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California’s rent control ballot measure could reverberate across the US: Proposition 33 would allow cities to limit rent increases. Some economists doubt that’s a good idea. (stateline.org)

submitted 1 month ago by [email protected] to c/[email protected]

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If passed, the measure would give authority back to local governments to enact or change laws on rent control. For advocates, passing Proposition 33 would be a critical opportunity to address California’s housing crisis head-on. For the real estate industry, defeating Proposition 33 would mean maintaining the status quo in a market that has made billions for corporate landlords.

While rent control — caps on rent increases — provides relief to tenants, some economists suggest there are significant trade-offs: Rent control policies can lead to higher rents for uncontrolled units, reduce landlords’ incentive to maintain units, and dampen the creation of new rental housing — exacerbating affordable housing shortages.

Since January 2021, states and localities across the country have implemented more than 300 new tenant protections, according to the National Low Income Housing Coalition, a nonprofit that pushes for housing affordability.

And some housing advocates think that if Californians approve the ballot question, other states could follow suit, expanding rent control in the coming years as a way to prevent large rate hikes that can force out low- and middle-income tenants.

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[–] [email protected] 11 points 1 month ago* (last edited 1 month ago) (1 children)

Rent control policies can lead to higher rents for uncontrolled units, reduce landlords’ incentive to maintain units, and dampen the creation of new rental housing — exacerbating affordable housing shortages.

This sounds like the same alarmist BS we hear any time a minimum wage increase is on the ballot, and once it's passed, we find that it's actually a really good thing. Does it not follow logically that rent control, by keeping more money in the hands of people who actually spend it, is a win for the economy as a whole?

[–] [email protected] 3 points 1 month ago* (last edited 1 month ago) (1 children)

Not necessarily. The advantages of the minimum wage is that the benefits go directly to low wage earners who can use the money. So even though it imposes costs on the rest of society, it’s worth it because those are the people who need that money the most (other than the unemployed).

Rent control primarily benefits renters who stay put for extended periods. While this does have some benefits in allowing tenants who would otherwise be forced out of gentrifying neighborhoods to stay, the problem is that it doesn’t benefit their kids or other less resourced people who didn’t get in early. Since the benefits accrue the longer you stay put, it’s usually older tenants who benefit the most and they often have higher than average levels of wealth among tenants. Meanwhile, tenants who don’t get in early can be harmed by increased prices overall.

It’s a complex policy with many pros and cons. Overall I don’t think it’s a smart one but either way I don’t think we can just point to minimum wage increases and say that means rent control is good.

[–] [email protected] 3 points 1 month ago* (last edited 1 month ago)

Rent control primarily benefits renters who stay put for extended periods. While this does have some benefits in allowing tenants who would otherwise be forced out of gentrifying neighborhoods to stay, the problem is that it doesn’t benefit their kids or other less resourced people who didn’t get in early. Since the benefits accrue the longer you stay put, it’s usually older tenants who benefit the most and they often have higher than average levels of wealth among tenants. Meanwhile, tenants who don’t get in early can be harmed by increased prices overall.

there's also the fact that even when it works, it's still a stopgap measure. rent control alone obviously isn't going to bring down already high rent--it basically can't do that--it's just going to lock in a tenant's current current rent price or put a cap on the maximum increase in rent they can experience. and that's only so helpful if your rent is already $1,500/mo or $2,000/mo like it is in many major US cities. you need to do other things to make rent control maximally useful for tenants.