So when over-regulation drives up prices, the appropriate response is to introduce new regulations to fight the other regulations? Because that’s exactly what this is. It won’t even improve the problem. The problem is that there are more people who want to live in California than there is housing. The reason for that is because regulations prohibit the market from increasing supply at a rate that comes anywhere near keeping up with demand.
This has already been proposed by Scott Wiener as SB50. It was opposed by local councils and never put to an actual vote, and it never will be, unless political pressure is applied in the form of counter-regulation.
Yes. The effort to reduce regulations on construction has failed. As such, retaliating against the beneficiaries of those regulations with counter-regulations is appropriate.
It's not pretty or efficient, this is a fight between different interests, not a group problem-solving effort.
Hopefully this move leads relaxed zoning laws and regulations, allowing new development... People who want such things will gain political clout because capital will want return on investment, and rent control shifts the calculus for good ROI in the real estate market toward new development (marginally).
I'm sure hundreds of economists have written thousands of papers about this subject, each going its own idiosyncratic way, so maybe I've actually been proven wrong in this particular case, I don't know, but I have to say that the idea that regulation only ever increases costs is silly.
It does precisely the opposite. It reduces the value of rental properties, which makes investing in constructing them less competitive against investment in constructing new housing in some other state or country, or constructing commercial properties rather than residential ones, or any other competing investment securities.
EDIT: to be clear, not suffering for its own sake, but to pressure owners to stop supporting the current regulations.
This law in California allows for 5% annual increases after inflation. It’s hard to see how this will even hurt landlords. Creating a pretty clear incentive to perform a maximum increase ever year doesn’t seem great for renters though.
