“California voters will decide on Nov. 6 whether government rent controls would make housing more affordable or even more expensive. Controlling rent hikes would help keep tenants under shelter and off the street. At least that’s the theory.
But controls also could drive up rent prices by reducing housing supply in several ways, it’s contended.
Developers could back off from building new apartment complexes, fearing a lousy return on investment. Existing rental units could be converted to condos. “Mom-and-pop” landlords could sell their single-family rentals to owner-occupiers.
Those are the basic arguments for and against Proposition 10, a citizens’ initiative that would allow cities and counties to greatly expand rent controls.
Under current law, enacted in 1995, the rent control authority of local government is kept on a state leash. Rents on single-family homes or condos can’t be controlled. Apartment complexes built after 1995 also can’t be regulated — nor can others constructed before then if a city already had rent control. In Los Angeles, rent regulations can’t be imposed on any apartment built after 1978.
Proposition 10 would repeal the current law. Cities and counties could regulate rents on any housing. There’s a caveat: Landlords must be allowed a “fair rate of return.” That’s a U.S. Supreme Court edict.
But local governments could impose rent controls on single-family houses, condos, apartments — all of it. Or not, depending on local situations and moods.
California’s housing situation is a mess, becoming increasingly unaffordable in the major cities and along the coast. I hesitate to call it a “crisis” because the word has lost its meaning. Just about every problem these days seems to be labeled a crisis by interest groups and the news media.
Proposition 10 sponsors say that 17 million Californians live in rentals, 7.7 million of them in single-family homes. About one-third spend roughly half their income on rent. Experts say it shouldn’t be more than 30%.
Rents go up, tenants can’t pay and they’re evicted. Senior citizens on fixed incomes are especially vulnerable.
“People end up on their friends’ couches,” says Amy Schur, state campaign director for the Alliance of Californians for Community Empowerment, an activist group pushing the ballot proposition.
“People are making enormous profits in real estate right now,” she asserts. “We want to stop the rent gouging — stop the people who are greedy and want to charge too much. Do we value limitless profit over people having a roof over their head?
“Is this going to be just a state for the wealthy?”
Schur, a longtime housing activist, says that because of escalating rents people “are being forced out of the communities they’ve lived in for decades, where they’re employed and have their social networks. They’re being pushed out too far away” beyond reasonable commutes to work.”