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California Approves Statewide Rent Control

• stevenalowe 7y ago
  Just curious how the success of such a measure might be evaluated? Or is this pure theatre?
  • roseway4 7y ago
    "... there could be a big effect in rapidly gentrifying neighborhoods like Boyle Heights in Los Angeles, where typical rents on apartments not covered by the city’s rent regulations have jumped more than 40 percent since 2016." A deceleration in rental inflation in neighborhoods such as the above? A reduction in newly homeless populations?
    • rsj_hn 7y ago
      So are you willing to accept that if none of these things happen, and the homeless problems increase, that this measure failed and should be repealed? It's one thing to describe a proposal's political motivations, but quite another to actually declare that you might be wrong in your approach and are willing to define object criteria for success.
• jseliger 7y ago
  Finally, a novel and innovate solution no one has thought of before. What could go wrong? https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-affair.html https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent...
  • tmh79 7y ago
    To be clear, this is a 20 year old article, the literature on rent control has changed a lot since this was written. Basic economic consensus rn seems to be that rent control is a poor long term solution to rising housing costs but a necessary short term solution as the required supply shock wouldn't even be able to happen in the near term even if regulatory barriers are eased due to labor, construction, and land costs in expensive metros and that the anticipated negative impacts of rent control (less liquidity in rental market, higher prices) dwarfed by the impact of lack of supply.
    • melling 7y ago
      It’s a 20 year old story about rent control in San Francisco. So, we are talking about a long term problem? “ A few months ago, when a San Francisco official proposed a study of the city's housing crisis, there was a firestorm of opposition from tenant-advocacy groups. ”
      • tmh79 7y ago
        yes, and there was a huge well funded study a few stanford professors conducted of rent control in SF in 2018 that is a much more accurate study of the affects of rent control policies. "Rent control appears to help affordability in the short run for current tenants, but in the long-run decreases affordability, fuels gentrification, and creates negative externalities on the surrounding neighborhood." To be clear, the rent control studied was a yearly rental increase of ~2/3 CPI, or 1-2% annually, while market rents increased at about 7% annually since the 50s in SF. The proposed policy is a rent cap of around 8%, which is higher than the aggregate rent increase in the SFBA over the past 30 years or so (also 7%). This isn't a rent control law as much as it is an anti gouging law, disallowing landlords from increasing rent 10-20% YoY, which happens to maybe 1-3% of the market. https://www.brookings.edu/research/what-does-economic-evidence-tell-us-about-the-effects-of-rent-control/ https://www.brookings.edu/research/what-does-economic-eviden...
        • dublinben 7y ago
          It sounds like this is a poor solution for a non-problem then.
          • tmh79 7y ago
            its a great solution for people who's landlords are price evicting them by raising their rents by 25%. This law will allow people 2-3 years to find an alternate living arrangement compared to the 30-60 days they have today.
    • Kalium 7y ago
      If I were to guess, this bill will likely be positioned as a long-term solution and the other bit where housing supply is addressed will go largely neglected. Which is, coincidentally, an apt summary of San Francisco's housing policy for the past twenty years.
• tmh79 7y ago
  The real solution here is to build more housing, as high prices are a market signal of a shortage. While I support more unit creation more than I support rent control, in the current crises we need both. What I still can't get over is how much of CA land use politics is pure generational warfare, the olds vs the millennials, and it seems that the millennials are finally starting to win some fights.
  • pitaj 7y ago
    Rent control deters the building of more housing. It's literally part of the problem.
    • cryptoz 7y ago
      Can you explain what you mean? I don't follow. Rent control is a bandaid that provides a level of stability to the lower classes. They can live without daily anxiety of being rudely defacto 'evicted' by radical, surprise rent increases. This enables a society to continue to grow and function at a somewhat more sustainable pace, letting cities and counties grow without intense boom-bust and crash cycles, with a more stable working class, and therefore a long-term sustainable housing construction market. I understand that rent control is no grand solution, and that we need more houses built - but I do not understand how rent control is part of the problem. The problem starts and ends with personal and corporate greed. The rent control is an attempt at constructing a sustainable, stable society from the ashes of an out-of-control capitalism that is leaving most of its consumers in the dust. Rent control is not part of the problem and would not deter rational actors from building additional housing - I believe it would increase it.
      • pitaj 7y ago
        Rent doesn't get changed daily, only when a lease is up for renewal. Rent control deters the creation of new housing. This reduce in supply raises the price, which is bad for the poor - exactly the people it is meant to help.
        • 7y ago
• souprock 7y ago
  Oh joy, politicians trying to get votes from the economically unaware. If you thought there was a housing crisis, just wait. It's going to be crazy. Here is a different article, more tolerant of private browsing: https://www.forbes.com/sites/adammillsap/2019/09/04/more-rent-control-in-california-will-make-housing-problem-worse/ https://www.forbes.com/sites/adammillsap/2019/09/04/more-ren...
  • tmh79 7y ago
    Limiting rent increases to max 8% (what this bill encodes) is only going to affect maybe 1-3% of lease agreements annually. This isn't about vast controls of housing stock, it about limiting 20% rent spikes people experience.
    • pitaj 7y ago
      At the cost of further disincentives to actually building more housing. What a great idea. Every field of economics agrees that rent control causes harm to the people it's supposed to help.
      • tmh79 7y ago
        this doesn't impact new buildings (only buildings older than 15 years old), its impact on housing creating is miniscule compared with the regulatory barriers of zoning and cost barriers of impact fees and construction costs.
        • 0xEFF 7y ago
          The value of a new building is lower because it’s expected future value is lower.
          • tmh79 7y ago
            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.
• bubmiw 7y ago
  Vote pro housing centrist fiscally right republicans , we need a more diverse ca congress
  • raldi 7y ago
    "As in previous polling, the law [to dramatically increase the housing supply] is more popular with Democrats than with Republicans, with 76 and 55 percent support respectively." https://sf.curbed.com/2019/5/17/18629809/sb-50-housing-transit-poll-crisis-ca-yimby https://sf.curbed.com/2019/5/17/18629809/sb-50-housing-trans...
    • cybersnowflake 7y ago
      Yeah, thats why we're seeing oodles of houses now that the Democrats practically control all of california. Are you trying to argue that the current one party rule is a good thing?
      • raldi 7y ago
        I didn't say that. But the fewer Republicans there are in Sacramento, the better the chances of SB-50 (or something like it) getting passed.
        • cybersnowflake 7y ago
          Ummmm...you do realize the Dems hold supermajorities in both houses right? Do republicans have psychic powers they're using to control the Dems now?
          • raldi 7y ago
            A single state senator (one of the few Democrats who opposes SB-50) blocked the bill from being voted on. The supermajority was irrelevant.
            • 7y ago
• mc32 7y ago
  I wonder if they put in measures to make permitting easier for builders so we can actually get more housing built? I guess we’ll find out in some years whether rent control entices builders to build more or if it will depress the market for building (as it usually does) such that at some point we see people (families) bunking together ala Soviet housing solutions to demand.
  • Kalium 7y ago
    I know people doing that in Berkeley already.
    • pkaye 7y ago
      Berkeley and Oakland are two places that have outrageous transfer taxes when you buy/sell your house. Its 15x what it is in most other cities in California. Basically more impediment to owning a home.
      • Kalium 7y ago
        1.5% is definitely high, but I have a difficult time believing that it's a larger impediment to owning than the generally high price of property due to lack of supply.
        • pkaye 7y ago
          Its a lot to come up with with when you are struggling for a downpayment on your first house.
          • mc32 7y ago
            It is a lot in some ways (it’s a remodel, or repair, etc.) but you’re not going to buy your fist home in Berkeley if you’re working with a tight budget. People are paying cash in some instances.
• rubicon33 7y ago
  Ah, because it worked so well in SF to ease housing prices! So why don't we expand the program? Will never cease to amaze me just now inept politicians are.
  • roseway4 7y ago
    SF's (and CA's) housing crisis has it's roots in NIMBY-ism and property tax policy. Both are intertwined and share proponents. Rent control is a bandaid, which isn't to say it's not needed as an emergency measure.
  • mc32 7y ago
    This reminds me of the approach dictators have to issues. Issue an edict or decree making the problem itself illegal. Problem solved!
    • fuzz4lyfe 7y ago
      Sparrows are eating a great deal of the produce grown in California, let's remove them to end food insecurity.
      • mc32 7y ago
        Exactly! The “Four Pests Campaign” (除四害) aka the Great Sparrow Campaign (打麻雀运) agree. [1]https://en.m.wikipedia.org/wiki/Four_Pests_Campaign https://en.m.wikipedia.org/wiki/Four_Pests_Campaign
  • phil248 7y ago
    This program is vastly different than the program you are criticizing, in case you actually care.
  • baby 7y ago
    It helps avoiding having one’s rent increase insanely and having to move out.
  • travbrack 7y ago
• chaostheory 7y ago
  It doesn't help the housing crisis when the core problem is severe lack of inventory. It will help politically though since this helps seniors, the most reliable voting bloc. Pricing controls will just make it worse for everyone else, especially younger generations and families.
• tusantrey 7y ago
  hope that
• bhauer 7y ago
  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 and when necessary due to market conditions, so it's smart to just steadily increase rent at the maximum rate permitted. If I agree, I believe the result will be more profitable for landlords, and hurtful to tenants. The real solution to a housing problem is to incentivize and facilitate the building of more housing. ADUs, relaxed zoning, reduced building regulations, reduced fees for permitting, etc. I fear rent control is actually going to do more damage to the housing market than good.
  • gregs1986 7y ago
    Landlords who choose to increase rents at the maximum rate permitted each year do so at the risk that they will be undercut by competing property owners who do not do so. Given this, I think that your property management company is offering you bad advice. Most landlords already increase rents at the maximum rate that the market will bear. Capping annual increases at 7% just ensures that in a year when the market would allow landlords to get away with increasing rents by over 7%, they won't be able to do so. I do not follow when you say that the strategy of increasing rents by the maximum amount permissible is necessary "because larger adjustments cannot be made if and when necessary due to market conditions". In what scenario would larger adjustments be necessary? If you made a viable investment in a property and are currently renting it out, wouldn't rent increases just need to equal inflation in order for you to maintain the same level of profitability? Sure, increasing by more than inflation allows you to increase profits, but I hardly see why maximizing profits should be seen as a necessity---especially when it comes at the cost of pushing people out onto the streets.
    • sologoub 7y ago
      That’s how large corporations behave, but what the OP is voicing is a common sentiment for smaller investors or people doing landlording as a side gig or housing hack to financial independence. If the market can support it, these laws guarantee the maximum increase. If the market cannot, well you are already at the top of the market aren’t you? So no benefit here.
• DevKoala 7y ago
  Rent control is abused in SF. Every engineer I know, who has been living in SF for over 5 years is currently paying an absurd amount compared to their monthly income. I even sub-leased an apartment from a friend who took off a sabbatical, and he didn’t want to lose his rent control. I don’t know who rent-control is supposed to benefit, but it seems broken. Eventually these places end up in the hands of people who know how to game the system. Just build more housing and the incentive will go away.
  • baby 7y ago
    Abused? When I moved here I heard horror stories of rent increasing suddenly. I did what any sane person would do. I looked only for rent controlled places before moving in.
    • neonate 7y ago
      Certainly it gets abused. People keep their apartments even though they're not living in them, because otherwise the rent would go up. I know someone who did that for 20 years with an apartment on Russian Hill. She would sublet the place for a year or two and then come back.
      • nerfhammer 7y ago
        I know several people that do that: luck into a sweet rent control deal even though you were wealthy enough to afford market rates anyway, never, ever give up the lease even after you've essentially moved away anyway and then sublet the unit out at market rates yourself. I don't know the same people that get mad at a corporation for allegedly "cheating the system" in some way don't find this sort of thing offensive, but weirdly they don't seem to at all.
        • pcwalton 7y ago
          > I know several people that do that: luck into a sweet rent control deal even though you were wealthy enough to afford market rates anyway, never, ever give up the lease even after you've essentially moved away anyway and then sublet the unit out at market rates yourself. If this is in San Francisco, report them to the landlord or the city so they can be evicted. Tenants who abuse the system worsen the housing market for everyone.
• baby 7y ago
  I’m surprised to read negative opinions about rent control. The alternative to rent control is having one’s rent double next week. I’m amazed that rent control was not a thing!
  • phil248 7y ago
    Most rent control implementations are far too restrictive and create severe market distortions that can last generations. This one, thankfully, is not, and the allowable increases mean units are unlikely to get too far out of whack with market rates.
    • cybersnowflake 7y ago
      The market's too high, lets implement market controls to keep prices at the market.
  • Mountain_Skies 7y ago
    Sorry if this comes off snarky but perhaps others posting here can see past next week. All too often these quick fix Band-Aids end up causing more problems in the long run while also spreading the problem far beyond where it had previously been contained.
    • baby 7y ago
      Sure. In the mean time I’m not renting your place if it doesn’t have rent control. And anybody who does is insane.
      • macinjosh 7y ago
        Market solutions in action in these last 2 posts!
        • baby 7y ago
          The market solution is rent control + more housing. We got one.
• dawhizkid 7y ago
  For those living in SF, this significantly expands the number of eligible apartments for rent control. Right now only multi-unit homes/apartment complexes built before June 1979 have rent control. Now everything (except single family homes/owner occupied duplexes) built within last 15 years on rolling basis is eligible. Given how slowly SF builds housing, the fact that anything built 2004 and earlier is eligible basically means almost everything except new high rises.
  • deleted 7y ago
    [deleted]
• bgorman 7y ago
  One thing I have noticed as I have become more aware is that many of our laws are aimed at trying to freeze a moment of time, often by piling on contradictory policies on top of each other. Subsidize home loans Ban new construction Ban rent increases It is no wonder why housing prices/rents continue to rise in these markets. In software engineering sometimes conclude that a rewrite is necessary. How can we completely rewrite our regulations?
  • baby 7y ago
    So are you saying that landlord should be able to double your rent like that?
    • pitaj 7y ago
      Prices should increase in the case of increased demand. Prices must increase in that case if you want the supply to increase, which is the only way to actually meet demand. It's how the market works ffs.
      • cryptoz 7y ago
        The market is not working when actors frequently intentionally cause trauma and unexpected financial and life emergencies to tenets. The 'market' is not some divine thing that cannot go wrong; rather, trying to make the 'market' work is exactly why we have runaway climate change and incredible wealth disparity that's causing unnecessary pain and upheaval in the US today. There's no need to swear at people, this is an interesting and complicated topic with many valid points to debate.
        • pitaj 7y ago
          The reason the market is not working is because of onerous regulation by the government in the first place.
          • cryptoz 7y ago
• ahelwer 7y ago
  Perhaps an alternative real solution to the housing crises is the abolishment of professional landlords themselves. Why should we support a system where people can own many properties, each feeding them 1/2 of someone else's paycheck? Public-owned housing is the future. It works in Europe and it can work here. Treating housing as an investment vehicle is fundamentally incompatible with the ideal of housing being affordable. How can you possibly have affordable housing in a system where housing increases in value (cost) at 5% a year? Who could possibly afford it after several decades of compound growth?
  • pitaj 7y ago
    > Public-owned housing is the future. It works in Europe and it can work here. Public housing has failed time and time again in the US, so citation needed.
    • dantheman 7y ago
      Public housing isn't perfect in Europe - it leads to stagnant cities and the inability to redevelop areas as they change.
  • mc32 7y ago
    So how is housing going to get built? Are you suggesting that the state have a monopoly on buildings and housing? What process do we use to begin the expropriations and confiscations?
    • ahelwer 7y ago
      Start small. People can own one, maybe two housing units (everyone loves a good cabin). Get rid of REITs. Expand building of public housing; don't means-test it, it's available to everyone. Means-testing is how you get impoverished housing projects. Universal public goods have a habit of sticking around and getting funded.
      • refurb 7y ago
        Where do you plan on raising the funds to actually build housing? Unless it’s economically attractive to invest in real estate, the money won’t flow into housing. Sure you could have the govt do it, but based on their track record I don’t assume it’ll be done very efficiently.
• bradlys 7y ago
  Prop 13 but for renters now too! I wonder if this was pushed by landlords. It's easier to push a 5% hike in rent every year than random 10-20% hikes. Especially in a nearly tapped out market. The prices are already astronomical and the home prices are fluctuating/faltering. In 10 years, the rent will be 63% higher. And that's after inflation. Your $3,000 1-bedroom will be nearly $4900 after 10 years. Unbelievable. Will FAANG prop up landlords by adding 5-10% TC increases every year? Startups certainly won't. They stopped increasing comp a few years ago.
• skybrian 7y ago
  Before anyone gets too excited, the cap is apparently 5% plus inflation per year [1] which seems pretty mild? (For comparison, Oregon's rent control is at 7% plus inflation, and San Francisco varies but is below 3% [2].) [1] https://la.curbed.com/2019/9/10/20857225/california-rent-control-bill-1482-approved https://la.curbed.com/2019/9/10/20857225/california-rent-con... [2] https://sfrb.org/topic-no-051-years-annual-allowable-increase https://sfrb.org/topic-no-051-years-annual-allowable-increas...
  • pcwalton 7y ago
    San Francisco is 60% of inflation, which is the cause of all the problems. It's not even in the same league.
• pkaye 7y ago
  What is the historical rate of yearly rent price increase in the bay area?
• mabbo 7y ago
  It seems more and more clear that California, or at least those in power in California, don't want to fix the housing problem. Because if you're a land owner, the only problem is people trying to spoil the good times. All this VC money pouring into the pockets of tech employees, and a larger and larger fraction going straight into landlords' pockets. What's not to love? If actually you want lower home prices, build more homes. Build tall (curb height restriction rules); build everywhere (no more minimum parking rules); build immediately (reduce complex planning permissions for developers). Just build more. Supply and demand will decide the price of most goods, and housing is no exception. Rent control does not address the underlying issues that cause prices to rise- lack of supply and growing demand.
  • seph-reed 7y ago
    Are there really not enough houses? I've always been under the impression that there exists more than enough housing, but a lot of it is empty.
    • mabbo 7y ago
      Not enough to fix the housing problems CA has. Not nearly. And if that's the problem, tax empty homes. But even then, even if there are empty homes, building more will still fix the problem. Let those foolish owners leave the homes empty- we can build more anyways.
      • seph-reed 7y ago
        I really dislike the notion of clearing more land and putting up more cookie cutter houses and apartments for the sake of saturating the housing market in order to get people to rent for reasonable prices.
        • mixmastamyk 7y ago
          Density is preferred, ie clearing parking lots downtown, not open spaces in the country.
        • 7y ago
• creato 7y ago
  > The bill limits annual rent increases to 5 percent after inflation and offers new barriers to eviction The limits to rent increases seem like they are enough to avoid significant short term spikes, while keeping up with market rate rents. The biggest problem with some existing rent control (like in SF) is that the limit is so low that rents can't keep up with market rates even over decades, which is clearly terrible economic policy. Maybe this limit is high enough that this won't be as much of a problem for the rest of California.
• RcouF1uZ4gsC 7y ago
  AirBnb really changes the dynamics of rent control. If you rent to someone in a hot market, you are entering a long term agreement with less flexibility in raising the rent in accordance with market rates. In the past, when faced with rent control, the landlord had to either accept it, or let the property sit vacant. Now, with AirBnb, landlords have a much more viable option. They can put the property on AirBnb and have the flexibility to charge what the market will bear. I foresee that as a consequence of this law, there are going to be fewer rentals and more AirBnb properties in California.
  • usaar333 7y ago
    Agreed if there were no other side effects. However, since both NIMBY owners occupying their home and renters hate AirBnB, it's quick to imagine anti-airbnb legislation (like what SF already has) quickly passed if the tide turned.
• dangjc 7y ago
  It's 5% rent increase, not the 1-2% seen in SF and NYC. Properties don't typically increase in rent that much. This isn't likely to lead to the absurd $1000 studio apartments in Manhattan.
• WheelsAtLarge 7y ago
  I agree that at this point rent control is a good option. Housing prices are going up so fast that rents need to go up too. The higher rents then give an incentive for house prices to go up. It becomes a cycle for both to increase. But rent control by itself is not enough. The other leg of the solution is to increase housing via governmental incentives. Otherwise, rent control will make the situation worse since there is no incentive to increase housing.
  • olliej 7y ago
    The problem is that increasing rent has no restraint in CA. When a landlord increases rent by X% they are saying that the value of the property has increased by X%. Unfortunately businesses and landlords got together to push (and pass) prop 13 which amended the CA constitution to prevent assessed property value from increasing at more than 2% per year. That means any time a landlord increases rent by more than 2% they are benefiting from incorrect taxable valuation. Because property taxes cover the infrastructure that supports homes + buildings (the roads, police, firefighters, teachers, etc) they are directly offloading the costs of those services onto people who don't own property: The people who don't own property then have to (in addition to insane rent increases) pay higher income taxes, in order to support those services the are functionally there to benefit the undertaxed properties.
    • refurb 7y ago
      The cost of being a landlord is much more than just property taxes.
• neonate 7y ago
  http://archive.is/5jIXP http://archive.is/5jIXP
• johngrefe 7y ago
  You hear that? That's the sound of my home rising in value as supply to compete against it is reduced. Very cool CA!
  • baby 7y ago
    Hear this? These are the tenants that would have had to move out because they made the mistake of not moving in a rent-controlled place.
• thaumaturgy 7y ago
  HN: According to the simple laws of supply and demand, housing prices would go down if we just increased supply to meet demand. Also HN: These rent controls are just going to make the housing problem in this state even worse. I don't get it. If the situation were really as simple as the first statement implies, then if this particular law was really going to have a catastrophic effect on housing, that would just mean people would leave and demand would go down and prices would fall, right? Is it possible that California's housing problems are maybe a little more complex than a few out-of-context pull-quotes from Wealth of Nations would suggest?
  • quixoticelixer- 7y ago
    Rent control decreases the supply of housing
    • cryptoz 7y ago
      This phrase is repeated frequently throughout these comments but never with an explanation. I think the opposite of that phrase is true; that in these circumstances, rent control is part of what will enable an increase in the supply of housing. The inequality gap must be lessened for there to be sustainable growth in the housing construction market; this rent control is part of that.
      • kec 7y ago
        Rent control decreases the liquidity of the rental market because anyone currently renting is strongly incentivized to stay put in order to keep their low rate.
        • cryptoz 7y ago
          I still don't understand this. Most people are motivated by a lot more than the desire to pay less rent. Jobs change, people move, they go upward in their careers, etc. Is there any evidence to suggest that rent prices are actually "strong incentives" to not move? I think this isn't true. I think people are much more motivated by their social circles, their job prospects, upward social mobility by working hard, or starting a business, etc. There are so many factors that go into choosing where to live that I find it difficult to believe that simple rent control like this would "strongly incentivize" people at large to not move. Especially in California. Anecdotally, I have voluntarily left 5+ rent-controlled apartments without even a thought to them being rent controlled and my next place being unknown. It simply has not mattered, because the amount saved by rent is often far less important than the other aspects of life.
• diogenescynic 7y ago
  This is only going to make the housing problem worse. They need to remove all the onerous zoning laws and restrictions of building taller buildings. It’s a supply problem.
• newintellectual 7y ago
  These morons never learn. There's now a guarantee both of even bigger housing shortages and lack of maintenance with existing housing.
• andymoe 7y ago
  Ok, now there should be very little reason or objection from tenants rights folks not to pass SB-50 next session to make it easier to build density near transit. https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200SB50 https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...
• lettergram 7y ago
  I’m sorry, I think it’s pretty odd when you can’t set the price for your property being leased. If you like better rates, negotiate, fix zoning, or buy. If you can’t do any of those, you should leave. The rest of the country is really not that bad.
  • blisterpeanuts 7y ago
    California already has a net outflow of people, especially middle class. This is offset by immigration and undocumented migration from Mexico so that the state's population actually continues to grow. But most of the newcomers are not affluent, will almost certainly rent rather than own, and tend to live together in large family groups like 10 people in one apartment. This is going to keep putting pressure on the housing market -- people need a place to live, they can't afford to buy, so the powers that be, in their wisdom, decided to just legislate limits to the price, hoping no one would notice all the unintended consequences that will definitely happen.
• foota 7y ago
  California hurt itself in confusion
• dev_dull 7y ago
  > For a quarter-century, California law has sharply curbed the ability of localities to impose rent control. Now, the state itself has taken that step. Yep. Because communities shouldn’t be able to decide for themselves. Make it a state law. I’m just glad that (for now) these central planners are limited to a state economy and are not in Washington. Great news for property owners in CA. Studies show over and over rent control legislation further restricts supply[1], so the existing housing will become even more valuable! 1. https://web.stanford.edu/~diamondr/DMQ.pdf https://web.stanford.edu/~diamondr/DMQ.pdf
• fuzzieozzie 7y ago
  This rent control is a result of populism - plain and simple. Rent control works for those already renting - and that is about it! Everyone else suffers: those moving to the area, the landlords and those wanting to build more.
  • baby 7y ago
    Rent control is a thing world wide. It’s not populism. It’s the same concept as free healthcare or free education. It’s here to ensure people can still find affordable places to live. You can’t make everything an investment if you want a healthy society.
    • forrestthewoods 7y ago
      > It’s here to ensure people can still find affordable places to live. Rent control does the opposite. It radically reduces choices and increase on price on people looking for a place to live. Rent control chooses a small handful of existing renters to be winners. And it makes everyone else a loser. Except it's also shitty renters, because it traps them in place. Sure it gives them a home somewhere. But it denies them opportunity to move to another city, or even the other side of time, to pursue opportunity.
      • baby 7y ago
        That’s FUD. It works great in other countries and if strict can give equal chances to tenants no matter your background.
        • bdcravens 7y ago
          Anything you can cite?
        • statusquoantefa 7y ago
          The US economy is the driver of the world economy, and has been for quite some time and it's why we see so much innovation of entire new sectors in the US. (Yes, you can see sustained higher growth for a time in some other places, like China, because starting from a lower level allows for piggybacking in the same way the US economy grew with regard to Europe in the 19th century.) The reason mature European economies do not come close to entrepreneurship and the rate of innovation in the US economy is because widespread govt regulation and taxes across the board stifles economic options for investors. It is simply not true that housing and employment laws in other places "works great", it's a tradeoff, and if the US follows that path the world will become a less good place for everybody because Europe and Asia will no longer have an innovative capitalist petri dish to follow and leverage from.
• joshfraser 7y ago
  When you mess with supply and demand there are always unintended consequences. I'm currently a beneficiary of rent control and am lucky to be paying below-market rate for my apartment. It would be nice to move to another neighborhood, but it would be dumb for me to give up the savings. My neighbor pays 1/10th of what I pay for the same size apartment. Neither of us are leaving anytime soon. This is why there's no liquidity in the SF housing market. They're trapped and live in constant fear of being evicted. On a philosophical level, why should my landlord be subsidizing our housing costs? If we want to make housing more affordable for low-income families, surely there's a more equitable way to finance it.
  • baby 7y ago
    Same. I’m in a rent control place and I would never ever make the mistake of moving in a place that can arbitrarily increase its rent. I fee bad for people who didn’t have a choice and will probably have to move out at some point because of that :/
    • bdcravens 7y ago
      Do you feel trapped at all? My understanding is that rent control only affects increases. So if the area you live in becomes less desirable, you're likely to face a choice of "starting over" and paying market rate, or sticking with your current living arrangement due to not wanting to lose that rate.
      • baby 7y ago
        I feel trapped living in SF yes. You can’t purchase anything because it’s too expensive and if I want to move to a different place next year probably the prices will have increased.
  • hindsightbias 7y ago
    Why should we subsidize your landlord, paying on a Prop 13 valuation 1/10th the market rate? None of them are suffering.
• kevindong 7y ago
  In NYC, rent stabilization laws have long had the concept of "preferential rent." Rent stabilized apartments have a limit to how much can be charged for them (called the "legal regulated rent"). That amount can only be adjusted (on a percentage basis city-wide) by a government board every year and by a handful of other exceptions (historically: improvements to the building/apartment, major repairs, new tenant in the unit---however some of these exceptions were recently eliminated). The legal regulated rent is sometimes hilariously more than what any sane person would pay for a particular apartment and landlords would never be able to get a tenant at that price (for reference, as an NYC renter, my preferential rent is ~26% less than the regulated rent). So in comes the concept of "preferential rent": a price below what the landlord is legally entitled to charge. That preferential rent is in effect for the duration of the lease signed. With the recent rent stabilization reforms in New York state, renewal leases on rent stabilized units will only be able to charge the preferential rent plus that year's percentage increase (as decided by the government board). Previously, landlords were allowed to raise the rent all the way up to the legal regulated rent plus that year's percentage. In other words, before the recent reforms, landlords had a strong incentive to keep the legal regulated rent as high as possible since they can always raise rents upon renewal to that value. Previously, preferential rents were truly temporary and the landlords had no obligation to maintain them upon renewal. Now the only way to raise the preferential rent to the regulated rent is if the current tenant vacates the apartment and the landlord finds a new tenant, on whom they may charge any value up to the regulated rent. It's difficult for landlords to kick out rent stabilized renters since those renters are generally entitled to renewal leases, but one simple tactic before was to just raise the rent from the preferential value to the regulated value. With the recent reforms, this is no longer a viable tactic.
• wahern 7y ago
  Rent control is about housing security for existing tenants. Even a perennial 7% increase can be better than discovering your rent will jump 300% next month. But rent control in the absence of housing supply increases will undoubtedly exacerbate the problem, and at a steady 7% inflation would also slowly price out existing tenants. Many parts of California already had rent control that was based on building age. Theoretically this could have been the best of both worlds--improved housing security for the majority of existing tenants, but an incentive for new construction, which would be excluded from rent control. Of course, the price of housing security would be marginally higher rent prices up front, but in the real world that's a reasonable tradeoff. Security and predictability are at the top of most people's hierarchy of needs, whether they admit that or not, and regardless of whether they'd willing pay for it. (Healthcare being a great of example of people predictably making irrational decisions, requiring government intervention to mitigate the consequences.) Unfortunately, new construction in California is extremely costly for entirely unrelated reasons. I think most developers in California would have bargained statewide rent control for development as-of-right. That California permitted rent control again without doing anything substantive about lowering the costs of development is inexcusable. I'm sure lawmakers told themselves that they were buying the acquiescence of NIMBYs and local control advocates regarding future development as-of-right legislation, but they're just lying to themselves.
  • pcwalton 7y ago
    > I think most developers in California would have bargained statewide rent control for development as-of-right. In fact, that was more or less the deal—until Anthony Portantino torpedoed it.
  • icelancer 7y ago
    >> But rent control in the absence of housing supply increases will undoubtedly exacerbate the problem You can virtually guarantee that rent control and NIMBYism go hand in hand.
• raldi 7y ago
  This is a misleading headline. The problem with rent control is that it allows many well-off individuals to collect ever-growing rent subsidies, to the point where after 10 or 15 years their rent is a joke compared to what their (often less-fortunate) neighbors are paying. This bill does not have that flaw. Crucially, it sets the maximum allowable rent increase to be well above, not below, the historic long-term rent curve. Over time, in the long run, rents will approach market-rate. And that makes all the difference.
  • spaceflunky 7y ago
    What you're ignoring is voters resoundingly rejected Prop 10, the rent control measure that went on the ballot LESS THAN ONE YEAR AGO. Which was pretty close to AB1482. Yet, despite the majority of voters saying no, the legislature felt it necessary to push forward with legislation anyways. Above all else, the government ignoring a direct vote from the people is most disgusting of all and reason enough for why this should be vetoed. https://www.sfchronicle.com/politics/article/Prop-10-Califor.. https://www.sfchronicle.com/politics/article/Prop-10-Califor....
    • raldi 7y ago
      AB-1482 is nothing like Prop 10.
• sologoub 7y ago
  Meanwhile in the booming Seattle: https://www.seattletimes.com/business/real-estate/amid-building-boom-1-in-10-seattle-apartments-are-empty-and-rents-are-dropping/ https://www.seattletimes.com/business/real-estate/amid-build... > “I’ve been renting in Seattle since 2014, and this is the first time where I felt like I have negotiating power,” said Kjerstin Wood, who went apartment hunting with her partner last weekend and got bombarded with offers like free parking that she plans to use to play landlords off one another. “For the most part, everyone we’ve met with has been very eager to get us to apply right then and there.” > The trend is likely to continue: The apartment-construction surge that began earlier this decade is continuing at the same brisk pace, outpacing demand for rentals even as the city’s population booms. And a 2017(!) article talking about vacancy rate in Downtown LA that has seen a huge building boom (no not nearly enough to really depress prices, but enough to stave off the meteoric rise): https://www.scpr.org/news/2017/09/15/75615/in-high-vacancy-dtla-landlords-offer-move-in-speci/ https://www.scpr.org/news/2017/09/15/75615/in-high-vacancy-d...
• phil248 7y ago
  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 of years, at most. Whereas the laws we love to hate result in units getting stuck far below market for decades or even generations. The difference with this law is that a 20% rent hike will take 3-4 years to be implemented instead of 30 or 60 days. That difference, while not enough to allow all families to remain in place, will allow families time to adjust or move within a reasonable time frame. This law is different. If you want to complain about rent control in SF or NYC or elsewhere, have at it, but know that most of your complaints do not apply to this law.
  • throwaway5752 7y ago
    This should be the top comment. The upshot is that if you are a family that is renting, you won't be forced out of your home on short notice. Try - for a moment - to imagine you are living close to your maximum expenses and your landlord increases your rent by 20% next year.
    • m463 7y ago
      This happened to a family I know, except it was 50%. The building was purchased, "refurbished" and the rent was reset to a very high number.
      • optimusclimb 7y ago
        > The building was purchased, "refurbished" and the rent was reset to a very high number. And if someone was willing to pay that number, then that's what the place was worth.
        • anthony_doan 7y ago
          That doesn't help the housing issues... which is the whole point of this article and the comment your replied to. While what you're saying isn't false it's not going to solve anything. Unless you don't think there is a housing issue.
• archie2 7y ago
  Imagine being suprised when big-government pinko democrats do big-government pinko democrat things and then continuing to elect them decade after decade while you hand them your livelihood on a silver platter. Absolutely shocking I say. Enjoy being a "3rd world country" California. Seriously...are Californians brain damaged or something? What is in the water there?!
• chank 7y ago
  We're already at unsustainable YoY rent increase levels in many places IMO. I for one have no problems moving if my LL decides to increase my rent ANY percentage. I know that over the course of my next lease I will always be able to come out ahead by hundreds if not thousands of dollars for the same price I'm currently paying and for sometimes better place.
• bcrosby95 7y ago
  Things like this can make sense in the short term, but there needs to be sunset provisions to force a long term solution. I'm not really sure what that would look like though.
• rayiner 7y ago
  As a Marylander, I’m okay with this. Let California destroy itself. Better for the rest of us.
  • pcwalton 7y ago
    An allowable increase of 5% per year plus inflation that expires after 10 years and exempts single-family homes and new construction isn't going to destroy anything. That amount is in line with the amount market rate rents have been rising on their own. We're not talking San Francisco rent control here.
• inlined 7y ago
  I recently bought a house in CA. Knowing this legislation was pending I didn’t get roommates. I’d rather AirBnB than be forced into rent control. That’s now two rooms off the market.
  • pcwalton 7y ago
    Did you buy a single-family home? The bill exempts single-family homes.
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• blisterpeanuts 7y ago
  Do statewide rules even make sense, in such a large state as California? The housing markets in the rural east and north surely are not identical to the housing market in the Bay area, San Diego, and LA. Even Sacramento's rentals are an average $1000 cheaper than the SF area.
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• c3534l 7y ago
  What hope do we have for self governance when the poster child of bad economic regulations, universally derided for having the opposite effect for which it intends, can still be implemented? Are governments incapable of learning? Are we doomed never to make any political progress on policies that are counter-intuitive, even when there is overwhelming agreement and empirical evidence of its harm? This makes me cynical of climate change. Even if we do achieve a carbon-neutral lifestyle, who's to say the next generation of politicians won't make the same arguments being made today against stopping climate change?
• macinjosh 7y ago
  It is fun watching the Democrats running California to self pwn themselves over and over with idiotic legislation like this.
• claudeganon 7y ago
  The real solution is to decommodify housing. >The landlords, like all other men, love to reap where they never sowed, and demand a rent even for the natural produce of the earth. -Adam Smith
  • wanderer2323 7y ago
    >decommodify housing genuinely curious what would that entail, in practical steps
    • freehunter 7y ago
      My guess is to implement a higher tax on properties where the owner does not live on the property, or put a limit on how many rental units a landlord can own. Something like that could dis-incentivize large tracts of rental properties.
      • nerfhammer 7y ago
        How does that create an abundance of housing?
    • claudeganon 7y ago
      Look into the history and development of Vienna’s social housing system as a start. 62% of people live in housing under this scheme: https://m.huffpost.com/us/entry/us_5b4e0b12e4b0b15aba88c7b0 https://m.huffpost.com/us/entry/us_5b4e0b12e4b0b15aba88c7b0
    • mythrwy 7y ago
      Increased land or property taxes (while eliminating income taxes) might help. Make it undesirable to sit on large amounts or expensive property, reduce the propensity to resell for gain and put a stop the home ownership casino which in some ways looks like bitcoin speculation over the past two decades. Give credit for primary residence (and or legit Ag or industrial use, but maybe collecting land taxes from industry is preferable to capital gains even.). After these deductions tax like crazy for the privilege of squatting on what I think truly is, by nature, communal social property (land). That should dampen down the speculation and return prices to earth while encouraging primary single residence ownership. Oh, and stop inflating financial bubbles that distort the price of a basic human need. For starters.
• rcpt 7y ago
  Between this and prop 13 it might be easier to just build a wall around the state.
• DoreenMichele 7y ago
  Well, more bad and broken policy coming out of the state that has a long history of borking its housing policy. This does nothing to fix the problem. They need to build more housing. A lot more housing. But, no, we can't do that. That makes too much sense or something. For people looking for solutions, here is a link to a supposedly suppressed Housing Development Toolkit put out by the White House in 2016: https://www.whitehouse.gov/sites/whitehouse.gov/files/images/Housing_Development_Toolkit%20f.2.pdf https://www.whitehouse.gov/sites/whitehouse.gov/files/images...
• deleted 7y ago
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• dgzl 7y ago
  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 government to come in and authoritatively force everyone into an unnatural framework, which is pure ignorance.
  • lawnchair_larry 7y ago
    That’s definitely the general mentality in Portland, so I’m not surprised.
    • dgzl 7y ago
      I fear Portland is close to some kind of serious breakdown, and I feel like they're not going to learn anything from it, only blame others who don't vote for hyper-progressive laws.
  • icelancer 7y ago
    >> From my experience, people who support heavy laws, regulations and taxes don't spend enough time considering potential side effects. This is basically everyone. On today of all days, we see what the PATRIOT ACT USA has done to this country decades later, and people are quick to point that out but not consider it for laws that have not yet passed.
  • jacobolus 7y ago
    YMMV, but in my experience people who use phrases like “Big Daddy government” and accuse everyone else of “pure ignorance” are typically not arguing in good faith.
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• outside1234 7y ago
  The only solution to higher rent is to build more, a LOT more, housing. The rest of this is just distortion on the economy that will lead to all sorts of bad outcomes
• antman 7y ago
  People will cry foul this will drive costs up in the long term. But we are far removed from free market economics since cities have put restrictions in building new housing thus keeping real estate prices artficially high. Now the state puts rent cost restrictions that will drive the prices of real estate down. Rent control seems to be used as a means to an end rather than a goal on itself because politics.
• kissickas 7y ago
  > California lawmakers approved a statewide rent cap on Wednesday covering millions of tenants, the biggest step yet in a surge of initiatives to address an affordable-housing crunch nationwide. As though California is at all symptomatic of the problem of providing affordable housing in the rest of the nation. They might as well say it's the biggest step taken in an affordable-housing crunch globally. A whole article about California's housing problem without a single mention of Prop 13, though? That's some impressive willful ignorance.
  • rcpt 7y ago
    > A whole article about California's housing problem without a single mention of Prop 13, though? It's insane how many of these there are. I even know someone who recently bought a townhouse who didn't even know what prop 13 was.
• rackad 7y ago
  This is a good idea. I don't know about the state of California. I have lived in NY and rent was crazy. Since I signed my lease in the early 90s, I was paying peanuts compared to my "new" neighbors who used to pay twice the amount.
• ozzyman700 7y ago
  I think Henry George's Land Value Tax is a great solution that can really help us avoid a situation similar to what occurred during Mao Tse Tsungs revolution.
• mlindner 7y ago
  Well there goes the state. These people have no clue how to manage a state. This will ruin what's left of the housing market and make the state completely unlivable.
• human20190310 7y ago
  There is no functioning market to begin with. Housing prices and rent are through the roof in California, yet supply is not rising to meet demand, largely because existing owners oppose new construction. Turnabout is fair play. If owners organize politically to control supply, tenants can organize politically to control prices.
  • ralusek 7y ago
    Let's just not even talk about the fact that regulation is the reason why housing is scarce, let's just assume California is 100% at capacity. How the hell does rent control increase turnabout? It just let's people who got in at the right time have their status as a resident enforced indefinitely, when there are plenty of people who are willing and able to pay far more in order to live there.
    • jackvalentine 7y ago
      > Let's just not even talk about the fact that regulation is the reason why housing is scarce, let's just assume California is 100% at capacity. AKA ignore the entire foundation of the previous poster's point? Edit: upon re-reading your comment I think maybe you don't know what the phrase 'Turnabout is fair play.' means. https://en.wiktionary.org/wiki/turnabout_is_fair_play https://en.wiktionary.org/wiki/turnabout_is_fair_play
      • dgzl 7y ago
        Thanks for that, I didn't know this term. However I disagree with the idea that two wrongs make a right. Forcing the suffering around like that just creates more problems than it's worth.
        • jackvalentine 7y ago
          In this case two wrongs may not make a right, but at least it shares some pain with the rent-seeking property owning class and may in time cause them to accept change. It's a bit fatalistic but if we're going down anyway, we're going down together!
• jdavis703 7y ago
  There's three paths: 1) Rent cap landlords. The landlords will cry Big Government. 2) Abolish single family-only zoning and legalize backyard cottages, townhomes and small apartments. The homeowners will cry Big Government. 3) Do nothing. Watch as more people start living in tents or endure super-commutes that snarl your traffic and worsen climate change.
  • malandrew 7y ago
    Well if you explicitly pass things as “reversing a commit” instead of making a new hack to control unintended consequences, it’s harder to complain about big government since you’re making it smaller not larger.
  • exfed 7y ago
    It may only apply to LA, but this whole (regulatory) issue seems deeply related to another similar article: https://news.ycombinator.com/item?id=20806752 https://news.ycombinator.com/item?id=20806752
  • ralusek 7y ago
    I'm a landlord and would love decreased housing regulations, even if it decreases the value of my property by increasing supply.
    • TheReveller 7y ago
      When regulations allow for denser housing land prices go up because you can put more rentable dwellings in the same space.
      • dgzl 7y ago
        Land prices go up because that's what it's worth. If the government says "you can't do this profitable stuff on your land", then the land is less valuable.
        • onlyrealcuzzo 7y ago
• Fakira 7y ago
  This move is already proving pretty awesome for homebuyers like me as more builders seem to be focusing on "build and sell" not instead of "build and rent out".
• adventured 7y ago
  > The housing crisis is reaching every corner of America, where you’re seeing high home prices, high rents, evictions and homelessness that we’re all struggling to grapple with,” said Assemblyman David Chiu Chiu is being misleading, to put it mildly. The median home value in Texas is under $200,000; in Dallas it's only $213,000. In Florida it's $235,000; in Tampa it's $219,000. In Illinois it's $182,000; in Chicago it's $226,000. In Pennsylvania it's $174,000; in Pittsburgh it's $146,000. In Ohio it's $140,000; in Cincinnati it's $144,000. And so on. So much for every corner of America. In California it's $548,000; in San Francisco it's $1.3 million. California's housing problems are in fact not a national problem.
• alexnewman 7y ago
  I'd be down if rich yuppies like me got not rent control, but a retiree got all the protections. Where do we draw the line?
• crb002 7y ago
  This is nuts. In Iowa this might be unconstitutional as the government is prevented from rewriting contracts.
• munherty 7y ago
  Supply and demand
• aussieguy1234 7y ago
  Instead of controls like this, increase housing supply and let the market drive down rent and house prices. If they do that, maybe the renters won't have to rent anymore. The landlord's would be much more afraid of this kind of market based solution.
• alexmlamb 7y ago
  Has anyone done an analysis to see what fraction of the wealth generated by silicon valley ends up in the hands of people who happened to own land there? If normal houses cost millions of dollars, I could see it being a sizable fraction. I think the pricing mechanism plays a useful role in encouraging people with valuable land to give it to others who will use it more productively. At the same time, I think there's a risk that people who just own land could capture an unreasonable fraction of the generated wealth. Would it really be right for San Francisco homeowners to capture over 50% of the wealth from Silicon Valley's success?
• telaelit 7y ago
  It’s about time. Landlords have been exploiting tenants in California (and across the US) for far too long.
• flyGuyOnTheSly 7y ago
  Governments respond to complaints from the masses. From what I've heard, rent in a lot of Californian cities is extremely expensive, so I assume people are complaining about the price of their rent... probably statewide to some extent. Hence the new bill. It's just a reaction to a temporary problem. Which will probably stay in place long past the problem is solved!
• all_blue_chucks 7y ago
  The only way to drive down rents AS A WHOLE is to increase the supply of housing. Any legislation that makes renting less profitable will make BUILDING RENTAL PROPERTY less profitable. This sort of thing, on the whole, makes rents increase by decreasing housing supply.
• baggy_trough 7y ago
  California is certainly coming out with a bevy of terrible legislation recently. This particular one should be entitled "The Disincentive to Produce and Maintain a Healthy Stock of Rental Housing Act".
• ummonk 7y ago
  It's still allowed to grow much faster than taxes under prop 13, which is rent-control to benefit property owners.
• test6554 7y ago
  So if a new apartment comes on the market in SF (never gonna happen, I know) what rental rates can they start with? Whatever they want?
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• todd8 7y ago
  Rent control benefits renters in the short term who don’t want or don’t need to move. However, property owners can’t price rents according to market conditions. This suddenly lowers the value of rental property and will mean that there is less incentive to build new rental property or maintain or improve existing rental property. Where else is it being done? Is it a success in these places? There must be some places it is viewed as working or why else would California do this.
• jklm 7y ago
  Can someone explain how rent control works? It seems like it only benefits long-lived tenants. In the Bay Area, every apartment I’ve signed with advertises a “1 month off” deal or some equivalent. That guarantees them the option of at least a 9% increase in rent the second year.
• ganitarashid 7y ago
  The only positive about this (counter intuitively) is that it will show that rent control does not work
• BurningFrog 7y ago
  This is not "approve by California" yet. It passed in the assembly, but must also pass in the senate and be signed by the governor before it actually is law!
• dingdongding 7y ago
  In the past 5 years in Bay Area. My rent has been increasing by 9-10% every year, so I welcome this law.
• enz 7y ago
  In Paris, FR, rent control was approved a few years ago. The problem is that there is no incentives for landlords to update their apartments and to maintain them clean and good looking. Before, a pretty apartment was typically more expensive than a similar apartment (same size, same zone) which was ugly and Now, it’s same price.
• LaserToy 7y ago
  Well, looks like I will be forced to increase the rent next year to a maximum so I can decrease long term risk.
• chillacy 7y ago
  > Economists from both the left and the right have a well-established aversion to rent control, arguing that such policies ignore the message of rising prices, which is to build more housing. Nonetheless while it doesn't fix the underlying economics, I can see how it could be good to have a damper on the volatility of real estate prices, so that prices swing over the course of many years rather than violently.
• camdenlock 7y ago
  Aren’t the effects of rent control well-studied and well-understood phenomena at this point? Won’t this cause the rental market to become effectively deadlocked? i.e. people staying put for very long amounts of time due to not wanting to lose their low rents, landlords refusing to maintain their properties due to lack of incentives, inefficient allocation of rental properties (one person living in a 2 bedroom merely because the rent is low), and so on? This seems like a bad solution to a problem (housing shortage @ current market prices) with an obvious solution (allow more housing to be built). It’s almost like the politicians pushing for this policy don’t value the input of experts and the application of research, but instead are only interested in solutions that sound good at the most superficial level. Golly!
• _ah 7y ago
  Another unintended consequence is likely to be a degradation in the average quality of the housing stock. Everything gets old and needs to be replaced / upgraded. With limited ability to pass on the cost of improvements, and less mobility for tenants, the best strategy for owners is to extract value from the property by neglecting repairs. The annual rent increase can be pegged at maximum, while the building itself moves "down market".
• nullc 7y ago
  I wonder how much someone would charge for insurance to cover the difference between 5%+inflation and market rate? It's effectively a option on future rent prices... it shouldn't be particularly hard to value numerically.
• manav 7y ago
  The problem is we need new housing units and the local governments usually make the construction process so difficult that it's becoming increasingly unprofitable unless you are a very large corporation. This makes it even more difficult, especially in the multifamily space.
• raz32dust 7y ago
  How does this work? Can't the landlord just refuse to renew the lease, and then lease it out to someone else with a higher rent?
  • KODeKarnage 7y ago
    Turning over the leaseholder has a cost all by itself. But more importantly, there is also the reputation damage you'd sustain by doing this. Consider, any perspective leaseholder who googles the property could find that out that you're kicking out the tenant to increase the rent. That would drastically reduce the potential demand from people looking for the security of a long-term occupancy. So, yes, it might be possible for a landlord to do that. But if he does it twice, he will earn a reputation and only attract short-term tenants. This means, it is an option only for the most short-sighted and stupid landlords.
• mytailorisrich 7y ago
  Rent controls are either toothless or only help standing tenants. Indeed, they work against supply while increasing demand. This does not help people looking for a home.
• mntmoss 7y ago
  One thing that tends to be excluded in most analysis of rent control is the preference of landlords to operate fewer, more expensive units. When you have more units, you have more to keep track of - more tenants, more staff, more maintenance. A high-end luxury unit and a dirty fleabag mostly differ in some move-in amenities and services; rich tenants might demand more, but they don't trash the place faster. So every unit tends to be luxury by default since that's where the upside is. If your rent increase gets capped by rent control, your ability to stay at a limited scale of operation and just add to the price gets squeezed, and that motivates making more capital investments in property(and specifically in vertical upgrades, since horizontal expansion puts them in a land bidding war). It hits investment properties run by large companies the most, and challenges them to use land more effectively to stay competitive, in the same way that higher minimum wage challenges companies to use labor more effectively. However, we still need an SB50 or successor bill to deal with the build restrictions. The landlords and developers can demand building big(and they do already in many cases) but they're held back by zoning laws put in place by NIMBY residents. The trick is that instituting rent control does something change the outlook of the NIMBYs too, since their property value has a relationship to the value of rentals. Rental rates and turnover slow down = property values slow down = their house becomes less of an investment. So it's a good first step either way.
• deleted 7y ago
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• CommieDetector 7y ago
  (In 2 years) Californias housing shortage deepens
• d_burfoot 7y ago
  > “The housing crisis is reaching every corner of America, where you’re seeing high home prices, high rents, evictions and homelessness that we’re all struggling to grapple with,” said Assemblyman David Chiu, a San Francisco Democrat who was the bill’s author. If your new law is such a good idea, why do you have to lie so blatantly to promote it?
• jeffdecola 7y ago
  Just great news. Landlords would also raise rents to kick people out they didn't like. Then reduce the rent back with the new tenants.
• xivzgrev 7y ago
  Hello, 11 month leases! “Notwithstanding any other law, an after a tenant has continuously and lawfully occupied a residential real property for 12 months, the owner of the residential real property, in which the tenant has occupied the residential real property for 12 months or more, with or without a written lease, property shall not terminate the lease tenancy without just cause”
• michalmartin 7y ago
  What has changed in the new state laws?
• pcvarmint 7y ago
  Rent control causes housing shortages. It limits the price of housing to an arbitrary price which is below the demand price of housing. It fails to communicate the housing shortage with higher prices, and therefore it does not incentivize the building of additional housing to relieve the shortage. Nor does it incentivize the finding of lower-cost alternatives, because all prices are capped at the limit, and so there is no information communicated about their relative differences.
• pulse7 7y ago
  They could just build/provide new housing for everyone and everything would be at normal rates... But if you don't allow, then the prices go up...
• pontifier 7y ago
  I've just read through this law, and I think there might be some problems with it. My uncle has just been evicted so that the owner can fix the place up and raise the rent. Under this law, that would be illegal, but this protection only comes into effect starting January first. I expect to see thousands of similar last-minute evictions as anyone contemplating this course of action tries to get their tenant out before the end of the year.
• negamax 7y ago
  Most new (first time tenants) will get a cliff rent with next few years of upside factored in. But this will benefit existing tenants. I still think right law to change would be to allow high rises and right government intervention would be to create large scale new units
• Katzenjammer 7y ago
  The same thing will happen as does in NYC. 1. Single people live in large apartments, but don’t move because they are paying way below market, what a smaller place will cost. 2. Because people aren’t moving, there is limited availability so new comers pay very high rents. 3. Landlords won’t rent to bad credits because its hard to evict. 4. Builders won’t build for rental because they don’t want to deal with rent control. (In nyc, new housing is not rent controlled.). Basically, it’s good for people who have apartments, but bad for people who are looking.
• ScottBurson 7y ago
  So yet another thing -- along with Prop. 13 and the cost of housing, which is partly the result of Prop. 13 -- that helps people who are already here, at the expense of newcomers. I suppose you could argue that that's appropriate, but it seems short-sighted to me. I'd rather see us build a lot more housing.
• edpichler 7y ago
  This is a really difficult-to-solve problem. I never found a city with good prices for housing (compared to the local average salary).
• walterkrankheit 7y ago
  This is interesting as Berlin, Germany is also set to pass a five-year rent freeze to address tenant concerns and rising gentrification. I always attributed to the fact that Berlin for some years has had a pretty left-leaning state/city government and the fact that Europeans are more willing to try things like this. As an American living here, I never thought I'd see such a large scale action back in the States. Is it now 'global' zeitgeist at this point to make moves like this?
• Jonahgay 7y ago
  Great, competitors will leave the market.
• ecmascript 7y ago
  I 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.
• mark_l_watson 7y ago
  I 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.
  • negrit 7y ago
    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.
• nemo44x 7y ago
  When 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.
• magoon 7y ago
  So every landlord will now raise 5% annually even if they hadn’t in the last. That’s often the effect of governments regulating increases, from what I have seen of stage utility regulation.
• abstractbarista 7y ago
  Any rent control is a distortion that should not be done. Open up property rights and get more high-density housing built. Done.
• alkonaut 7y ago
  This allows for time to adjust (move) which is good. It doesn’t allow the person serving the espresso to the lawyer to live next door to the lawyer. That may or may not be an ideological goal, but this doesn’t address that.
• bluntfang 7y ago
  What we really need to do is make owning a house more affordable. People buying up rental properties is a bane on the housing market and human existence in general.
• exabrial 7y ago
  Wow. State takeover of everything. Downright scary
• gdubs 7y ago
  Text of the bill here: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB1482 https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...
• amyjess 7y ago
  And of course there are exemptions for mom & pop landlords in the law. This is why I'd rather do business with big megacorps than with small businesses; mom & pops are straight-up allowed to hurt their customers and their employees in ways megacorps aren't legally allowed to. See also: exemptions mom & pops have from mandatory sick leave laws, anti-discrimination laws, mandatory health insurance, etc.
• ApolloFortyNine 7y ago
  Won't this slow down gentrification of a neighborhood? There's neighborhoods in most cities that 10 years ago were 'the bad neighborhood' that have become walkable and popular again. It's hardly unfeasible for the bid area to have a rent of <$500, but after gentrification could easily pull $1500. At a 5% cap a year, it would take considerably longer to reach this price, which will likely slowly down the conversion of these areas, as the demographics would change much more slowly.
• tathougies 7y ago
  I thought california was trying to reduce its homeless population?
• djrogers 7y ago
  Can anyone point to a place (city, state, country) where homelessness and housing supply were positively impacted by rent control?
• robbiemitchell 7y ago
  The Bay Area desperately needs ~6-story units in every urban area and near every public transit stop.
  • kshacker 7y ago
    Along with 6 story units, we need better commute. The challenge is that the developers and cities lie and say hey we can add housing but we do not need to improve roads, and even if we improve roads, we will improve it just a tiny bit. Please travel from Sunnyvale Saratoga starting at 101 at the north end to 85/DeAnza at the south end at 5-6 PM every day and see how long it takes to travel 6 miles. Unless you live here and know it already, you will be surprised. But when it comes to selling housing, the developers, one example being of the vallco mall owner, somehow gets their way without any indication that their project will benefit the city, and thus rightly gets overturned at the ballot. [ And this is from someone (me) who failed to buy a house in Cupertino and now lives elsewhere.] Anyways the way to build 6 story buildings can not be by making the living worse for everyone who already lives there. Much worse.
• whydoyoucare 7y ago
  Rent control benefits no one, nor the landlord and certainly not the tenant. However, it is a classic "virtue signaling" used by politicians to advance their career. This is no exception.
  • themagician 7y ago
    Rent control benefits current residents and communities from being disrupted by real estate pricing.
• PorterDuff 7y ago
  Now that I think of it, I wonder why the larger employers in the South Bay don't build dormitories. Given a strong tendency to hire people fresh out of school (or nearly so), I would think that a great big dormitory on the company campus might be just the thing. It removes housing as an issue for a new hire, ties them more closely to the company (quit, you have to find an apartment), and they can spend their evenings shooting Nerf darts and shopping at the GoogleGrocery and the GoogleCoffeeShop.
• rhacker 7y ago
  We absolutely need more ways to buy a house without all the rigamarole that causes a buyer to sell at 20% more a year later. Banks and real estate agents already force most people into selling at much higher. What if there was a special kind of property that's good at in-and-out ownership, low friction moves like rentals. Get rid of the bank and agent fees. Build it into the lien. Startup idea anyone. The demand would be high.
• samlevine 7y ago
  This will encourage landlords to tear down existing properties rather than renovate them, as well as to not maintain them well. Rental housing quality will bifurcate further, with poor and lower middle class people living in worse housing. This is bad policy. It's not replicating the absolutely insane policies of SF, but it's still bad.
• thorwasdfasdf 7y ago
  This is a disaster. Have we learned nothing at all? Rent control won't help anyone except those who already have a low rent place and it'll only help for the short term until they need to move. After 50 years of ridiculous regulations that prevent more housing from being added, we're still moving in the wrong direction. This is truely a sad day.
  • scarlac 7y ago
    It's not ideal and no silver bullet, but having rents go up means "normal" people living in places for years get pushed out of the city and land lords get richer, faster. It seems to address that issue, which is not all bad on the surface. It's not the perfect solution, but what do you propose as something better that still helps normal people not get pushed out?
    • rconti 7y ago
      I don't have a perfect solution, either, but I see unintended consequence from this: * Fewer rentals on the market * More instances of landlords "re-occupying" a place (eg, ACTUALLY kicking out the residents) in order to fix it up (or not) and then re-rent to someone else at a much higher base rent, later. When rents go up, tenants push themselves out (or, the market pushes them out). When we devise tenant protection laws, we invent 'better' landlords who find clever ways to PUSH out people who are paying below market. If there was a way to artificially hold ALL rents down, it might be less obvious -- but under a rent control scheme, everyone knows when you're paying below market; you look at the classified ads (okay, craigslist) and see that you could never afford to find a 'new' place like yours at the same price. The tenants know it, the landlords know it. The tenants have protection. For awhile. Until they don't.
      • pontifier 7y ago
        My uncle was given an eviction notice last month so the owner can fix the place up. Expect many more people to get similar notices before the new eviction protections kick in at the end of the year.
  • 7y ago
• blobbers 7y ago
  Regarding SF house prices in particular: San Francisco prices go up => only tech bros can afford rent San Francisco rent prices get capped => tech bros still need place to live and win rental application lotto Artists can't afford rent, but want to live in city full of tech bros and glass condos? It doesn't make a lot of sense to me why you'd want to stay in SF if you're genuinely an artist. Is it a romanticization of the city's past rather than the reality of the present - a stark line between rich and poor with tent cities all around? An elementary school system not friendly to families making community ties (random geographic assignment)? SF doesn't have a thriving liberal arts school - the art academy is a profit pit meant to create student debt. Aren't places like Berkeley, Pacifica, and Santa Cruz much more attractive locations? Even farther south like San Luis Obispo? Lastly I am just going to ask this more fundamental question: should anyone be allowed to live anywhere they want, and is that the right people are striving for? Or is it simply they should be able to stay in the place they are once they're able to `get int`?
• rudolph9 7y ago
  In Oregon rent control was applied in a very targeted way to encourage new building such as exemption for the first fifteen years after a building is constructed and rezoning of a massive number of lots to allow multi tenet housing. Did the California laws include anything to encourage additional housing to be built?
  • vproman 7y ago
    AB 1482 also only applies to properties over 15 years old.
• 40acres 7y ago
  I genuinely don't understand folks reaction to Rent Control bills like this or the one recently passed in New York. Don't you think that policymakers KNOW that the best way out of a housing crisis is to build your way out? California has put out bills in recent years to try to remedy this (ie. the bill that would require housing near transit lines) that FAILED, breaking down all the local neighborhood associations and powerful interests is not something that can be done in a single legislative cycle. Rent control is about making it easier for everyday folks to survive day to day, its not meant to be a permanent solution, and if in 20 years this bill is still needed it won't be for lack of effort, it will because the NIMBYs were able to win out.
• ARTEMbI4 7y ago
  Really cool