Californians longing for the “Good Ole Days” of wage and price controls under President Nixon may get their wish.
Wage controls in the form of a series of minimum wage hikes just passed the California legislature.
Price controls in the form of rent caps have spread to suburbia.
Please consider Rent Control Spreads from Pricey San Francisco to Suburbs.
Last year, a raucous city council meeting over rent control in Alameda, population 75,000, resulted in two arrests. Farther north, city leaders of Sonoma County’s Healdsburg, population 11,000, approved voluntary guidelines to keep rent increases to 10 percent or less.
Tenant activists in Alameda and Richmond — a waterfront industrial town of nearly 110,000 — are fighting to place rent control on municipal ballots this fall. So are residents of Burlingame, a pricey, leafy city of 30,000 on the San Francisco Peninsula.
The burst of Bay Area suburban squabbles doesn’t surprise analysts. The median rental price in the five-county San Francisco metropolitan area for February was $3,350, up 10.5 percent from a year ago, according to Zillow. Wages, while high for Silicon Valley professionals, have not kept pace for many other people.
Economists, landlords and developers say rent control makes the situation worse by restricting supply, resulting in run-down apartments and driving market prices higher. Tenant advocates, however, argue that caps on increases and other renter protections are critical in a housing market that’s ousting seniors and families.
Three Bay Area ballot proposals would limit annual increases to the consumer price index or less, which would result in hikes in the low single digits rather than the double-digit ones that have renters clamoring for help. The measures also limit evictions to “just cause” so landlords can’t simply toss someone out for another tenant who can pay more.
Landlords say they need to recover costs to pay higher property taxes or for property improvements.
The California Apartment Association is trying to qualify a competing measure for the November ballot that would prohibit restrictions on rental prices in Richmond.
Thomas Bannon, the association’s chief executive, said he understands tenant concerns, but it’s not fair to ask landlords to shoulder the burden for a housing shortage.
“Rent control has never addressed that issue,” he said. “At best, it’s been a temporary fix for a very small number of units.”
Wage Control Floors
For my take on wage hikes please see Chart of the Day: California Minimum Wage Hike History
I though we had established that wage and price controls do not work, but here we go again.
Charles Edwards, a 77-year-old retired city gardener will be knocking on doors in Alameda to persuade voters to support a citizen initiative to cap rent increases. Last June, the rent on his one-bedroom flat increased 24 percent to $1,300, leaving him $289 a month for utilities, food and other expenses.
Charles Edwards waits for a train on his model layout in Alameda, Calif. AP Photo/Ben Margo
Rent Control Now!
Longing for Stagflation
Central banks are hell bent on forcing up prices amidst a backdrop of price-deflationary demographics, robotics, and other technological advancements.
As a result, people like Charles Edwards seem to be clamoring for Nixonian-style stagflation complete with wage and price controls. Expect this idea to spread beyond rents to healthcare, insurance, and other areas.
First we have a recession to deal with.
Mike “Mish” Shedlock