Rent-control Initiative Could Obliterate California’s Housing Markets: New at Reason

Activists in California appear to have gathered enough signatures to place a statewide initiative on the November ballot that would overturn state limits on local rent-control ordinances. The 1995 Costa-Hawkins Act forbids California localities from placing rental-price caps on single-family homes, condos and newer construction. It also bans vacancy controls, meaning that landlords in rent-controlled cities are free to raise the rent to market rates once tenants vacant the property.

If California voters approve the repeal of that measure, the state’s housing crisis will get worse—especially in the liberal, high-priced coastal cities that almost certainly will embrace tougher rent control laws. It’s going to be difficult to stop the initiative, for obvious reasons. The pro side will hit the “easy button” (the rent is too damn high; we’ll magically make it lower!). Unfortunately, it’s hard to make a complex economic argument to voters who are suffering from unaffordable rent and housing prices, but it’s worth rehashing the long-proven results of such ordinances.

In San Francisco, New York and other cities that have embraced the concept, we find glaring housing shortages, escalating prices and a burgeoning homeless population. Rent control isn’t totally to blame, but these problems have been exacerbated by rent controls. (Growth controls are the other culprit.) Vast areas of San Francisco resemble an open sewer thanks to the homeless situation. Rents typically exceed $4,000 a month, leading families to double-up in tiny apartments. Poverty is rampant, as rents consume the bulk of people’s income.

The entire housing market is out of whack, writes Steven Greenhut.

Read the whole thing here.