PD Editorial: No on 21: Rent control law won’t end housing crisis

California voters soundly rejected rent control in the November 2018 election for a good reason: It won’t alleviate the state’s housing problems.

In fact, economists almost universally agree that imposing rent control would be counterproductive.

State lawmakers voted in 2019 to cap rent increases anyway, while requiring landlords to show “just cause” for evictions.

Yet here we are again, barely a year later, asked to decide another rent control initiative. Voters should once again say no.

Proposition 21 on the Nov. 3 ballot is virtually identical to Proposition 10, the 2018 initiative that barely mustered 40% of the vote statewide.

Proposition 21 targets the Costa-Hawkins Act, which prohibits cities and counties from imposing rent control on multifamily dwellings built since 1995, or limiting rent increases when a new tenant moves into a rent-controlled unit. The law also bars rent control on single-family homes.

Proposition 21 would authorize cities and counties to restrict rent increases on any multifamily units more than 15 years old, repeal the prohibition on vacancy control and allow rent control on some single-family homes.

But it does nothing to address the root problem: California doesn’t have enough housing for all the people who want to live here. The Great Recession, wildfires, conversions to vacation rentals and excessive restrictions on new residential development have only exacerbated the state’s chronic housing shortage.

The result is predictable: high prices.

There is one surefire way to make rentals more affordable: build more housing. Increase supply, ease demand, curb prices. That’s Economics 101.

Apparently the sponsors of Proposition 21 never took that class. The net result of their approach almost certainly would be fewer rental units, making for an even tighter market for prospective tenants.

Rent control can be a good deal for tenants who stay put for a long time. But there’s no assurance that the benefits accrue to people with the greatest need for low-cost housing.

For property owners, rent control creates an incentive to sell their units to someone who will live in them. Rental property declines in value because the return on investment for potential landlords is reduced. So is revenue for upkeep and maintenance.

You don’t have to take our word for it. Ask New York Times columnist Paul Krugman, a Nobel Prize-winning economist. “The analysis of rent control is among the best-understood issues in all of economics and — among economists, anyway — one of the least controversial,” he wrote in 2000. “In 1992 a poll of the American Economic Association found 93 percent of its members agreeing that ‘a ceiling on rents reduces the quality and quantity of housing.’”

About two dozen California cities already have some form of rent control, but it hasn’t delivered lower prices. Indeed, the list includes some of the most expensive cities in the state: San Francisco, Los Gatos, Palm Springs and Beverly Hills.

In San Francisco, a Stanford University study found, 15% of rental units were demolished, sold as condos or otherwise removed from the market after rent control was implemented. Santa Monica, West Hollywood and other cities that enacted rent control lost units, too.

The state’s 2019 law capping rent increases at inflation plus 5% for homes older than 15 years will remain in effect whether Proposition 21 passes or fails. There’s no need to pile on yet another disincentive for building badly needed rental housing. The Press Democrat recommends a no vote on Proposition 21.

You can send a letter to the editor at letters@pressdemocrat.com.