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California Approves Statewide Rent Control

nytimes.com

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Re: California Approves Statewide Rent Control

#811

Post by EpicEng »

FussyZeus wrote: post #779
34679 wrote: post #764

Earlier quoted context omitted.

The lack of affordable housing always has been and always will be a supply problem. When demand for homes outpaces the number of homes being built, prices go up. Plain and simple. Homes that are built for renting (mainly apartments and condos, but some houses, too) are built for profit. If you make it less profitable to build, fewer will be built. If fewer homes are built, the problem is compounded, not rectified. If…

> Homes that are built for renting (mainly apartments and condos, but some houses, too) are built for profit. If you make it less profitable to build, fewer will be built. If fewer homes are built, the problem is compounded, not rectified. Arguments like this continue to be made for more and more aspects of our market: pharmaceuticals, heathcare services, elder care services, and now housing. Everywhere you look the…

The reason that supply is not meeting demand is because the market is not free to expand to meet the needs of the people.

Re: California Approves Statewide Rent Control

#812

Post by sgc »

AnthonyMouse wrote: post #597
jackvalentine wrote: post #586

Earlier quoted context omitted.

I would completely agree with that, but for some reason it isn't as politically do-able as this rent control legislation was.

> I would completely agree with that, but for some reason it isn't as politically do-able as this rent control legislation was. The reason is that landlords know exactly what rent control does. Landlords know that the tenants with the strongest interest in local housing costs are the people who already live there and plan to continue to do so indefinitely. Rent control is a method of buying them off without actually…

Hanlon's rasor: Some idiot naively thought up this legislation and a bunch of people voted it in because it sounded "good". This was most probably brought into being by a bunch of bumbling fools trying to do good without due diligence rather than by a cabal of elite landowners.

Re: California Approves Statewide Rent Control

#813

Post by mikeash »

34679 wrote: post #764
phil248 wrote: post #138

I'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…

The lack of affordable housing always has been and always will be a supply problem. When demand for homes outpaces the number of homes being built, prices go up. Plain and simple. Homes that are built for renting (mainly apartments and condos, but some houses, too) are built for profit. If you make it less profitable to build, fewer will be built. If fewer homes are built, the problem is compounded, not rectified. If…

Lack of supply is a problem, but is it caused by an inability to turn a profit? It seems like developers have no trouble making money from new construction. The difficult part, and the part that limits supply, is getting permission to build.

Re: California Approves Statewide Rent Control

#814

Post by Jweb_Guru »

lotsofpulp wrote: post #758
Jweb_Guru wrote: post #693

Earlier quoted context omitted.

Rents are growing insanely fast in SF compare to anything else. The idea that landlords can't afford to make repairs because they aren't extracting maximum rent from the property is completely ludicrous on the face of it. Do you actually believe these arguments?

One possible scenario is if a landlord purchased property at a price factoring in assuming certain increases in rent, then they’re constrained by the debt payments.

Then they were taking a gamble by purchasing a property they couldn't actually afford, and lost. If you want risk-free investments, try bonds.

Re: California Approves Statewide Rent Control

#815

Post by Jweb_Guru »

TuringNYC wrote: post #775
Jweb_Guru wrote: post #693

Earlier quoted context omitted.

Rents are growing insanely fast in SF compare to anything else. The idea that landlords can't afford to make repairs because they aren't extracting maximum rent from the property is completely ludicrous on the face of it. Do you actually believe these arguments?

You assume the rents are actually going to and staying with the landlords. In reality, landlords also have bills -- big bills (mortgages, property taxes) and bills that move [upwards] dynamically (gas, electricity, water, repairmen).

Property taxes in California are miniscule. Mortgages are only as high as they are because people assume they can extract ridiculous rents from tenants, so this is a self-made problem that should go away with sufficiently stringent rent control. The other bills do not vary significantly enough from city to city to justify the absurd rent differences between them.

So no, I'm not assuming anything of the sort. Beyond that, landlords are extremely notorious for spending much less money on repairs than they should and saddling their tenants with the bills.

Re: California Approves Statewide Rent Control

#816

Post by MarkMc »

phil248 wrote: post #138

I'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…

Given the booming demand and restricted supply for homes in San Francisco, the market rate for rent could easily outstrip inflation by 3% per year. That means it would take a decade for a rental rate that is currently 20% below market rate to catch up.

Re: California Approves Statewide Rent Control

#817

Post by Jweb_Guru »

refurb wrote: post #766
Jweb_Guru wrote: post #693

Earlier quoted context omitted.

Rents are growing insanely fast in SF compare to anything else. The idea that landlords can't afford to make repairs because they aren't extracting maximum rent from the property is completely ludicrous on the face of it. Do you actually believe these arguments?

I know a few landlords and that’s exactly what’s happening. I’m not sure why you find it hard to believe. When you have a 3 unit building and everyone is paying less than 1/3 the market rate, it’s not worthwhile in the least for a landlord to fix up the building beyond the absolute minimum. Contractor rates have skyrocketed in SF, so even just repainting the building might cost $15k, which might represent several yea…

The skyrocketing rates for services are directly tied to the skyrocketing rent increases. The cost of performing these services does not change substantially from city to city, or else landlords renting to people in cities with more reasonably priced units would not be able to repair them. The big difference is the cost of living for the contractors, which gets passed to the people paying for repairs--and by far the largest component of cost of living in SF is rent. Like I said in the other comment, this is a largely self-imposed problem.

Re: California Approves Statewide Rent Control

#818

Post by azernik »

adamsb6 wrote: post #662
ac29 wrote: post #321

Earlier 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…

What if the market clearing price increases at greater than 5% plus inflation? This isn’t a free lunch, the tradeoff of a price cap is under provision of a good.

Market-wide price increases of 5%+inflation are rare; sustained market-wide price increases of 5%+inflation are very rare.

This forces landlords to do two things:

* When there is a sustained rise in fair market rent, they will need to implement that increase over time instead of falling behind, and then raising it all at once 5 years later when they realize they're leaving 20% on the table. This allows people being priced out advance warning.

* When there is a spike in fair market rent, like the 8-10% spikes of '14-'15 in the Bay, they will need to spread that rise over multiple years. Since this doesn't affect the profits of new units brought onto the market in response to the demand spike, it should have minimal if any effect on supplier behavior.

(And what happens when market clearing price does increase at 5%+inflation for years on end? Then housing will come to dominate the CPI, and the "inflation" term will more and more closely track housing prices.)

Re: California Approves Statewide Rent Control

#819

Post by briandear »

jacobolus wrote: post #345
closeparen wrote: post #256

Earlier quoted context omitted.

Many landlords are not paperclip maximizers. REITs are, but small time families often charge below-market rents to the long term tenants they personally like or can’t be bothered to replace. They feel comfortable doing this because they can always revert to market rate later. With that long-term optionality going away, some will revert to market rate or as close as legally possible right now.

So in other words, landlords love to reserve the right to kick a tenant they stop liking out at the drop of a hat for no specific reason, by jacking the rent up as high as they want. As compensation for this power, they are willing to charge well below market rates to help indigent tenants. If they lose this “right”, they insist on becoming pure profit maximizing machines?

The landlords own the building. They don’t owe the tenant anything beyond the lease.
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