As a Realtor® there are many times I scratch my head about what legislation and policies the California Association and local Association of Realtors® is backing. The coming rent control measures is no different. Here are two disastrous Rent Control measures that will pillory landlords, drive up rent prices and cause a massive rental housing shortage far worse then we have right now, and nary a peep is heard from C.A.R. and the rest of the Associations.
One must remember though that special interest groups gain off of “progressive” policies. In this case Realtors® are set to have a wind fall drop in their laps. There has been a very tight housing market the last few years with far too few properties for sale on the market. It seems no one was selling. Now with the coming wave of debauching the landlord looming over all our heads this logjam is about to burst! Already smaller investors are beginning to list their rental properties for sale. The Block Busting of investors is truly about to begin. FEAR will drive the coming housing market as landlords seek to dump their investment proprieties on the market to get out from under the STATES draconian rent control.
This is a boon to real estate agents sitting on the sidelines waiting to sop up all of this extra listing and sales potential. So, why fight a quick and easy way to make thousands of dollars of of the misery of landlords? The flip side of things is that as these properties hit the market the price of housing will go down making it more affordable for first time home buyers. Previous renters kicked out of their rentals as they are sold will have very little choice but to buy a home, or go homeless. So now we get a twofer. The Housing Market booms!
So in the short term real estate agents will win big, but in the long run it will be a disaster. Thousands of rental properties will be converted to owner occupied dwellings. Thousands more will sit vacant as landlords will be reticent to rent to new tenants under the new laws. Rental housing starts will fall as builders and investors will not want to build new apartment buildings under the new draconian laws.
Everywhere rent control has been tried it has had the same disastrous results, rents increase, rental housing decreases until it becomes a chronic shortage and yet the economically illiterate and the historically ignorant continue to think that human nature and the laws of economics can be changed by mere emotional whim and State interference in markets. The problem with the emotional reaction to do something now, is that the law of unintended consequences stalks your every move.
The only real world solution to any resource shortage is building more supply. The California legislature and local governments desperately needs to make it easier and far less expensive to build housing throughout the state. If they loosened the reigns here, then the number of rental housing units built in CA would increase dramatically, and this new supply would bring down all rental prices. This is the only real world way to do so, everything else is just fantasy by people who believe that the economy can be run on whim, unicorn flatulence and fairy dust.
So, if you want to double the homeless population then by all means pass your draconian rent control measures, but if you want real world solutions to the housing issue, then what you need to do is make it cheaper and easier to double the supply of rental housing.
Some links to articles about rent control;
Rent-control initiative could obliterate state housing markets