Could Oregon Become the First State to Ban Single-Family Zoning?

[the urban politician]

Originally Posted by jaxg8r1

Having said that, I think you could make a credible argument that this is more of a "message to the market". The message being "reign in these abuses or we will through tightening this", which I'm ok with.

How is charging what you feel is fit for a product, in the setting of ample competition and plenty of comparable inventory, an abuse? And how do you even know it’s an abuse to begin with? How do you know that the owner’s property tax, water bills, and cost of maintaining the building didn’t go up as well?

If I am leasing a 1 bedroom to you at $1000 per month, and I raise the rent to $1200 per month, you can simply move out because there are probably hundreds of other one bedroom apartments on the market for the price you are looking for. I in no way have a corner on that market.

Compare that to the pharmaceutical that has a patent on the ONLY drug that can treat a condition, while price-gouging the consumer for it. Now that is something Government should reign in long before they reign in an industry that already is well regulated by virtue of an abundance of supply.

Oregon is at fault for constraining housing supply, and now they want to punish property owners for the consequences of their own policies? Why are you guys voting these buffoons into office?

[jaxg8r1]

Originally Posted by the urban politician

How is charging what you feel is fit for a product, in the setting of ample competition and plenty of comparable inventory, an abuse? And how do you even know it’s an abuse to begin with? How do you know that the owner’s property tax, water bills, and cost of maintaining the building didn’t go up as well?

If I am leasing a 1 bedroom to you at $1000 per month, and I raise the rent to $1200 per month, you can simply move out because there are probably hundreds of other one bedroom apartments on the market for the price you are looking for. I in no way have a corner on that market.

Compare that to the pharmaceutical that has a patent on the ONLY drug that can treat a condition, while price-gouging the consumer for it. Now that is something Government should reign in long before they reign in an industry that already is well regulated by virtue of an abundance of supply.

Oregon is at fault for constraining housing supply, and now they want to punish property owners for the consequences of their own policies? Why are you guys voting these buffoons into office?

First of all, a couple of things. This law allows so many exemptions (buildings built within the last 15 years, etc.) that this is hardly true rent control.

Now, lets address what you mentioned above: Property Tax cannot rise more than 3% per year in Oregon (state law). Utility bills are largely not included in rent here either, at least not in my experience. So if water or sewer bills increasing more than normal were an issue, landlords would simply not include them in the rent and thus they wouldn't be subject to rent increase restrictions. Cost of maintenance is the one point you mentioned that would have to be included in rent but my suspicion here is that this hasn't changed much otherwise we would've heard about it.

Now, having said that I largely agree with the principles you describe. I've never once advocated for rent control largely because of how its been implemented in the past. I suppose we will see if it has any effect here (I'm guessing no true effect either way).

I do know that this issue (politically speaking) was beginning to simmer in a lot of places within the state. This is largely the effect of a steady influx of people moving into the state that have a huge disposable amount of cash to drive up real estate prices (think of selling a house in San Fran and moving to Portland). Portland (and Seattle) led the nation for years in rent increases and priced out a lot of long term folks. Now in theory, that is how the market works and no biggie. But it doesn't really recognize that those people have recourse at the voting box and if this solution wasn't implemented, I suspect there would have been a lot of momentum for a much more harsh solution to be imposed (i.e. true rent caps, etc.) in the near future. People and various groups were already organizing for ballot measures and those people are pissed. This may be the middle ground that prevents that from happening.

[digitallagasse]

Rent control is a failed idea. It all comes back to supply and demand. Sadly over restrictive zoning, NIMBYs and overly restrictive additional requirements artificially limit what can be built and how much can be built. If not enough supply is able to be built and said supply is diverse enough for most peoples needs then prices rise.

Not only is upzoning needed but upzoning should happen automatically if the demand is supports it. Likewise far more development and redevelopment of land needs to happen as a right. Additional requirements need to be better balanced. It would be very unwise to return to a time of little to no regulation. Unsafe buildings and such not being something we want to return to. On the other extreme we have cities and neighborhoods with so many additional requirements that little to nothing can be built. What does happen is extremely costly which in itself further limits what can be built.

[mhays]

If Oregon is also eliminating "single family only" zoning, it's at least doing some good on enabling supply.

Generally Portland doesn't allow much density, which is paradoxical given its reputation.

[Vlajos]

Stanford University recently published a study on Rent Control. It's a very good read.

https://www.gsb.stanford.edu/faculty-res...on-tenants-landlords-inequality-evidence

[MonkeyRonin]

Originally Posted by the urban politician

The best way to keep as much housing supply as available as possible is to not cap rents and not regulate the market. Let landlords everywhere compete for your business. You will find the cheapest apartment that suits your needs, and the landlord will have the revenue to maintain their buildings for future tenancy.

That's great in theory, and might work out just fine in lower-cost, less competitive markets, but it doesn't really go like that in higher-demand, higher-cost places.

The purpose of rent control is not to create a cheaper housing market - it's to protect tenants from rent increases beyond what they can bear. And in those high-cost, high-growth markets, that is absolutely essential because there isn't necessarily going to be a cheaper alternative.

Originally Posted by the urban politician

How is charging what you feel is fit for a product, in the setting of ample competition and plenty of comparable inventory, an abuse? And how do you even know it’s an abuse to begin with? How do you know that the owner’s property tax, water bills, and cost of maintaining the building didn’t go up as well?

I'm guessing you've never lived or owned somewhere with rent control, but that's not really how it works. In most cases, there is an regulated max annual allowable increase in rates that reflects inflation & utility price growth. Likewise, if there is substantial maintenance required, a landlord can apply for an above-guidline rental increase.

Also, when leasing to a new tenant you can charge them whatever price they'll agree to (which presumably, would be enough to cover your mortgage & expenses, and as high as the market will bear at that time). So unless you're a completely incompetent as a landlord you should never be losing money on a tenant.

I can't say I really have any sympathy for landlords being unable to increase their rates after-the-fact because they would like to make more money than what they had originally agreed to.

If I am leasing a 1 bedroom to you at $1000 per month, and I raise the rent to $1200 per month, you can simply move out because there are probably hundreds of other one bedroom apartments on the market for the price you are looking for. I in no way have a corner on that market.

Because - even assuming there even is a supply of other available cheap housing - being forced to move is just so easy, right!?

[downtownpdx]

Originally Posted by mhays

Without rent control, some buildings might go up 15% but most will grow moderately (like 2-3%?) when averaged over a long period.

With rent control, that one building might be limited to 10% or 7%, but the typical will generally be higher, like 4% for example, due to scarcity (to the extent the law has effect).

It seems to me it's worth curtailing abusive rent hikes if the side effect is average rents nudging up by a percent or two, and perhaps not even that much. People can handle that, but few can handle the sudden 20-30 percent hikes that basically kick them out of a home.

Originally Posted by mhays

With rent control, rents will often rise even if the current vacancy rate doesn't merit an increase...if you want to have the potential for a certain cash flow in 2020, you'd better raise rents in 2019 to keep the 2020 number in reach.

Is it better to raise rents incrementally for your tenants, or hit them all at once in 2020 when you need more cash flow? I just don't see much of a hardship here for landlords.

[downtownpdx]

Originally Posted by the urban politician

^ So what if tenants "want" it? I want to buy a 2019 Honda Accord for $12,000, but that's not what a 2019 Honda Accord costs. If the Government forced Honda to sell the Accord for $12,000, three things would happen: 1) it would be made of junk and fall apart, 2) they would largely stop making it, and 3) Original Honda Accords would suddenly become much rarer and be viewed as luxury items, thus retailing for far more than they originally did.

Point being, the real estate market cannot survive based entirely on the price of simply what tenants "want". If it costs a certain amount of money to construct, maintain, and serve a property with utilities, then that's what it costs. Period. If the tenants don't like it, there are literally hundreds of other apartments to choose from--rentals are not a public utility like an electric company. The consumer has choices.

In the context of this law, they're simply putting a (pretty generous) cap on rent hikes that abruptly kick people out of a home.

Having a stable place to live and buying a Honda are not interchangeable ideas. I can easily look elsewhere if the Honda is too spendy for me ... But "consumer choice" doesn't really have the same breezy ring when my rent goes up $300 and I have to scramble to find another place to live. Will they allow my pet? Are they near mass transit? Will I spend 2 hours getting to work? Is the neighborhood safe? Is the apartment well maintained? Is there room for my family? Can I even come up with the money for deposit and first and last month's rent? Not the same set of concerns.

There's a human side to all this that market forces alone don't consider, and saying 'just go find somewhere else to live' misses the point.

[mhays]

I can't believe you're arguing that it's ok if the market gets more expensive due to this.

Rents matter to most people. Expensive cities are expensive generally because of structural issues like supply/demand and public policy (including rent control in the worst cities). This matters!

[mhays]

Originally Posted by MonkeyRonin

That's great in theory, and might work out just fine in lower-cost, less competitive markets, but it doesn't really go like that in higher-demand, higher-cost places.

The purpose of rent control is not to create a cheaper housing market - it's to protect tenants from rent increases beyond what they can bear. And in those high-cost, high-growth markets, that is absolutely essential because there isn't necessarily going to be a cheaper alternative.

I'm guessing you've never lived or owned somewhere with rent control, but that's not really how it works. In most cases, there is an regulated max annual allowable increase in rates that reflects inflation & utility price growth. Likewise, if there is substantial maintenance required, a landlord can apply for an above-guidline rental increase.

Also, when leasing to a new tenant you can charge them whatever price they'll agree to (which presumably, would be enough to cover your mortgage & expenses, and as high as the market will bear at that time). So unless you're a completely incompetent as a landlord you should never be losing money on a tenant.

I can't say I really have any sympathy for landlords being unable to increase their rates after-the-fact because they would like to make more money than what they had originally agreed to.

Because - even assuming there even is a supply of other available cheap housing - being forced to move is just so easy, right!?

You're not getting the economics. The worst effects of rent control are specifically in the expensive markets...it's no coincidence that NYC and SF are both rent control cities.

In a busy market, supply and demand play a huge role. Demand fills the supply, which expands when the cost/risk/reward equation merits it. New supply is the pressure valve. If the local rent control law adds risk to the equation (for example curtailing rents in 15 years, restricting future value) then less gets built, adding scarcity, and raising market rents.

[the urban politician]

Originally Posted by MonkeyRonin

The purpose of rent control is not to create a cheaper housing market - it's to protect tenants from rent increases beyond what they can bear. And in those high-cost, high-growth markets, that is absolutely essential because there isn't necessarily going to be a cheaper alternative.

Completely disagree. The Government does not have any obligation to insulate tenants from the real and true cost of real estate ownership and maintenance, and when they start getting into the business of "picking and choosing" who to help in a private contract between 2 parties, they distort the market and usually cause harmful consequences that they don't intend. The fact that Government takes on this role is nothing less than short-sighted and pandering for votes.

In addition, you cannot simply legislate lower prices unless you enact policy changes that reduce the cost of doing business. It's utterly ridiculous.

I'm guessing you've never lived or owned somewhere with rent control, but that's not really how it works. In most cases, there is an regulated max annual allowable increase in rates that reflects inflation & utility price growth. Likewise, if there is substantial maintenance required, a landlord can apply for an above-guidline rental increase.

Also, when leasing to a new tenant you can charge them whatever price they'll agree to (which presumably, would be enough to cover your mortgage & expenses, and as high as the market will bear at that time). So unless you're a completely incompetent as a landlord you should never be losing money on a tenant.

And I'm guessing you've never owned rental property. The reality is, I reject any notion that rent control can be fair in perpetuity. Every city has a different rent control policy, but what does tend to happen is that once you let Government regulation in the door, you never can undo it. All it takes is a particularly heinous administration with populist leanings to come in that will tighten regulations further and turn property ownership into a living hell.

In addition, I reject the notion that having a high cost of doing business, but allowing property/business owners to simply "submit an application" to the Government to "appeal" to increase their revenue is anything but miserable public policy. Time and time again we've seen that imposing bureaucratic burden and creating appeals processes simply a) increases the cost of business, b) particularly places a burden on small landlords who usually don't have the time or resources to go through it all, c) often creates unnecessary legal costs, and d) is a recipe for corruption. We see this day in, day out in Chicago.

I can't say I really have any sympathy for landlords being unable to increase their rates after-the-fact because they would like to make more money than what they had originally agreed to.

And I can't say that I have sympathy for our tenants living in cities like NYC and SF, making six-figure salaries, eating at nice restaurants, drinking fine cocktails with their friends, who suddenly want to pay less in rent for the privilege of living in these cities just so that they have more disposable income to enjoy.

The ubiquitous rich landlord/poor tenant narrative is a blatant, unadulterated lie. I have no tolerance for it.

Rent control today in our luxury cities is nothing short of a wealth transfer from property owners to the increasingly well-to-do tenants living in them, and they certainly aren't in need of it.

[Crawford]

Originally Posted by mhays

You're not getting the economics. The worst effects of rent control are specifically in the expensive markets...it's no coincidence that NYC and SF are both rent control cities.

NYC and SF are rent control cities because they're Lefty cities with strong "tenant advocate" groups, not because they're expensive.

[the urban politician]

Originally Posted by Crawford

NYC and SF are rent control cities because they're Lefty cities with strong "tenant advocate" groups, not because they're expensive.

Exactly.

Rent control is not about sound public policy or even about reducing prices. It's about pandering.

[mhays]

Originally Posted by Crawford

NYC and SF are rent control cities because they're Lefty cities with strong "tenant advocate" groups, not because they're expensive.

I'm talking effect, not cause. Their rent control has had a major effect over the years...some of it simply takes units out of the commercial market, meaning the market-rate group is competing for fewer units even while a protected class benefits. And some policies have actively discouraged new construction.

[M II A II R II K]

Oregon’s New Rent Control Law Is Only A Band-Aid On The State’s Housing Woes

https://www.brookings.edu/blog/the-avenu...y-a-band-aid-on-the-states-housing-woes/

[MonkeyRonin]

Originally Posted by mhays

You're not getting the economics. The worst effects of rent control are specifically in the expensive markets...it's no coincidence that NYC and SF are both rent control cities.

In a busy market, supply and demand play a huge role. Demand fills the supply, which expands when the cost/risk/reward equation merits it. New supply is the pressure valve. If the local rent control law adds risk to the equation (for example curtailing rents in 15 years, restricting future value) then less gets built, adding scarcity, and raising market rents.

New York and San Francisco have rent control precisely because they're so expensive; they're not expensive because of rent control. With or without it, these are very desirable cities and face extreme demand that the rental market is unlikely to be able to fully accommodate.

It is likely true that the average vacant apartment in either would be cheaper without rent control, but would the advantage of having slightly cheaper new apartments offset the negative effects of having potentially millions of people being displaced because they can't afford the rent increases that may be imposed indiscriminately by their landlords? I'm not sure what the answer is, but I would hazard a guess that the effects of the latter are worse.

If the goal is to provide large quantities of cheaper housing while minimizing displacement & poverty, make development easier - but don't get rid of rent control.

Originally Posted by the urban politician

Completely disagree. The Government does not have any obligation to insulate tenants from the real and true cost of real estate ownership and maintenance, and when they start getting into the business of "picking and choosing" who to help in a private contract between 2 parties, they distort the market and usually cause harmful consequences that they don't intend. The fact that Government takes on this role is nothing less than short-sighted and pandering for votes.

In addition, you cannot simply legislate lower prices unless you enact policy changes that reduce the cost of doing business. It's utterly ridiculous.

The point isn't to pick and choose who to "favour", it's to protect the more vulnerable party in the agreement. Which, for the record is not uncommon or unique to renting property. Consumer protection laws exist in many forms across most industries - these ones are just particularly essential because it's peoples homes we're talking about here. Having some legal protection on the ability to have a roof over your head is kind of important, both to the individual and the collective health of the state (homelessness & public housing are a lot more economically inefficient and eat up more tax dollars than it would to enforce rent control).

And no one is legislating lower prices or telling owners what they can or cannot charge - only that they can't charge more than what they already had agreed to charge in the first place (beyond increases accounting for general inflation & utility costs).

[mhays]

As a builder of apartments, I'll say that you're wrong about what affects the building of apartments. (I'm not claiming deep expertise, but trying to understand this stuff is part of my job.)

[digitallagasse]

Originally Posted by MonkeyRonin

New York and San Francisco have rent control precisely because they're so expensive; they're not expensive because of rent control. With or without it, these are very desirable cities and face extreme demand that the rental market is unlikely to be able to fully accommodate.

It is likely true that the average vacant apartment in either would be cheaper without rent control, but would the advantage of having slightly cheaper new apartments offset the negative effects of having potentially millions of people being displaced because they can't afford the rent increases that may be imposed indiscriminately by their landlords? I'm not sure what the answer is, but I would hazard a guess that the effects of the latter are worse.

If the goal is to provide large quantities of cheaper housing while minimizing displacement & poverty, make development easier - but don't get rid of rent control.

I somewhat agree. The market is so distorted in both places that some form of rent control needs to be in place until those metros could return to a better balance. Even if removing the only strict housing policy across the whole metro for both cities it will take time for additional housing to catch up to demand. As that gets closer to happening then rent control can be backed off.

[the urban politician]

Originally Posted by MonkeyRonin

New York and San Francisco have rent control precisely because they're so expensive; they're not expensive because of rent control. With or without it, these are very desirable cities and face extreme demand that the rental market is unlikely to be able to fully accommodate.

It is likely true that the average vacant apartment in either would be cheaper without rent control, but would the advantage of having slightly cheaper new apartments offset the negative effects of having potentially millions of people being displaced because they can't afford the rent increases that may be imposed indiscriminately by their landlords? I'm not sure what the answer is, but I would hazard a guess that the effects of the latter are worse.

If the goal is to provide large quantities of cheaper housing while minimizing displacement & poverty, make development easier - but don't get rid of rent control.

Originally Posted by digitallagasse

I somewhat agree. The market is so distorted in both places that some form of rent control needs to be in place until those metros could return to a better balance. Even if removing the only strict housing policy across the whole metro for both cities it will take time for additional housing to catch up to demand. As that gets closer to happening then rent control can be backed off.

^ Well, I just have a different view of Government's role. I simply don't accept your line of reasoning that Government should intervene to make sure that people can live in highly expensive and desirable places that they otherwise should not be able to afford.

In fact, I find it odd that digitallagasse is saying that the market in SF and NYC is "distorted" when it's actually the opposite. The market is working as it's supposed to. Demand is strong and the people with the means are living where they can afford to live. It's a system that is sorting itself out just fine.

It's the Government that is doing the "distorting" by messing this up, forcing property owners to get less than what the market would earn them by making them accept a lower rent just to accommodate people of less means who decided that they get to live in Manhattan too.

The point isn't to pick and choose who to "favour", it's to protect the more vulnerable party in the agreement. Which, for the record is not uncommon or unique to renting property. Consumer protection laws exist in many forms across most industries - these ones are just particularly essential because it's peoples homes we're talking about here. Having some legal protection on the ability to have a roof over your head is kind of important, both to the individual and the collective health of the state (homelessness & public housing are a lot more economically inefficient and eat up more tax dollars than it would to enforce rent control).

And no one is legislating lower prices or telling owners what they can or cannot charge - only that they can't charge more than what they already had agreed to charge in the first place (beyond increases accounting for general inflation & utility costs).

^ Sorry, but I disagree with everything you just wrote. "Fixing" Landlord-Tenant relations to suddenly make Landlords the more vulnerable party is lousy policy and it has worsened the housing shortage because landlords have reacted to this by becoming even more picky with which tenants they would approve and which they won't. In addition, I think that you are crafting arguable roles for Government out of convenience to justify unhinged Government intrusion.

I don't think Government should have any business telling a property owner what to charge to reside in their property. Period. If housing is such a human right as you say, it should be treated as a public utility. And in that case, municipalities can buy up property and house the most vulnerable citizens at their own cost. They should build more public housing for the poor, or greatly expand the Section 8 voucher program (which has a waiting list many years long) at the very least. If Government wants to burden the world with their mandates that x, y, and z are human rights, then society at large must pay the full cost of it instead of laying that burden on, and unfairly villainizing a subset of the citizenry.

[digitallagasse]

Originally Posted by the urban politician

^ Well, I just have a different view of Government's role. I simply don't accept your line of reasoning that Government should intervene to make sure that people can live in highly expensive and desirable places that they otherwise should not be able to afford.

In fact, I find it odd that digitallagasse is saying that the market in SF and NYC is "distorted" when it's actually the opposite. The market is working as it's supposed to. Demand is strong and the people with the means are living where they can afford to live. It's a system that is sorting itself out just fine.

It's the Government that is doing the "distorting" by messing this up, forcing property owners to get less than what the market would earn them by making them accept a lower rent just to accommodate people of less means who decided that they get to live in Manhattan too.

It is distorted due to overly restrictive housing policy in both metros. How many projects can't happen because no more intensity is allowed in a neighborhood. How much cheaper could a project be if it be built as a right and and without so many excessive restrictions.

The important that I mention is metro and not just city proper. You have to allow growth everywhere in the metro. The more intensification across the metro and further outward expansion if possible. The more of the metro you restrict for either the more pricing gets pushed up metro wide.

Hyper in demand neighborhoods will always be so. If surrounding neighborhoods are also allowed to grow more as well that serves as a release valve for adjacent neighborhoods.