The Overhead Wire Daily | July 17th, 2024 | Rent Caps

I want to circle back to something that was posted Monday on a rent cap proposal and discussed more yesterday. I see a lot of hand wringing over the policy of rent control generally on social media so I wanted to jump in and see what the idea is overall.

First there are a lot of economists that hate rent control with a passion and when you pair that with statewide votes here in California against it and you get a lot of feelings shared on the subject. I’m not here to argue about whether it’s a good policy or not long term. I did benefit from the policy here in San Francisco for a number of years and appreciated how it insulated from extreme increases in prices just like homeowners get with Prop 13 property tax limits and 30 year fixed mortgages.

And now that I am in charge of a unit that’s been under rent control since the 1990s, I still appreciate the certainty of it, especially when it comes to rental raises annually that are agreed upon citywide and everyone can be on the same page.

So with that being said, it seems that this specific very targeted policy is more like rent stabilization than rent control. As noted on social media, it also isn’t a hard cap in that any increase over 5% annually from landlords that own more than 50 units would be subject to a removal of any tax benefits. That includes just half of all rental properties and would only be for a two year period while other housing supply solutions are enacted. Which would make sense from the side of the policymakers because as we’re seeing in California you can’t just snap your fingers and have housing supply magically appear, no matter how bad someone may want that.

Another aspect of these housing policy machinations that isn’t really getting much attention is that, as I mentioned, it is supposed to be tied together with other home building plans including opening up federal lands for affordable housing construction through the Postal Service, Bureau of Land Management, the Department of Defense, and even Department of the Interior.

The rental cap would have to be enacted by congress, not the president, which seems unlikely at this point in time. But I also think we’re not really doing enough to allow construction of housing around the country. We’re just kind of nibbling around the edges at the idea. And it should be paired with much better transit to connect existing affordable housing with destinations. Until we can build a few million units extra in places with lots of jobs and opportunity, much of this feels like its just a drop in the bucket and not big enough.

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