2 ms·

Rents are set by market supply and demand, not arbitrarily.

• ScottBurson 9y ago
  They are. The caveat here is that in the long run, the attractiveness of owning rental property is affected by the ROI, which is affected, to some extent, by property tax rates. A case could be made that Prop. 13 has expanded the rental supply by increasing the returns to property owners. So even though rents at any given time are determined by supply and demand, over time there should be some tendency for the system to self-correct. The question, though, is the magnitude of this effect compared to the other forces acting on supply. I think it's small. The value appreciation being enjoyed by rental property owners greatly outweighs the small increase in property taxes they would pay without Prop. 13.