Any price control inevitably has negative consequences in the market. This is practically a law of economics.
> Its limited to buildings that are 15 years old or older, and it limits rent increases to 8% annually, which in practice is about 1 - 3% of all lease agreements in CA, a very small amount.
If it with have such minimal effect why even have it?
> Commercial construction loans are based on the 15 year revenue generating potential of the proposed building, this law was created specifically with that in mind so as not to interfere.
Then it's not as bad as it could be. Doesn't mean it's justified.
It may not seem justified to you, but to a low income family in a rapidly gentrifying area, it means everything.
And what is the magnitude of the consequences of this law? That’s what matters. It’s very small.
There is an exception: if the price ceiling is higher than the market price, then the ceiling will have no effect. It may be that the allowed rate of increase is high enough that it's an ineffective price control, in which case there would be minimal market distortion.
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.
- 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.
Rent control deters the creation of new housing. This reduce in supply raises the price, which is bad for the poor - exactly the people it is meant to help.
> Rent control deters the creation of new housing.
I keep seeing this repeated but I don't understand. Why does rent control deter creation of new housing?
> This reduce in supply raises the price
But you've glossed over why supply is reduced. I don't see any reason that supply would be reduced with basic moderate rent control like this one.
Edit: I have tripped some wire (?) and am not allowed to post any more. In response to the comment below,
> https://www.google.com/url?sa=t&source=web&rct=j&url=https:/...
That seems to be Washington, not California. According to http://www.hrc-la.org/doc.asp?id=36 it seems to read that some leases allow rent increases mid-lease.
