California’s housing crisis has opened the door for rent control, a Haas Institute Report out of Berkeley found in a September 2018 publication.
“California’s housing affordability crisis is harming communities across the state, stripping people of their incomes, disconnecting families from each other, restricting opportunities, forcing people into homelessness, and generating new patterns of segregation and stratification,” write authors Nicole Montojo, Stephen Barton, and Eli Moore. “Housing insecurity, unmanageable rent increases, and the threat of displacement carry deep consequences, since having a home is about more than just having shelter.”
They add: “The impacts of the housing crisis in California are intensifying racial and economic inequality. A decade after the Great Recession, many of those who lost their homes to foreclosures are still not able to again become homeowners. The high cost of rent forces Californians to pay for housing with income they could otherwise put toward education, retirement, investments, and other productive uses that increase economic opportunity.”
The report finds that California “is at a tipping point,” as neither the government nor the private market are able to meet the needs of the majority of the state’s estimated 17.5 million renters. They find, “Skyrocketing rents, intensifying threats of eviction, and ongoing displacement are all part of a broader crisis of widening inequality and structural exclusion that is testing our values and identity as a state.”
The results they find are far-reaching, with people being pushed out of their communities, into homelessness and away from jobs and opportunity.
They argue: “The extent of these long-term harms will be determined in large part by how we respond today. This moment requires that local governments have the ability to enact immediate solutions to protect tenants from unfair rent increases as well as wholesale evictions.”
Taking a long-term view of housing affordability, they draw five key conclusions:
- California has reached a tipping point where policies and the private market are failing to meet the needs of the majority of renters. There are over 9.5 million Californians living in rent-burdened households and there has been a startling increase of approximately 3.7 million rent-burdened tenants since the year 2000.
- The housing crisis also harms Californians’ physical and mental health. Exposure to hazardous conditions in the home, social isolation, severe stress, and other health problems are being exacerbated.
- Rising rents have pushed many residents into homelessness. California now has the largest number of people experiencing homelessness among all 50 states, and research shows a clear link between rising rents and increased homelessness.
- Stabilizing rents would have broader benefits to the state’s economy, environment, and public services—from improved traffic conditions and reduced traffic-related greenhouse gas emissions, to increased spending by tenants in their local economy.
- Seniors, Latinos, African Americans, low-wage workers, and families with children face the most severe burdens from the housing crisis. Rapidly increasing rents are displacing residents to areas with fewer quality jobs, well-performing schools, and other resources—reproducing racial segregation, particularly in suburban areas far from urban jobs centers.
They then focus on the rationale for rent control and “the importance of allowing government to fulfill its responsibility to rebalance the broken housing market and advance public well-being.”
One thing they make clear: “This brief is not intended to provide a detailed policy agenda or propose specific policy designs, as we know that this must come from further conversations that involve a full range of stakeholders.”
Instead they focus on where they believe that the conversation must begin. They argue that conversation begins with “opening the door for local governments and the state to design and enact rent control policies that can truly address the immediate needs of California’s renters. “
They argue: “While it will not solve the housing affordability crisis on its own, rent control is part of a needed adjustment to the rules of the market to ensure Californians’ access to housing.”
Here they raise five key points:
- Rent control has several unique, essential benefits related to current housing challenges facing California. The policy can stabilize rents for existing tenants, improve affordability for tenants in the future, and preserve the existing affordability of housing that may otherwise become unaffordable.
- Rent control is a cost effective policy with immediate effects: Where most other programs require tremendous financial resources and take a great deal of time, renter protections can be established as a matter of law and the administration of rent control is typically paid for through modest per-unit fees.
- The disadvantages of rent control policies do not outweigh its benefits. Claims that rent control has negative effects on development of new housing are generally not supported by research, but if there are some modest effects in that direction, they should be mitigated by other policy and investment mechanisms. The urgent need for stabilizing rents for tenants in the state makes this a policy priority.
- Housing production is needed, but only rent control will provide a near-term solution for renters. The magnitude of California’s housing shortage indicates just how long-term any effort to resolve the crisis must be. The state currently has an affordable housing gap of 1.5 million homes for extremely low- and very low-income households, and overall, it needs to build 3.5 million new homes by 2025 to accommodate current demand, pent-up or latent demand, and projected population growth. Thus, rent control can provide a timely solution that the market will not.
They argue, “While millions are struggling with housing instability and the threat of displacement due to extreme rent increases, our policy debates over solutions are too narrow when it comes to the needs of renters. Laws like Costa Hawkins have placed restrictions that limit communities’ ability to meet the needs of those who are hardest hit by the crisis—and furthermore, establish a path toward a better quality of life for all Californians.”
Thus they conclude: “These restrictions on rent control ought to be lifted in order to expand the conversation and create the possibility for a more equitable future in which all Californians can belong and thrive.”
Watch their presentation in September on their report:
—David M. Greenwald reporting