Posted on 03/07/2019 8:55:47 AM PST by SeekAndFind
Last week, Oregon became the first state in the nation to adopt a mandatory statewide rent control policy. Yet, rent control never delivers on the promise that it will multiply the affordable housing in high-value markets to serve middle- and lower-class families. It also always has negative consequences, and this time will be no different.
The new statewide law applies to landlords who have at least four units, one of which is at least 15 years old. It prohibits them from increasing rent more than seven percent over inflation annually. The bill also prohibits no-cause evictions after the first year of residency, in addition to the protections against eviction already on the books.
The change comes after the median rent in the state increased by 14 percent over three years during the population boom. The largest hike took place in Portland, Oregon, where, according to The New York Times, rents have grown by 30 percent since 2011.
The Beaver State's new law is quite a stunning move, as 37 other states actually prohibit cities from implementing rent control. There's a reason for that: It doesn't work. Rent control didn't provide more affordable housing when it was implemented in various regions back during the '70s, and it hasn't worked since. It didn't work when they tried it in Paris, and it isn't working now in New York City, Washington, Los Angeles or San Francisco where rent controls are currently in place. It won't work in Portland, either.
Brookings Institute associate professor of economics Rebecca Diamond did a recent review of the literature on rent control, finding that "Rent control appears to help affordability in the short run for current tenants, but in the long-run decreases affordability, fuels gentrification, and creates negative externalities on the surrounding neighborhood." The reason is simple and boils down to the law of supply and demand. While some of the people renting may benefit from rent control by removing some of their risk, it also gives landlords an incentive to alter their supply of rental property.
They have several options based on the circumstances. First, they may withdraw their properties from the rental market to sell them as condos. Former George Mason University Chairman of the Department of Economics Donald Boudreaux summed it up nicely in a 2006 letter to the editor of The New York Times. "By decreasing the profitability of supplying units occupied by renters, these controls spawn condo conversions and prompt builders to construct fewer rental units and more units for sale to owner-occupiers. People who can't afford to buy housing are unnecessarily disadvantaged." Landlords may also stop investing in maintenance, which, over time, may lead to neighborhoods with many run-down properties. The bottom line is that rent control never increases the supply of affordable rented housing.
The good news is that the rent control legislation in Oregon may not be as punishing as we fear. Looking at Zillow's data on neighborhood rents from 2010 to 2017, my colleague Emily Hamilton only found seven neighborhoods out of 98 -- all of them in Salem and Bend -- where the median rent increased by more than seven percent annually. It means that a small number of neighborhoods will be affected and the negative impact of the law will be limited. That is, of course, until legislators get pressured into lowering the threshold to the point where it does take a bite out of the rental market and prevents growth.
Now, there is something that legislators in Oregon can do if they truly want to slow down the growth of rents, Hamilton tells me. First, they could eliminate -- or, at the very least, reform -- the zoning laws that restrain development in the state. There's a bill going through the state legislature that would take a stab at terminating zoning restrictions that allow only single-family homes in many neighborhoods. Second, they must reform the state growth boundary requirement, which creates boundaries around urban regions outside of which no development can take place. That reduces the supply of development and, in turn, jacks up the rents. Making matters worse, the regulation has formulas that allow the boundaries to grow only slowly.
Slow development opportunities and high rents go hand in hand. Time for a new approach.
Land lords take the max increase every year no matter the market. That’s what I was advised by my property managers. It worked. People would grumble and pay up.
Last week, Oregon became the first state in the nation to adopt a mandatory statewide rent control policy.
—
As one Freeper posted recently on another thread on this subject:
Is it still rent control if it’s not mandatory?
(Question for the Department of Redundancy Department.)
>>The change comes after the median rent in the state increased by 14 percent over three years during the population boom. The largest hike took place in Portland, Oregon, where, according to The New York Times, rents have grown by 30 percent since 2011.
Yet, the bill allows up to 7% increase annually which would not have prevented the increases they are citing as justification.
The Oregon Rats KNOW that rent control doesn’t work, so they crafted the bill so that they can claim to have passed ‘rent control’ without there being the effects of actually controlling rent. It’s all just Kabuki theater until someone takes the idea seriously.
Just another step on the road to complete government control of private property. They aren’t there yet, so they limit how you can use YOUR property.
When they get full power, YOUR property becomes the collectivity’s property.
Sounds like a great way to drive out rental developers and put the housing market into bubble growth.
That’s what I’m hoping. I want the value of my home to go as high as possible in the next ten years. That way I can retire and move back to the USA.
During WWII Chicago had rent control (and for that matter it may have even been federal). That my dad struggled with when he owned a brick 3 story, 9 flats of 4 room apartments building which was already 60 years old in Chicago’s Bridgeport community .
Needless to say the place needed continuous maintaining plus apartment upgrading which was impossible to do at $6.00 per month.
I know of a far left psycho who moved from NJ to the outskirts of Portland Oregon. When you think Antifa,Socialists and their ilk, this is what she represents. She bought a home with a magnificent home with stunning view years ago. Within the last five years that stunning view is no more and vast cookie cutter million dollar homes occupied with the flood of California refugees are “gentrifying” and bringing their “politics”. LMAO
Massachusetts eliminated rent control years ago.
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As a life long bookkeeper/accounting person, I can tell you that landlords have expenses that often exceed any legislative limit restriction.
Landlords do NOT control the maintenance costs....the property taxes.....the power/gas/water rates......and most of all: They don’t have alot of control over the quality of renters.
IF I were a landlord in any part of the country-—I would:
Never be a landlord to Section 8 renters
Never have a small ‘security’ deposit.
Require inspections at MY discretion with 24 hours notice..
Require a list of the cars/pets they will have there.
NO snakes, etc, No Pit Bulls, etc.
Also- I would require a criminal background check & a credit check===both of which must be current.
Don’t want to allow a criminal background check? Then, WHEN you have a registered SEX OFFENDER in your apartments, you are even MORE Liable for the small children & women elsewhere in your apartments.
Are you willing to lose everything you have over having a criminal in your properties?
I was a Property Manger for 3 years in a college town in my younger life.
It was nothing but headache after headache after headache. While I’ve had rental property opportunities come to me, my previous experience has tainted that so badly I have absolutely no desire.
How Nixonium of them.
7/11/2008 - While aggressive evictions are reducing the number of rent-stabilized apartments in New York, Representative Charles B. Rangel is enjoying four of them, including three adjacent units on the 16th floor overlooking Upper Manhattan in a building owned by one of New York’s premier real estate developers.
Mr. Rangel, the powerful Democrat who is chairman of the House Ways and Means Committee, uses his fourth apartment, six floors below, as a campaign office, despite state and city regulations that require rent-stabilized apartments to be used as a primary residence.
Mr. Rangel, who has a net worth of $566,000 to $1.2 million, according to Congressional disclosure records, paid a total rent of $3,894 monthly in 2007 for the four apartments at Lenox Terrace, a 1,700-unit luxury development of six towers, with doormen, that is described in real estate publications as Harlem’s most prestigious address.
The current market-rate rent for similar apartments in Mr. Rangel’s building would total $7,465 to $8,125 a month, according to the Web site of the owner, the Olnick Organization.
Rent controls will result in fewer rentals, not cheaper rentals.
Years ago, Hawaii tried price controls on gasoline. They abandoned the plan after just eight months because instead of cheaper gasoline, they got less gasoline.
And who can forget the mess with California's price controls on electricity? Cheaper electric power was not the result but rolling blackouts were.
The unintended consequences of well-intentioned government intervention.
Rent controls in Oregon will end in a disaster of fewer rental units and higher rents.
Rent controls will result in fewer rentals, not cheaper rentals.
Years ago, Hawaii tried price controls on gasoline. They abandoned the plan after just eight months because instead of cheaper gasoline, they got less gasoline.
And who can forget the mess with California's price controls on electricity? Cheaper electric power was not the result but rolling blackouts were.
The unintended consequences of well-intentioned government intervention.
Rent controls in Oregon will end in a disaster of fewer rental units and higher rents.
Liberals NEVER learn the lessons of a free market.
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