Great, competitors will leave the market.
California Approves Statewide Rent Control
731–740 of 1001 posts
Re: California Approves Statewide Rent Control
#732Earlier quoted context omitted.
The point was that this CA statewide bill is quite different from places like SF. New state law: 5% + inflation SF: 60% of inflation. This has has never been over 2.9% a year since the law changed in 1992 from a fixed 4% [0]. I think one could sanely argue that allowing increases of up to 5% plus inflation is a suitable restriction, while limiting increases to significantly below inflation is not. [0] https://sfrb.or…
It is still rent control. The problems you see will not be fixed by the law. >I think one could sanely argue that allowing increases of up to 5% plus inflation is a suitable restrictio Based on what data? And no, it's not a 'sane' argument: 1) if 5% + inflation is above market rates then this rent control is either a no-op or detrimental because it may incentivize landlords to hike rent to maximum because they won't…
> [...] because it may incentivize landlords to hike rent to maximum because they won't have have the flexibility to do that in the future if the market changes.
Relatively unlikely to have a big impact. Even without such a law they already have an incentive to raise rents as how as possible: profit.
Mostly the law should be a no-op.
I'm not sure what the argument is for why freedom of contract can't provide the "increase < inflation + 5%" provision voluntarily?
Re: California Approves Statewide Rent Control
#733I live in Sweden, which is heavily rent controlled. Let me just say that this hasn't worked out. Rental apartment contracts in larger cities gets sold on the black market for larger sums.
Queues are over 10 years in many cities and there is no real way of getting a rental apartment in any larger city. This means people are pushed into buying a housing apartment which cost a lot of money and drives up prices a lot.
It's not viable or logical that an apartment in central Stockholm should cost as much as an apartment in a small village in northen Sweden.
Norway, Finland and Denmark all have more free market and it's much easier to find a rental in all those countries. I would advice against having rent control.
Re: California Approves Statewide Rent Control
#734I 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…
Wouldn't you lose tenants, if rent goes too high?
Re: California Approves Statewide Rent Control
#735I have owned income property in San Diego for over thirty years, so I have a direct interest in this.
After looking at the details, this law looks OK for the present but if we enter a period of hyper inflation then it is not so good. The 5% plus inflation might not be enough since the government jumps through hoops to underestimate the rate of inflation. If we have 75% inflation and the government admits to only 20% inflation (for a hypothetical argument), then landlords will be damaged financially. I believe that sometime the government will inflate its way out of debt.
Re: California Approves Statewide Rent Control
#736Earlier quoted context omitted.
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.
They could already do that. Nothing was stopping them from forming an oligopoly or landlords association/guild or whatever you want to call it and raising rent in lockstep by 7% each year. The entire point of the 7% cap is to stop that from happening above 7%, because certain hotzones experience that already, not because of a formal agreement, but because the demand outstrips supply by that much and supply can't (or…
> Nothing was stopping them from forming an oligopoly [...]
You are forgetting about transaction costs.
The new law does provide a Schelling point. (But I do agree that it's probably not going to be an important one.)
Re: California Approves Statewide Rent Control
#737When rents are high we should incentivize development of more housing stock. Increase supply until the market finds balance with the demand. Rent control has the opposite effect. It’s a disincentive to new development.
Re: California Approves Statewide Rent Control
#738Earlier quoted context omitted.
It’s not so easy, how do you prove this? What if someone’s on vacation or has mail being delivered there etc. or comes in once in a while or Airbnb’s it’s much harder to impliment I think than it sounds.
Well, what you do is get rid of prop 13 and do yearly appraisals. Then you just tax the property on what it's worth, and if a landlord refuses to rent, then the tax is now a vacancy tax. The real problem is we're not taxing these properties at the true value they could provide to society, so a massive market inefficiency exists.
A vacancy tax is indeed a bit more complicated.
You hint at the easier solution: repeal prop 14 and increase property taxes. A lot. Problem solved.
(If you want to be a bit more sophisticated, look into land value taxes.)
Re: California Approves Statewide Rent Control
#739I 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…
Yes, the real solution is to make life as easy as possible for real estate developers and strip tenants of their rights. That is definitely good for tenants, according to landlords such as yourself. For the rest of us, I hope you understand why this sounds fairly nonsensical. "More housing" does not automatically translate to "affordable housing" and many regulations are there for a reason--including regulations prot…
How does more housing not translate to more affordable housing?
Do rich people to afford that extra housing get created out of thin air?
Re: California Approves Statewide Rent Control
#740I have owned income property in San Diego for over thirty years, so I have a direct interest in this. After looking at the details, this law looks OK for the present but if we enter a period of hyper inflation then it is not so good. The 5% plus inflation might not be enough since the government jumps through hoops to underestimate the rate of inflation. If we have 75% inflation and the government admits to only 20%…
The perfect way to do it would be to only match the rent increase by the property tax increase. If the landlord isn't getting any increase on property taxes then it's fair for the tenant to not get any rent increase.