
California Approves Statewide Rent Control - dawhizkid
https://www.nytimes.com/2019/09/11/business/economy/california-rent-control.html
======
bhauer
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.

~~~
joshAg
The entire point of the law is to prevent you from being able to make those
larger adjustments, though.

How often do you replace tenants? And what's your occupancy rate? If you're in
a situation where you can reliably raise rent 7% YoY indefinitely without
decreasing your occupancy rate, then you were severely underpriced for the
market (and you should probably fire that management company for pricing you
that absurdly low). 7% YoY after inflation is a big increase that outstrips
average wage increases.

If you aren't severely underpriced, then what's going to happen is that when
you increase by 7%, the tenants will choose to end the lease because they can
find something cheaper (or they emmigrate from the city because nothing is
affordable), and you'll struggle to replace them with wealthier tenants
willing to pay what you think is market price, so you'll have to lower rent to
attract a tenant. Once you get to the point where your price is roughly in
line with what the market will bear, you'll only be able to squeeze one or two
years of rent increases out of a tenant before the non-monetary costs of
moving are outweighed by the cheaper rent, so constantly trying for 7% YoY
post inflation will just mean a decrease in your occupancy rate, both because
you'll be replacing tenants more frequently and because finding new ones will
take longer.

~~~
tolmasky
What in your second paragraph doesn’t apply without rent control? In other
words, what makes 7% the magic number? Your entire argument seems based on
market forces (if you raise too much, your tenant leaves and if there’s no
wealthy people to replace them, you're stuck). How is this not the case
without rent control? Do wealthy tenants somehow appear without rent control?

~~~
joshAg
Nothing. The parent comment was arguing that because the law now says that
rent couldn't increase by more than 7% they were now being advised to increase
rent by that much every year (ostensibly because they are now planning to do
this), and my response is that it's absurd to claim that anything in the law
will change things so that you could make that sort of increase now if you
couldn't already make that increase before the law existed.

~~~
closeparen
Many landlords are not paperclip maximizers. REITs are, but small time
families often charge below-market rents to the long term tenants they
personally like or can’t be bothered to replace. They feel comfortable doing
this because they can always revert to market rate later. With that long-term
optionality going away, some will revert to market rate or as close as legally
possible right now.

~~~
jacobolus
So in other words, landlords love to reserve the right to kick a tenant they
stop liking out at the drop of a hat for no specific reason, by jacking the
rent up as high as they want. As compensation for this power, they are willing
to charge well below market rates to help indigent tenants.

If they lose this “right”, they insist on becoming pure profit maximizing
machines?

~~~
cookiecaper
> So in other words, landlords love to reserve the right to kick a tenant they
> stop liking out at the drop of a hat for no specific reason, by jacking the
> rent up as high as they want.

It's disingenuous to pretend like the landlord is the only party with any
control. Landlords cannot remove a tenant at "the drop of a hat" by any
stretch of the imagination, nor can they arbitrarily increase rental prices.
Rentals usually involve a lease that protects the tenant from arbitrary
removal and price modifications as much as it protects the landlord from
unexpected vacancy. If you're renting, you should know when your lease is up
and know that the landlord has the option not to renew and/or to modify the
price. (If you're in California, you should also know that the new law
punishes your landlord for trying to do you a solid and keep your rent stable
across lease terms.)

On top of conventional lease protections, virtually every state has default
tenant protections written into statute that can't be overridden by lease
agreements, and that include a default implicit month-to-month tenancy term,
providing at least basic protection from out-of-the-blue demands to vacate.

If an eviction must occur, it has to be conducted as prescribed in state law.
Tenants overstaying or defaulting on their leases frequently can't be removed
without 3-6 months of legal wrangling, which is no fun.

~~~
joshAg
>>> (If you're in California, you should also know that the new law punishes
your landlord for trying to do you a solid and keep your rent stable across
lease terms.)

The CA law allows the rental price to reset to market rate for a new tenant,
so unless the landlord doing you a solid was planning to stick you
specifically with a rent increase down the line to recapture the present
solid, they can still keep your rent stable across lease terms.

~~~
yojo
I am a CA landlord of a single house. Keeping track of “market rate” is an
annoying exercise and I tend to just leave the rate unchanged for multiple
years (3-5) then bring it up in one go. The last time I did this the rent
increased ~12%.

Before, the tenant was happy because they got below market rent for 4 years,
and I was happy because I could defer pricing work without long term penalty
or risking a move-out during an already busy year. This new law will likely
result in my tenant paying more, and me working more at times I don’t want to
work.

It’s not the end of the world, it’s just one more annoying piece of red tape
that doesn’t seem to help anyone.

~~~
mratzloff
Was the tenant happy when you increased it? Increasing rent 12% in one go
effectively kicks out most tenants. A smaller annual increase will give them
time to adjust to market conditions and choose over a longer period whether or
not to move and to save up to do so.

You are doing no one any favors except short-term renters who never get an
increase. In other words, your so-called benefit is actually a detriment to
long-term renters.

~~~
yojo
I have done this twice with the same tenant without complaint or moveout. My
tenant was presumably getting basic inflation based increases at work, which
offset most of the delta.

Unclear on why doing it all at once is worse than doing it regularly and
extracting more rent in the period in between. Is the theory that they will be
unable to adjust their budget in 60 days?

~~~
avar
It's beyond me why people would think this is worse for the tenant. Can I move
to CA and be your tenant? You're basically giving your tenants free money.

Let's say the rent is $1000/month (for simplicity). That's $12000/yr in the
first year. If you increase the rent by 12% ever 4 years they'll have 3 years
of paying $1000/month, followed by a 4th year of $1120/month and so on.

If you instead raised it yearly by 2.87%, which give-or-take is the same as a
12% one-off increase we can calculate the net rent paid over the period in the
two scenarios:

    
    
        $1000*12*3 = 36000
    
        r=1000;x=1.0287;
        (r*x^1*12)+(r*x^2*12)+(r*x^3*12) =~ $38106
    

The result is that by deferring rental increases you've given your tenant a
benefit of $2106, and we can safely assume the rent is a lot higher than
$1000/month. I.e. every month of the rent not keeping with market increases is
more money for the piggy bank.

~~~
aschismatic
Not only that, the money saved in the short term (those 4 years without a rent
increase) can be allocated however the tenant chooses. It can be frivolous
spending, or the tenant can choose to turn it into long-term investments for
compounding effect. I love being a tenant in these scenarios.

I think people that are arguing bigger rent increases that happen less often
are bad are assuming tenants are stretching their housing budget to the max
and won't be able to afford the large hikes. In which case they wouldn't have
been able to afford it with smaller increases either.

~~~
eyelidlessness
Getting a surprise bill for 48 months of interest free credit is still a
surprise bill. The landlord in question admits both to deferring out of
disinterest in tracking market value (which as a trend is simply not hard work
to determine) and to increasing the rent enough to recoup the rent lost by
deferring the increase. During this time a tenant has no idea there is a claim
on some undisclosed portion of their budget and has every incentive to set
their operating budget accordingly.

It is well known that most people can not afford significant sudden expenses.
I think the inability of some folks here to recognize how bad a 4 year rent
hike can be have the privilege of not being in that group.

~~~
cookiecaper
Renters generally understand that rent can be changed when the lease runs out
and should be braced for the possibility that there will be a moderate
increase. If the renter doesn't understand that, they probably haven't rented
much before, and they'll learn it the first time their rent increases. If you
are lucky enough to go multiple years without any adjustment, you should
expect that the landlord will want to correct the differential at some point
and budget accordingly.

Note this works both ways. If the market goes down, if no one wants to live
there anymore, tenants have a lot of room to negotiate. Vacancies are
expensive and the hassle of getting a new tenant is not something many people
want to handle even in good conditions.

------
phil248
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.

~~~
34679
The lack of affordable housing always has been and always will be a supply
problem. When demand for homes outpaces the number of homes being built,
prices go up. Plain and simple.

Homes that are built for renting (mainly apartments and condos, but some
houses, too) are built for profit. If you make it less profitable to build,
fewer will be built. If fewer homes are built, the problem is compounded, not
rectified.

If you want to make housing more affordable, make it as cheap and profitable
as possible to build new homes. Get rid of the fees that can push over
$100,000 for a single family home in some counties, before the builder even
buys a nail or 2x4. In most states you can build a home for less than the
price of permission to build a home in some California counties.

~~~
FussyZeus
> Homes that are built for renting (mainly apartments and condos, but some
> houses, too) are built for profit. If you make it less profitable to build,
> fewer will be built. If fewer homes are built, the problem is compounded,
> not rectified.

Arguments like this continue to be made for more and more aspects of our
market: pharmaceuticals, heathcare services, elder care services, and now
housing. Everywhere you look the markets seem ill equipped to handle the needs
of people.

Maybe the problem is markets then? Maybe the problem is expecting our entire
society to work based on profit motive? I don't deny it's served us fairly
well for awhile, but it seems like we're hitting the wall a lot lately.

~~~
eloff
Markets are hardly perfect, but in this specific case it should be the most
efficient solution to the problem - if you could fix the zoning and other laws
that distort it so badly that it's dysfunctional. And your still going to want
to add incentives for things you value but the market does not - perhaps like
lower income housing. In some of the other cases you mentioned markets are not
necessarily the best solution. Canada benefits greatly from having a single
buyer for pharmaceuticals - that concentrates the negotiating power and we get
better prices because of it.

~~~
FussyZeus
What are the zoning laws you see as the problem? Serious question, I'm not in
that area and don't know much about SF's zoning issues.

~~~
sologoub
There are severe restrictions on density and heavy parking requirements just
to start. It’s much much more complex than that, but to simplify - people who
lived in a given area want it to remain the same.

SF Bay Area is creating 3+ jobs per new unit built (any unit). So the gap is
growing rather rapidly, resulting in demand far outpacing supply.

Most of the peninsula cities/towns do not want any growth and want to remain
single family home neighborhoods. However, based on demand, they should
probably evolve more into either denser row houses or apartment/townhome type.

The way to restrict this from happening is to require more land per sq.ft. of
housing and require more parking per bedroom and guest parking for Multifamily
housing. All this makes land use less efficient and therefore more expensive,
deterring development.

------
human20190310
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
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.

~~~
human20190310
It hurts the owners who would be receiving the wealthy newcomers' money.

It doesn't solve anything directly, but it's an attack on the prosperity of
the people who are maintaining artificial restrictions on new construction.

A laissez-faire approach to both construction and rent would probably be a
better option. But that's already not happening, and it's not going to happen
without pressuring homeowners and landlords to stop opposing construction.

~~~
dgzl
Construction isn't easy anymore. we've taxed and regulated it into a luxury.

~~~
dcolkitt
Maybe, but construction may not even be necessary. Shipping containers can now
be easily retrofitted into stylish apartments. They can easily be stacked
eight stories tall.

95% of the work can be done in overseas factories and is subject to the same
globally competitive downward price pressure as every other manufactured good.
Build them in Shenzen at a wholesale cost of $30,000 per pod, ship them to San
Franciso for $2000, stack and install them at a cost of $8000. At 320 square
feet, that's $120 per square foot. The same cost as new homes in rural Texas.

All the California legislature needs to do is pass a law zoning everywhere in
the state for multi-story shipping container apartments. Then watch prices
plummet. Even for single family regular construction homes, because the
shipping container apartments will suck so much demand out of the market.

~~~
yocheckitdawg
Who the fuck wants to live in a shipping container?

~~~
dcolkitt
A shipping container is 320 square feet. Two pods can be joined into a single
740 square foot unit. That's a total cost of $80,000. Let's round to $100,000.
Assume a rental yield of 12%.

$1000 a month for a brand new 740 square foot apartment in the middle of San
Francisco. Plus with modern finishes that are frankly much nicer than anything
you'll find in the low-end SF rental market. I'd imagine quite a lot of people
would sign up.

~~~
patmcc
Why do you think construction price, and not land price, is the limiting
factor?

I'm in a high-demand city in Canada. The house I'm in right now is worth about
$70k. The land it sits on is worth $900k. Shipping containers aren't going to
help with that.

~~~
dcolkitt
It will if you stack them eight stories high.

Don't know where you live, but I doubt it's more expensive land than San
Francisco, where the average acre of land costs $3.2 million[1]. Taking that
acre of land, save half the area for green-space and courtyard. Use half the
footprint for shipping containers. Stack the containers 8 high.

You now have 242 double-pod units. The amortized land cost per unit is
$13,000. Assuming a generous rental yield of 12%, the land cost only adds $130
a month to the rent. That's hardly anything for a 720 square foot apartment.

The lesson is that even San Francisco land costs are no match for the power of
high-rise high-density housing.

[1] [https://www.6sqft.com/study-shows-huge-disparity-in-u-s-
urba...](https://www.6sqft.com/study-shows-huge-disparity-in-u-s-urban-land-
value-with-nyc-making-up-10/)

~~~
patmcc
Same ballpark ($2-3 million/acre) - and yeah, you're not wrong that if you can
get approval for 250 units in an acre you can have reasonably priced housing.
But the hard part in that equation is convincing whoever controls zoning to
allow for it - once you do that, whether it's shipping containers or
traditional construction you can have affordable housing.

------
bgorman
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
Stop making housing an investment?

~~~
cabaalis
I've seen this argument before. Why shouldn't it be an investment?

1\. Land is a limited resource. 2\. Property improvements last for a very long
time, and are incrementally improved. 3\. The buy-in price is relatively high,
so only very interested parties get involved. 4\. It's a home for goodness
sake, why would you not call it an investment?

~~~
manfredo
Housing cannot be both affordable _and_ and a good investment. The definition
of a good investment is a piece of property that has a price that increases
over time. The nature of exponential growth means that eventually housing will
become unaffordable if it is perpetually a good investment.

Society's expectation that housing is a good investment results in people
taking on significant debt to buy increasingly expensive homes. The
consequence is that homeowners have a huge incentive to suppress the
construction of additional housing, to inflate the values of their homes. And
when housing prices do fall, people's financial lives are ruined. Contrast
metros like SF, Portland, and Seattle with places like Tokyo where homes can
be bought for < $400,000. A big part of this is that housing is expected to be
a depreciating asset:
[https://www.youtube.com/watch?v=iGbC5j4pG9w](https://www.youtube.com/watch?v=iGbC5j4pG9w)

~~~
kortilla
You’re conflating “an investment” with “an exponentially growing investment”.

~~~
strstr
That's sort of the classic interpretation of investment. AFAIK, the first
question most people ask about investments is "what is the expected rate of
return (relative to the risk)?".

I would not describe my car as an investment, since it's basically guaranteed
to depreciate. Housing could be expected to behave in a similar manner
(although that would likely require a decrease in population growth).

~~~
kube-system
The value of the structure does often decrease over time. The land might be a
different story, if it’s a neighborhood where people want to move. Location,
location, location. You can get property that decreases in value too, just
move into a neighborhood in decline.

------
wahern
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
> 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.

------
dgzl
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.

~~~
pvelagal
Well, i disagree with your opinion. Silicon Valley has been attracting a lot
of people from lot of states, who all need housing. Remember , size of
California is fixed. Housing in Silicon valley doesn't grow at the same rate
as number of people coming here. Added to that, foreigners living in foreign
countries ( who have never visited USA, who have no intention of living in
USA) are able to own land/houses in silicon valley , and do that purely for
monetary reasons, ie get more money out of the property , jacking up prices
even more. An ordinary American who wants to live in California is suffering
as a result of this. rent control or low income housing are essential tools to
make ordinary Americans’ lives better.

~~~
zamfi
> Housing in Silicon valley doesn't grow at the same rate as number of people
> coming here

Bingo. And why not?

~~~
aswanson
Existing homeowners don't want their living space turned into downtown
Manhattan because there's a temporary exorbitant demand for ad click
optimization and pic sharing networks.

~~~
zamfi
There's a whole spectrum between single family homes and "Manhattan". It's not
a binary!

The Bay Area's population has grown by 8.5% in the last 10 years. [0] Please,
that's not "Manhattan". That's one person on your block converting their
garage into a rentable unit.

Those "existing homeowners" are really messing things up for everyone because
they don't want Bob to turn his garage into a rental? Somehow I think there's
more to it than that.

[0]: [https://www.kqed.org/news/11741275/map-the-bay-area-leads-
ca...](https://www.kqed.org/news/11741275/map-the-bay-area-leads-california-
in-population-growth)

~~~
pacala
Full quote: The population of the nine-county region grew by over 600,000
people since 2010 — a nearly 8.5% increase — outpacing the growth rate in any
other part of California, according to U.S. Census Bureau data released
Thursday.

600k people is about as much as Seattle proper. Which happens to span 83.94 sq
mi. In less than 10 years. That's _a lot_ of construction.

~~~
zamfi
Huh? 600,000 people in the Bay Area's 7,000 square miles -- I don't see how
the Seattle comparison of "83.94" square miles is related.

No residential neighborhood in the Bay Area needs to turn into "Manhattan" to
house 600,000 extra people. If every block added a house we'd have extra
housing to spare. Zoning prevents a ton of development, and everyone pretends
they're fighting "Manhattan".

At Manhattan densities, the Bay Area would house 468 million people. That's
not what's happening, and no one is advocating for that.

We don't need to build Seattle in the Bay to house everyone. We just need
cities to stop dragging permits out years and every planning committee to stop
saying "no" to any small increases in density.

How much construction it is isn't super relevant -- if it's profitable, it
will happen!

------
kevindong
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.

------
DevKoala
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.

~~~
holy_city
When I was interviewing for jobs in the Bay area I noticed entry level
salaries (even at smaller shops) were in the range of 100-120k and rent was
like 35-40% of your salary after taxes. Certainly higher than the recommended
30% but it's not that different from somewhere like LA or NYC, even Chicago
and Miami aren't much cheaper.

Are my numbers just totally off?

~~~
ng12
$120,000 comes out to around $6k/mo. A mediocre studio in SF is pretty close
to $3k.

~~~
holy_city
After taxes it's a bit under $6,900 so 40% of that is ~$2,700. Browsing
Zillow/Apartments.com/Padmapper shows several thousand listings for studios
under $2k and single bedrooms around $2.2-2.7k, depending on area. SF proper
seems pretty tiny and the most expensive, is everyone just trying to cram in
there? Do people try not to commute?

~~~
shuckles
You are right that most casual analyses overstate the real cost of living in
SF. A Bart commute in the Daly City direction, or Oakland, or a drive in from
Pacifica all get you much more reasonable cost / commute trade offs for jobs
in the city. Certainly in absolute prices remain absurd.

~~~
TMWNN
I can confirm that as of December-January it was possible to find a decent
900-1000 sq ft house with two bedrooms in southern SF (Visitacion Valley or
Crocker/Amazon, say) or Daly City, near BART, for $3000 a month. Still more
expensive than than the comparable in New York, where a two-bedroom apartment
in Jersey City with a comparable commute to lower Manhattan was $2300.

------
fuzzieozzie
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
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.

~~~
nerfhammer
It will not help you find an affordable place to live, it will help those who
already have existing leases hold on to them forever. Rent control does not
create an abundance of housing, it just creates a constituency of people that
gets a better deal than those who don't.

~~~
blisterpeanuts
Correct, rent control in the Boston area created haves and have-nots. It was
great for those lucky enough to get in, but the rest of us were effectively
subsidizing them.

------
mabbo
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
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
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
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.

~~~
xvector
I really dislike the fact that I’d have to save for decades just to afford a
decent house in California.

The land isn’t doing anything just sitting there. I am totally fine with
clearing it out so people can actually afford houses.

~~~
seph-reed
Coming from CA and living elsewhere now, it honestly hurts me how much people
take that land for granted. It's so damn gorgeous and rare.

~~~
xvector
It is definitely stunning, and it can make a painful commute bearable, but I
would put the needs of my fellow humans over aesthetic.

That said, there is still a ton of "boring" land we can build on first before
cannibalizing the scenic drives.

~~~
seph-reed
> my fellow humans

This may be the pivotal pinch point which marks the root of our disagreement.
I honestly feel more fellowship with animals and computers than humans.

Also, when it comes to the "needs" of humanity, I think we've surpassed that
mark. It's beginning to appear that people are insatiable consumers that will
destroy anything for a bit of convenience, all while being unhappy the entire
time.

I'm not on team human.

------
joshfraser
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.

~~~
hindsightbias
Why should we subsidize your landlord, paying on a Prop 13 valuation 1/10th
the market rate?

None of them are suffering.

~~~
rcpt
I don't like rent control but I hate prop 13. Interesting is that Howard
Jarvis rallied renter support claiming that landlords would be nice and pass
the tax savings on to tenants. Of course this didn't happen and there were
immediately movements for rent control around the state.

------
tmh79
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
Rent control deters the building of more housing. It's literally part of the
problem.

~~~
cryptoz
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.

~~~
ProfessorLayton
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
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.

------
raldi
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
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
AB-1482 is nothing like Prop 10.

------
thorwasdfasdf
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
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
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
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.

------
jseliger
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...](https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-
affair.html)

~~~
tmh79
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
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
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-
eviden...](https://www.brookings.edu/research/what-does-economic-evidence-
tell-us-about-the-effects-of-rent-control/)

~~~
dublinben
It sounds like this is a poor solution for a non-problem then.

~~~
tmh79
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.

------
jdavis703
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.

~~~
dgzl
I'm not a landlord or homeowner, and 1 makes me cry Big Government.

What if something crazy happens to the economy, say the dollar gets devalued,
and all you have is rental property for income? Realistically you would raise
your rental price.... But wait, there's a cap, and you can't.

2) "legalizing backyard cottages" is actually against Big Government, and I'm
with you there.

You're forgetting another option: deregulate and let the market compete.

~~~
wahern
> What if something crazy happens to the economy, say the dollar gets
> devalued, and all you have is rental property for income?

In San Francisco rent control is indexed to inflation. If the dollar is
devalued, inflation increases, and you get to increase your rent more. The
same is true for Oregon's new law, which permits 7% increases _in_ _addition_
_to_ _inflation_.

> You're forgetting another option: deregulate and let the market compete.

Rent control is about providing housing security and controlling volatility.
Over the long-term unfettered markets may produce optimal supply, but in the
short-term people can easily be pushed onto the street. As Keynes said,
"economists set themselves too easy, too useless a task if in tempestuous
seasons they can only tell us that when the storm is past the ocean is flat
again". (The more famous bit is, "in the long term we're all dead.")

~~~
refurb
SF is capped at 60% of CPI. Inflation is 10%, you can get 6%. Doesn’t take
long for that to add up.

~~~
crashedsnow
In which universe is inflation 10%?

[https://www.bls.gov/regions/west/news-
release/consumerpricei...](https://www.bls.gov/regions/west/news-
release/consumerpriceindex_sanfrancisco.htm)

~~~
refurb
Let me restate that, if inflation was 10%, you’d only be able to increase by
6%, so you’d be losing 4% per year, which adds up quickly.

------
creato
> 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.

------
rubicon33
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.

~~~
mc32
This reminds me of the approach dictators have to issues. Issue an edict or
decree making the problem itself illegal. Problem solved!

~~~
fuzz4lyfe
Sparrows are eating a great deal of the produce grown in California, let's
remove them to end food insecurity.

~~~
mc32
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)

------
RcouF1uZ4gsC
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
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.

------
souprock
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-
ren...](https://www.forbes.com/sites/adammillsap/2019/09/04/more-rent-control-
in-california-will-make-housing-problem-worse/)

~~~
tmh79
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
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.

~~~
52-6F-62
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-
re...](https://urbantoronto.ca/news/2018/11/people-why-universal-rent-control-
worth-fighting)

~~~
pitaj
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/...](https://www.economist.com/the-economist-
explains/2015/08/30/do-rent-controls-work)

[https://www.nytimes.com/2018/10/12/business/economy/rent-
con...](https://www.nytimes.com/2018/10/12/business/economy/rent-control-
explained.html)

[https://www.businessinsider.com/does-rent-control-work-no-
it...](https://www.businessinsider.com/does-rent-control-work-no-it-actually-
increases-rent-prices-for-most-people-2015-9)

[https://www.bloomberg.com/opinion/articles/2018-01-18/yup-
re...](https://www.bloomberg.com/opinion/articles/2018-01-18/yup-rent-control-
does-more-harm-than-good)

[https://www.nytimes.com/1989/05/30/opinion/how-rent-
control-...](https://www.nytimes.com/1989/05/30/opinion/how-rent-control-
hurts-the-poor.html)

~~~
52-6F-62
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
Consensus are built from empirical data of more than just one metro area.

~~~
52-6F-62
A consensus of opinion is irrelevant. And among those articles is hardly a
consensus. One wants regulations limited to an extent, another wants vouchers
instead of rent controls.

------
bradlys
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.

------
claudeganon
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
>decommodify housing

genuinely curious what would that entail, in practical steps

~~~
freehunter
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
How does that create an abundance of housing?

------
mc32
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
I know people doing that in Berkeley already.

~~~
pkaye
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
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
Its a lot to come up with with when you are struggling for a downpayment on
your first house.

~~~
mc32
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.

------
lettergram
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
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.

------
johngrefe
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
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.

------
chaostheory
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.

------
sologoub
Meanwhile in the booming Seattle: [https://www.seattletimes.com/business/real-
estate/amid-build...](https://www.seattletimes.com/business/real-estate/amid-
building-boom-1-in-10-seattle-apartments-are-empty-and-rents-are-dropping/)

> “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-d...](https://www.scpr.org/news/2017/09/15/75615/in-high-vacancy-dtla-
landlords-offer-move-in-speci/)

------
robbiemitchell
The Bay Area desperately needs ~6-story units in every urban area and near
every public transit stop.

~~~
kshacker
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.

------
stevenalowe
Just curious how the success of such a measure might be evaluated? Or is this
pure theatre?

~~~
roseway4
"... 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
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.

------
blobbers
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`?

------
bubmiw
Vote pro housing centrist fiscally right republicans , we need a more diverse
ca congress

~~~
raldi
"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-
trans...](https://sf.curbed.com/2019/5/17/18629809/sb-50-housing-transit-poll-
crisis-ca-yimby)

~~~
cybersnowflake
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
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
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
A single state senator (one of the few Democrats who opposes SB-50) blocked
the bill from being voted on.

The supermajority was irrelevant.

~~~
cybersnowflake
So you blame republicans and want even more Democratic control of the
Legislature than they already have.

~~~
raldi
When did I blame Republicans?

~~~
cybersnowflake
You having problems reading your past posts? You just basically said evil
Republicans are blocking common sense housing solutions and indicated the
solution is an even greater proportion of Democrats but then said that a
Democrat blocked it and their numbers don't matter.

~~~
raldi
Could you quote the part where I said Republicans were blocking things?

~~~
cybersnowflake
"The fewer Republicans" et al

------
dev_dull
> _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)

------
skybrian
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-
con...](https://la.curbed.com/2019/9/10/20857225/california-rent-control-
bill-1482-approved) [2] [https://sfrb.org/topic-no-051-years-annual-allowable-
increas...](https://sfrb.org/topic-no-051-years-annual-allowable-increase)

~~~
pcwalton
San Francisco is _60% of inflation_ , which is the cause of all the problems.
It's not even in the same league.

------
mntmoss
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.

------
kissickas
> 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
> 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.

------
walterkrankheit
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?

------
dawhizkid
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.

------
diogenescynic
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.

------
pcvarmint
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.

------
rhacker
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.

------
amyjess
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.

------
andymoe
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.xhtm...](https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200SB50)

------
d_burfoot
> “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?

------
enz
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.

------
camdenlock
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!

------
jklm
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.

------
40acres
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.

------
ecmascript
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.

------
aussieguy1234
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.

------
all_blue_chucks
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.

------
c3534l
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?

------
alexmlamb
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?

------
DoreenMichele
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...](https://www.whitehouse.gov/sites/whitehouse.gov/files/images/Housing_Development_Toolkit%20f.2.pdf)

------
mark_l_watson
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
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.

------
dangjc
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.

------
foota
_California hurt itself in confusion_

------
whydoyoucare
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
Rent control benefits current residents and communities from being disrupted
by real estate pricing.

------
PorterDuff
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.

------
ozzyman700
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.

------
pontifier
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.

------
antman
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.

------
mytailorisrich
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.

------
chillacy
> 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.

------
outside1234
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

------
xivzgrev
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”

------
chank
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.

------
flyGuyOnTheSly
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!

------
ScottBurson
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.

------
ummonk
It's still allowed to grow much faster than taxes under prop 13, which is
rent-control to benefit property owners.

------
samlevine
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.

------
rudolph9
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
AB 1482 also only applies to properties over 15 years old.

------
crb002
This is nuts. In Iowa this might be unconstitutional as the government is
prevented from rewriting contracts.

------
neonate
[http://archive.is/5jIXP](http://archive.is/5jIXP)

------
blisterpeanuts
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.

------
negamax
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

------
gdubs
Text of the bill here:
[https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...](https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB1482)

------
alkonaut
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.

------
nemo44x
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.

------
rcpt
Between this and prop 13 it might be easier to just build a wall around the
state.

------
nullc
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.

------
pkaye
What is the historical rate of yearly rent price increase in the bay area?

------
adventured
> 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.

------
magoon
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.

------
inlined
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
Did you buy a single-family home? The bill exempts single-family homes.

------
bcrosby95
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.

------
tathougies
I thought california was trying to reduce its homeless population?

------
Fakira
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".

------
bluntfang
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.

------
pulse7
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...

------
BurningFrog
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!

------
jeffdecola
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.

------
ApolloFortyNine
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.

------
edpichler
This is a really difficult-to-solve problem. I never found a city with good
prices for housing (compared to the local average salary).

------
test6554
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?

------
raz32dust
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
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.

------
djrogers
Can anyone point to a place (city, state, country) where homelessness and
housing supply were positively impacted by rent control?

------
todd8
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.

------
abstractbarista
Any rent control is a distortion that should not be done. Open up property
rights and get more high-density housing built. Done.

------
alexnewman
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?

------
WheelsAtLarge
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
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
The cost of being a landlord is much more than just property taxes.

------
_ah
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".

------
LaserToy
Well, looks like I will be forced to increase the rent next year to a maximum
so I can decrease long term risk.

------
dingdongding
In the past 5 years in Bay Area. My rent has been increasing by 9-10% every
year, so I welcome this law.

------
rayiner
As a Marylander, I’m okay with this. Let California destroy itself. Better for
the rest of us.

~~~
pcwalton
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.

------
manav
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.

------
baggy_trough
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".

------
mlindner
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.

------
michalmartin
What has changed in the new state laws?

------
macinjosh
It is fun watching the Democrats running California to self pwn themselves
over and over with idiotic legislation like this.

------
telaelit
It’s about time. Landlords have been exploiting tenants in California (and
across the US) for far too long.

------
ganitarashid
The only positive about this (counter intuitively) is that it will show that
rent control does not work

------
munherty
Supply and demand

------
ARTEMbI4
Really cool

------
exabrial
Wow. State takeover of everything. Downright scary

------
baby
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!

~~~
Mountain_Skies
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
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
Market solutions in action in these last 2 posts!

~~~
baby
The market solution is rent control + more housing. We got one.

~~~
refurb
Except rent control means less housing!

~~~
negrit
Source?

------
thaumaturgy
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?

~~~
Litmus2336
I think you're intentionally misrepresenting the opposing viewpoint. If rent
control artificially reduces the price of housing, more people will want to
live in CA. Less houses will be built, as less profit is being made.
Therefore, prices will be lower for those already housed, yet more people will
be unable to purchase a home.

Of course the million dollar question is how many less units will be built if
they're less profitable, and how many people will be enticed to move or stay
in CA because of rent controls.

~~~
thaumaturgy
> _If rent control artificially reduces the price of housing, more people will
> want to live in CA._

There were two other comments in this same subthread pointing out that people
are in fact moving out of California. (One of them has been deleted.)

It's almost as if f(california_net_migration) is multivariate.

> _Less houses will be built, as less profit is being made._

Residential construction in California has been approximately steadily
climbing since 2008 [1]. Even if I believed your premise -- which I don't --
reality disagrees with it. The conditions surrounding new residential
construction are so much more complex than merely "omg rent control".

A San Jose Mercury News article published last year discussed some of the
influences in new residential construction:
[https://extras.mercurynews.com/blame/](https://extras.mercurynews.com/blame/)

Strangely absent from that article though is that people don't want to just
"live in California"; they want to live in the same places where everyone else
is already living. There is plenty of affordable land in the central valley,
in Kern County, and lots of other places with stagnant economies and
depressing downtowns. But if you want to live in San Francisco, expect to pay
a stupid amount of money for a vacant lot [2]. Again: this is not a situation
that rent control is going to have any effect on whatsoever.

> _Therefore, prices will be lower for those already housed, yet more people
> will be unable to purchase a home._

Funny, this sounds quite a bit like the situation that Proposition 13 created
back in 1978 [3].

And yet, proposition 13 is rarely cited as a significant contributor to
California's housing issues, especially by the "this is simple supply and
demand" crowd. Personally, while I suspect proposition 13 has contributed,
there are lots of other factors, including foreign investment [4].

But maybe we'll soon see just how much of an effect that particular factor has
had in housing costs [5].

Sure though, rent control is gonna have a huge impact on California's housing
prices. Totally.

[1]: [https://journal.firsttuesday.us/the-rising-trend-in-
californ...](https://journal.firsttuesday.us/the-rising-trend-in-california-
construction-starts/17939/)

[2]: [https://sanfrancisco.cbslocal.com/2016/10/21/san-
francisco-v...](https://sanfrancisco.cbslocal.com/2016/10/21/san-francisco-
vacant-lots-millions/)

[3]:
[https://en.wikipedia.org/wiki/1978_California_Proposition_13](https://en.wikipedia.org/wiki/1978_California_Proposition_13)

[4]: [https://calmatters.org/housing/2018/03/data-dig-are-
foreign-...](https://calmatters.org/housing/2018/03/data-dig-are-foreign-
investors-driving-up-real-estate-in-your-california-neighborhood/)

[5]: [https://www.cnbc.com/2019/07/17/foreign-purchases-of-
america...](https://www.cnbc.com/2019/07/17/foreign-purchases-of-american-
homes-plunge-36percent-as-chinese-buyers-flee.html)

~~~
Litmus2336
>And yet, proposition 13 is rarely cited as a significant contributor to
California's housing issues, especially by the "this is simple supply and
demand" crowd. Personally, while I suspect proposition 13 has contributed,
there are lots of other factors, including foreign investment [4].

Really? Because I am vehemently anti prop 13, and I don't think you have to go
far to find people that hate it too. So I'm not sure you can use that
criticism against me. That's essentially a straw man.

> Less houses will be built, as less profit is being made.

This is more or less a factual statement, that if less profit is to be made by
renting houses at least some portion of people will choose to invest in other
things. Whether that portion is even noticeable, I don't know

>There were two other comments in this same subthread pointing out that people
are in fact moving out of California. (One of them has been deleted.)

>It's almost as if f(california_net_migration) is multivariate.

If you want to have a serious conversation, being snarky isn't going to help.
Regardless of net migration statistic, California is still growing in
population. SF is still growing, and the state overall sees positive growth.

------
ahelwer
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?

~~~
mc32
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?

~~~
munk-a
Sorry, to clarify... Are you saying that because we have public transit no one
can own cars anymore?

The generous way to read the post above is an arrangement where property
ownership can be both public and private - possibly where rental units are
majority state owned and private ownership is more concentrated in actual
residents.

~~~
dsfyu404ed
>Sorry, to clarify... Are you saying that because we have public transit no
one can own cars anymore?

You joke but many people here would support just that.

~~~
munk-a
Eeeeh, in the long run I think it'll just become unnecessary to own a personal
car for most people if self-driving car fleets become a thing - I dunno... it
might be a luxury like owning your own boat, if you're vacationing on a lake
you can always rent one so why pay to maintain something you very rarely
need... more apt might be to consider it equivalent to owning your own train
car.

At any rate I don't think personal property ownership should be made illegal,
it could just be made to cost - taxi companies are taxed for running a fleet
of vehicles and charging people to ride on them, that sort of mass property
ownership could be similarly taxed.

