Posted on 08/15/2023 7:29:30 AM PDT by Twotone
California cities are adopting rent control as housing production plummets, leading to further declines in the housing development necessary to make rents more affordable. The neighboring Los Angeles County cities of Maywood, Bell Gardens, and Cudahy, each dense, renter-heavy communities long known for their affordability, have adopted rent control measures, according to The Los Angeles Times. The efforts are aimed at preventing outmigration of longtime residents as vast shortfalls of housing production and increasingly high desirability have led housing prices to explode.
Citing high levels of local poverty, especially among the elderly, the City of Maywood froze rent increases through September and is limiting rent increases afterwards to the lesser of 4% or the annual rate of inflation, writing, “the city finds such an increase provides a just and reasonable return on a landlord's property.” Should a landlord wish to make any capital improvements, they can file an application to pass on half of the cost of such improvements to renters, amortized over five years. Bell Gardens’s and Cudahy’s measures went even further, respectively limiting rent increases to the lesser of 4% or half the rate of inflation, and 3%.
While data for housing production in each of the three cities is unavailable, housing production data for the neighboring City of Los Angeles provides a bleak picture of the state of housing production in the area. In 2019 in Los Angeles, 20,645 market rate and 5,492 income-limited “affordable” housing units were approved. In 2022, there were just 12,967 market rate and 3,987 “affordable” housing units approved, or a decrease of 35% overall. Even with rents and thus potential returns surging – using the Department of Housing and Urban Development’s Fair Market Rate, or what it estimates as the 40th percentile rental rate, Los Angeles County’s fair market rate for a studio apartment has increased from $1,158 in 2019 to $1,534 in 2023, or 10% more than inflation. The Dodge Construction Network estimates new housing starts in Los Angeles are up just 2% over 2022 due to continued difficulty building new housing.
Under these new rent control programs, critics believe housing production will decline even further, as such measures will disincentivize housing production and result in investment funds being directed to more attractive investments elsewhere with higher, safer returns.
“Study after study has shown that rent control both reduces the amount of units on the market and reduces the quality,” California Apartment Association Senior Vice President of Local Government Affairs Fred Sutton told The Center Square. “These cities are not passing any laws to increase their housing supply. We’re in a situation where there are more people who want to live there than there are units, and these cities are passing policies that disincentive investment into their cities while not creating a single new unit in the process.”
Sutton also noted that with property insurance, especially fire insurance, rates rapidly climbing as insurers exit the state due to rises in claims, housing will become even more expensive, and rising insurance costs will further deter the construction of new housing.
“Fire insurance has skyrocketed so much that those dollars have to be passed on to the resident living there or the building is not viable as a business,” said Sutton. “A lot of policymakers do not understand that there are costs of operation, and that housing as a service does not just appear out of thin air.”
Can the Renters stop renting or are they stuck for life ?
Just wait until all those rental complexes and condos are mandated to install EV charging facilities, upgrade all appliances, and adopt other environmental mandates.
What a lousy market to be a landlord.
Sell and get out!
And what about property taxes? Do those stay static?
Do the property taxes go down as the value of the houses increase?
Between Taxes and Insurance. Getting bad renters and evicting non paying tennants. Going to be hard to be a landlord as a business.
That's the plan, to get the MegaCorps to buy up all the properties on the cheap. And then the government takes over all housing.
Oh, gee.
Rent Control. That’ll fix the problem. For sure.
I guess they have never read Thomas Sowell’s book “Basic Economics: A Citizen’s Guide To The Economy”.
“That’s the plan, to get the MegaCorps to buy up all the properties on the cheap. And then the government takes over all housing.”
Bulldoze all of the stand alone single families. Put up Gov Housing projects...
Ya, that will make it even nicer and attractive for people to live there.
Trying to build a house in SoCal, specifically Los Angeles County is a monumental affair. First it will take a Minimum of 1 year to get any initial permit, during which time you can expect to spend a minimum of $100,000 Dollars trying to satisfy the building dept. If you are lucky and have a good expediter you should be on the way in 1 1/2 years. But that is just the beginning of the nightmare. You should expect to spend another $200,000 in misc crap over the next 3 years before you get your Actual Building Permit.
In other words:
If you plan on building your own home in SoCal, go out in the backyard with $100,000 in CASH and LIGHT IT ON FIRE FIRST, just to get warmed up for what is to come.
“Can the Renters stop renting or are they stuck for life ?”
Why would they EVER “leave”?
The NY model, a rent controled apartment stays in the same family for generations. The owning family becomes a business making money sub letting that rent controled apartment.
In an area like NYC, the income on renting a property can be more profitable than working.
It won’t get any better.Owners should sell.
Rent control is the government unjustly interfering in a private transaction between an owner and a renter.
The government does not have to right to set rental rates. If it takes that right, it proves by that very fact that the country is no longer in a free market economy.
These lefties who promote rent control never, ever accept the consequences of such actions - fewer rental units.
In SoCal, 80% of rentals are owned by “mom and pop” outfits - who are busy selling out to developers as quickly as possible due to rising costs, rent control mandates, people living rent-free for years due to COVID restrictions, exorbitant taxes, fees - owning rentals becomes untenable.
The developers, buy up the properties, come in - they know how to get around all kinds of restrictions - kick out the renters, renovate the units and turn them into pricey condos WAY out of the former renters’ ability to pay.
Then the former renters load up the jalopy and move to Oklahoma, and that round of the cycle is complete.
kick out the renters, renovate the units and turn them into pricey condos WAY out of the former renters’ ability to pay
Then the former renters load up the jalopy and move to Oklahoma, and that round of the cycle is complete
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Except they can no longer drive that jalopy out of Calif on Calif roads cuz
it failed smog test.
Fewer rental units is not the worst effect of rent control.
Landlords will refuse to do needed repairs and let the properties deteriorate over time.
It can be many years before the negative impact gets obvious—but rent control is a great way to turn decent areas into slums.
Ya, that will make it even nicer and attractive for people to live there.
Eventually the plan is to put us in barbed wire enclosures with guard towers.
Fun fact: if your vehicle's registered address is any state other than CA, AZ or NV (meaning that's where the annual registration is mailed) you do not have to get your car smogged. We were in Florida for several years, caring for my mother, before we decided to move here permanently. We never had to provide a smog certificate. Of course, where would we even get one in Florida?
I think the DMV will issue a short term certificate to get such a vehicle out of state. Back in 2005
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That was 8 years ago.
I looked at dmv website, can’t find that under smog cert exemptions .
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Fun fact: if your vehicle’s registered address is any state other than CA, AZ or NV (meaning that’s where the annual registration is mailed) you do not have to get your car smogged.
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Fun fact
6 months residency and you are required to register and smog your vehicle.
Not so fun fact
Not all counties in California require smog certs. The one I live in does.
2nd generation Calif resident of dustbowl okie refugee that I am , the jalopy post tickles my funny bone.
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Gov’t cannot take control of someone’s property.
This should be in court asap.
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