

If you were to tax on the basis of land value the immediate impact would be massive increases in taxes payed in rural areas as a byproduct of the necessary increase in tax rates on land.

Re: California Approves Statewide Rent Control

#216

Post by pcwalton » Thu, Sep 12, 2019, 1:40 AM UTC

refurb wrote: post #186

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…

It also results in a lot of empty units. I was talking with a real estate agent in SF and he said it’s not unusual for landlords looking to sell their rent controlled building to just let units sit empty. Why? Because it can increase the value of the building by hundreds of thousands of dollars. Losing out on $24k worth of rent each year is easy if you know it comes with an extra $300k in your pocket when you sell.

Vacancy rates in San Francisco are very low compared to the rest of the state and the country. Rent control in SF is problematic not because it leads to vacancies but because the allowable increase is far too low, way below inflation.

Re: California Approves Statewide Rent Control

#217

Post by jethro_tell » Thu, Sep 12, 2019, 1:40 AM UTC

tmh79 wrote: post #49

chaostheory wrote: post #11

Earlier quoted context omitted.

> generational warfare, the olds vs the millennials This is a good example of that. Rent control tends to benefit the older generation at the expense of younger people and families. It does nothing to solve the actual problem of lack of housing inventory.

millennials in CA are disproportionately renters, not home owners. This bill will provide millennials with some extra security so they know their rent won't be spiked and they'll need to move.

until they need a two bedroom for a kid. rent control works great if you have your shit together and have no life changes coming up. If you're settled in your life and you already have a place, rent control is great, if you're going thought the life change stage of your life, rent control doesn't help to much. Rent goes up to market when you move out to go to college, then it goes back to market after you leave college to get that first job, then when you want to move into a place by your self or with a significant other, back to market. Need something bigger to start a family? Back to market. Once you finally get your shit together and ease into a stable part of life (if you haven't bought a house) your rent is stable. But it's not a big help until you're stable. So while most people are renters in the younger demographic, rent pretty much stays at market for the majority of the time through 20's and 30's. The answer is still more housing to lower the overall price of housing.

Re: California Approves Statewide Rent Control

#218

Post by mc32 » Thu, Sep 12, 2019, 1:40 AM UTC

joshAg wrote: post #180

mc32 wrote: post #87

Earlier quoted context omitted.

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 cha…

Ah, gotcha I see what you are saying.

I think what OP was saying was that in an unrestricted market they have wider range (due to discretion) but given this shackle on hikes, they are going to max it out. Maxing it out means there will not be downward adjustments when warranted (economic trends) and will instead ride it out (not make it avail at lower price) because when the economy picks up they’ll more than make the loss up.

Re: California Approves Statewide Rent Control

#219

Post by joe_the_user » Thu, Sep 12, 2019, 1:41 AM UTC

phil248 wrote: post #138

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…

Well,

It's not entirely unreasonable to think landlords somewhere in the state will take this "5% + inflation" as automatically what's called-for. Conceivably a few landlords who otherwise would have held the line will do this. But given this was more or less already standard for the large landlords and given the landlords who have been really, really gouging, this sad collateral.

Re: California Approves Statewide Rent Control

#220

Post by macinjosh » Thu, Sep 12, 2019, 1:41 AM UTC

tmh79 wrote: post #10

jseliger wrote: post #3

Finally, a novel and innovate solution no one has thought of before. What could go wrong? https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent...

To be clear, this is a 20 year old article, the literature on rent control has changed a lot since this was written. Basic economic consensus rn seems to be that rent control is a poor long term solution to rising housing costs but a necessary short term solution as the required supply shock wouldn't even be able to happen in the near term even if regulatory barriers are eased due to labor, construction, and land cos…

So does this bill automatically expire at some point? If not, why not? Not many laws are easily repealed as the side effects they create work to entrench them in society. A bad person is a person that think they can engineer other people's lives for the better through legislation.