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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

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.
        0xEFF 7y ago
        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.
  - 52-6F-62 7y ago
    In a vacuum, yes. Just as much as on paper 0.1+0.2=0.3 but in most floating point implementations it doesn’t. In application Toronto has seen the opposite effect to what you describe. We hear this argument over and over as we just had our rent control stripped, but it’s counter to the experience. Here’s one write-up: https://urbantoronto.ca/news/2018/11/people-why-universal-rent-control-worth-fighting https://urbantoronto.ca/news/2018/11/people-why-universal-re...
    - pitaj 7y ago
      Your article says this: > So far, empirical evidence shows that rent control has not crippled the purpose-built rental market. But the economic concensus is exactly the opposite. https://www.economist.com/the-economist-explains/2015/08/30/do-rent-controls-work https://www.economist.com/the-economist-explains/2015/08/30/... https://www.nytimes.com/2018/10/12/business/economy/rent-control-explained.html https://www.nytimes.com/2018/10/12/business/economy/rent-con... https://www.businessinsider.com/does-rent-control-work-no-it-actually-increases-rent-prices-for-most-people-2015-9 https://www.businessinsider.com/does-rent-control-work-no-it... https://www.bloomberg.com/opinion/articles/2018-01-18/yup-rent-control-does-more-harm-than-good https://www.bloomberg.com/opinion/articles/2018-01-18/yup-re... https://www.nytimes.com/1989/05/30/opinion/how-rent-control-hurts-the-poor.html https://www.nytimes.com/1989/05/30/opinion/how-rent-control-...
      - 52-6F-62 7y ago
        The article continues beyond that line. They outline, with numbers, the practical effects of rent control in the sample size of metro Toronto. I’m not an economist but I didn’t think consensus was a valid benchmark against empirical data.
        pitaj 7y ago
        Consensus are built from empirical data of more than just one metro area.
        7y ago
  - toast0 7y ago
    > Every field of economics agrees that rent control causes harm to the people it's supposed to help. Is that for rent control as in New York or San Francisco, where the allowed rent increases are very small; or for rent control as in San Jose (8% until reduced to 5% in 2016) or Oregon, or maybe this bill, where the allowed rent increase is larger than most of market increases? A limit of 5% + inflation is probably more than most markets in most years, and more importantly, is a big enough limit that most leases will be able to catch up to the market over a few years. So, this would still distort the rental market, but in a much more limited way, that may be more likely to actually help people.
- maxk42 7y ago
  It's 5% above inflation, which would currently put it at about 6.8%.
olliej 7y ago
Here's the problem: Prop 13 amended the CA constitution to prevent the state from increasing assessed property value by more than 2% a year. Landlords recognize that the real value is actually increasing faster than 2% and so increase the rent at the actual market rate. Given living costs make up the single largest force controlling cost of living, including for tax payer funded workers: police, firefighters, teachers, etc this fundamentally resulted in a massive tax cut for landlords, and more importantly businesses (who unfortunately aren't impacted by this). The increasing disparity between taxed value and real value results in all tax payers having to pay increased income tax, which is then directed largely to landlords who aren't contributing their fair share - their properties are benefiting from services that they aren't paying for.
- gbacon 7y ago
  So tax-control bad, rent-control good? Owners’ properties benefiting from services that they aren’t paying for also bad? Renters benefiting from services they aren’t paying for doubleplus good?
  - olliej 7y ago
    Renters are paying for services though - that’s part of what the rent they are paying to their landlord is for. But landlords currently aren’t paying that so the burden has been shifted to tenants income. So tenants are currently having to pay market rates for rent, and increased income tax to subsidize their landlord.
SomeOldThrow 7y ago
> I am Senior Fellow, Economic Opportunity at the Charles Koch Institute. My research focuses on cities, urban development, population trends, labor markets, and federal and local urban public policy. Great source there! No agenda at all.

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.
      - 0xEFF 7y ago
        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.
- 52-6F-62 7y ago
  In a vacuum, yes. Just as much as on paper 0.1+0.2=0.3 but in most floating point implementations it doesn’t. In application Toronto has seen the opposite effect to what you describe. We hear this argument over and over as we just had our rent control stripped, but it’s counter to the experience. Here’s one write-up: https://urbantoronto.ca/news/2018/11/people-why-universal-rent-control-worth-fighting https://urbantoronto.ca/news/2018/11/people-why-universal-re...
  - pitaj 7y ago
    Your article says this: > So far, empirical evidence shows that rent control has not crippled the purpose-built rental market. But the economic concensus is exactly the opposite. https://www.economist.com/the-economist-explains/2015/08/30/do-rent-controls-work https://www.economist.com/the-economist-explains/2015/08/30/... https://www.nytimes.com/2018/10/12/business/economy/rent-control-explained.html https://www.nytimes.com/2018/10/12/business/economy/rent-con... https://www.businessinsider.com/does-rent-control-work-no-it-actually-increases-rent-prices-for-most-people-2015-9 https://www.businessinsider.com/does-rent-control-work-no-it... https://www.bloomberg.com/opinion/articles/2018-01-18/yup-rent-control-does-more-harm-than-good https://www.bloomberg.com/opinion/articles/2018-01-18/yup-re... https://www.nytimes.com/1989/05/30/opinion/how-rent-control-hurts-the-poor.html https://www.nytimes.com/1989/05/30/opinion/how-rent-control-...
    - 52-6F-62 7y ago
      The article continues beyond that line. They outline, with numbers, the practical effects of rent control in the sample size of metro Toronto. I’m not an economist but I didn’t think consensus was a valid benchmark against empirical data.
      - pitaj 7y ago
        Consensus are built from empirical data of more than just one metro area.
        7y ago
- toast0 7y ago
  > Every field of economics agrees that rent control causes harm to the people it's supposed to help. Is that for rent control as in New York or San Francisco, where the allowed rent increases are very small; or for rent control as in San Jose (8% until reduced to 5% in 2016) or Oregon, or maybe this bill, where the allowed rent increase is larger than most of market increases? A limit of 5% + inflation is probably more than most markets in most years, and more importantly, is a big enough limit that most leases will be able to catch up to the market over a few years. So, this would still distort the rental market, but in a much more limited way, that may be more likely to actually help people.
maxk42 7y ago
It's 5% above inflation, which would currently put it at about 6.8%.

olliej 7y ago

Here's the problem: Prop 13 amended the CA constitution to prevent the state from increasing assessed property value by more than 2% a year. Landlords recognize that the real value is actually increasing faster than 2% and so increase the rent at the actual market rate. Given living costs make up the single largest force controlling cost of living, including for tax payer funded workers: police, firefighters, teachers, etc this fundamentally resulted in a massive tax cut for landlords, and more importantly businesses (who unfortunately aren't impacted by this). The increasing disparity between taxed value and real value results in all tax payers having to pay increased income tax, which is then directed largely to landlords who aren't contributing their fair share - their properties are benefiting from services that they aren't paying for.

gbacon 7y ago
So tax-control bad, rent-control good? Owners’ properties benefiting from services that they aren’t paying for also bad? Renters benefiting from services they aren’t paying for doubleplus good?
- olliej 7y ago
  Renters are paying for services though - that’s part of what the rent they are paying to their landlord is for. But landlords currently aren’t paying that so the burden has been shifted to tenants income. So tenants are currently having to pay market rates for rent, and increased income tax to subsidize their landlord.

SomeOldThrow 7y ago

> I am Senior Fellow, Economic Opportunity at the Charles Koch Institute. My research focuses on cities, urban development, population trends, labor markets, and federal and local urban public policy. Great source there! No agenda at all.