Housing shortageIncome PropertyResidential Income

Rent Control & Proposition 10

This is for all those who have asked my professional opinion regarding Proposition 10, which makes rent control possible in California, basically by voiding the 1995 Costa-Hawkins Rental Housing Act.

In the process of evaluating this ballot item, I researched a number of relatively contemporary studies and reports. Doing so was an interesting study in how arguments are crafted without ever saying what the source of information is, or proving the validity of same. Below you’ll find a collection of web-based documents I used. Happy reading!

I am not including support for my position in this writing. The facts and arguments are contained in the documents below. If my statement is not convincing, you’re welcome to do your own research.

What I have been able to determine is that rent control most benefits those people who are living in a rental at the time rent control is applied, assuming they remain in that unit. Those people have two benefits. First is the social benefit of being able to continue living where they have been living and know the locale, the neighbors and are close to the places where they regularly travel. Second is the financial benefit that attends having a predictable rent which does not periodically take huge jumps in concert with the ebb and flow of US economic conditions.

As time goes on, laws are gradually changed, and landlords find work-arounds that avoid rent control. As it was stated in one paper, “Rent-controlled buildings were almost 10 percent more likely to convert to a condo or a Tenancy in Common (TIC) than buildings in the control group, representing a substantial reduction in the supply of rental housing.” At that point rent control becomes not only useless, but acts as a constraint on those who would find a more effective or fair way of dealing with the problem of income inequity.

There appear to be lots of different ways to address the problem of inadequate housing for lower and middle class households. The basic rent control mechanisms employed today have not been updated to contemporary standards of research, thinking, and analysis. If we were to apply some “big data” techniques to the problem, there could be some newer, more successful plans developed, much as is being done right now in the field of public housing projects. Ideas that have failed over time should be trashed and new emphasis placed on finding solutions. That has not been done. We are still tossing up the same tired ideas and unproven concepts, and arguing over ancient “facts.”

None of those improvements will take place as long as the current prohibition on rent control continues to exist. While the Costa-Hawkins act remains in place there is no motivation for government or landlords to look for a solution. As is stated in the Haas report, “California can protect cost-burdened renters from exorbitant rent increases and displacement while also increasing the needed supply of housing, provided that we take a comprehensive approach that includes rent control among multiple policy mechanisms and investments.”

We need that comprehensive approach, and we need a serious, unbiased look at how to make housing a “non-concern” for our citizens. In short, we need to vote “Yes” on Prop 10 and then put our elected representatives to work funding a serious study and solution. Note I said “funding,” not “finding.” This needs to be accomplished with government money, not with money from an industry noted for finding ways to make more money, more easily. Profit cannot legitimately be the goal.

https://www.gsb.stanford.edu/insights/rent-controls-winners-losers
https://psmag.com/economics/can-california-repeal-state-wide-l
https://sf.curbed.com/2018/9/27/17910948/uc-berkeley-haas-rent-control-prop-10
https://haasinstitute.berkeley.edu/sites/default/files/haasinstitute_rentcontrol.pdf
https://psmag.com/economics/in-defense-of-rent-control
https://caanet.org/app/uploads/2016/02/Jan2016_Rent_Control_Study.pdf
http://www.lao.ca.gov/Publications/Report/3345
https://www.nmhc.org/news/articles/the-high-cost-of-rent-control/

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