Rent control has an obvious appeal in California’s tight housing market.
But complex problems seldom lend themselves to simple solutions.
California’s housing crisis is no exception.
The antidote offered by Proposition 10 on the Nov. 6 ballot — repealing California’s long-standing restrictions on local rent control laws — could instead make a bad situation worse.
Proposition 10 targets a symptom: soaring rents that are pricing some people out of the market. But it ignores the disease: a shortage of apartments and other housing units.
Rents go up when demand outpaces supply. That’s Economics 101 — and it’s California in 2018.
“Rent is high in California because the state does not have enough housing for everyone who wants to live here,” the state’s nonpartisan legislative analyst said in an assessment of Proposition 10. “People who want to live here must compete for housing, which increases rents.”
The remedy is more housing.
Building more housing takes time, and Proposition 10 supporters contend that rent control ordinances could protect tenants in the interim.
That sounds good, and if it were true, we might support Proposition 10. But history shows that price controls reduce the supply of rental housing.
Faced with rent control, many landlords turn apartments into for-sale condominiums or convert their property to other uses. In San Francisco, a Stanford University study found, 15 percent of rental units were removed from the market after rent control was implemented. Santa Monica, West Hollywood and other cities that enacted rent control lost units, too.
Rent control — or the threat of price controls — also is a disincentive for anyone contemplating construction of new rental housing.
Finally, tenants tend to hang on to rent-controlled units even if they can afford nicer apartments. Why give up the low price? That adds to the squeeze in tight markets. Moreover, there’s no way to ensure that available units go to people with the greatest need for protection against steep rent increases.
Those are among the reasons why California has restricted rent control since 1995. Under the Costa-Hawkins Act, rent control is limited to multi-unit apartment building built prior to Feb. 1, 1995.
Proposition 10 would repeal Costa-Hawkins, allowing cities and counties to adopt rent control for apartment buildings regardless of when they were built. Proposition 10 also would allow rent control for single-family homes and condominium units.
California needs to add 180,000 new housing units a year to keep pace with population growth, but construction has lagged far behind for the past decade. The numbers are starting to improve because of rising demand and increased availability of financing for new construction.
There are public policy changes that could encourage housing construction, but rent control isn’t one of them. Cities can offer incentives, such as expedited reviews and reduced or delayed development fees, as Santa Rosa has done for downtown projects.
The state should consider extending its rent gouging law, which only applies during officially designated emergencies.
And voters can approve Proposition 1, Proposition 2 and Santa Rosa’s Measure N to provide funding for affordable housing.
It’s no surprise that landlords oppose Proposition 10, but they aren’t alone. Opponents include Gavin Newsom, the Democratic gubernatorial candidate, his Republican opponent John Cox, affordable housing developers, the NAACP and organizations representing veterans and senior citizens. Santa Rosa voters rejected rent control in 2017, and The Press Democrat recommends a no vote on Proposition 10.