5 ms·

Rent control deters the building of more housing. It's literally part of the problem.

by pitaj 7y ago

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.
  - cryptoz 7y ago
    I was under the impression that some rents can be increased during the lease. I do not think it is only a renewal event, by law. > Rent control deters the creation of new housing. I keep seeing this repeated but I don't understand. Why does rent control deter creation of new housing? > This reduce in supply raises the price But you've glossed over why supply is reduced. I don't see any reason that supply would be reduced with basic moderate rent control like this one. Edit: I have tripped some wire (?) and am not allowed to post any more. In response to the comment below, > https://www.google.com/url?sa=t&source=web&rct=j&url=https://tenantsunion.org/rights/rule-changes-rent-increases&ved=2ahUKEwjPo9nzh8rkAhUNCTQIHUNGD70QFjAFegQICxAU&usg=AOvVaw2s5EfPAjtZv2bNjxTalN9J https://www.google.com/url?sa=t&source=web&rct=j&url=https:/... That seems to be Washington, not California. According to http://www.hrc-la.org/doc.asp?id=36 http://www.hrc-la.org/doc.asp?id=36 it seems to read that some leases allow rent increases mid-lease.
    - Litmus2336 7y ago
      https://www.google.com/url?sa=t&source=web&rct=j&url=https://tenantsunion.org/rights/rule-changes-rent-increases&ved=2ahUKEwjPo9nzh8rkAhUNCTQIHUNGD70QFjAFegQICxAU&usg=AOvVaw2s5EfPAjtZv2bNjxTalN9J https://www.google.com/url?sa=t&source=web&rct=j&url=https:/... I believe you might be thinking of month-to-month, which is not a traditional lease. On all fixed term leases over a month rent cannot be changed during the term of the lease.
      - phil248 7y ago
        Which is an oddly elaborate way of saying that rent increases in California can happen annually.
        Litmus2336 7y ago
        Technically, you can have a lease of any length. I've seen 3 and 6 month leases. I'm sure it's possible to have a 24+ month lease.
    - aianus 7y ago
      > Why does rent control deter creation of new housing? If you have a lot of money and you want to build/buy a rental property, would you do it in a) a growing city with no rent control where your discounted future cash flows are unbounded or b) a city where there is a law placing a ceiling on your returns. All else being equal, you are going to choose the city without rent control to build your new housing units in (or invest in something other than real estate altogether), thus illustrating how rent control disincentives new investment in housing, and specifically low-income rental housing.
      - cryptoz 7y ago
        I think your illustration has failed, though, because I would very much choose b). I consider a) as an evil in the world and would avoid participating in that if at all possible. b) sounds like a really good choice for long-term investment in in sustainable society. > All else being equal Okay but all else is not equal, and in the real world, it is never equal. These thought experiments do nothing to improve conditions in the real world, since they are based on flawed models of how people behave.
- ProfessorLayton 7y ago
  Rent control does indeed make the housing shortage worse in the following ways: - It makes it so new renters subsidize the old ones, raising prices for newly vacant places, defeating the purpose of controlling costs. It also doesn't offer tons of protection from boom/bust cycles, as mainly those riding the boom will be able to afford absurd prices in highly regulated places like SF — Where a 1br can fetch 3.7k/mo (!!) - "FU, got mine" attitude disengages renters from organizing the same way NIMBY homeowners do. For example, SF renters could easily outnumber homeowners to allow much more housing to be built, but ~70% of housing stock there falls under rent control. I do want to be clear that I fully support controlling costs in some manner, however, this desperately needs to be tied to a solution that results in more housing.
  - phil248 7y ago
    Luckily for all of us, this law will not create a new class of rent control prisoners/devotees because the allowable increases are too high.
tmh79 7y ago
do you have any clue about this specific measure? Its limited to buildings that are 15 years old or older, and it limits rent increases to 8% annually, which in practice is about 1 - 3% of all lease agreements in CA, a very small amount. Commercial construction loans are based on the 15 year revenue generating potential of the proposed building, this law was created specifically with that in mind so as not to interfere.
- pitaj 7y ago
  > do you have any clue about this specific measure? Any price control inevitably has negative consequences in the market. This is practically a law of economics. > Its limited to buildings that are 15 years old or older, and it limits rent increases to 8% annually, which in practice is about 1 - 3% of all lease agreements in CA, a very small amount. If it with have such minimal effect why even have it? > Commercial construction loans are based on the 15 year revenue generating potential of the proposed building, this law was created specifically with that in mind so as not to interfere. Then it's not as bad as it could be. Doesn't mean it's justified.
  - dawhizkid 7y ago
    The landlords that jack up rent more than 8% a year, at least in SF, are the commercial landlords of large apartment complexes like Avalon. At the very least this will stop the ones managing older complexes built 2004 and earlier from doing that anymore.
  - phil248 7y ago
    This is simply about spreading out massive rent hikes over the course of a few years instead of a few months. It gives families time to adapt or move. The allowable increases under this law are very high. It may not seem justified to you, but to a low income family in a rapidly gentrifying area, it means everything.
    - dantheman 7y ago
      All you need to do is say, if you're increasing the rent by more than 7% then you need to give a years notice. That's it.
raldi 7y ago
This bill specifically exempts new housing from its controls.
- dantheman 7y ago
  It can be expected to stay exempted?
  - raldi 7y ago
    They'd have to start over from scratch with a new piece of legislation to do that. Many of the legislators who supported it specifically cited this aspect of the bill, so I don't think such a change would make it through.

Rent control deters the building of more housing. It's literally part of the problem.

by pitaj 7y ago

Rent control deters the building of more housing. It's literally part of the problem.

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.
- cryptoz 7y ago
  I was under the impression that some rents can be increased during the lease. I do not think it is only a renewal event, by law. > Rent control deters the creation of new housing. I keep seeing this repeated but I don't understand. Why does rent control deter creation of new housing? > This reduce in supply raises the price But you've glossed over why supply is reduced. I don't see any reason that supply would be reduced with basic moderate rent control like this one. Edit: I have tripped some wire (?) and am not allowed to post any more. In response to the comment below, > https://www.google.com/url?sa=t&source=web&rct=j&url=https://tenantsunion.org/rights/rule-changes-rent-increases&ved=2ahUKEwjPo9nzh8rkAhUNCTQIHUNGD70QFjAFegQICxAU&usg=AOvVaw2s5EfPAjtZv2bNjxTalN9J https://www.google.com/url?sa=t&source=web&rct=j&url=https:/... That seems to be Washington, not California. According to http://www.hrc-la.org/doc.asp?id=36 http://www.hrc-la.org/doc.asp?id=36 it seems to read that some leases allow rent increases mid-lease.
  - Litmus2336 7y ago
    https://www.google.com/url?sa=t&source=web&rct=j&url=https://tenantsunion.org/rights/rule-changes-rent-increases&ved=2ahUKEwjPo9nzh8rkAhUNCTQIHUNGD70QFjAFegQICxAU&usg=AOvVaw2s5EfPAjtZv2bNjxTalN9J https://www.google.com/url?sa=t&source=web&rct=j&url=https:/... I believe you might be thinking of month-to-month, which is not a traditional lease. On all fixed term leases over a month rent cannot be changed during the term of the lease.
    - phil248 7y ago
      Which is an oddly elaborate way of saying that rent increases in California can happen annually.
      - Litmus2336 7y ago
        Technically, you can have a lease of any length. I've seen 3 and 6 month leases. I'm sure it's possible to have a 24+ month lease.
  - aianus 7y ago
    > Why does rent control deter creation of new housing? If you have a lot of money and you want to build/buy a rental property, would you do it in a) a growing city with no rent control where your discounted future cash flows are unbounded or b) a city where there is a law placing a ceiling on your returns. All else being equal, you are going to choose the city without rent control to build your new housing units in (or invest in something other than real estate altogether), thus illustrating how rent control disincentives new investment in housing, and specifically low-income rental housing.
    - cryptoz 7y ago
      I think your illustration has failed, though, because I would very much choose b). I consider a) as an evil in the world and would avoid participating in that if at all possible. b) sounds like a really good choice for long-term investment in in sustainable society. > All else being equal Okay but all else is not equal, and in the real world, it is never equal. These thought experiments do nothing to improve conditions in the real world, since they are based on flawed models of how people behave.
ProfessorLayton 7y ago
Rent control does indeed make the housing shortage worse in the following ways: - It makes it so new renters subsidize the old ones, raising prices for newly vacant places, defeating the purpose of controlling costs. It also doesn't offer tons of protection from boom/bust cycles, as mainly those riding the boom will be able to afford absurd prices in highly regulated places like SF — Where a 1br can fetch 3.7k/mo (!!) - "FU, got mine" attitude disengages renters from organizing the same way NIMBY homeowners do. For example, SF renters could easily outnumber homeowners to allow much more housing to be built, but ~70% of housing stock there falls under rent control. I do want to be clear that I fully support controlling costs in some manner, however, this desperately needs to be tied to a solution that results in more housing.
- phil248 7y ago
  Luckily for all of us, this law will not create a new class of rent control prisoners/devotees because the allowable increases are too high.

tmh79 7y ago

do you have any clue about this specific measure? Its limited to buildings that are 15 years old or older, and it limits rent increases to 8% annually, which in practice is about 1 - 3% of all lease agreements in CA, a very small amount. Commercial construction loans are based on the 15 year revenue generating potential of the proposed building, this law was created specifically with that in mind so as not to interfere.

pitaj 7y ago
> do you have any clue about this specific measure? Any price control inevitably has negative consequences in the market. This is practically a law of economics. > Its limited to buildings that are 15 years old or older, and it limits rent increases to 8% annually, which in practice is about 1 - 3% of all lease agreements in CA, a very small amount. If it with have such minimal effect why even have it? > Commercial construction loans are based on the 15 year revenue generating potential of the proposed building, this law was created specifically with that in mind so as not to interfere. Then it's not as bad as it could be. Doesn't mean it's justified.
- dawhizkid 7y ago
  The landlords that jack up rent more than 8% a year, at least in SF, are the commercial landlords of large apartment complexes like Avalon. At the very least this will stop the ones managing older complexes built 2004 and earlier from doing that anymore.
- phil248 7y ago
  This is simply about spreading out massive rent hikes over the course of a few years instead of a few months. It gives families time to adapt or move. The allowable increases under this law are very high. It may not seem justified to you, but to a low income family in a rapidly gentrifying area, it means everything.
  - dantheman 7y ago
    All you need to do is say, if you're increasing the rent by more than 7% then you need to give a years notice. That's it.

raldi 7y ago

This bill specifically exempts new housing from its controls.

dantheman 7y ago
It can be expected to stay exempted?
- raldi 7y ago
  They'd have to start over from scratch with a new piece of legislation to do that. Many of the legislators who supported it specifically cited this aspect of the bill, so I don't think such a change would make it through.