It’s no secret that California, specifically San Francisco, is experiencing a housing crisis. Over the past 20 years, the city has seen major changes, carving out space for the city’s higher-income tech sector employees, while leaving behind our neighbors in low- and moderately-incomed households.
Many fault rental & housing prices as the general reason for pushing much of the population out of San Francisco and into its sister neighborhoods. So at first glance, it seems like passing a bill like Prop 10, i.e allowing for California cities to lift rent control restrictions on certain housing types, seems like the obvious solution, right? Well, it may not be that simple.
There are many people in favor of and opposed to passing Prop 10. From our perspective, it may not be an easy yes or no answer. Let’s take a closer look:
1 . What is Prop 10?
Proposition 10 is the Affordable Housing Act. It is designed to repeal Costa-Hawkins which puts restrictions on which housing falls under rent control.
2. Currently Only Part of the City’s Housing Is Rent Controlled
Costa-Hawkins was passed by California lawmakers in 1995 and prohibits rent control on certain housing types. In a nutshell, it states:
Any single-family home or condominium, and any apartment built after February 1995 cannot be placed under rent control.
L.A. cannot place rent control on apartments built after 1978. San Francisco cannot place rent control on apartments built after 1979.
Landlords can raise the rental price following a tenant vacancy.
3. Passing Prop 10 Doesn’t Automatically Mean Your City Will Lift Rent Control Restrictions, but in Larger Cities Like San Francisco or La, It Is Much More Likely
Passing Prop 10 means that individual cities in California will have the ability to impose rent control on all housing & restrict landlords from driving up rent for new tenants after a tenant vacancy. Local cities ultimately have the control & have the power to regulate as they see fit.
4. More Than 60% of San Francisco Renters Are Already Living Under Rent Control, and It’s Not All Affordable
A June article of CurbedSF discusses the cities housing issues and the fact that more than half of the city’s renters already live under rent control. The article states that regardless of this fact, even rent-controlled homes are less and less affordable. According to the article, “In 2015, almost 100,000 out of San Francisco’s estimated 160,000 rent-controlled units are rented at rates that would be affordable to households earning less than 80 percent [of Area Median Income]. In 1990, more than 140,000 rent-controlled units were affordable to those households.”
5. There Are Benefits of Rent Control
It’s no secret that renters can benefit from rent control and economists agree. A Stanford study, for example, found tenants in San Francisco with a rent-controlled apartment saved anywhere from about $2,300 to $6,600 every year after the city expanded rent control.
6. There Are Economic Limitations of Rent Control
A report by The Library of Economics and Liberty states that virtually all Economists agree that rent control is ultimately destructive. The article states that in a 1990 poll of 464 economists published in the May 1992 issue of the American Economic Review, 93 percent of U.S. respondents agreed, either completely or with provisions, that “a ceiling on rents reduces the quantity and quality of housing available.”
Why? Well, if you look closely, we see a lot of this in the city today. Certainly not all, but a portion of homes that are under rent control are deteriorating, with no legal incentive for the landlord to repair, maintain or even update their renter's living situations. This could be exacerbated if all of the cities housing is placed under rent control.