It is a given that CA legislators are economically illiterate, but it is also a given that they have a severe animus against landlords and their property rights. After all to a socialist a landlord is public enemy #1. But all of their steps toward destroying landlords property rights have disastrous unintended consequences that actually fuel the rental housing shortage. Let us take the recent move to pass a rent control initiative, a measure that was luckily voted down by the people. Just in the shadow of this disastrous measure and its possible passing the following happened.
- Landlords that hadn’t raised the rents in years all raised their rents. Why, they were facing a draconian process of having to ask for a rent increase from an unelected rent control board and then the increase would be tied to the CPI and limited to 2% a year. So if the rent on your property was $1,200 a month, you could only raise it $12, or a whopping $144 a year! Given the real inflation rate adding in all such items as energy and construction materials and the ever rising bevy of taxes, water, sewer and garbage costs and you have the recipe for disaster. Anyone remember the Slumlord phenomena?
- Many landlord only own one or two rental homes. Facing the possibility of more stringent over regulation they decided to throw in the towel last year. Many of these investors sold their rental properties to first time home buyers, taking them off the rental market for good. If the legislature continues on the road to seizing landlords property by patently fascist measures, this trickle will turn into a flood.
- Then there were the rent control radicals who wanted a $6,000 move out stipend that would have to be given to all tenants asked to leave by the landlord. This of course can wipe out several years of any profits for them.
I fully expect that the Economic simpletons will wade confidently forward on Leviathan legs to misappropriate more landlords property rights, so expect a tidal wave of landlords selling their homes in the near future. If Realtors think that this will be a heyday for them, it won’t be for the homeowner. One of my largest investors owns over 150 houses in one area of Sacramento. Imagine if he decided to sell all of his rentals at once? He would single handedly suppress housing prices in that area. Now imagine all of the other large and small investors joining him in getting rid of their rental properties before the illegal taking of it by the legislature goes into effect?
One can imagine what the homeless problem will be when the supply of rental housing drops by another 50% or more in CA. This is what is on the horizon and the idiots driving the short bus to this devastation is the more left leaning Democrats in the CA legislature. It is time for any remaining Blue Dog Democrats to stand up and fight for sanity and economic reality in CA.
This is probably why the legislature also put forward a measure recently that would allow tenants to take in homeless people for up to 12 months and landlords wouldn’t have any say about it. It doesn’t matter that this violates the rental/lease agreement, landlords would be forced by CA law to accept this untenable situation. It seems to be that the legislature is actually preparing for a dramatic increase in homelessness doesn’t it?
The only way to stop the rental housing shortage is to fast track building and the only way to do that is to significantly drop the price of the permit and connection fees that have doubled or even tripled over the last 10 years. I personally know many owners of vacant lots in Sacramento who would love to build single family and multi-family residences and they all tell me, “Craig, the permit and connection fees to build have become so high that I cannot build on my lot.” Add on to these burgeoning costs the ever growing pile of requirements that all new builds must have and the cost to build new homes skyrocket. If you want to know why housing prices and thus rents in CA are so high, one needs only to look at the CA legislature and Governor, better known as the inflationists and chief.
If Gruesome Newsom cant seem to find a mirror to see who is responsible for the high price of gas in CA, do not expect him to ever realize who is ultimately to blame for the high housing prices and the rental shortage and with a shortage of anything one always gets higher prices.