3 ms·
California likes to do complicated stuff like this because it provides the appearance of improvement without threatening the status quo. Rent control is a grea
by hedora 3y ago
California likes to do complicated stuff like this because it provides the appearance of improvement without threatening the status quo.
Rent control is a great example. It decreases housing supply, so it increases returns on investment for real estate in California, and increases homelessness. However, the politicians get to claim it does the opposite of those things because basic macroeconomics are too nuanced for campaign slogans.
- vkou 3y agoNIMBYs are the reason California doesn't build enough housing, not rent control.
- Xorakios 3y agoBoth of those, plus environmental reviews adding years, sometimes decades. https://www.theatlantic.com/ideas/archive/2021/03/signature-environmental-law-hurts-housing/618264/ https://www.theatlantic.com/ideas/archive/2021/03/signature-...
- vkou 3y agoEnvironmental review is just another way of saying NIMBY. Developers building non-rental housing don't care about rent control. In fact, they benefit from rents being high, and from there being a housing shortage, as it makes non-rental housing more financially attractive. Developers building rental housing shouldn't care much about it, either, as their financing is dependent on what they are going to rent the units out for, not what some grandma who lived in her apartment for 30 years is paying. Grandma's not part of the tenant market for new units, L5 SWEs making 400k/year are. Rent control isn't the reason you can't build.
- itake 3y ago> Rent control isn't the reason you can't build. Can you explain why builders are paying rent control tenants to leave [0]? And where does the payoff money come from? Future rent? Future home buyers? [0] - https://www.nytimes.com/2015/12/25/nyregion/new-york-builders-paying-huge-buyouts-to-tenants-in-their-way.html https://www.nytimes.com/2015/12/25/nyregion/new-york-builder...
- vkou 3y agoWhat % of a development's budget goes to this? I expect it to be less than 2% on the average, across the whole city. It's not the first, second, or even fifth reason for the supply-side shortage. The costs are passed on to the buyers/renters, and despite that, demand continues to massively exceed supply.
- itake 3y agoRent control is amazing deal for old people: Multi-million dollar payouts and insanely cheap rent, but these benefits are paid by the future generation of residents. As you said, eliminating rent control would lower prices by 2% on average (saving future residents millions) and helps projects be built faster (by removing red tape).
- itake 3y agoA "classic" scenario with rent control is a tenant lives in a home for 10 years and has below market rent. The LL wants the tenant to leave, so the landlord create more housing units [0]. But everyone throws their arms up, because the tenant can't afford market rent. A battle in court proceeds and the tenant ends up receiving a $100k buyout to leave. Based on this relatively common situation, rent control prevents more housing from being built and causes prices to increase (the $100k buyout needs to come from somewhere). [0] - https://www.nytimes.com/2015/12/25/nyregion/new-york-builders-paying-huge-buyouts-to-tenants-in-their-way.html https://www.nytimes.com/2015/12/25/nyregion/new-york-builder...
- Guvante 3y agoHonestly rent control isn't as simple as you specified either. Implying that there are no benefits to rent control for those living in rent controlled units is just as deceptive as claiming that rent control will help everone. The underhanded "rent would be lower so everyone would pay less" is fundamentally flawed. Certainly you can argue some people pay more due to rent control but we cannot pay more on average unless you decide to ignore that getting rid of rent control would also increase demand while increasing supply.