Proposition 33 on the ballot this year in California repeals the 1995 Costa-Hawkins Rental Housing Act. I won’t go into details about the bill, but I wanted to defend rent control because I believe it is a red herring in the housing affordability debate.
There’s a game theory model to how much a landlord raises the rent on a tenant when the lease is up. The tenant can either stay or move at the end of the lease. If they stay they’ll be subject to the rent increase of the landlord. If they move they’ll be subject to the new rent plus the cost of finding and moving to a new unit. The landlord knows this and will capture the moving costs by raising the rent by a bit less than they think it costs the tenant to move units.
There’s a lot bundled into moving costs. Time spent searching for a unit, time taken off work touring units, the cost of hiring movers, and more. It’s particularly difficult for families who may have to move school districts and break routines. It’s also difficult for the elderly who have accrued emotional attachments to their unit and valuables and have mobility issues that make moving dreadful without outside help. Moving is expensive and difficult for a lot of people. Conniving landlords can take advantage of this and raise rents higher on tenants with higher moving costs.
Rent control policies help prevent this coercive dynamic. In San Francisco units in buildings built before 1979 are covered by the San Francisco Rent Ordinance. The ordinance rent is raised by a percentage of the Bay Area’s consumer price index. The current rate active from March 1, 2024 to February 28, 2025 is 60% of the Bay Area CPI. Buildings built after 1979 are not covered by the ordinance, including one of my friend’s buildings that tried raising his rent by 10% year over year.
Housing is expensive in California. We should not blame renters for this. Instead let’s focus on driving down the cost of housing in California. Efficiencies in permitting processes, denser zoning, and technological improvements in construction should make the cost of a housing unit fall.
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