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California Approves Statewide Rent Control

nytimes.com

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Re: California Approves Statewide Rent Control

#431

Post by cookiecaper »

maxsilver wrote: post #327
seanmcdirmid wrote: post #318

Earlier quoted context omitted.

Have there been leasing periods in your past where rent increases exceeded 7 percent? Is that common? Also, I assume there is some market pressure to consider, if your increases outpace supply and demand, then tenants would simply move, right?

In the US, it is very common the past decade or so. I'm in bumblefudge-nowhere-Midwest USA, and even we've averaged 10% yearly rent increases, for more than 5+ years now. Every top-20 metro area I've looked at, has had it worse than us on rental price increases.

It really depends on the landlord. I just renewed my lease on a single-family home in a relatively hot market with no price increase. Of the 7 or 8 different units I've rented across 4 different states, only 2 of them had landlords that routinely nudged the rent upward at lease renewal. My personal experience is that unless someone is really working to maximize profit per unit, they're usually content to leave well enough alone, and only raise rates when the unit goes empty. I know multiple people who've rented for 15+ years with no increase in rent.

Indexes and aggregations may show something, but it's important to remember that they're lossier than many people appreciate. You'd have to dig into the data to learn how representative it may or may not be. Since small-time landlords are hard to collect data from, most of these city rental indexes are probably relying on large-scale apartment landlords who are constantly trying to squeeze maximum price-per-unit. I'd say you'd do well to take it with a grain of salt.

Re: California Approves Statewide Rent Control

#432

Post by refurb »

baby wrote: post #253
refurb wrote: post #184

Earlier quoted context omitted.

Arbitrary rent? No, the market rate. And yes, if you’re living in a rent controlled place and paying $1000 per month when the same place is going for $3000, it’s virtually a cash transfer from the landlord to you every month. That’s why you hear about massive ($100k+) buyouts in SF.

This is wrong. Because the landlords are still making money. If they were renting at a cost they would have sold their places a long time ago.

I know several landlords who are net negative on their rent. Why did they buy? For the expected appreciation.

Re: California Approves Statewide Rent Control

#433

Post by cryptoz »

aianus wrote: post #365
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…

> Why does rent control deter creation of new housing? If you have a lot of money and you want to build/buy a rental property, would you do it in a) a growing city with no rent control where your discounted future cash flows are unbounded or b) a city where there is a law placing a ceiling on your returns. All else being equal, you are going to choose the city without rent control to build your new housing units in (…

I think your illustration has failed, though, because I would very much choose b). I consider a) as an evil in the world and would avoid participating in that if at all possible. b) sounds like a really good choice for long-term investment in in sustainable society.

> All else being equal

Okay but all else is not equal, and in the real world, it is never equal. These thought experiments do nothing to improve conditions in the real world, since they are based on flawed models of how people behave.

Re: California Approves Statewide Rent Control

#434

Post by manfredo »

ng12 wrote: post #112
holy_city wrote: post #86

Earlier quoted context omitted.

When I was interviewing for jobs in the Bay area I noticed entry level salaries (even at smaller shops) were in the range of 100-120k and rent was like 35-40% of your salary after taxes. Certainly higher than the recommended 30% but it's not that different from somewhere like LA or NYC, even Chicago and Miami aren't much cheaper. Are my numbers just totally off?

$120,000 comes out to around $6k/mo. A mediocre studio in SF is pretty close to $3k.

The rent figures are an exaggeration. I lived in a mediocre studio for between $1.8k and $1.9k. $3k will get you a mediocre 1 bedroom or a pretty good studio.

Re: California Approves Statewide Rent Control

#435

Post by WWLink »

ralusek wrote: post #363
human20190310 wrote: post #322

There is no functioning market to begin with. Housing prices and rent are through the roof in California, yet supply is not rising to meet demand, largely because existing owners oppose new construction. Turnabout is fair play. If owners organize politically to control supply, tenants can organize politically to control prices.

Let's just not even talk about the fact that regulation is the reason why housing is scarce, let's just assume California is 100% at capacity. How the hell does rent control increase turnabout? It just let's people who got in at the right time have their status as a resident enforced indefinitely, when there are plenty of people who are willing and able to pay far more in order to live there.

I highly doubt that. At least in LA county, this place was built up in a giant friggin profit-motivated hurry.

Now, if we're talking about planned cities built in the 80s in orange county, maybe we have a point! Maybe.

SF has a similar story of sorts. Building code regulations were heavily relaxed after the 1906 earthquake in fear that people wouldn't rebuild otherwise.

Businesses will build whatever is most profitable. If it's more profitable to de-regulate and unzone everything, then they would be lobbying like hell to get that.

Re: California Approves Statewide Rent Control

#436

Post by flyGuyOnTheSly »

Governments respond to complaints from the masses.

From what I've heard, rent in a lot of Californian cities is extremely expensive, so I assume people are complaining about the price of their rent... probably statewide to some extent.

Hence the new bill. It's just a reaction to a temporary problem.

Which will probably stay in place long past the problem is solved!

Re: California Approves Statewide Rent Control

#437

Post by all_blue_chucks »

The only way to drive down rents AS A WHOLE is to increase the supply of housing.

Any legislation that makes renting less profitable will make BUILDING RENTAL PROPERTY less profitable.

This sort of thing, on the whole, makes rents increase by decreasing housing supply.

Re: California Approves Statewide Rent Control

#438

Post by novok »

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…

Thats why cities like oakland allowed landlords to 'store' rental increases if they didn't increase it to the max in previous years AFAIK.

Re: California Approves Statewide Rent Control

#439

Post by gleenn »

xoa wrote: post #390
pvelagal wrote: post #347

Earlier quoted context omitted.

Well, i disagree with your opinion. Silicon Valley has been attracting a lot of people from lot of states, who all need housing. Remember , size of California is fixed. Housing in Silicon valley doesn't grow at the same rate as number of people coming here. Added to that, foreigners living in foreign countries ( who have never visited USA, who have no intention of living in USA) are able to own land/houses in silicon…

> Remember , size of California is fixed Yeah, fixed at ~164 thousand square miles (~400,000 km^2). Are you for real? Los Angeles and New York City proper (not the metropolitan areas) are interestingly nearly identical in official area at around 468 square miles each. But LA has a density of around 8000/mi^2 while NYC is well over 27000/mi^2. If LA merely matched NYC that'd cover another 10 million or so population b…

While your are technically correct, there are significant issues getting water. Just because there is a spare part of land also doesn't mean it's not in the middle of one of our huge deserts or is connected in any meaningful way to roads. Empty land doesn't equal inhabitable land.

Re: California Approves Statewide Rent Control

#440

Post by wahern »

dgzl wrote: post #402
jdavis703 wrote: post #341

There's three paths: 1) Rent cap landlords. The landlords will cry Big Government. 2) Abolish single family-only zoning and legalize backyard cottages, townhomes and small apartments. The homeowners will cry Big Government. 3) Do nothing. Watch as more people start living in tents or endure super-commutes that snarl your traffic and worsen climate change.

I'm not a landlord or homeowner, and 1 makes me cry Big Government. What if something crazy happens to the economy, say the dollar gets devalued, and all you have is rental property for income? Realistically you would raise your rental price.... But wait, there's a cap, and you can't. 2) "legalizing backyard cottages" is actually against Big Government, and I'm with you there. You're forgetting another option: deregu…

> What if something crazy happens to the economy, say the dollar gets devalued, and all you have is rental property for income?

In San Francisco rent control is indexed to inflation. If the dollar is devalued, inflation increases, and you get to increase your rent more. The same is true for Oregon's new law, which permits 7% increases in addition to inflation.

> You're forgetting another option: deregulate and let the market compete.

Rent control is about providing housing security and controlling volatility. Over the long-term unfettered markets may produce optimal supply, but in the short-term people can easily be pushed onto the street. As Keynes said, "economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again". (The more famous bit is, "in the long term we're all dead.")

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