If far more people were opting out, residential buildings would be empty, and rents would fall well below their pre-2020 level.
The fact that rents are still higher than that is pretty good evidence that a large number of people continue to opt in.
The fact that rents are still higher than that is pretty good evidence that a large number of people continue to opt in.
It’s the same situation as in New York.
Plenty of landlords can afford keeping their prices high hoping for the eventual bite. If they lower their prices further they do a bigger damage to their portfolio for years to come once you factor in rent control.
EDIT: of course if you mess up, that mistake is now set in stone and backed by legal resource of your city, so it’s not risk free.
this assumes the returns set out by the rent control is appropriate in all future situations. Even with the allowance for increases, there are still situations where such an increase is insufficient.
Unfortunately, the proverbial cat is out of the bag and we will likely see repeats of such “subsidies”. It’s unclear how it will change the calculations long-term. Short-term, it has already driven the unlucky small landlords out of business and forced surviving to keep greater reserves. This increased reserves need will definitely hamper future development and probably will drive rents up even more due to lack of supply. Large corporate landlords tend to focus on the higher end of the market, but the shortage is in the more affordable price range…
They hope to ride out the lows.
I didn't read the article, and assumed the opposite of its actual conclusions.
Rents are way down from pre-2020 times.
Which makes it even more fun to read the responses that argue rents will not drop even when demand declines.
Demand for some things is elastic only down to a point. That's the point where customers are hostages.
People stop getting papers delivered in favor of online news, so prices have to go up to cover fixed costs, pushing more people to stop getting papers delivered and so on.
I notice, walking around the 'hood, that some people still get the San Jose Mercury-News delivered. Why?
I think they just have to get a morning paper, and if it's getting shittier by the year, well, so be it. You're right, lots of readers have already cancelled, but there's a core of readers who won't. The Merc can raise the price and they'll just pay it.
The rent being higher feels more like collusion than actual demand.
And if you dig into the data you'll also notice that there's "asking rent" and "effective rent" (rent after concessions)