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California Approves Statewide Rent Control

nytimes.com

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Re: California Approves Statewide Rent Control

#541

Post by AnthonyMouse »

rtpg wrote: post #523
jeffdavis wrote: post #452

Earlier quoted context omitted.

> Turnabout is fair play. The biggest myth is that this kind of stuff actually helps the less-powerful. In reality, it just means they are hurt twice: government artificially suppressing supply, and government manipulating prices which has bad side effects for mamy even if its good for a few. Also, in reality, the powerful often don't get hurt, and arbitrary market manipulations just introduce new ways for them to ge…

> manipulating prices which has bad side effects for many even if its good for a few. There are way more renters than owners. Prices have been going up more than 5%. Owners are most definitely not the "less-powerful" here. So in reality the gov't might be artificially surpressing supply (though it's mostly due to owner pushback), but the "manipulating prices" (trying to keep rent growth from getting out of control) i…

> thought experiment: if raising 5% every year with the law made sense, why would it not make sense to raise it 5% every year without the law?

If you don't raise it now then you can no longer do it later in the event that taxes or mortgage interest rates or some other cost increases. That creates a major risk for the landlord, which most of them would prefer to mitigate by raising rents even if it means apartments going vacant longer. And when they're all similarly situated, they all do the same thing, which means the tenants can't avoid the rent increases by moving to another apartment, which allows for more of the landlords to get in on the rent increase without incurring vacancies.

Re: California Approves Statewide Rent Control

#542

Post by dcolkitt »

camjohnson26 wrote: post #512
dcolkitt wrote: post #487

Earlier quoted context omitted.

Maybe, but construction may not even be necessary. Shipping containers can now be easily retrofitted into stylish apartments. They can easily be stacked eight stories tall. 95% of the work can be done in overseas factories and is subject to the same globally competitive downward price pressure as every other manufactured good. Build them in Shenzen at a wholesale cost of $30,000 per pod, ship them to San Franciso for…

I genuinely can’t tell if this is sarcasm or not because there are definitely people with this level of economic illiteracy.

In zoning-restricted markets like the Bay Area, housing supply is extremely price inelastic. The coefficient is at least 2.0 if not higher.

If cheap, abundant, shipping containers pull 25% of the demand out of the low-end multi-family segment, that's a 50% drop in prices. Low-end housing is a substitute good with mid-end housing for at least some of the demand.

The prime example are people who live with roommates in mid-end housing, who with cheap enough low-end prices, would get their own place. A 50% price shock to low-end multi-family at the very least would pull 10% of the demand out of the mid-end. That would lead to a 20% drop in mid-end multi-family prices.

Just the same there's at least some substitutability between mid-end multi-family and mid-to-high-end single family. A prime example are empty-nesters looking to downsize. With a 20% price shock to multi-family, that would suck at least 5% of the demand out of the single-family segment. That's a minimum of a 10% price reduction.

Hence a positive supply shock in the form of cheap, abundant shipping container homes would reduce the price of mid-high-end single family homes by at least 10%. This is all micro-econ 101.

Re: California Approves Statewide Rent Control

#543

Post by pacala »

zamfi wrote: post #384
aswanson wrote: post #364

Earlier quoted context omitted.

Existing homeowners don't want their living space turned into downtown Manhattan because there's a temporary exorbitant demand for ad click optimization and pic sharing networks.

There's a whole spectrum between single family homes and "Manhattan". It's not a binary! The Bay Area's population has grown by 8.5% in the last 10 years. [0] Please, that's not "Manhattan". That's one person on your block converting their garage into a rentable unit. Those "existing homeowners" are really messing things up for everyone because they don't want Bob to turn his garage into a rental? Somehow I think the…

Full quote: The population of the nine-county region grew by over 600,000 people since 2010 — a nearly 8.5% increase — outpacing the growth rate in any other part of California, according to U.S. Census Bureau data released Thursday.

600k people is about as much as Seattle proper. Which happens to span 83.94 sq mi. In less than 10 years. That's _a lot_ of construction.

Re: California Approves Statewide Rent Control

#544

Post by clucas »

dcolkitt wrote: post #524
yocheckitdawg wrote: post #511

Earlier quoted context omitted.

Who the fuck wants to live in a shipping container?

A shipping container is 320 square feet. Two pods can be joined into a single 740 square foot unit. That's a total cost of $80,000. Let's round to $100,000. Assume a rental yield of 12%. $1000 a month for a brand new 740 square foot apartment in the middle of San Francisco. Plus with modern finishes that are frankly much nicer than anything you'll find in the low-end SF rental market. I'd imagine quite a lot of peopl…

I don't think shipping container housing is the panacea the marketing makes it out to be. The savings aren't as crazy as you might think because of all the retrofitting involved to make them pleasant for human occupancy. Square feet are a nice shorthand for certain aspects of habitability, but floor area is not the only relevant factor.

This is mostly from an NYT article, so perhaps it's just one school if thought among many, but I found it convincing on the merits. https://www.nytimes.com/2019/08/14/opinion/shipping-containe...

Re: California Approves Statewide Rent Control

#545

Post by gigatexal »

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…

Landlord here in Oregon with just a single unit. I was a renter and now I’m fortunate enough to be an owner and I go out of my way to do right by my tenant. Rent increases are just for inflation for me 1-3% on renewal only.

There is a lot of knock on affects that rent control brings that are negative that I don’t have time to go into

Re: California Approves Statewide Rent Control

#546

Post by AnthonyMouse »

jackvalentine wrote: post #489
sgc wrote: post #481

Earlier quoted context omitted.

If they are making less money, they certainly won't allow more construction to deflate prices even further. Rent is already below mortgage in California, so I am not sure what kind of deal people are looking for. As others have said here in various ways, it seems more like lashing out at someone because it sucks life is so expensive where you live rather than dealing with the root causes.

How would you deal with the root causes?

Impose relaxed zoning rules at the state level instead of imposing rent control there.

Re: California Approves Statewide Rent Control

#547

Post by zaroth »

refurb wrote: post #490
flatline wrote: post #423

Earlier quoted context omitted.

I was thinking that too; but then, a lot more would complain about the renters at their neighbors’ house, increased traffic, noise, problems with lower income renters, HOA violations, and the ungodly backup at the city permitting office for any minor construction.

SF calls them ADUs(auxiliary dwelling units) and incentivized people to build them. A lot of people don’t want to because once you’ve rented it out, the tenant can never be kicked out unless they break the law. Do you want to sign up for someone living in your backyard for the next 20 years?

Well then they didn’t really incentivize people to build them!

An ADU should be like renting a room in your house. Exempt from fair housing laws, and at worst a non-guaranteed lease renewal, if not a simple 30 day notice.

Re: California Approves Statewide Rent Control

#548

Post by PorterDuff »

sgc wrote: post #501
PorterDuff wrote: post #397

Earlier quoted context omitted.

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…

Do they require fire suppression systems and solar panels in the rest of the US? I honestly don't know.

Re: California Approves Statewide Rent Control

#549

Post by Rapzid »

dgzl wrote: post #259

I'm a renter in Oregon and I've been outspoken about this long before the laws were passed. From my experience, people who support heavy laws, regulations and taxes don't spend enough time considering potential side effects. They feel like with enough support, they can just force anything they want to happen, while completely disregarding the market. I feel like an amount of the general public just wants Big Daddy go…

What constitutes a natural framework?

IMHO, there is nothing "natural" about land ownership. Land ownership in the USA isn't actually what most people think it is. It's not an inalienable right and is largely at the pleasure of the public by way of legislation that can be changed.

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