Shared Top Border
sdcia_head3.jpg (14795 bytes)
SDCIA Message Board
Register Latest Topics
 
 
 


Reply
  Author   Comment  
larrywww

Senior Member
Registered:
Posts: 2,018
Reply with quote  #1 
I've Wondered Why certain communities accept rent control.

Here is a list (which includes under rent control cities that narrow the reasons for evictions, only for "just cause", etc).

Rent Control   [Other than Mobilehome Parks]
 Other Measures short of Rent Control
Berkeley Campbell  [starting Ch 6.09 mediation only]
Beverly HillsFremont [mediation only]
East Palo AltoGardena [mediation only]
HaywardGlendale [just cause eviction, only]
Los Angeles San Diego [98.0730 just cause eviction, only]
Los Gatos  San Leandro [non-binding review & mediation only]
Oakland Thousand Oaks [only pre-1988 tenancies]
Palm Springs 
San Francisco 
San Jose  [note:separate one for mobilehomes] 
Santa Monica 
West Hollywood 
  
  
Mobilehome Park rent controls [complete list without links]
CalistogaPleasanton [starting 6.60.010]
ConcordRedlands [starting 5.48.010]
Cotati Rohnert Park  [9.70.010] & Regulations
EscondidoSanta Cruz County [unincorporated area only]
Fontana [Chapter 14, sec 14-56]San Jose  [Title 17]
Grover Beach [starting Sec.3996.10]San Juan Capistrano   [Tile 2, Chapter 2, 2-2.901, etc]
Malibu  [2.28.010] and RegulationsSanta Rosa
Milpitas [Title III, Chapter 30]Sonoma County
Morgan Hill [Title 5, Chapter 5.36]Thousand Oaks [Title 5 Chapter 25]
Novato [Chapter XX start Sec 20-1]Union City [starting 16.04]
 Windsor [Title VIII, starting 8-1-200]]
{see also the CMRAA and GSMOL sites)Yucaipa
  
  

By the way, aside from "Just cause" limitations on rent control, does San Diego really have a full fledged rent control law? 

In any case, part of the answer why cities accept rent control is because they have become overwhelmingly tenant occupied.

I was surprised to learn that there are zip codes in Los Angeles that are almost 100% tenant occupied.

Here is a map from the LA Times showing the % of renters versus owners.

http://maps.latimes.com/neighborhoods/renters/neighborhood/list/

You can also drill down into specific neighborhoods to find out what the percentage is.


I've heard rumors that some other cities might do likewise.  The problem is where you have such an overwhelming percentage of renters-----what do they have to lose?

Which is why, in the future, I'm going to be somewhat reluctant to buy in overwhelmingly tenant occupied areas (although there are other reasons not to do that, such as the quality of the rental, etc)

According to the CAR economist, California is about 5 years away from becoming a tenant majority state.  (See Bruce's interview of Leslie Appleton Young)

Another thing that I find surprising: The fact that a city has a rent control law (like SF and San Jose, etc) apparently doesn't prevent it from reaching bubble territory.  (It's my opinion that they have reached bubble territory, I'm not citing any authority for that proposition).

Although there are alot of foreign sales that might buoy the market, even with the rent control law.  I have no explanation for this.  Does anyone?  Just animal spirits taking over?

According to the economist for CAR, 7 out of 9 Bay Area counties have significantly exceeded (not just equaled) their market peak price in 2005-2006.  And San Francisco exceeded by 40%.

So maybe this type of consideration gets swept away in a market really where animal spirits predominate.

As far as I can tell, what really mattered in the bay Area wasn't schools, rent control, or anything else---but distance to a major city center on the coastal plain.

That formula worked for the Bay area.  But it didn't work for the further inland counties of the Central Valley.  Merced County is still 40% below its previous market peak price.

In Southern California,  counties like San Diego, Los Angeles and Ventura hit the prior peak.  But it didn't work for San Bernardino County, for example, which had a prior peak of 350K and is now around 245K.  Riverside hasn't hit the number either and is about 30% down from its previous peak.

And the old market cycles used to be around 10 years---this cycle might go for 20 years, according to some predictions.

A really different landscape.  


larrywww

Senior Member
Registered:
Posts: 2,018
Reply with quote  #2 
Uh Oh.

I don't know about the likelihood of this, but if it's realistically coming, then time to consider heading for the exit.

Once rent control hits, the value of a commercial property plummets in value, and we are in the midst of an unbelievably inflated market already.

Consider what happened in Santa Monica: The landlords would take it off the market to give to family to live in, or tear it down and build a commercial building that is not governed by rent control, or sell to the bigger fool, or whatever other options remain.
Nyou

Junior Member
Registered:
Posts: 49
Reply with quote  #3 
Last night San Jose passed JCE for all rental units
larrywww

Senior Member
Registered:
Posts: 2,018
Reply with quote  #4 
I'm not familiar, I'm in Southern California.

If it's just a question of asking landlords to get a license and/or annual inspections, that isn't nearly as burdensome as rent control that limits how much rent you can ask for.

If it's actual rent control, then Yes, it will make a major difference in the market value of the property and I would consider selling.

Although keep in mind that I don't do business in the area, so I don't know much about it.
Nyou

Junior Member
Registered:
Posts: 49
Reply with quote  #5 
I'm in Southern California too.
AB1506 allows all cities in CA put RC and JCE.
San Jose's JCE( Just Cause eviction) to all units (apartments and SFH).
will city San Diego, Escondido, Vista have RC and JCE soon?

thanks
mlreits

Avatar / Picture

Senior Member
Registered:
Posts: 1,012
Reply with quote  #6 
Such a sad day for San Jose. The major of San Jose is against it, but he has been out-voted by the city councils. 

I can see some price pressure in the near future as some landlords will be conned to sell their multi-family by commercial agents/brokers. [biggrin]

Rent control hurts nice landlords who haven't raised rents for years. The property value is depressed when they go to sell. The beneficiaries are investors who have a long-term investment horizon or who have deep pockets. Every time there's a turnover, they can bring the rent to fair market. Some would do cash for keys. Some would permanently take the inventory off the market by converting them to corporate rentals the moment the unit goes vacant. This further reduces the inventory. That is what I have seen in my market.

Being a politician is a business. All they care about is getting re-elected and lining their pockets. It's a number's game. Tenants out-number landlords. The politicians are doing it for their best interest in the name of "helping other people". They are very short-sighted. It has nothing to do with helping others. Of course, that's just my personal opinion.

Ironically, banks love to lend in rent control markets. My partner and I had this conversation with three of our lenders in the past. They see rent control as stability as rent control units tend to be below market rates. In general, we get discounted rates between 0.25-0.5% when we borrow money from them due to this.

__________________
Minh

"Be formless, shapeless like water." Bruce Lee
larrywww

Senior Member
Registered:
Posts: 2,018
Reply with quote  #7 
Again, I know nothing about this law---and whether it is "true" comprehensive rent control.

But I must say that I disagree with the banks philosophy.

If your rents are severely capped---the example I would use is Santa Monica----then owners have zero incentive to fix things----and major incentives to take them off the rental market.

Rentals in Santa Monica are akin to rent controlled apartments in New York---they are handed down from generation to generation.  And if there is a rental open house---fistfights can break out amongst the potential tenants. 

Instead of compensating the landlords for renting in a great city----the few tenants who can get rent controlled units fight like hell to keep them---and they are the ones who get rewarded by simply having been first in line.  Not really good for the landlord.

Which is a shame since it is a beautiful city by the beach.

That is just my experience---your mileage may differ.
Nyou

Junior Member
Registered:
Posts: 49
Reply with quote  #8 
From Joshua Howard:

Thank you to those of you who attended the city council meeting.  i know many rental owners are deeply frustrated by the changing political landscape
in San Jose and the continued regulations the Housing Department and city council want to place on the housing industry. 
 
Today's vote was disappointing but not unexpected...the council voted 6-5 to develop an ordinance that subjects ALL rental units in the city to just cause.  The six voting for FULL just cause were Council members Jimenez, Peralez, Carrasco, Nguyen, Arenas, and Rocha.  Apparently the move also includes duplexes and single family homes AND the Housing Department was directed to also explore coming back with a rent ordinance to reduce the 5%
limit on rent increases to CPI.  
 
It is unclear when the actual ordinances will come back to the City Council
for ratification but suffice it to say we view this as a long battle that
will likely end up in court or the ballot box.
 
 
Joshua Howard
Senior Vice President
California Apartment Association
mlreits

Avatar / Picture

Senior Member
Registered:
Posts: 1,012
Reply with quote  #9 
Thanks Nyou for sharing the message from Joshua. He's so eloquent in presenting his case. Unfortunately, the Housing Director had her agenda. She would push all of these new regulations through at any cause. They also implemented the registry and charge landlords an additional $19.25/unit. When asked why landlords should pay for this when tenants are the beneficiaries, she brushed them off. 

It is what it is. Have to work with what we have. 

__________________
Minh

"Be formless, shapeless like water." Bruce Lee
larrywww

Senior Member
Registered:
Posts: 2,018
Reply with quote  #10 
Dennis Block is a well known eviction attorney from Los Angeles---who has fought many battles with rent control cities in this area.  He says that the City of Santa Monica passed a resolution stating that rejecting Section 8 tenants merely because they are enrolled in the program is considered discriminatory.

The legality of the ordinance may end up on appeal, but I believe that the trial judge sustained the law.

That is why I stay away from rent control cities (although I know nothing about San Jose's law---it may not even be rent control in this sense))---you give up too much control over your property.
Previous Topic | Next Topic
Print
Reply

Quick Navigation:

Policy