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The Lockean Project

How to create a housing shortage

“How to create a housing shortage,” Carmel Pine Cone – June 2, 2023 — Editorial

CALIFORNIA POLITICIANS are really good at choosing the wrong solution to a problem, even when it would be much easier to pick the right one, and nothing better illustrates this phenomenon than the current push to require landlords to register their rental homes and apartments with the government.

The “rental registry” idea is all the vogue in many parts of the country, and now Salinas is doing it, with Monterey considering jumping on the bandwagon, too.

As Mary Schley reports on our front page, setting up such a registry isn’t just a neutral step to help tenants find places to live or make sure landlords are paying their taxes. The purpose goes much deeper than that.

Monterey community development director Kim Cole hinted at the real purpose when she told a public meeting this week that the idea is to help Monterey develop “policies to provide equitable access to affordable housing.”

In Syracuse, N.Y., one official was even more direct when he praised that city’s rental registry, saying its purpose is to “collect data about the number of rental units, the current rent rates, and what housing services are offered — information that’s used to enforce the current rent control or rent stabilization regulations.”

In Palo Alto, where a rental registry is under consideration, a community website says, “city leaders believe it will serve as a foundation for future programs to regulate rents, cap security deposits and expand protections from evictions.”

And a nationwide affordable housing advocacy group recently complained that “most decisions that landlords make about their tenants’ housing situations are never approved, reviewed or even witnessed by an outside party. It’s a system designed for abuse.” The answer: create a rental registry so that landlords can be brought under control.

In other words, registering rentals is more about regulating rents, limiting security deposits, and requiring that evictions only be done for “good” reasons than it is about helping tenants find good places to live.  But the more you add to landlord’s costs and limit their revenues, the more difficult you make it for them to stay in, or join, the landlord business. The long history of rent control in the country proves that all it does is create a housing shortage — and the same thing is true of any other regulatory mandate that gets in the way of the free-market relationship between
landlords and tenants, or between any business and its customers.

Of course, that landlord-tenant relationship works best when there is plenty of housing available — a situation that provides tenants with lots of options and gives them the power to refuse to pay rents which are too high. But the reverse happens when the housing is scarce.

In fact, California’s dire housing shortage is responsible for soaring rents in some parts of the state — rents that have made it impossible for many low-income workers to find homes. But the shortage was caused by government over-regulation of the housing supply. Is the answer to increase regulation of the rental market?

Obviously, the answer is no. If you want to create affordable housing, the solution is to stop requiring it to happen and start letting it happen. To do that, all you have to do is throw rent control, rental registries and eviction protections out the window, along with the onerous zoning and development rules that prevent new housing from being built.

Unless you do all of it, affordable housing will just become more scarce than it is today. Sure, you can take a handful of apartments and force landlords to rent them at below-market rates. The lucky tenants who occupy those apartments will feel like they’ve won the lottery, but everyone else who needs an affordable place to live won’t be able to find one at all.

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