California Approves Statewide Rent Control • Hacker News Board

Re: California Approves Statewide Rent Control

#501

Post by sgc » Thu, Sep 12, 2019, 4:09 AM UTC

PorterDuff wrote: post #397

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.

It's worth considering California building code in the cost of new construction.

California building code is really not that different from anywhere else in the US, since almost all states base their code off the IBC. it costs a little more to build in a seismic zone or a high fire risk zone, but that is inevitable. The code does help keep people alive and healthy, and protect against more costly damage than otherwise in case of natural disasters.

In California, 25% of a new SFR is land. Another 25% easy goes to permits and municipal utility connections. 40% construction costs (including paying the boss a salary), and if you are lucky, 10% profit. Simply reducing permitting costs and streamlining the process to reduce holding costs (without even easing restrictions, just being more efficient/faster at the municipal level) could shave 20% off a new home price. That would drive down all home prices to some extent and open up a large number of people to get out of the renters pool.

So CA government is the major player to blame for housing costs, and these laws are in place of just doing their jobs well. This might drive prices down too, eventually, but not nearly as quickly or fairly as bureaucratic reform would.

Re: California Approves Statewide Rent Control

#502

Post by ganitarashid » Thu, Sep 12, 2019, 4:11 AM UTC

The only positive about this (counter intuitively) is that it will show that rent control does not work

Re: California Approves Statewide Rent Control

#503

Post by sgc » Thu, Sep 12, 2019, 4:11 AM UTC

AmericanChopper wrote: post #492

coliveira wrote: post #471

Earlier quoted context omitted.

Talking about "regulation" doesn't really say anything. All laws, good and bad are regulation. There is regulation passed by businesses, and very few passed by citizens. When you cry about regulation, it is similar to crying about the water being wet or over having to breath. In modern society, very few things are done without regulation. Even basic rights that we take for granted, such as freedom of speech, are guar…

I’m not sure what this is supposed to contribute to the conversation. Regulations make it simply impossible for housing supply to keep up with demand in California (and lots of other places too). This point in particular is not even contentious as far as I can tell. If you want to fix the problem, the only way to do it is to relax zoning and permit regulations. Trying to fix over-regulation with more regulation will…

As I said above, they don't even need to ease the regulations, just work faster for permit approval and charge less for them, and the problem could largely sort itself out.

Re: California Approves Statewide Rent Control

#504

Post by labster » Thu, Sep 12, 2019, 4:11 AM UTC

sgc wrote: post #483

nradov wrote: post #469

Earlier quoted context omitted.

Many parts of California are already beyond 100% capacity for certain pieces of infrastructure like transportation, schools, water, and sewers. So I only support more housing in those areas if building permits are directly coupled with equivalent infrastructure upgrades.

There are places in California where infrastructure can't help. There is just not enough water for more people.

That's not really true except perhaps on the shallowest level. There's a lot of environmental issues, pre-1914 water rights, short-term climate issues like ENSO and MJO, and crop choices that have caused California to experience water shortages. Maybe in some cases we can put crops under solar panels to save water[0], or reclaim more water through toilet-to-tap programs. You know, through infrastructure.

Reductionist statements like yours never really reflect any real-world policy environment. The real world is messy and complicated.

[0]: https://arstechnica.com/science/2019/09/crops-under-solar-pa...

Re: California Approves Statewide Rent Control

#505

Post by AmericanChopper » Thu, Sep 12, 2019, 4:11 AM UTC

human20190310 wrote: post #488

AmericanChopper wrote: post #474

Earlier quoted context omitted.

If over regulation drove up prices, what exactly do you expect from more regulation?

To expand the set of people suffering to include landlords and owners, instead of having own group of people benefiting from regulation (in the form of restricted supply) and another not. EDIT: to be clear, not suffering for its own sake, but to pressure owners to stop supporting the current regulations.

As long as demand for housing continues to outstrip supply, especially if demand continues to grow at a rate exceeding the growth in supply, then there will always be money to be made in housing.

This law in California allows for 5% annual increases after inflation. It’s hard to see how this will even hurt landlords. Creating a pretty clear incentive to perform a maximum increase ever year doesn’t seem great for renters though.

Re: California Approves Statewide Rent Control

#506

Post by aeternum » Thu, Sep 12, 2019, 4:13 AM UTC

claudeganon wrote: post #332

graeme wrote: post #235

Earlier quoted context omitted.

This may not change the argument, but he was referring to the landed gentry who owned farmland rather than people who build and maintain buildings.

It doesn’t. The landlord captures increases in value from things like better public infrastructure or outside economic development in the same fashion. Tech workers in San Francisco, for example, have created massive amounts of wealth and value in the city, much of which has then been sucked up by landlords and developers who provide nothing even remotely comparable. They just profit from owning something other peopl…

The citizens of San Francisco have basically given the landlords a monopoly but not approving higher density zoning.

Only 43% of SF residents are homeowners, and many fewer are landlords, yet it is very rare for rezoning or higher density legislation to get passed. There are plenty of developers that want to develop in SF and create some competition for the existing landlords, forcing everyone to offer better services. Instead, we get laws like statewide rent control which reduce the potential long term value of new development, further reducing both supply and competition.

Companies capture external value all the time, that isn't the core problem. Improved infrastructure and more wealth in a city would normally attract more competition reducing the total amount of that value that each landlord could capture.

Re: California Approves Statewide Rent Control

#507

Post by qroshan » Thu, Sep 12, 2019, 4:14 AM UTC

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…

If the dollar gets devalued, then there is inflation, which the increase is tied to

Re: California Approves Statewide Rent Control

#508

Post by QuarterReptile » Thu, Sep 12, 2019, 4:14 AM UTC

sgc wrote: post #483

nradov wrote: post #469

Earlier quoted context omitted.

Many parts of California are already beyond 100% capacity for certain pieces of infrastructure like transportation, schools, water, and sewers. So I only support more housing in those areas if building permits are directly coupled with equivalent infrastructure upgrades.

There are places in California where infrastructure can't help. There is just not enough water for more people.

To push in a different direction, there isn't enough water for more people while keeping the amount and types of agriculture in California constant. Prioritize residential water use over agricultural rather than aggressively doing the reverse, and you'd probably see improvement. Singapore and Hong Kong are very strong arguments to me against the idea that California couldn't handle more.

Re: California Approves Statewide Rent Control

#509

Post by fzeroracer » Thu, Sep 12, 2019, 4:14 AM UTC

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…

Deregulate doesn't work when people won't sell. What do you do when highly wealthy people buy property and then never sell? You can't simply slash all of the regulations because regulations aren't the reason why they're not selling.

In fact, they're not selling because of market dynamics. Their property is becoming more valuable over time because no one else is selling, which means any property that does sell does so at an extreme premium. If you were an investor: Would you sell off your stock when your stock is performing strongly and continually growing?

Make no mistake. There is no free market happening here.

Re: California Approves Statewide Rent Control

#510

Post by camjohnson26 » Thu, Sep 12, 2019, 4:14 AM UTC

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.

That’s just not true, of course there is a functioning market. It’s disingenuous to say that just because the market has problems that means there isn’t one at all and to justify taking away what little freedoms are left.