The “Water Cooler” is a feature on Claycord.com where we ask you a question or provide a topic, and you talk about it.
The “Water Cooler” will be up Monday-Friday at noon.
Today’s question:
Governor Gavin Newsom recently reached an agreement with landlord and tenant groups to introduce statewide rent control.
QUESTION: Do you think statewide rent control is a good or bad idea?
70 comments
Bad
Good idea. Rent is out of control and tenants are suffering. It could also reduce crimes from desparation.
Could we tie this to control of government budgets? Seems only fair to put same limitation on government revenue as they put on property owners.
Oh yeah! Good one!
Yeah let’s tie and tack on everything these over spenders propose. Fair is fair correct?
I have mixed emotions about rent control. I don’t like greedy property owners, nor do I like government interference. For the most part, I’m against rent control. Rents are way out of control, but punishing the property owners isn’t the answer. If you can’t afford to live (anywhere) move to a more affordable state, city, home, etc. CA is moving in the direction that one day, only the rich and poor will be able to live here. The wealthy can afford to live anywhere, and the poor have all the handouts they need.
What KDerby said (for the most part) with an emphasis on I don’t like greedy property owners.
What?! how is it punishing the property owners? There wasn’t an issue before with people making money on renting out property. If there is no limit on what you can charge for rent then what do you think selfish people will do? You say if you can’t afford to live where the rent is getting really high then leave, that’s so selfish and sad. So no limit on the rent then? Force everyone out? I was born in San Francisco and have lived in the bay area all my life, why should I be forced out by greed? Only the rich get to live here? So what happens if they raise the rent to ridiculous amounts everywhere? Where would most of the nation go? What is wrong with you?
I am absolutely FOR more rent control! The more the better.
You see, I already own my home so anything that helps restrict the supply of housing—as rent control surely would—exacerbates the problem of scarce supply. When I finally flee my home state in a few years I can be guaranteed a windfall that will allow me early retirement where market forces are allowed to work.)
(Of course, if you’re a renter you’d be screwed. No one wants to build needed new housing when they cannot earn a market return. And what good is a low rent controlled apartment you cannot find?)
So go for it! I’ll be fine!
There is such a thing as profit and a profit margin. The individual owner business makes the call what they need to maintain the business. They should be free to decide their needs not a government control freak system. If there is no free market how will long term problem correct itself ? By more control measures? So your tentative plan is to flee and flee. A flee for all for the rest of us.
Uh oh, someone understands supply and demand. You must not have gone to public school.
It amazes me that, after all these years, and the utter failure of price controls on just about anything, Democrats just keep going back to that well to drink.
It reminds me of Obama’s statement when they raised the capital gains tax. Sure, it would actually harm investment and the economic recovery, but sometimes it was better to do these things out of fairness.
Sure, the amount of rentals available will dry up under price controls, thereby screwing all potential renters. But at least those greedy landlords wont be getting rich, and that is the real moral of the story.
At the heart of progressivism is envy and retribution.
100% agree…EXCEPT next will come price controls on selling…you can’t make TOO much profit…that would be “unfair”
As a property owner you should be able to charge anything you desire when you want. It’s your property! Another example of more government control and giving handouts to people who can’t afford to buy. If you can’t afford it then move or get a better career path and work harder like the rest of us and be able to buy. The only people complaining is the people who don’t own property.
So I make 75K a year and still can’t find a place to purchase. I think you need to get your head out of the boomer sky, and stop being a greedy human.
I have owned properties for years. The costs for maintenance, PROPERTY TAXES, insurance, and the multitude of never ending numerous miscellaneous fees are enormous. 75K in a state like California is chicken feed TODAY
You cannot consider an owner a greedy person if their situation differs. Many many years ago commercial paper was sold abroad so the actual co owners of properties do not even reside in the continental United States but live else where abroad.
They are the greedy party Mr.
@Steve
How about stop living beyond your means save up and get out of debt and you could definitely afford to buy a home in the Bay Area such as in Oakley where a 3-4 bedroom house can range from 350k and up.
Steve,
Your problem finding property to buy has everything to do with the inability of industry to build housing at a rate commensurate with demand, as does high rents. And that scarcity comes from government policy and NIMBYism.
You are right that the younger generation is getting hosed in the real estate market, but the younger generation keeps voting for the party that is causing it.
Increase supply, or accept the high prices. There isn’t really any middle ground.
There is a reason everyone is moving to Texas or Idaho.
Horrible idea. Unless you are trying to encourage middle and lower income residence to move out of California so that only the rich can afford to live here. Rent control harms the people it is intended to help. Landlords will convert affordable housing into ‘luxury condos’ which are often exempt from rent control. The financial burden to landlords makes it not affordable to maintain and upgrade rent control properties, creating rundown “affordable” slums. If you take the profit out out of residential property rentals, buildings will not be rehabbed into livable spaces, developers will not build new/modern/efficient dwellings and the high demand for a lower supply will end up increasing the cost and availability of affordable living.
Anybody who thinks rent is too expensive should just buy their own house.
Did the sky fall on you? It’s not that simple.
the middle class always suffers…. cannot afford and no handouts!
Thanks for making my point, Aunt Barbara. It’s expensive to own and maintain real estate. And since you can’t afford it, you think the landlord (who, in many cases, is also a member of the “suffering” middle class) should just absorb all those costs in order to subsidize an “affordable” monthly rent payment for you. Sorry, that’s not a sustainable business model.
Very bad.
https://www.cato.org/publications/commentary/rent-control-old-bad-idea-wont-go-away
Wouldn’t it nice if the government controlled everything when in fact especially in California they can run nothing. Rent is sort of a bottom up thing and when you have twenty million illegal aliens living in the state the rent for the not so wealthy areas goes up and triggers prices on up the scale. Then we have the foreign wealthy who can bid up the cost of housing in higher priced neighborhoods. The perfect storm.
Agreed perfect storm. What else is new these days?
Property owners will sell and leave California to other states where they can make money. This will leave the sold (or abandoned) properties with no one living in them. When government steps in and tells you how much you can make for the services you provide, the service provider will simply find something else to do.
San Francisco rent control has been extensively studied and determined to have made the housing problems significantly worse overall in the city. The links posted above cite work by both liberal and conservative economic organizations and individuals which clearly determined this to be true.
OK with me. Time to sell those units and retire anyway. Why should I have to take phone calls in the middle of the night? Some tenants are nice and others are just idiots. How about that phone call in the middle of the night about ants in the kitchen? Don’t need that any more.
That’s what you hire a rental management company for.
Gee dad, thanks for the advice. I’d never have thought of that!
As long as the ants are not in the pants. Get a referral for a decent prop. management company. They do exist.
A rental management company cuts into your bottom line and gets passed on as a rent increase, too, just like that expensive BART ballot measure that passed.
Gittyup what is wrong with a decent management service to stay on top of any issue that occurs. Doesn’t that add value to your private business venture? In the rental agreement doesn’t the landlord promise to keep up with ALL issues in a timely manner? Tenants do have rights to a normal habitable environment. The costs mitigate in regards to the value you are providing to the dwelling.
Like I stated earlier socialism belongs elsewhere. We are a free society able to run a free market. A free market Mr. Governor.
@Jojo Potato – have a client with rental properties who gets phone calls about burned out light bulbs, as in come over and put on a new bulb now. And he has high-end income properties. I would never be a landlord.
Rent control won’t solve the problem just like raising the minimum excessively didn’t either. Rent prices are always at the mercy of the market. Instead create incentives to keep rent prices down. And also create more rental properties rather than monster homes for profit. Building more affordable housing probably won’t effect the price of existing homes that much anyway. Renters often don’t want to home own, too many headaches. Leave that to someone else.
The main incentive to keep rent prices down is… building more. Nothing else works. And it doesn’t have to be specifically affordable housing – if enough housing is built, all of it becomes more affordable. Even without rent control, income caps, lottery, and all other stupid inventions.
However, the reality is that in the past 10 years CA has been issuing ~40 building permits for every new 100 residents. And the very same people who push rent control bill, like Assembly Speaker Rendon, represent some of the worst districts in terms of compliance with housing goals.
Let’s imagine that we live in a saner state than CA. And because it’s a saner state, it has rent control tied to meeting Regional Housing Needs Assessment goals (essentially, the number of building permits per 100 new residents).
Say, your property is in a district that hasn’t met its housing goals and is doing nothing to try and meet them. Like Santa Clara or San Mateo Co. that won’t meet their housing goals for the next 300 years if they continue building at their current rate. In this case your property is under the strictest rent control, which covers not only multifamily dwellings, but also single family homes, severely limits rent raises and allows only for-cause evictions.
On the other hand, if you’re in a district that’s building enough new housing, like East or West Contra Costa Co, then your property is not subject to rent control at all.
Personally, I would vote for such rent control law with both hands. You?
that’s why you don’t vote statewide control tashaj. All markets are local area only. I repeat all markets are local area only and subject to the locality. So in other words there are vast areas that have completely different sets of circumstances. A statewide measure simply compounds an already pre existing condition subject to the LOCAL AREA MARKET.
@tashaj Personally, I don’t care to make my house “more affordable.” If I understand what you are suggesting, that would be like being forced to discount the most expensive investment anyone will ever make. You want maximum return on your dollar when you sell it and what you are suggesting doesn’t give that.
Well – the landlords greatly benefit from the government laws that limit new buildings – including multi-tenant buildings that would provide competition.
The problem now is that the Landlords have more of the Free Market on the side limiting competition for their product.
So either the market is opened to builders to essentially build all of the homes and multi-units that the Market Will Bear – or the Landlords get some limits placed on the artificially high rents that they can charge due to that lack of competition.
Of course, before folks get all excited about unrestricted building that isn’t viable for many reasons: infrastructure, uncontrolled population growth and you can bet that Homeowners and the folks who Own Rental Properties will do everything they can to limit new buildings because the more of them built, as demand starts decreasing they will find their own property values start to fall….
Fixed property values are one thing. You can only leverage so much. The only way to keep up is an investor pool. Which always involves new risks. Landlords unfortunately have to carry the burden of the largest risk shareholder. Depreciation is constant and major costs like the roof or house hold equipment always needs maintenance.
of course short term memories serve as a fine example as well. Even though we have had a drought stricken condition for years all of a sudden there is plenty of water for new buildings and soccer stadiums in the middle of the desert.
completely messing with a free market. anybody who knows anything about anything understands this concept. He’s just trying to score points for his political affiliates and trying to save the underworld at the same time. Don’t mess with local area free market SIR.
Is Rent Control a good thing?
Absolutely not. Stupid is as stupid does…
WOW
really
uuhhhmmm you have made some good comments punishing owners is not the answer ….most of them are private …if you bust them out you get left with
well the projects ….a state run mass population hi rise built by the lowest bidder and of course not kept up to the standards pushed onto private landlords
now the bigger issue that blows my mind not one mentioned it …as it relates directly to the problem
there are over 4.2 million illegals being housed mostly on gov section 8
wow yeah ….so that’s a lot of housing ….???
are we all following …..
the state is filling all the affordable housing with illegals …then asking you to vote for them so they can fix it ….of course they don’t …and then ask for more tax money and some more votes to allow them to fix it with slapping property owners with high prop taxes so they then sell then the state buys and makes more project housing for illegals …and the low income people get slapped again and told more votes for dems will solve the problem… now their bed budy is rent control so drive down property values so they can buy more property
its so funny to see these people vote for dems and riot and scream for dems and yet they get nothing for it ….housing gone ….in favor of illegals
and those same illegals are sucking up the system money so fast ….money from our schools is being diverted to house and feed and provide free healthcare to illegals …bypassing the voters for non citizens …and telling you ..to keep voting dem and your problems will be solved …
worked for over 40 years now ….and here we are …and still votes keep coming in for dems and the state keeps going down hill …no progress and no outlook accept to import more bums and illegals …citizens are in a holding pattern while being over taxed ….so fast the money cant be tracked
keep voting dem and more bums and illegals will keep taking from citizens
now before you go all hair on fire ….bums are not homeless
homeless have been generated by this dem agenda of givjng everything belonging to citizens to illegals all to up the population so they can bloat the sensus and get more fed money that they can pilfer ….you see once the fed money reaches sacramento …..its a free for all or rather favor time
so yes by all means beat down citizens who own property and vote for dem agenda of giving your means to illegals and forcing you to the shelter
the devil it is said can not force you to damn yourself …it has to be done through free will onto yourself
congrats you should be proud it worked ….now your living it …lol
This is a problem that has been extensively studied and the results indicate that rent control actually makes the problem worse when landlords sell off their property either by converting it to owner occupied housing or to expensive, high-income rentals reducing the stock of rental housing available at market rate. Conservative and liberal economists alike agree that rent control results in a shortage of rental properties, driving up the market rate of available rental housing in the long run.
https://townhall.com/columnists/thomassowell/2002/02/07/the-housing-farce-n1303788
https://www.aeaweb.org/articles?id=10.1257/aer.20181289
Rent control is one of the things that hsa caused the shortage of housing and the huge cost increases. Rent control essentially takes a portion of housing off the market as people in rent control units tend to stay put and in some cases families take over the unit when a family member mocves or dies. Costs for maintenance, taxes etc go up faster than the allowable rent increases so the units don’t get maintained. Which is a problem because rental uinits have higher maintenance costs than owner occupied dwellings because many renters simply trash the places. The government ddrives up the costs of buiolding rental units while reducing the return on investment.
Property taxes go up very predictably at 2% per year except under the most extreme conditions, for example, during the recession while Obama was in office. They were later raised to compensate when the Consumer Price Index justified it. So, the landlord has only a 3% cushion to cover virtually everything else.
We’ve seen increases regularly in water, garbage, gas and electricity, and maintenance services. If a rental management company is involved, they likely have become more expensive in recent years. That leaves very little wiggle room for the property owner if he did not have his units jacked up in price in the first place.
Depending on when this is due to become law, I’d say you’re about to see a rent increase. It will cover, in the long term, the difference in what he will be losing in profit (which is why he is doing it in the first place) after it becomes law and he won’t be able to raise the rent to keep up with costs.
As a landlord it wouldn’t have bothered me much. I had a good tenant and to keep them happy, I didn’t raise the rent, to the chagrin of my manager. I just wanted my mortgage et all paid for and a little cash.
Absolutely the landlord assumes all the risks. What is so wrong with little cash?
No need to “control” rent or anything else. Bernie and Pocaliesalot are going to give us rent, food, entertainment, education, medical intervention and everything else….FOR FREE! What? Me Worry?
Yeah Poltergeist and for FREE. worry FREE
BAD. Why would a landlord bother to upgrade their property if they are not able to rent for fair market value.
They won’t and now you have a landlord doing the bare minimum……aka slumlord.
I hate to break it to you, but it’s not the cost of housing that’s keeping businesses from relocating to California.
Glad I received an excellent education at Las Lomas. That’s how I know that price controls don’t work and always lead to shortages or surpluses. In this case, a max legal selling price for a good (housing) will create an enormous shortage as suppliers (landlords) make less housing available since they are barred by law from receiving a market price for their product.
Amazes me how many people don’t understand something many of us learned in High School.
How does this work when you have a Lease ? Can the Landlord raise rents 5%/year anyway ? And taking it from the other direction, when a Lease is up, is the Landlord limited to 5% from the previous Lease ? Are there provisions for Capital Improvement recovery (I fear without cost recovery, there is no reason a Landlord should upgrade)
I see both sides of the issue. Basically it would be good solution for the greedy landlords.
However that being said not all landlords are greedy. Just everyday people renting out a duplex are not getting rich by any means but they do have to make some profit. They are not in the business to rent properties with no return. Renters do not always realize all of the endless costs that go into their rental units like property taxes, maintenance issues. I was one of those people that had no idea until I purchased a property. It is a real eye opener the cost of owning a home and keeping it up. It feels like a never-ending money pit sometimes. Almost does not seem worth it at times to be honest.
“Greediness” does not serve a product provider’s interests (in this case, housing offered by a landlord) because in a free market, the consumer simply goes elsewhere. Why should anyone offer the product or service for less than what the market will bear? Are you being greedy when asking for a raise when making, say, $20 per hour and the market for tour line of work is $35? No? Of course not; you have the option to choose another employer.
With finite housing in the Bay Area, there is something called inelasticity of demand—substitutes and alternatives are not commonplace…one MUST buy housing (well, most of us). The cure for insufficient or unaffordable housing is…more housing. Free prices adjust to compensate…and housing is built or reduced, businesses and people choose to stay or go, based upon these economic realities.
While convenient to label landlords ‘greedy,’ they are simply acting in their enlightened self-interest…just like you. And offering a product or service—no one is forced to live anyplace they offer for rent.
For me, I struggled and scrimped and saved to get in to my first house—and lost money when it went down in value. Did I blame ‘greedy’ buyers unwilling to pay what the market demanded when I bought? No! Was I angry? You bet I was. And now that I’m well positioned in the home I own, I’m grateful for the risk I took so many years ago…to buy again.
Statewide rent control is a bad idea. If you take away incentives for individuals to own investment property, that will ultimately drive down the quality of housing and the rate of new construction.
Further, existing owners will eventually want to sell their investment property. If rent control drives down the net operating income, then new potential owners will pass on the property for more favorable CAP rates elsewhere. The owner loses money and the renter loses amenities. Bad for everyone.
Tiny violin for the guy who has sell his rental home. Homes should be owned by people who live in them, not by people who dream of being feudal lords.
It’s a business just like any other.
It depends. Are you a renter or a rentee? Perspective is everything.
Bad one, landlords who don’t raise rents every year will start doing so.
As usual almost everything newsom touches eventually turns into what SF (newsomville) is having problems with.
Like the Millennium Tower. Who authorized building that Master Piece? Leans lefty huh?
Horrible…creeping socialism. Supply and demand should determine what is charged.
It’s the California Democrat way – coddle, support and provide for the lazy dependent ones of society; and punish, drain and demonize the self sufficient responsible ones.
You nailed it.
Rent control might help the incumbents, but it definitely won’t help people to relocate here! Quite the contrary.
2028 Nationwide Rent Control by president Newsom
I would start by limiting foreign ownership of non-commercial RE assets.
There are many countries that only allow its citizens to own property.
Would also institute a policy whereas only property owners were allowed to vote since they have “skin” in the game so to speak.
Will we see cell phone rate controls? Or the rates for internet connections? What about I-phones, Apple stock prices, cars, food…? I understand that price controls are having quite the effect in Venezuela.
Fighting the law of supply and demand makes as much sense as protesting the law of gravity by jumping off a cliff. The fact is that land, labor and materials are very expensive in the Bay Area. Taxes, fees, etc…as well.
Phone rate controls? No way. The big comm corporations pay off and bribe(political contributions) the politicians. The politicians are in it for money, power and personal gain. Period. They would never bite the hand that feeds them. The politicians pretend like they care about the middle class, but that’s only to get their votes.
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