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California Approves Statewide Rent Control

nytimes.com

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Re: California Approves Statewide Rent Control

#841

Post by xxxpupugo »

YPCrumble wrote: post #757
xxxpupugo wrote: post #685

Earlier quoted context omitted.

Well said. It is weird to see so many people jumping out to lay the accusations of 'uninformed!', 'never works', etc... In fact, the CA, especially in bay area, the rent is already top among this country. 7% on top of that is still a quite sizable increase. And it is hilarious to see those (aspiring) landlords playing the blame-the-game-not-the-player rhetoric here to blame the government not allowing more houses to…

Saying "7% on top of that is still a quite sizable increase" is not a fact, it's an opinion. Furthermore it's like my employer telling me "you should take this 7% raise and be happy even if the market dictates a 20% raise. It's still a quite sizable increase". Then you make an ad-hominem argument about landlords being hypocrites which isn't relevant. Landlords act in the best interest of landlords. I don't yet know w…

> Landlords act in the best interest of landlords.

That is the point. Landlords will gather information or their side of evidence to push for their arguments, as well as ones that called for rent control.

All players are just playing our own shares in the game here. Is rent control necessarily good or bad in this particular case? Only future number can verify that. But because the landlord-just-be-landlord arguments, it is probably not good for the renters to take the other side of stories for granted.

Let the bullet fly for a moment.

Re: California Approves Statewide Rent Control

#842

Post by Jweb_Guru »

woah wrote: post #837
eru wrote: post #739

Earlier quoted context omitted.

How does more housing not translate to more affordable housing? Do rich people to afford that extra housing get created out of thin air?

As amazing as it seems, a lot of far left people in the Bay Area who engage in the housing debate actually don’t believe in supply and demand. Hard to have any kind of discussion on that basis.

I believe that, on average, housing prices increase when housing is limited and decrease when it is not. I don't believe this relationship is nearly as linear as people imagine, especially since not all "demand" for housing comes from people wanting to live in it (thanks to rampant speculation in the market). I also don't believe that even a tremendous increase in available housing will cause the price to decrease enough that rent is actually affordable for the people who currently depend on rent control, and I am not willing to treat those people as "collateral damage" in the quest to lower housing prices in SF.

Re: California Approves Statewide Rent Control

#843

Post by Jweb_Guru »

tathougies wrote: post #840
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?

Do you think contractor costs and material costs are going down?

Do you think they are going up faster than rents in SF have?

Re: California Approves Statewide Rent Control

#844

Post by thatfrenchguy »

refurb wrote: post #517
irq11 wrote: post #467

Earlier quoted context omitted.

The rent control laws in SF aren’t even as bad as HN comments would have you believe. Rent control doesn’t apply to new construction in SF. It also allows a regulated annual increase, and rent automatically jumps back up to market upon a number of different conditions - not the least of which is that the owner can push you out to renovate the building! HN commenters are usually just repeating stuff they heard somewhe…

Rent control in SF really is that bad. Rent increase limits are 60% of CPI, so it can’t even match inflation. If your costs go up (utilities) or you want to do capital improvements, good luck getting the rent board to approve a pass through. Want to prevent other people than the tenant from moving into a 1 bedroom? Tough, can’t say no to that, it just has to be under 3 people. Want to move into your own house? Sure,…

... But Prop 13 guarentees every landlord in the state that they won’t have to pay their share, and they get it even on >1980 construction, unlike rent control.

It seems fair to me that if you’re going to protect landlords (and companies !) you need to protect tenants as well.

Re: California Approves Statewide Rent Control

#845

Post by Jweb_Guru »

_gi12 wrote: post #836
Jweb_Guru wrote: post #694

Earlier quoted context omitted.

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…

> "More housing" does not automatically translate to "affordable housing" Imagine two hypothetical cites, each with one million residents. The first one has half a million apartments, while the second one has ten million apartments. Which city would have cheaper apartments?

What city are you imagining where ten million apartments would be built with no demand for them? I'm assuming the city with ten million apartments and half a million residents is economically depressed, since that many apartments were clearly built for a much larger number of people.

Here's a better question: under a realistic model of building, where building slows down when landlords and property owners feel they have maximized the profit they will get out of it, by what date do you think housing prices will be low enough that current residents who rely on rent control to stay in SF will be able to live there again? 2025? 2035? 2050? What is your recommendation for those people in the meantime?

Re: California Approves Statewide Rent Control

#846

Post by 0xEFF »

tmh79 wrote: post #281
0xEFF wrote: post #162

Earlier quoted context omitted.

The value of a new building is lower because it’s expected future value is lower.

The value of a new building (for finance purposes, IE getting a loan for construction) is based on the DFCF over the next 15 years, this is an industry standard. This rent control implementation doesn't start until the building is 15 years old, it will not impact real estate finance for new buildings.

My point is when the new building is sold after being built and rented up, it’s value to a buyer is lowered by the rent control.

Re: California Approves Statewide Rent Control

#847

Post by Symmetry »

mikeash wrote: post #813
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…

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.

They aren't unrelated. The more hoops a developer has to jump through to get permission to build anything the more outside returns are required to get people to push to do that. The people who thrive in this environment aren't the most ethical of business people and you'd get more ethical developers if there were clear rules allowing certain things to be built and less outsized returns. But better that than nothing getting built.

Re: California Approves Statewide Rent Control

#848

Post by chrisdhoover »

joshAg wrote: post #159
bzbz wrote: post #85

Earlier quoted context omitted.

So then what’s the point of not being able to make those larger adjustments?

There's certain hot zones in cities where the rent can increase by much greater than 7% YoY. In those hot zones no one's wages are rising at the same rate, so that law is the only thing that prevents the people previously living there from being forced to move even if they would rather stay. Essentially, it's the policy that is in response to all the stories about retirees being forced out of a home they rented for d…

Cops and fire fighters are unionized, protected and well paid. For years the argument for higher pay for cops in Frisco was that cops couldn’t afford to live where they worked. That was effective marketing, cops never wanted to live in the city they all live in Santa Rosa. Perhaps using teachers as an example would be better.

Re: California Approves Statewide Rent Control

#849

Post by refurb »

Jweb_Guru wrote: post #817
refurb wrote: post #766

Earlier quoted context omitted.

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…

Not sure how big an impact that is. There aren't many contractors moving into the area like tech workers. Most of them are locals who have lived here for decades, so either have a rent controlled place or bought a home when prices were more reasonable.

Re: California Approves Statewide Rent Control

#850

Post by aschismatic »

avar wrote: post #727
yojo wrote: post #724

Earlier quoted context omitted.

I have done this twice with the same tenant without complaint or moveout. My tenant was presumably getting basic inflation based increases at work, which offset most of the delta. Unclear on why doing it all at once is worse than doing it regularly and extracting more rent in the period in between. Is the theory that they will be unable to adjust their budget in 60 days?

It's beyond me why people would think this is worse for the tenant. Can I move to CA and be your tenant? You're basically giving your tenants free money. Let's say the rent is $1000/month (for simplicity). That's $12000/yr in the first year. If you increase the rent by 12% ever 4 years they'll have 3 years of paying $1000/month, followed by a 4th year of $1120/month and so on. If you instead raised it yearly by 2.87%…

Not only that, the money saved in the short term (those 4 years without a rent increase) can be allocated however the tenant chooses. It can be frivolous spending, or the tenant can choose to turn it into long-term investments for compounding effect. I love being a tenant in these scenarios.

I think people that are arguing bigger rent increases that happen less often are bad are assuming tenants are stretching their housing budget to the max and won't be able to afford the large hikes. In which case they wouldn't have been able to afford it with smaller increases either.

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