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?
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.
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/
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...
[2]: https://sanfrancisco.cbslocal.com/2016/10/21/san-francisco-v...
[3]: https://en.wikipedia.org/wiki/1978_California_Proposition_13
[4]: https://calmatters.org/housing/2018/03/data-dig-are-foreign-...
[5]: https://www.cnbc.com/2019/07/17/foreign-purchases-of-america...
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.
The inequality gap must be lessened for there to be sustainable growth in the housing construction market; this rent control is part of that.
There's a literature on this; there's no need to speculate.
Another thing worth checking is the IGM Economic Experts Panel, which covered rent control in 2012: http://www.igmchicago.org/surveys/rent-control
Yes, which is why a rent-control law is too simplistic to be a solution.
