Rent Control is Finally Coming to Sacramento
Attorney · Sacramento, CA · Member since 2014 · 300 posts · 172 votes
Rent Control is Finally Coming to Sacramento
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7yRent control is never, ever, ever, ever reasonable. Rent control hurts everyone. It hurts property owners, it hurts tenants. Rent control creates housing shortages. Rent control drives up the cost of non rent controlled units. Rent control creates animosity between tenants and owners. Rent control causes properties to fall into disrepair.
In the words of Assar Lindebeck, "Rent control is the best way to destroy a city other than bombing it."
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37 Replies
- 7yMike CumbieBusiness MemberREALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
Sounds like you could plan on renting out a house for a year and then moving in your son when he comes back from the military. Oh but wait, the tenant doesn't want to leave at the end of the term, guess who now has a tenant as long as they decide to stay. Outright silliness.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes7y
Rent control is never, ever, ever, ever reasonable. Rent control hurts everyone. It hurts property owners, it hurts tenants. Rent control creates housing shortages. Rent control drives up the cost of non rent controlled units. Rent control creates animosity between tenants and owners. Rent control causes properties to fall into disrepair.
In the words of Assar Lindebeck, "Rent control is the best way to destroy a city other than bombing it."
District Invest Group545 Reviews - Attorney · Sacramento, CA · Member since 2014 · 300 posts · 172 votes7y
@Mike Cumbie In that hypothetical you could evict the tenant because you were removing the property from the market. Just give notice and you'd be good!
- Investor · Sacramento, CA · Member since 2012 · 289 posts · 151 votes7y
Seems completely reasonable. It's great to see they're calling this a 'compromise' even though Mayor Steinburg pretty much got everything he wanted. The pro-rent control side is also calling this a victory, which will give landlords a lot of cover.
@Russell Brazil - I completely agree that the rent control policies started in some cities in the 70s-90s did exactly that, but this policy is different if you look at the details. 6% - 10% annual increase is enough to keep up with market rates in the long term around here. 120 days to back control of a unit to do what ever you want with it is more than enough time. This won't have negative market consequences classical rent control had.
This is also a great defense against more extreme rent control. It impacts the extreme cases rent control advocates claim to care about. - Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes7y
Originally posted by @Derek Daun:
Seems completely reasonable. It's great to see they're calling this a 'compromise' even though Mayor Steinburg pretty much got everything he wanted. The pro-rent control side is also calling this a victory, which will give landlords a lot of cover.
@Russell Brazil - I completely agree that the rent control policies started in some cities in the 70s-90s did exactly that, but this policy is different if you look at the details. 6% - 10% annual increase is enough to keep up with market rates in the long term around here. 120 days to back control of a unit to do what ever you want with it is more than enough time. This won't have negative market consequences classical rent control had.
This is also a great defense against more extreme rent control. It impacts the extreme cases rent control advocates claim to care about.Every time a new jurisdiction comes out with a new rent control idea, they always say this time our idead are different and better, and every time its a disaster. There is a reason why nearly every economist agrees that rent control is a disaster. This will be as well as it always is. Price is only 1 factor in rent control. Shortages of housing occur regardless od exemptions or flexibility in pricing. Families not downsizing as their families shrink, illegally subletted apartments removing units from the markets for decades as opposed to average move times creates housing shortages. Buildinga being condoized, buildings being torn down and rebuilt to avoid price controls all create shortages.
Rent control is the amongst the best understood things in economics and is universally reviled by economists on both the left and right, both keynesians and austrians.
District Invest Group545 Reviews - Attorney · Sacramento, CA · Member since 2014 · 300 posts · 172 votes7y
With all due respect @Russell Brazil, everything you're saying is generalized to the idea of rent control. There's no analysis of this particular ordinance.
What exactly in the text of this ordinance is troublesome to you? I'm truly interested in your perspective.
Sacramento is experiencing a crisis of rental housing because there are more people moving here than are leaving. Couple that with the tremendous numbers of flippers and developers driving up prices that affordability is the main issue. For example, in 2014, I purchased a rental unit where market rents were $1200, by 2018 market rent was $1800. Folks making $50k/year can't afford $200-300 rental increases in a single year. That's why I think the 6% annual rental rate increases is extremely fair because it allows landlords to make a living while remembering that this system only works if people can afford to rent in the first place.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes7y
@Embert Madison jr
Read any econ 101 book. Read any advanced econ book. Dozens and dozens of rent control variations have been tried. Own a certain amount of units, exempt, certain age of building, exempt, larger than normal raises allowed....and each and every time the consequences help a very few amount of people and hurt huge numbers of people.
You are worried about a housing shortage now? Get ready for that problem to be exponential. You think that people cant afford large rent raises, just wait til they cant find housing at all.
We have a 100% failure rate with every type of rent control that has been tried, and this one has been tried before. In fact we have nearly 150 years of data on price controls in general, not just housing but across all konds kf things, and never has it turned out well.
As Paul Krugman, Nobel laureate said
"THE ANALYSIS OF RENT CONTROL IS AMONG THE BEST-UNDERSTOOD ISSUES IN ALL OF ECONOMICS, AND -- AMONG ECONOMISTS, ANYWAY -- ONE OF THE LEAST CONTROVERSIAL. 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.''
Economists dont think its good. The only people who do are politicians looking to buy votes and those lacking a fundamental lack of education in economics.
District Invest Group545 Reviews - 7yDJ DawsonBusiness MemberReal Estate Agent · Sacramento, CA · Member since 2015 · 394 posts · 259 votes
I like the idea of rent control and these numbers seem to be decent but putting this into practice hasn't proven to be successful in any instances I have seen (if there is some data out there please send it to me)
- Attorney · Sacramento, CA · Member since 2014 · 300 posts · 172 votes7y
What would make rent control successful? Slowing the rising prices of rentals? Lowering homelessness? Investors making more money? Personally, I don't kn ow. There's a lot of interested parties at the table.
- Phoenix, AZ · Member since 2017 · 135 posts · 294 votes7y
6% + inflation is completely reasonable. This is in stark contrast to areas such as SF or NYC where a landlord is handcuffed so tightly that even Houdini would be impressed when it comes to their ability to increase rents. The problem with rent control in general is situations like SF or NYC where if a tenant stays long enough their rent becomes so out of line with what fair market rents are. Until recently, there was a tenant living in the top floor in a Greenwich Village apt in NYC since 1955, and her monthly rent was a whopping $28.43 per month. However with 6% + inflation rent rates should never become lopsided.
The only thing that I'm not a fan of is it imposes an oversight fee on any property subject to its jurisdiction.
It would be interesting no get an idea of the average/median age of multifamily housing product in the Sacramento area. One issue I can foresee arising (if the average building date of MF deals in the area is from the 1960s - 1980s) is the continued dilapidation of multifamily product with this new law in place.
Investors who follow the business model of buying older, mismanaged properties that have had stagnant rental rates with the goal of deploying sizeable amounts of capital for renovation will begin to abandon the region. The only way that business model works is if you can subsequently increase rents to current market levels which adds appraised value to the property and allows you to exit or refinance. For properties with rents that are well below 94% of current market value, the ceiling on rent increases detracts from the value proposition of the deal.
I think this will also make it difficult for working (middle) class housing stock to grow. Given the arbitrary rule of property built post-1995 being exempt from controlled rent, that class of housing will see outsized appreciation in rental pricing due to the increased demand from upper-middle & upper-class renters who desire (and are willing to pay for) Class A homes. Builders & renovators will hone in on that post-1995 product knowing they will see much better returns from supplying that housing stock. Meanwhile the lack of investor interest (discussed in my point outlined in the previous paragraph) in pre-1995 property will lead to lack of property upkeep, not to mention the lack of natural tenant turnover (because a tenant is incentive-ized to remain in a rent controlled unit) needed for a growing population/renter base to flourish.
A few more ancillary ramifications could be: stagnation in property taxes collected by the city due to lack of property value growth, decline in lower income and working class housing being built due to lack of project feasibility, deterioration and/or flight of the business community surrounding areas of older property because of lack of available housing.
Would love to hear your thoughts @Russell Brazil @Account Closed
Rent control will make things worse, no doubt. Inventory shortage will grow, non-rent control units rates will increase, properties with rent control unit will be fall behind in maintenance and upkeep. It's been proven time and time again across multiple cities. Like @Russell Brazil said, it's Econ 101. It does not address the SUPPLY problem. It forces private market to subsidize public agenda, and that's never good. The market and investors will create a path around rent control to make money. Areas in rent control will fall apart.
6% + inflation seems like it's generous. And it is for MF units that are currently charging market rents. But value-add assets where the owners failed to raise rents in the past because of laziness, low debt and expenses, etc will be screwed. The value of their properties just diminished and they have alot of catch up to do if they plan on selling it.
One thing it guarantees is that landlord will raise rents every opportunity they can get, regardless of what their current rents are. That rent control cap took away that piece of mind that they can raise rents later when they want to sell. Tenants should expect rent increases guaranteed from now on....and that's not good for those who have been enjoying lower rents from mis-managed properties.
@Account Closed, This is just my opinion, but in answer to your question, the only scenario I've thought about for rent control being a solution is as a stop gap measure. So if it were used as a tool to prevent highly appreciating rents in a rising market, while zoning laws were loosened to keep people relatively stabilized while supply catches up, then I could see that as a positive approach.
However, in reality, that would be an impossible thing to accomplish, because you'd have to remove the rent control at a certain point. Government policy would have to be incredibly nimble (which it isn't). Not to mention that California is the poster child for preventing development in the amount of volume we actually need. Also, you would have had to implement these policies years ago, not now at the top of the market.
It's a classic issue of government only implementing what's politically viable, while ignoring the other side of the equation entirely (usually because of special interest).
@Russell Brazil & @Paul Choi have this spot on. This is a move that satisfies the political pallet, and for those uneducated on fundamental economics and historical data on the subject it seems "like a good middle ground". The supply issue in Sacramento will not only continue, it will compound and people who are struggling to make rent now will be on the streets sooner than without rent control. The older assets in the marketplace will not get the TLC they deserve from their owners.... this is a rabbit hole of all bad news. Sad.
- Attorney · Sacramento, CA · Member since 2014 · 300 posts · 172 votes7y
Everyone knows the Econ 101 rent control stuff. But after Econ 101, there's more advanced econ classes where you explore issues more in depth. That was my goal by asking what specifics in this ordinance will lead to the sky is falling rent control issues.
So first, if a landlord raises a low-income tenant's rent 16% in two years, there's no way that person can afford that increase because they are on a fixed income. Therefore the tenant will be forced to move out. Now our benevolent landlord can raise rents to whatever they want. So value add positions will still occur, it just may take a different approach. Where some see lemons, others make lemonade.
Secondly, there's no new affordable housing being built in this city now! So a rent control measure won't be the reason that's not happening in the future.
Third, @Ike Ekeh if a property owner increases rents by 6% every year, doesn't the value of that commercial property increase each year due to the increased income? Also, statistically California counties rely on property tax revenue from SFRs drastically more than they do from commercial/industrial property. So, I don't see a real issue with property tax stagnation. The real source of property tax stagnation is California's split roll property tax rule. This loophole limits commercial/industrial property reassessment upon sale. Large property owners have been using their special interests to stall all legislation that would have fixed this issue years ago.
Fourth, @Paul Choi, in response to this statement --"But value-add assets where the owners failed to raise rents in the past because of laziness, low debt and expenses, etc will be screwed." I would argue those owners are screwed because of their laziness and business ineptitude.
Fifth, I agree that supply issues are generally the cause of out of control rents. But, this rent control ordinance doesn't constrain new properties because they are exempt from rent control. So long as it pencils out, savvy investors will simply knockdown a lot with a small home on it and build multis. Or they'll take a 16 unit and make it a 32 unit. They're already doing that in the SFR space (knock down or pop the top and add square footage). And that's the real issue with supply right now: it costs too much and takes too long to build property for the middle of the road consumer. And that's due to government fees and zoning rules. So @Robert C., I agree with your point there. The state has been trying to force locals to streamline things with bills like SB 95, SB 35, SB 167, AB 678, and AB 1515. Personally, SB 95 will likely help me build without worrying about parking issues.
Finally, everyone is overlooking one thing: the City of Sacramento could not put its head in the sand and pretend that the rent control issue would go away. They had to act because an ordinance would have been put on the ballot by rent control advocates. When your choice is, (a) a rent control ordinance completely written by rent control advocates that will be impossible to amend and (b) a rent control ordinance negotiated with both sides, you have to choose (b). It is always easy to criticize, but the real work is in trying solve the problem. So there's no point in arguing "this was a dumb idea" "rent control is always a bad idea" unless the next statement is, "here's how we can make it better." That's where the classes after Econ 101 are necessary.
Originally posted by @Account Closed:
Everyone knows the Econ 101 rent control stuff. But after Econ 101, there's more advanced econ classes where you explore issues more in depth. That was my goal by asking what specifics in this ordinance will lead to the sky is falling rent control issues.
So first, if a landlord raises a low-income tenant's rent 16% in two years, there's no way that person can afford that increase because they are on a fixed income. Therefore the tenant will be forced to move out. Now our benevolent landlord can raise rents to whatever they want. So value add positions will still occur, it just may take a different approach. Where some see lemons, others make lemonade.
Secondly, there's no new affordable housing being built in this city now! So a rent control measure won't be the reason that's not happening in the future.
Third, @Ike Ekeh if a property owner increases rents by 6% every year, doesn't the value of that commercial property increase each year due to the increased income? Also, statistically California counties rely on property tax revenue from SFRs drastically more than they do from commercial/industrial property. So, I don't see a real issue with property tax stagnation. The real source of property tax stagnation is California's split roll property tax rule. This loophole limits commercial/industrial property reassessment upon sale. Large property owners have been using their special interests to stall all legislation that would have fixed this issue years ago.
Fourth, @Paul Choi, in response to this statement --"But value-add assets where the owners failed to raise rents in the past because of laziness, low debt and expenses, etc will be screwed." I would argue those owners are screwed because of their laziness and business ineptitude.
Fifth, I agree that supply issues are generally the cause of out of control rents. But, this rent control ordinance doesn't constrain new properties because they are exempt from rent control. So long as it pencils out, savvy investors will simply knockdown a lot with a small home on it and build multis. Or they'll take a 16 unit and make it a 32 unit. They're already doing that in the SFR space (knock down or pop the top and add square footage). And that's the real issue with supply right now: it costs too much and takes too long to build property for the middle of the road consumer. And that's due to government fees and zoning rules. So @Robert C., I agree with your point there. The state has been trying to force locals to streamline things with bills like SB 95, SB 35, SB 167, AB 678, and AB 1515. Personally, SB 95 will likely help me build without worrying about parking issues.
Finally, everyone is overlooking one thing: the City of Sacramento could not put its head in the sand and pretend that the rent control issue would go away. They had to act because an ordinance would have been put on the ballot by rent control advocates. When your choice is, (a) a rent control ordinance completely written by rent control advocates that will be impossible to amend and (b) a rent control ordinance negotiated with both sides, you have to choose (b). It is always easy to criticize, but the real work is in trying solve the problem. So there's no point in arguing "this was a dumb idea" "rent control is always a bad idea" unless the next statement is, "here's how we can make it better." That's where the classes after Econ 101 are necessary.
Good points and great to keep the discussions going! Some 2 cents I would like to add:
"So first, if a landlord raises a low-income tenant's rent 16% in two years, there's no way that person can afford that increase because they are on a fixed income. Therefore the tenant will be forced to move out. Now our benevolent landlord can raise rents to whatever they want. So value add positions will still occur, it just may take a different approach. Where some see lemons, others make lemonade."
Value add acquisitions will now take longer to implement the strategy. From a landlord/investor's perspective, non-rent controlled unit can be managed and massaged to fit the business plan strategy for that property. For rent controlled units, yes 16% is alot over 2 years, but may not be for properties that have servery below market rents upon acquisition. What would have taken 2 years will now take 4. IRR takes a hit, exit strategy will have to be revised, and so on. For a small property like a 10 unit, it can be worked out but I was mainly thinking about 80-200+ unit MF properties. Millions dollar swings if strategy is not implements right."Fifth, I agree that supply issues are generally the cause of out of control rents. But, this rent control ordinance doesn't constrain new properties because they are exempt from rent control. So long as it pencils out, savvy investors will simply knockdown a lot with a small home on it and build multis. Or they'll take a 16 unit and make it a 32 unit...."
Yes, rent control affect new properties - new inventory that has been slated to start or developers planning on starting. With prices of labor, materials, soft costs such as permits, the only thing developers can build is Class A here in California. Almost 0 of Class B and C are being built...the workforce, more affordable rental housing. The fact that the City of Sacramento has implemented rent control sets the tone in the neighborhood. It sets precedence. Developers, who want to build, who want to provide more housing, who want to help with the housing crisis, is faced with multiple head winds and resistance in California. A business climate that makes it so hard to even build. The permit and planning review process in most California jurisdictions is absurd when compared to other states. You have to spend huge amounts of capital before even lifting the first shovel.And then adding rent control to the mix. Buildings built after 1995 (I think) are exempt but not sure if it's a rolling clock. If it's not, maybe it will be revised to one later. That affect exit prices of developer before they consider building. Investors always plan out exit before they start and try to anticipate how political perspective will help or hurt their pro forma.
Rent control is detrimental to the rental market so what's the solution? Build more housing. Demand is there, fix the supply. Lower permit costs, speed up the planning review process, green light development, get on the side of developers and landlords who want to help address the housing shortage. You don't need an advanced degree from Econ 101 to understand the solution.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes7y
Everyone knows the Econ 101 rent control stuff. But after Econ 101, there's more advanced econ classes where you explore issues more in depth.
Guess what, those advanced books are all against rent control too. Every single individual since the advent of rent control who has won the Nobel Memorial Prize in Economics agree on the issue. Every single peer reviewed paper agrees. There have been attempts to have exemptions to rent control, there have been attempts at having large rental increases allowed. All have failed miserably time and time again. It removes elasticity from prices. 19% fewer people move from rent controlled apartments than when there is elasticity to pricing, thus effectively taking these units out of circulation. 100% of the time rent control is implemented in a location, homelessness increases. DC experimented with a large rent increase being allowable, and even created an application exemption to get around the rent cap. What happened? A massive increase in condoization removing units from the rental market. San Francisco in their wisdom tried exempting new builings.....so the Market saw that the old rent controlled buildings were torn down and rebuilt in an exempt state. NYC tried it, and units get illegally subletted for decades taking the units out of the rental market.
There is exactly 1 issue that both the Brookings Institution and the Heritage Foundation agree on, and it is rent control. 2 diametrically opposed institutions.
And we can look at history and look at any study of any price control ever and find equally good ideas that all have equally bad consequences. Whether it was post French revolution France putting price controls on grain, Poland price controlling TV's, Japan in the 80s setting prices on stock brokerage fees, post Dodd Frank limits on fees lenders charge. Price controls distort markets, they remove elasticity from the market. Every single time they create huge problems such as the subsequent wheat shortages in France even though there was no agricultural problem, scarcity of tvs in Poland, the removal from the market of brokerages available to everyday people in Japan, the reduction of lending on cheap assetts post Dodd Frank.
There is 1 solution only to creating more affordable housing......that is building more affordable housing.
District Invest Group545 Reviews @Embert Madison jr
On the front end I'd like to say that I'm glad you started this thread and am pleased with the discourse so far. Affordable housing is a huge issue in that region, this state and the country at large and some of the smartest business minds, legal experts & politicians have yet to come up with a viable solution. With that (and at the risk of "piling on" or repeating points previously made by others) I'd like to add the following:
You make valid points when discussing the local politics of the city but the economic principles still stand. Yes, the city could not put its "head in the sand" and tried its best to be proactive with this issue, but if it spent more time educating its constituents on why the economics of rent control don't make sense instead of trying to appease the masses with what looks like a solution, the people would be better off in the long-term. Again, the economics of this simply cannot be refuted. The people should be trusted to understand and synthesize that as fact as opposed to being fed short-term band aids for a systemic issue.
Continuing with another economic principle, consider Opportunity Cost. You are indeed correct that the increase of rental income by 6% per annum will add incremental value to a property. But the investor putting capital at risk for that marginal gain could easily realize a much larger gain if they simply invested the same time and effort in an area that isn't subject to growth restriction. Not to mention invest in the local economy of that other region while doing so because they will have a vested interest in the success of that area. The bottom line is flight of capital from a region has rarely been healthy for a local economy and an argument can't be made that a rent control ordinance wouldn't cause just that.
Lastly, you are correct, the property taxes from SFHs outweigh that of commercial/industrial buildings so stagnation may not become an issue. That said, we can be certain that decline in growth of property taxes assessed will occur. No argument can be made that a city will benefit from less taxes being paid to it. That loophole you alluded to will be fortified because the value of commercial property will artificially be depressed, that can only be worse for the city.
Again, you are spot on with the political implications in that something HAD to be done, but that's not to say that something wrong had to be done. @Paul Choi made some good points on alternative measures that can be taken to fix the housing shortage issue, it would be great to see a city advocate for growth in housing stock as opposed to regulation of current supply
- 7yAnthony GaydenPro MemberRental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
Originally posted by @Account Closed:
On Tuesday, August 13, the Sacramento City Council will likely vote to enact a rent control ordinance.
Here are the highlights:
- - Landlords will be prohibited from raising rent more than 6% plus the “consumer price index” percentage for the West Region per year. For this June, that CPI percentage would be 2.7%. So in this hypothetical the total allowable increase would be 8.7%.
- - Landlords will never be able to increase rent more than 10%.
- - Landlords will be prohibited from evicting tenants unless 1.) tenants stop paying rent, 2.) are criminally charged, 3.) are illegally selling drugs, 4.) fail to give landlords access to the unit, or 4.) otherwise violate their lease.
- - Landlords will be able to evict tenants if they are making certain repairs or selling the unit and provide the tenants an extensive 120-day notice.
- - The ordinance will not apply to single family homes unless they have been converted into a duplex.
In my opinion, this ordinance seems totally reasonable. The 6% increases are fine. The only sticky point will be the fact that landlords will no longer be able to evict tenants for whatever reason.
What are your thoughts?
That is very short sighted. This isn't a compromise, it punishes property owners at the expense of renters.
Basically you took it up the butt, and they convinced you this was a "compromise".
I'm going to go across every point of this and explain why it is very bad for landlords.
- Landlords will be prohibited from raising rent more than 6% plus the “consumer price index” percentage for the West Region per year. For this June, that CPI percentage would be 2.7%. So in this hypothetical the total allowable increase would be 8.7%.
This would be good IF all rental properties were currently charging market rates. For those landlords who haven't raised rents in several years, or given smaller rent raises, they are now punished because they will NEVER be able to bring that unit up to market rent rates as long as that tenant is in the unit. This is a big F-U to those landlords who didn't raise rates in the past. It also completely ignores the market.
- Landlords will never be able to increase rent more than 10%.
See my above response. If a landlord is currently charging rents that are far under current market rates, they will be unable to raise rents to anywhere near market rates.
I'm sure everyone has seen stories of San Francisco or NYC rent controlled tenants who are paying $500 a month to live in a popular/expensive neighborhood. Even if you raised the rent 100%, the rent would be far cheaper than anything else in the area. Yet doing that would be illegal under this law. Instead the most you could raise it would be $50 a month to $550.
- Landlords will be prohibited from evicting tenants unless 1.) tenants stop paying rent, 2.) are criminally charged, 3.) are illegally selling drugs, 4.) fail to give landlords access to the unit, or 4.) otherwise violate their lease.
Read that again. You are no longer in charge of who occupies your property. Even if you hate your tenant's guts and they harass you and your family whenever they see you, you can't evict them. Even if your tenant is a Neo-nazi and has a flag with a swastika hanging in the window of your property, unless it is expressly forbidden in your lease, you can't get rid of them.
- Landlords will be able to evict tenants if they are making certain repairs or selling the unit and provide the tenants an extensive 120-day notice.
4 MONTHS NOTICE?!?!?! When a person is going through a financial crisis and needs to sell their property as soon as possible, they don't need to sit around for months on end to help the tenant out. Also define "certain repairs". To a tenant group, you would be unable to do many critical repairs/upgrades.
- The ordinance will not apply to single family homes unless they have been converted into a duplex.
Punish one class of landlord to the benefit of another. DUMB. Also, eventually they will go after single family landlords too. It's never enough for the people who promote these sort of ideas.
The short term benefits of rent control are great for renters. None of these policies ever looks 20-30 years down the line. There will be fewer housing units available for rent, fewer units will be built, the condition of the existing units will have deteriorated, the rent for the units not under rent control (single family homes) will have skyrocketed, there will be far fewer mom and pop landlords and a lot more corporate control, and every year they will raise rents the absolute maximum (no more being nice and not raising rents for a year).
@Account Closed, another factor to consider is competition from other convenient places to live. Sacramento only has 1/3 the population of Sacramento county. Sacramento currently has a lower per capita income and double the poverty rate than the county as a whole. Also, I don't believe that Sacramento possesses certain advantages that NYC and San Francisco possess relative to its neighbors (commuting cost and time).
This proposal would seem to be very good news for property owners area outside the city of Sacramento.
- Not an economist but it seems the big issue is when landlords fall behind on slowly raising rents over the years (big mistake by them) and then all of a sudden want to raise it a huge amount....or the value add new buyer that wants to increase it when they purchase....so there wont be nearly as many buyers trying to do that.... Guess my simple take away for us smaller landlords..... don't be afraid to gradually increase the rent on a regular basis....don't wait until its too late...
- Member since 2019 · 120 posts · 26 votes7y
My question is this. I am in the process of buying a property that has a single family home and a studio on top of the detached garage in Sacramento. So in essence, this is a 2 unit property but not exactly a duplex. Both units are already occupied by tenants. I am going to be the new landlord. So does this rent control law still apply to the single family home because this property is kind of a duplex? Also, I read on page 4 of the ordinance under State Policy that owners with less than 10 single family home units are exempted. Since this will be my first rental property, am I exempted? Should I backout of the deal? I already put down my deposit and the owner is putting in extensive repairs. Would it be difficult to obtain permission for higher rent increases?
- Realtor · San Francisco, CA · Member since 2017 · 408 posts · 361 votes7y
You are welcomed to demonize proponents of rent control all you want but when you do please also consider the NIMBY's all over California who are equally effective at resisting housing.
Compare zoning on the Eastern side of San Francisco versus the Western side of San Francisco and consider the impact that has on the fair market.
Take Concord for example, I lived there for a year and half. Empty lots galore, all over the Nextdoor app they complain about potential traffic that would result from new apartments, non rent controlled. On 2018 a developed bought a sizeable building and immediately raised rents in existing tenants by 25% or more. Walnut Creek is staunchly against duplexes and quads and when pressed for an opinion, the mayor's response was that "people migrated West because to avoid dense communities".
It goes both ways. You cannot have your cake and eat it too.
- Investor · Austin, TX · Member since 2013 · 680 posts · 1k+ votes7y
When the government gets involved with markets it gets FU. Let the market decide the rents up and down. I don't like the idea that I can't just decide not to renew a tenant for whatever reason. Here in Texas, we don't even have to give a reason for non-renewal. My fear is that all these Californias' will come and change our culture.
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