How California Is Redefining Rent Control | WSJ

– [Reporter] If you live
in New York your city became unaffordable to rent in in 2004. See this line? That line is 30% of what you make. Generally for rent it’s advised you don’t spend past that
line, but if you live in Miami you probably passed that line in 2001 and in Chicago in 2012. Los Angeles has been plain
unaffordable since before 1979. Rent is growing faster than the money most people make to pay it. Either wages have been relatively
stagnant like in Atlanta so it’s hard to keep up or supply doesn’t keep up
with demand like in Houston. Until the last few years solutions have remained pretty local. San Francisco had its own
rent stabilization laws. New york did, too, but
now to protect millions from financial renter’s ruin
California upped the stakes and passed a state-wide cap of 5% a year on rent increases making it the second state behind Oregon to tackle the problem on such a high scale which begs the question,
if California could do it and it actually works out
does that mean laws like it could start popping up
all over the country? – You can understand why it
would be an appealing solution to that problem, and it’s
essentially a costless solution to policymakers ’cause it
doesn’t cost the taxpayer any direct money unlike subsidies or other types of interventions. Rent control is simply a policy, right? While I think it’s
understandable that policymakers are increasingly looking
for creative solutions and rent control is in some
ways an out of the box solution we need to think more expansively. – [Reporter] Across the country that might mean protecting tenants from eviction without just cause, giving tenants the right to legal counsel, or creating non-discrimination policies against tenants using housing vouchers. – Typically we don’t actually have what people think of
as rent control anymore which is a strict price
ceiling that’s inflexible. Those started in the 1920s
and grew in popularity after World War Two to
address the housing needs of people coming back from the war, but we learned very
quickly that flexibility was important to succeed and make sure that rent regulations weren’t
actually making it harder to build more housing and find housing. Since the 1970s most rent regulations are what we call rent stabilization. The standard features would be to have some sort of limit on
how much you can raise rent while a tenant is living in the unit. – [Reporter] Which is
exactly what we’re seeing in California’s bill
capping rent increases to 5% plus inflation. The law also provides other
kinds of tenant protections like requiring landlords to provide a just cause when evicting tenants. – Where we see growth is
in rent stabilization. We don’t see a lot of the
extreme cases of rent control anymore, where they do
exist they’re fading out. So you can think of the
California and Oregon laws as more anti-gouging laws than they are traditional rent stabilization laws. You can think of an anti-gouging law as trying to curb the
worst excesses, right. It is not intended to limit
normal rent increases, but extraordinary rent increases
which may be driven by, for example, gentrification pressures. – [Reporter] That 5% cap in
California is meant to cover those extraordinary rent hikes. Nearly 30% of rentals in the Sacramento and Riverside areas saw rent
hikes more than 5% in 2018. And 12% of rentals in the Bay Area saw rate increases larger
than allowed under the bill. But rent stabilization has
more than a few critiques. – With rent regulation
in general the debate tends to devolve to one side arguing that limiting price sends the
wrong signal to the markets. It reduces incentives
for landlords to invest. That I think was the
dominant view of economists for many years although I think the debate has moved beyond that simple perspective. On the other side people
emphasize the imbalance between landlords and tenants in terms of when tenants can be evicted,
under what circumstances, on what reasons, can have all sorts of collateral consequences
for people’s lives. – [Reporter] Proponents of the bill argue that those critiques get addressed through exceptions in
the bill like exceptions for small mom and pop land owners or the bill expiring after 10 years or exceptions for new buildings
to inspire new construction. But experts are still skeptical if something like this could
blanket apply to the country. – But I don’t think that
one size fits all solutions, particularly a national rent control is going to work across all markets. We have essentially a mixed bag and a lot of disagreement in the field. And it’s fairly novel
to have a state do this. Before we move from state
to federal protections we really need to see how it works in places like California and Oregon. It’s hard enough to do
that at a city level. We’ll see how they can
accomplish it at the state level. It seems next to impossible at this point to do it at the national level. – So if the question is,
what’s the trajectory of this policy, I don’t think
we’ve seen it play out fully. I think there’s a lot of energy from local government officials
and tenants themselves, and I think that energy is
actually going to increase. We’re in a housing crisis
across the country. Although rent regulation
and tenant protection isn’t the only solution to that crisis I think there’s a growing
recognition that this is a policy area that’s
garnering increasing support, and the fact that you now
have statewide approaches, and I think we’re likely to see more and we’re now beginning
to see national proposals I think means we’re at the
beginning rather than the end of the policy conversation.

100 thoughts on “How California Is Redefining Rent Control | WSJ

  1. Rent control forces rent increases to maximum amount because owners have no choice but to raise to the maximum to maintain property current and future peoperty sales values. It is good for renters who never move, but bad for renters moving because rents are artificially pushed uo to maintain property values and rental incomes. I beleive rental unafforadabilaty is in large part unaforable due to rent control in certain cities over the last 30 years.

  2. I'm glad here in Toronto that rents are basically capped at inflation – which is 2%. Housing supply is low because of mass immigration and building restrictions that impede supply. It's no longer affordable for the average wage earner to live in major cities.

  3. Just move to Michigan and you wouldn't need to deal with this. I don't see why people complain about rent, but refuse to move out of bigger cities. You don't deserve to complain if you have options.

  4. rent is only high because there are people are willing to pay those high prices. If you cant afford it maybe its time to move out or get a better job.

  5. Do not solve a problem created by regulation with more regulations.

    Rent control is a temporary solution. A better solution is flexibility / deregulation of building laws, so we can have high-rise apartments (supply to meet demand) especially for larger cities. Why can't Los Angeles look more like Tokyo and Seoul where they can build such high rise buildings and maintain affordable rent.

  6. This rent ceiling is a very stupid method to affordable housing. If you put rent ceiling as an option on the table. Any landlord will now increase their rent before the law passes. Then nee building will maybe not be build because it is not so profitable. So demand for creating new space is reduced, which will lead to fewer supply which puts more pressure on rent prices. Best would be Gov reducing regulations for new permits. Allowing some industrial areas being converted to residential and co finance apartment blocks

  7. I’m interested to see how this will play out on the state level. It should stay like that, state by state decision. A federal law capping rent increase should never come

  8. Millions of invaders allowed in and allowed to stay by The Party for glorious revolutionary support. Housing shortage is just one of the results. Keep voting for The Party, comrades.

  9. In religion, there is a thing called presupposition where foundational arguments are assumed as a given. The master/slave relationship in capitalism works via the same device. The slavemasters love this type of media as it presupposes that the landlord-tenant relation is legitimate. It's not! It's a spiritual crime invented by usurers in the past few centuries.

  10. This is allready law in Vancouver, british columbia but if your tenant leaves your alowed to do renovations and jack up the rent again. Moral of the story is theres allways a way around the game and the rich will continue to play the game . Coffin apartments (like Hong kong) coming to a city near you.

  11. The goverment controlling the price, what a terrible idea! Supply and demand will take care of the cost, just like it does on other products or services. And if that means the rent is to high for someone, then they need to move to somewhere cheaper.

  12. Quite sad how in so many cities, a couple earning minimum wage can’t even afford to live a studio that’s up to code (and not have to worry about paying the bills & meals).

  13. It's your property you should be able to make whatever agreement you have with your customers without the government coercing you!

  14. Gavin needs to overide all the existing red tape that hinders new housing development. It's the nimby crowd that needs to get slapped around a bit so they know the world does not revolve around them. Californians voted for this by a huge majority. It's time for these lawmakers to end the bs bureaucratic nonsense haulting everything.

  15. Price controls don’t work it makes things worse. Why doesn’t California lower their taxes? Or how about the fed stop devaluing people’s saving and end inflation?

  16. My landlord raised rent by 300 in a year . we have been in the same place for 14 years. He fixes nothing nor has he painted . We have the original carpet from before we moved in .

  17. I'm not watching this garbage. In the end the idiot liberals move to red states for the quality of life they've voted themselves out of, only to continue their mental retardation and vote democrat come November. Makes sense huh?

  18. Paying $2000 rent when a person makes $500 a week? And then they force to have roommates is a joke. And even if people live in Oklahoma people are paid very low but housing is cheap in a way you don’t win anywhere but the hipsters need to stay where they come from they cause these rent hikes!

  19. 30%? Are you crazy? That number only works if you have a two income household. Any single person with a decent career (making around 50k a year) will be spending about 50% of their income for a house or apartment.

  20. A few years ago (2017?) Ireland capped rent virtually country-wide at 4% annually and strengthened pro-tenant laws considerably

  21. 5% ?? well that assumes everyone in the city is getting 5% annual raises , and most arent .. Most companies give 2-3% raises meaning people are still getting poorer by the day

  22. The cap on rent increase already existed in Germany. It's not a new idea, and California did not come up with it. It could've been implemented countrywide a long time ago. The real story is why it wasn't.

  23. Rent regulation increases inflation in something called 'inertial inflation'. Because the increase is limited, the assumption is that price has to increase. Typcally either the economy is booming or busting. If it's booming you have higher inflation, if its busting, you have lower inflation. The problem with inertial inflation is during the bust you maintaing high inflation. This causes a long recession because the economy cannot stabilize. Think 2009, but milder only with a longer duration. It doesnt sound as bad, but its actually worst.

  24. 5% a year is still too much. If wages continue to remain stagnant and the cost of everything goes up every year there becomes a breaking point where people just have to put on yellow vests and occupy the streets.

  25. Denver Colorado has seen rent increases of 25% every 6 months for the last 4 years. Don't move to Colorado! "It's a trap"

  26. Ah rent control, Another fine example of the government coming up with a solution to a problem they created.
    Let’s all give a big round of applause to the federal reserve bank Inflating your Currency a minimum of 2% a year or more. God for bid a working person should ever be able to save money and earn interest in a savings account

  27. It’s worth pointing out California caps property tax at 2% annual increase by constitution, so the 5% + inflation is actually quite generous to the landlords.

  28. Rent control is of the few things that economists are agreed on is that rent control is disastrous and should never be done. Truly dishonest nonsense in this video, playing with words to avoid the fact that any law imposing any limits on rental prices is rent control.

  29. How is this going to work???? Maximum at 5% plus inflation. Who is going to be a landlord (invest money in property to rent to people) when they can take their money and invest it in the stock market and get AT LEAST 8% plus inflation

  30. How about CA SIT and FED FICA and FED FIT they take a chunk of money out of our paychecks where’s the outrage in that one .

  31. How about codes, regulation, and compliance driving up prices. Every new house needs solar panels and shot like that. Low density buildings.

  32. I love how Dallas and Huston are just at 30% now, D.C is only cause all the politicians and their bureaucrats live there, and their the most free market economy in the union 0% property taxes or income tax. The ones who "try" to fix the situation are only make the process harder and more expensive for everyone.

  33. We tax everything from tea to to the paper that makes the bags the tea comes in why not tax Wall Street or star cutting my taxes

  34. Rents have more than doubled in the Bay Area due to high tech jobs that pay certain employees very well. They are plentiful enough to cause a huge change in the whole market, New housing is being built like crazy and none of it is affordable. People who have rented the same place since the recession have seen rent increases of over $200-300/ month and more in one year and when rent control laws came up on city ballots renters voted for them. Because of this market, mobility has decreased and people stay put for as long as they can. When they move, they leave the area, unless they see a big increase in income. Why not just leave? Because we form communities where we live; we have friends, churches, clubs, teams, organizations, jobs. Moving when we don’t want to upsets equilibrium and security. For those not in tech, well paying jobs have decreased and many, young and older, are in a tough place in terms of getting ahead and beyond staying renters. There is a lot of financial vulnerability.

  35. lol 30% im paying 60% in rent. when i turn 60 im probably gonna be homless I hope i will have the courage to kill myself then.

  36. Some ideas to make housing affordable:

    1. Lax the zoning laws
    2. Convert golf course and cemeteries into housing development
    3. Issue more house permits making it easier to build housing units

    Rent control doesn't work

  37. Rent control and stabilization are provable failures. They only benefit a narrow group of beneficiaries and hurt everyone else. This video gets a downvote for the complete lack of context and skepticism brought to such a terrible piece of public policy.

  38. I want to become a property owner that rents to the type property owner that complains about rent control and keep inflating the rent. See what tune they will be signing then…

  39. It’s seems an impossibility that any tenant could keep pace with any rent increase greater than the cost of living increases.

  40. Following the accessory dwelling unit conversation in California will be interesting. Builders can’t build affordably in California. Projects get tied up in costly lawsuits from environmental groups, municipalities charge incredibly high fees, some utilities charge high connection fees, and the cost of time to get through the build process is Rii full to pinpoint. ADUs leverage existing infrastructure. In October, Newsom signed several bills stripping municipalities of their ability to stop them. Even HOAs now have limited ability in CA. If California is serious about affordable housing, this is where what to watch.

  41. there are more empty apartment and houses than homeless people, it's not about supply or demand, it's about financialization and debt-based financing hoping to sell the cement back at profit. Some people can just gobble up the properties with cheap debt / money with low / zero / negative interest rate.

  42. In Canada, the federal and provincial governments and politicians don’t care about tenant rights. They don’t enforce any policies to punish or mitigate developers and landlords to evict tenants under the guise of a renoviction. Currently, the Canadian supply of homes are not keeping up with the demand for homes.

  43. They will do 5% raise every year now or else they will lose money. This will be bad in the long run. They need to do by fair market share or have housing zone limits.

  44. All tenant protections are an insurance policy paid unequally by the poorest tenants. Landlords are essentially bookies. They have to profit a percent of the overall expenses. Want lower rent; look at the building codes and zoning. Never mentioned is how the greenies have totally screwed the poor. If high efficiency housing paid it wouldn't need to be required by regulation. I've been a landlord for 35 years full time. This will put additional millions in my pocket. Tenants need competition not taxes.

  45. I wish it was so easy to solve such complex problem by just passing a law, this won't solve anything. Price control have always ended up in failure.

  46. The rent control really doesn't matter, because they can raise the rent 5% plus the rate of inflation annually which averages 2%, so hypothetically if a person is renting an apartment for $1500 a month, after 10 years their rent would have increased by 49%, so after 10 years that person would be paying $2,235. It's just a matter of time until the person is forced out, and once the unit is vacant, they can set a new rent rate for a higher price.

  47. NYC and the boroughs Was alot of fun and affordable still in the 1980-90's… now it's muffled, smug and boring. As city full of rich people is boring.

  48. The moment the homelessness issue prop up you guys start to defend the Democrat government…And pretend that you doing Abject journalism

  49. The 2007 bailout went to the wrong people. That money was ultimately used to purchase the foreclosed homes. Now more people must rent, and rent from conglomerates that can afford to keep units empty until they get their price.

  50. 5% + inflation, supposed to "curb the worst excesses"…and rent hikes. But such a high cap will make landlords stretch to that number. No wage increase will keep up with that.

  51. Absurd. Housing is not and will never be a human right. That is 100% your responsability and other taxpayers should not carry the burden of your ignorance

  52. This sounds wonderful. However, my rent just got increased because if this. California is impossible! We need more housing, more competition. I don't think this will work out as well as they want.

  53. Rent control forces landlords to raise the rent every year or else they will be behind market value. If the market value is high enough you would just keep the property vacant further reducing supply. Also, rent control will discourage you from building apartments, further limiting supply.

  54. Everyone of those city’s on the graph are democRAT regions no surprise that nobody especially minority families can afford rent. Higher housing taxes and regulation on where and when you can build in the state of California is one example of democRAT run state government.

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