California Rent Controls: Good Intentions with Disastrous Consequences
[http://www.sandiego.edu/news/business/detail.php?\_focus=67472](http://www.sandiego.edu/news/business/detail.php?_focus=67472)

Quick summary on the problems with the rent control being proposed in California.
[{"id": "dzsgcv2", "text": "link?", "replies": [{"id": "dzsgwd6", "text": "D'oh, sorry. First time back on Reddit after a break of about five years. Will give that another try. Here's the link for you:\n\nhttp://www.sandiego.edu/news/business/detail.php?_focus=67472", "replies": [], "depth": 2}], "depth": 1}, {"id": "dzsh72n", "text": "Just read this myself &amp; couldn't agree more.\n\nhttps://www.economist.com/united-states/2018/05/12/faced-with-a-housing-crisis-california-could-further-restrict-supply", "replies": [], "depth": 1}, {"id": "dzsjdno", "text": "You could follow almost any California law with: \"GOOD INTENTIONS WITH DISASTROUS CONSEQUENCES.\" ", "replies": [], "depth": 1}, {"id": "dzss60l", "text": "So why is it terrible?  You know what terrible?  Nothing but high end luxury apartments being built that most of the population can\u2019t afford.\n\n", "replies": [{"id": "dzsw2c7", "text": "Where do you think affordable prices condos / apartments come from? They are yesterday\u2019s luxury apartments. No one sets out to build Class C product, it just ages that way...", "replies": [{"id": "dzswnhg", "text": "Not if they get bought as a value add play.  Someone puts the equivalent of stackable washers and dryers, faux laminate and faux stainless steel appliances, and lo and behold Class A- rents.", "replies": [], "depth": 3}], "depth": 2}, {"id": "dzthak0", "text": "Moderate priced housing can be built in California if other regulations were eased. Prop 13 generated a gerontocracy of people who bought their homes in the 1970s who want no changes. What\u2019s needed in many areas is higher density housing which will make units more affordable. ", "replies": [{"id": "dztirle", "text": "Not when all the higher density projects are luxury.  The highest profit for developers is either going first cheap with tiny units and no amenities, or high end luxury.  The middle income units are very difficult to find, and the idea to let what was once luxury become C class is stupid because requires 15-20 for those units to become old.\n\nWithout regulation, the free market will build what generates the most profit, and the lower income renter is screwed.  ", "replies": [{"id": "dztlhme", "text": "Yes, a developer is going to want to maximize their profits and sell the most expensive units possible. Other things that are possible include density bonuses for affordable units. New York City does this and it has the benefit of creating mixed income communities. Massachusetts has a statewide law which allows developers to come in and build whatever affordable housing they want irrespective of zoning in any city where at least 10% of the units are not affordable. These types of projects to build affordable housing though do not work if you limit what can be built. Take Palo Alto for instance. Google engineers sleeping in campers because they cannot afford the multi-million $ single family crap ranches from the 1960s and 1970s. The market would tear that stuff down and replace it with higher density apartment complexes and some towers. Do that and have the local governments (or State of CA) mandate a certain # of affordable units and that would be a good first step to providing affordable housing.", "replies": [{"id": "dzu5zbh", "text": "Except when the city allows a fee in lieu, where you pay an amount per unit so you don\u2019t have to build affordable units.  \n\nBottom line, you can say these affordable housing laws are disastrous, but I think having so many people who can\u2019t afford a place to live is even more so.  People have to be forced, or incentivized to build affordable units, but allowing developers to dictate has been more so.", "replies": [{"id": "dzufkgq", "text": "Yes, developers need to be guided and incentivized to deliver a mix of products. Giving them an out like fees in lieu is not going to deliver affordable units unless it is channeled to some development authority tasked with building affordable units. \n\nThe challenge with rent control is that it removes incentives to build or maintain anything. Owners of existing rental properties defer all but basic maintenance. Developers then have no incentive to build units and housing that would otherwise be an affordable rental is taken out of that market, renovated, and flipped to luxury units at a small scale. ", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "dztn7cz", "text": "Expensive land, expensive construction costs, clever engineering, and consumer demand make luxury apartments about the same cost to build as cheap apartments.  Even when they talk about \"affordable housing\" they are just talking about slightly discounted luxury apartments that even low income people could never afford.\n\nRent control both decreases supply of housing (last time it was passed 15-20% of these units were converted or replaced) and decrease the supply of available units further because more people who got in early and won the lottery get to stay in place.\n\nToday, even if you moved into a rent controlled unit today they are so expensive it will never be a 'great deal'.", "replies": [], "depth": 2}], "depth": 1}, {"id": "dzt3zwn", "text": "Norm Miller is a great real estate professor ", "replies": [], "depth": 1}, {"id": "dzt4jyc", "text": "rent control is good for renters that want to buy bc it lowers the value/cash flow for investors, so theres incentive to sell. CA home prices are skyrocketing and homeownership is pretty low, so it makes sense to me that anything that is good for owner-occupancy would gather support.\n\ni dont agree with it, but if you're gonna give owners prop 13 so their property taxes stay low, then rent control seems like it evens the playing field. but thats 2 bad policies instead of one.", "replies": [], "depth": 1}]