06/13/2018

Frozen-Out In The Golden State

Michael Hendrix, City Journal

California is an expensive place to live. New residents of San Francisco face median monthly rents of around $4,000 per month, and median rents are cresting $1,900 even in Sacramento. Housing supply runs well short of demand, pushing up prices in more corners of the Golden State than ever before. Many residents are moving to cheaper locales like Idaho or Texas, while others are falling into California’s growing homeless population. Bad as things are, the state might yet make them worse if it goes ahead and declares war on the housing market—that would be the effect if voters approve an initiative on November’s ballot, supported by tenants-rights advocates, repealing a law limiting local rent control throughout California.

The Costa Hawkins Rental Housing Act prohibits rent control on single-family homes and apartments built after its 1995 enactment. Municipalities that already had local rent control laws have earlier cutoff dates; for Los Angeles, this means that rent control is limited to buildings completed before October 1978. San Francisco’s older housing stock means that its 1979 rent control ordinance still applies to three-quarters of the city’s rental units. When a rent-controlled unit is vacated, landlords are free to charge market value. At present, 15 California cities have rent-control ordinances on their books. Repealing Costa Hawkins will allow more localities to impose rent control, which, based on past experience, will deform the market and make it even harder for renters to find affordable housing.

Repeal advocates submitted some 588,000 signatures—200,000 more than needed—and a political fight is brewing that is expected to cost about $100 million in organizing and ad spending. “This ballot measure will pour gasoline on the fire of California’s affordable housing crisis,” said Tom Bannon, CEO of the California Apartment Association, in the Sacramento Bee. Landlord-affiliated lobbying groups are trying to stave off that conflagration by supporting efforts in the legislature to curb “price gouging” as a concession for taking the anti-Costa Hawkins initiative off the ballot.

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