U.S. CitiesCity-Data Forum Index
Covid-19 Information Page
Go Back   City-Data Forum > U.S. Forums > California > Los Angeles
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Closed Thread Start New Thread
 
Old 05-16-2008, 12:42 PM
 
27,076 posts, read 54,279,688 times
Reputation: 21277

Advertisements

Quote:
Originally Posted by BRinSM View Post
I think many of you are not understanding the economic impact of removing rent control. Rent control is a social program much like welfare, medicare, unemployment, food stamps, etc. There is a reason these programs are in place, to keep the economy running.
Very detailed post...

I've read it several times and I think we agree more than disagree and here's why.

Rent Control is a Social Program and unlike all of the Social Programs you've listed... the burden of Rent Control falls squarely on the Rental Property Owner.

Welfare, Medicare, Unemployment, Food Stamps, AFDC, etc., are all Social Programs funded by Government... and that is the crux of the problem.

If society deems Rent Control as necessary for the common good, it is incumbent on everyone to fund it through tax dollars... and we already do through the many HUD programs...

Section 8, First Time Home Buyers Assistance, FHA Loans, Below Market Interest Home Loans in Target Areas and Down Payment Assistance are all Taxpayer funded programs to help people get and keep affordable housing.

The other thing about rent control is the current model as practiced in San Francisco doesn't even allow owners to increase rents the amount of the Consumer Price Index... Not only are owners told how much they can charge... they continue to loose at greater at an ever increasing rate over time through inflation and the inability to match the CPI..

Your point about the inequities you've found in Santa Monica further illustrate the Rent Controls great flaw because the "Benefit" of Rent Control often goes to those not economically disadvantaged...

 
Old 05-16-2008, 12:45 PM
 
Location: South Bay
7,141 posts, read 19,527,516 times
Reputation: 3402
I wasn't really trying to make an argument either way, just stating the unintended consequences of changing the status quo.
 
Old 05-16-2008, 01:15 PM
 
27,076 posts, read 54,279,688 times
Reputation: 21277
Quote:
Originally Posted by northbayeric View Post
Left entirely out of this discussion is the horrible effect Proposition 98 would have on mobile home owners like myself who live in a mobile home park. 98 would toss out rent control not only for apartment tenants who have the freedom to say "the heck with these ridiculous rents" once the lease is up, but also for those of us who own our mobile homes BUT NOT THE SPACES THEY ARE ON.

The real estate market here in the north San Francisco Bay Area is so bad already that I've had my manufactured house up for sale since this past November. Hardly anyone has come over to look inside it. If Proposition 98 is passed, my house is rendered virtually worthless. I would have to sell it for a few pennies on the dollar with all the foreclosures on regular tract homes around here.

Believe me, my wife and I are JONESING to get the (expletive) out of California and move out of state. Prop 98 would trap us here even longer, or as I've just said, I would have to take an enormous loss on our house because the new owner would have to pay house payments PLUS a ridiculous space rent PLUS annual property taxes.

I love the Howard Jarvis Taxpayers Association, but on this issue they are dead wrong. It is as if mobile home park residents don't even exist as far as the discussion on 98 is concerned, and it's really starting to wear thin on me.

Reject 98, support 99, then come back with an eminent domain proposition in 2010 with teeth in it that doesn't hurt mobile home owners.
northbayeric...

You're in a difficult situation because the reality is... Mobile Homes like Automobiles, Campers and RV's depreciate...

The great attraction to Park living is affordability and Prop 98 will not change affordability for anyone presently under Rent Control.

Your cost to rent space is grandfathered under Prop 98... so all current rent control provisions continue as long as you remain in the same space.

Having some experience through friends and family living in Mobile Home Parks... I know owners must often pay to have to have older units disposed of due to obsolescence.

The useful life of a 25 year old stick built home is viewed much differently than a 25 year old Mobile Home...

Tying park owners to rent control after you've long sold and moved out of state is hardly fair...

However, you always have the option to move your home and I know a Mobile home owner that did just that... I concede the value of an older Mobile and the cost to relocate often makes little financial sense... and that is my point... the real value and appreciation in Real Estate is always Location, Location, Location... and not the structure
 
Old 05-16-2008, 01:38 PM
 
830 posts, read 2,618,325 times
Reputation: 381
Quote:
Originally Posted by BRinSM View Post
I think many of you are not understanding the economic impact of removing rent control. Rent control is a social program much like welfare, medicare, unemployment, food stamps, etc. There is a reason these programs are in place, to keep the economy running. When these programs cease to exist, the poor who use these programs have even less money for their daily needs then they had before, which actually is a bad thing for the economy as a whole. If you know anything about Keynesian Theory, you know that there is a mulitplier effect in the economy. In other words, for each dollar spent, a multiple of that dollar is infused into the economy. So logically, we can say that each dollar that is taken away from renters is compounded throughout the economy. If renters are spending more of their income on rents, they have less money for food, clothing and other products or services that would be purchased with disposable income. This would in turn decrease revenues of businesses. When the revenues of businesses decrease, they have to cut back on expenses which usually includes downsizing and lowering their payroll. When people don't have jobs, people can't afford their rent and they go looking for jobs elsewhere.

The other thing about rent control is that it has secondary impacts on landlords as well. Rental properties that fall under rent control restrictions decrease the value of the property. Also, landlords who own these types of buildings build rent control into their prices. Take for instance Santa Monica. There are people in my building who have been there for over 30 years. They probably pay well under $1000 for a two bedroom apartment. I pay nearly double this for a one bedroom. Unfortunately, supply is so tight that it drives up market rates in Santa Monica so that landlords can charge these exuberant rent amounts to people like me in order to make up for the "lost" rent from tenants who pay highly discounted rates.

Bottom line, capitalist economies need all sorts of workers, from the low class all the way up to the super rich. Removing income from the lower classes is bad for the economy, if you don't believe me, go to Mexico and see the amount of poverty that exists there. Better yet, visit Detroit and see what a city looks like when its economy can't support its population.

Higher rents take money away from businesses? What they hell do you think a property manager is? It's a business competing for your dollars just like every other business.
 
Old 05-16-2008, 01:46 PM
 
Location: South Bay
7,141 posts, read 19,527,516 times
Reputation: 3402
Quote:
Originally Posted by motoman View Post
Higher rents take money away from businesses? What they hell do you think a property manager is? It's a business competing for your dollars just like every other business.
Please read post #32. Thank you.
 
Old 05-16-2008, 01:47 PM
 
830 posts, read 2,618,325 times
Reputation: 381
Here is a very simple example of how those under rent control are being subsidized by those not under rent control.

Let's say you have a property with 2 units. One unit is under rent control, one is not.

Let's say the property owner needs to charge an average of $1,000 per month for both units to cover expenses and make the desired return on the investment.

If the unit under rent control is only paying $500 per month, that means the poor sap renting the other unit has to pay $1,500 per month.

So let's assume the person paying $500 per month can only afford that, and no more. What that person is doing is relying on a subsidy from the "rich" person willing to pay $1,500 per month. Charity, if you will.

Were rent control removed, a landlord could charge just $1,000 per month for both units and make the same money.

He/she would only be able to charge $1,500 for both units if there were two people willing to pay $1,500. If not, then the price has to come down until supply meets demand. Basic economics.

Because the person paying $500 per month could not afford $1,000 per month, with rent control they are creating artificial demand, because at $1,000 per month they would not be demanding that apartment, they would move somewhere else.

What rent control has done for LA is cause "squatters", if you will, to artificially increase the demand for housing, increasing the costs for everyone. More demand given the same supply means a higher price.

Take away the rent subsidy (rent control) and you immediately reduce the demand for housing. Reduce the demand for housing and what happens? Prices come down.

I don't know about you, but I'm all for lower rents.

For those of you arguing that all rents would go up, what you are arguing is that demand would not change. If demand would not change, then what you are saying is that all people currently under rent control could afford to pay more but prefer to be subsidized by the rest of us.

If you are arguing that everyone should have access to cheap housing, regardless of at what expense to anyone else, then you need to move to a socialist country.
 
Old 05-16-2008, 02:16 PM
 
2,573 posts, read 7,873,802 times
Reputation: 2558
Quote:
Originally Posted by EscapeCalifornia View Post
I don't own a damn thing.
neither do i, and i agree with you. owners should be able to lease their property for whatever rent the market will bear. renters can take it or leave it, and if there are too few takers at that price, the property will sit longer than the landlord can afford to let it, and the rent will decrease. no landlord, not even a corporate one, is going to jack up the rent so high that the property sits empty indefinitely. after all, real estate has no investment value if you can't make the mortgage every month.

as a renter, i would love to live whereever i want and pay no more than i think is "fair," but fair market value has nothing to do with my individual circumstance or subjective wishes, and fundamental economic principles don't change merely because i happen to be on the ****-end of them.

Last edited by katenik; 05-16-2008 at 02:25 PM..
 
Old 05-16-2008, 02:42 PM
 
830 posts, read 2,618,325 times
Reputation: 381
Quote:
Originally Posted by katenik View Post
neither do i, and i agree with you. owners should be able to lease their property for whatever rent the market will bear. renters can take it or leave it, and if there are too few takers at that price, the property will sit longer than the landlord can afford to let it, and the rent will decrease. no landlord, not even a corporate one, is going to jack up the rent so high that the property sits empty indefinitely. after all, real estate has no investment value if you can't make the mortgage every month.

as a renter, i would love to live whereever i want and pay no more than i think is "fair," but fair market value has nothing to do with my individual circumstance or subjective wishes, and fundamental economic principles don't change merely because i happen to be on the ****-end of them.

Spunky. I like it.
 
Old 05-16-2008, 03:41 PM
 
27,076 posts, read 54,279,688 times
Reputation: 21277
Many have touched on the issue...

A rental unit will ONLY rent for what it is worth in a Free Market... It will never rent for more...

It may rent for more than someone else is willing to pay and that's life... I personally wouldn't buy a new Mercedes because it costs more than I'm willing to pay... those that do find value that I don't see and that's OK.

A local business paid a very high price to buy adjoining land... it was worth more to that business than anyone else based on the needs of the business.

Last edited by Ultrarunner; 05-16-2008 at 07:19 PM..
 
Old 05-16-2008, 04:17 PM
 
Location: Sherman Oaks, CA
6,294 posts, read 15,771,894 times
Reputation: 8353
Quote:
Originally Posted by motoman View Post
Were rent control removed, a landlord could charge just $1,000 per month for both units and make the same money.

For those of you arguing that all rents would go up, what you are arguing is that demand would not change. If demand would not change, then what you are saying is that all people currently under rent control could afford to pay more but prefer to be subsidized by the rest of us.
I guarantee in the situation you described, my landlord would just charge $1,500 a month for both units, and because L.A. is a desirable locale, there are people who will pay it. So, no, I don't think demand will go down and nor will prices.

You're assuming that when the poor person moves, there won't be anyone willing to pay the higher price. I don't think that's necessarily true. After all, haven't we all seen apartments with six people in them, because they couldn't afford the rent otherwise?

Also, of course not all people currently under rent control can afford to pay more! I think many people would be stuck between a rock and a hard place. If you can't afford a 10% rent increase, how can you afford to move?? Moving isn't cheap, especially if you have to do it every year!
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Closed Thread


Options
X
Data:
Loading data...
Based on 2000-2016 data
Loading data...

123
Hide US histogram

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > U.S. Forums > California > Los Angeles
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

© 2005-2020, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top