The only solution to higher rent is to build more, a LOT more, housing.
The rest of this is just distortion on the economy that will lead to all sorts of bad outcomes
California Approves Statewide Rent Control
261–270 of 1001 posts
Re: California Approves Statewide Rent Control
#262I 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…
This tends to happen with new apartment buildings for the first 2 years or so, and its an artifact of real estate finance. For finance purposes, the building is valued on the theoretical sum of its leases when its at full capacity. If you have a 100 unit building where each unit rents for exactly 2.5k/month, then your building is valued on a multiple of of the $250000/month it generates. That value is used as capital for the real estate company that owns the building to use to get a loan to build another apartment complex. Where this gets tricky is that the max cashflow a building can generate is decreased when you lower rents in leases for for finance and accounting purposes,but when you give someone 1/2/3 months free rent the "max theoretical monthly rent" remains the same as if you hadn't given them the free rent. Thus, while the 2 months free rent is an effective ~18% rent decrease for the tenant, it doesn't impact the ability for the development company to borrow, and thats why it is widely used.
Re: California Approves Statewide Rent Control
#263The real solution is to decommodify housing. >The landlords, like all other men, love to reap where they never sowed, and demand a rent even for the natural produce of the earth. -Adam Smith
The quote refers to the land itself, not to the structures built on it. In other words, it is an argument for a land tax, not for the confiscation of buildings.
Re: California Approves Statewide Rent Control
#264This 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…
What you're ignoring is voters resoundingly rejected Prop 10, the rent control measure that went on the ballot LESS THAN ONE YEAR AGO. Which was pretty close to AB1482.
Yet, despite the majority of voters saying no, the legislature felt it necessary to push forward with legislation anyways.
Above all else, the government ignoring a direct vote from the people is most disgusting of all and reason enough for why this should be vetoed.
https://www.sfchronicle.com/politics/article/Prop-10-Califor....
Re: California Approves Statewide Rent Control
#265Earlier quoted context omitted.
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.
As a landlord this doesn’t make too much sense. The value of the property is net operating income divided by cap rate, so vacancies would lower value. It doesn’t matter what the gross scheduled rent is in that calculation.
If you have a tenant paying $1000 per month when market rate is $3000, an empty units drastically increase income and thus the value of the property.
It also opens it up to people who want to buy the building and move in.
Re: California Approves Statewide Rent Control
#266People will cry foul this will drive costs up in the long term. But we are far removed from free market economics since cities have put restrictions in building new housing thus keeping real estate prices artficially high. Now the state puts rent cost restrictions that will drive the prices of real estate down.
Rent control seems to be used as a means to an end rather than a goal on itself because politics.
Re: California Approves Statewide Rent Control
#267The real solution is to decommodify housing. >The landlords, like all other men, love to reap where they never sowed, and demand a rent even for the natural produce of the earth. -Adam Smith
I don't understand how that's possible. Housing is a good/service, how can that be decommodified?
Re: California Approves Statewide Rent Control
#268Earlier 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…
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.
I don't know exact specifics of typical PM agreements, but usually yeah the PM follows whatever the landlord specifies. If the PM doesn't like the landlord's terms, they will just decline to do business with them, but ultimately they're just the landlord's agent.
I'd hazard that the PM charges a percent of the gross rent, but has a minimum irrespective of the rent actually charged, so the landlord will then just tell them that they don't want the PM to rent at a price where the PM's minimum fee is more than the fixed percentage. (or in hard numbers. If the PM requires the greater of 10% or $100, then the landlord will just say "don't rent below $1000")
Re: California Approves Statewide Rent Control
#269I'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…
So ... you are arguing rent control is good? Or that this isn't rent control? Or that some rent control is good, but more is really bad?
Re: California Approves Statewide Rent Control
#270Earlier quoted context omitted.
Using the law to destroy the value of someone’s asset until they abandon it is confiscation, just indirectly.
Confiscation, it is not, anymore than negative reports are confiscation of stock. You can liquidate and acquire a different asset. Personal preference has rarely been rewarded (re: eminent domain). There are windows of opportunity, timing and strategy inherent to capitalism. Sell before it passes (or the market adjusts) to maximize your realized asset value.
Both your examples (eminent domain and a government using propaganda to devalue a company) are forms of confiscation. It doesn’t matter if smart people would be able to foresee and mitigate the damage.