Blogging Bayport Alameda

July 29, 2016

Blast from the past: everything’s fine

Filed under: Alameda — Lauren Do @ 6:09 am

Then in 1951 the City Council decided to declare that there was no longer a rental housing shortage:

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And here:

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  1. Th lesson is that whatever rent controls there are should be by ordinance that can be easily changed or repealed instead of a de facto permanent ballot initiative.

    Comment by dave — July 29, 2016 @ 6:23 am

  2. Connecting the dots, this looks to be a perfectly rational decision.

    Rent control was federally mandated and managed as a wartime measure staring in 1943, ending in 1950. Some communities continued after that, most notably New York City.

    Alameda’s population swelled during the war for both military and industrial reasons. Some say it was above 100,000 during that time, though the precise number is probably hard to verify.

    As the population shrank postwar, the housing shortage would have abated. Returning to a peacetime free market method was the rational & obvious choice.

    This conclusion is based mostly on intuition, the date to back it is not deep, but still, it makes sense…

    Comment by dave — July 29, 2016 @ 8:20 am

  3. The myth that reality can be decreed and described by passing a resolution (or an ordinance or a charter amendment) persists. (It was never true and never will be, of course.)

    What may be worse is what our City Council has done–or, rather, failed to do–with its partial (and inadequate) attempts to craft a “solution” to the crisis of rapidly rising rents that failed to actually put a cap on rent increases that matched the realities renters face. When fixed incomes do not rise at all or salaries rise perhaps 1% per year (for the lucky ones who get a raise) and rents are rising 5% to 35% per year, the “free market” has failed–as if often does in the real world. At that point, government action needs to effectively re-balance the scales (and the out-of-kilter market), but our City Council has failed its responsibility to its citizens to provide meaningful relief to this well-documented, widespread, and serious rental housing crisis.

    It truly grieves me to consider that, if Alameda’s homeowners faced a similar crisis in their housing costs, the City Council probably would have acted far more swiftly to rebalance the scales and its solutions would have been far more comprehensive. But, as Lauren’s post of this 1951 resolution shows,
    renters always get the short end of the lease–or the resolution.

    I should not be so surprised that in traditional Alameda, some things do not change…

    Comment by Jon Spangler — July 29, 2016 @ 8:21 am

    • t truly grieves me to consider that, if Alameda’s homeowners faced a similar crisis in their housing costs, the City Council probably would have acted far more swiftly to rebalance the scales and its solutions would have been far more comprehensive.


      Alameda’s homeowners faced sharply falling values from approx 2006-2010, then prices have risen sharply since then, at least as rapidly as rents & probably moreso.

      I don’t recall anything being done about either, nor do I recall anyone pressing council to interfere with property rights. I don’t recall you in particular expressing any worry that families wishing to buy here have faced sharply higher prices.

      Comment by dave — July 29, 2016 @ 8:33 am

      • “I don’t recall anything being done about either”

        TARP? Just off the top of my head from 3 seconds of thinking about it? A crankier person than me might also argue that the Fed’s near-zero-interest rate-policies were heavily influenced by falling home prices.

        Comment by brock — July 29, 2016 @ 9:10 am

        • I meant locally, city council, referencing Spangler’s whining about that body

          Comment by dave — July 29, 2016 @ 9:15 am

        • Federally or locally, the effects are the exact same. Would you be cool with it if the Federal Government imposed rent control across the country? It just irks you that its a local measure?

          As someone who bought a house in the 2006-2010 time frame, I can tell you it pissed me off immensely that home prices were being artificially propped up, at it didn’t matter at all to me what level of government it was coming from.

          People who owned homes already at that time better damn well acknowledge the NON FREE MARKET benefit they were given by the government.

          Comment by brock — July 29, 2016 @ 9:30 am

        • Your basic point that something was attempted federally to help home prices is true at some level, but the actual effects are debatable. Given that increases have been greatest in strong local economies and weak or nonexistent in weak ones, it’s fair to say that supply & demand had a much greater effect that federal actions.

          In any case, what the various federal forces attempted was not an abrogation of property rights, which is what the local measures are.

          Comment by dave — July 29, 2016 @ 9:40 am

        • Sometimes the anti-rent control side tries to appear very ideologically pure, except when it comes to something that benefits them. Then there are all these special considerations and minute differences & details.

          With TARP and ZIRP, as with restrictive zoning, the government is interfering in free-market capitalism to the benefit of one side of the players in that market. To me, “property rights” falls under the larger conceptual umbrella of “free market capitalism”. You can’t condemn rent-control as benefiting only one half of the renter-landlord equation, but turn a blind eye to TARP/ZIRP/heavy handed zoning and how it benefits sellers over buyers.

          Comment by brock — July 29, 2016 @ 10:38 am

        • Everyone is ideologically pure when it comes to their property. Tenants zealously believe in their own property rights just as landlords believe in theirs. I wonder how renters would react to a law that allowed others to seize partial ownership of their cars or jewelry or 401K accts. The problem here that others’ rights seem to less equal.

          And again, you have a point re: TARP being partially about home prices (tertiarilly) but the gulf between that and rent control is mighty wide.

          Comment by dave — July 29, 2016 @ 11:36 am

        • I sure wish the government respected MY property as a first time home buyer (the excess cash* I had to fork over due to government market manipulation inflated home prices), as it respects the property of the long-term home-sellers.

          *~$100k seems about right? At least on the order of magnitude?

          How long will it take a landlord with an existing tenant who is restricted by the proposed rent control measure to lose $100k versus market rates? 10 years? Tell me about that mighty wide gulf again?

          And if the relationship of housing to TARP is to “tertiary” for you, how about HAMP and HOPE?

          Comment by brock — July 29, 2016 @ 12:56 pm

        • When various federal, state and local laws were passed to slow down foreclosures, it surely had some effect of reducing supply and stopping prices from coming down as far as they may otherwise would have for potential buyers. Rent control generally has the same effect of reducing supply and raising prices on the consumer side: those looking for an apartment. That effect would be greatest under the tightest rent controls such as the ARC measure, but less so under the current City rent control law. That creates higher prices for people who, for example, grew up in Alameda and wanted to move back, those who are looking to move to a different apartment in Alameda (for any variety of reasons: e.g., a falling out with roommates, divorce, downsizing, etc.) in the similar way – maybe to a greater extent — that slowing down the foreclosure process, or making it more expensive, raised prices for potential home buyers. It also creates problems for incumbent tenants turned into apartment shoppers when their units become more valuable, or much less of a headache to the owner faced with, e.g., the strict provisions of the ARC ordinance and Rent Control Board, once they withdrawn from the rental market.

          Comment by MP — July 29, 2016 @ 1:46 pm

        • Sorry for the crap (non-existent, actually) proofread. Ln 2 strike “may”; Ln. 7 “in a similar way”; last line: “they are withdrawn”

          Comment by MP — July 29, 2016 @ 2:16 pm

        • MP you forget one group that will probably get screwed by higher starting rents caused by rent-control induced scarcity. I think this group gets frequently gets overlooked by the pro-rent-control people: children living in rent-controlled units who grow up and want to move-out and get their own place.

          Comment by brock — July 29, 2016 @ 2:30 pm

      • Considering value degradation and difficulty selling, many buildings lose that or more the day RC goes into effect.

        And again, you do have a point re: TARP and other federal programs, but again, I think you vastly overstate that effect. Weak markets had nothing like the rally you describe, in depressed areas values are still below their 06/07 peaks, suggesting that local supply & demand had far more impact than any federal scheme. Such programs were proportionally underutilized in the Bay Area because they covered only conforming mortgages, which with Bay Are valuations were rare even at the trough of the market. (later upward revisions of conforming size can be said to have done as you described, but again the effect was less than you believe).

        Comment by dave — July 29, 2016 @ 1:32 pm

    • Just like leasing an automobile the lessee has the option of leasing a lower priced auto or sleeping in the expensive one.

      Comment by jack — July 29, 2016 @ 10:00 am

    • If you do decide to buy the more expensive car Jon, and because of that can’t afford your rent, I’d be happy to rent you my driveway for a very reasonable rate and, heck, I’d even throw in an old car for you to sleep in so you could drive your expensive one.

      Comment by jack — July 29, 2016 @ 11:22 am

  4. We lost a tenant in January – they followed their family to Texas. It took until May to find a new tenant during this time of such a “crisis” in lack of housing. It was a regular 2 BR apartment with a big deck and back yard for $2K per month so nothing outrageous. When I asked our management company why we were not getting applicants she responded that it was not the season and that we would start to see people looking at it in April and she was right. Now, we have a great couple living in the unit that did not yield any rent for 4 months. In a true housing crisis, it would not have mattered if it was raining outside, school was in session, and it was not “the season”.

    I ask you – if there is such a crisis, why did this unit stand vacant for 4 months? I do not believe there is a housing market crisis. The crisis is a lack of affordable housing for low income renters but that is not what the ARC proposal is addressing and neither does the city’s.

    Comment by Nancy Hird — July 29, 2016 @ 10:50 am

  5. When they roll out a new stock or bond fund they back test it to try to get an idea as to how it will perform. It occurs to me that you can also back test rent control. Back in 1970 our rent for a one bedroom apartment in Alameda was $100 per month. Except for the late 70s the CPI index has been mostly under 5%, so at 65% of that one would be looking at an average increase of 3% . Under the rule of 72, this would double the rent every 24 years. This would put the rent at about $375 per month this year, which would be significantly below our costs. So we would be out of business.

    Comment by Ed Hirshberg — July 29, 2016 @ 10:55 am

    • Do you have a lot of tenants that stay in your units for 46 years Ed?

      Comment by brock — July 29, 2016 @ 10:59 am

      • We frequently have tenants who stay forty years, and that is at market rates. With below market rates the number would increase.

        Comment by Ed Hirshberg — July 29, 2016 @ 11:35 am

  6. All this time and dave still cannot see that, unlike the labor market or cattle futures, the rest of the universe views the market transaction and societal interests surrounding the landlord-tenant relationship as unique and deserving of special handling.

    If you cannot overcome that initial ideological hurdle, there is no point in arguing the wisdom of the finer points of any specific feature of various proposals.

    As for the original post, I still don’t understand many people’s thinking. I’m sure war-era rent control policies were somewhat different than modern rent stabilization policies w/ vacancy decontrol, etc. However, if the goal is to remove the possibility of displacement caused by rapid, large rent increases, then there is no need to remove the policy at the first downturn of the economy.

    If a 10% increase is not acceptable to the community now, why would it be acceptable during a recession? Of course, in most scenarios, a landlord wouldn’t be able to get a 10% increase due to competition. Why remove the policy that made sense and then wait until you are halfway through the next crisis to realize you need the policy again. The damage will already be done.

    Comment by BMac — July 29, 2016 @ 3:41 pm

    • Your insistence that it’s special borders on tautology. You’ve got to do better than “it’s special because it’s special.”

      As for the “rest of society” believing that, perhaps you are unaware that the vast majority of America is without RC.

      A vote to deprive a targeted group of its rights is wrong, full stop. (You weren’t for prop 8, were you?) It’s also ill advised policy, according to a near universality of economists. It compounds the problem that it purports to solve.

      No amount of plugging your ears and repeating “it’s special cuz I want it” can change that.

      Comment by dave — July 29, 2016 @ 4:16 pm

      • Dave in this comment, when it’s his side that’s affected:

        “A vote to deprive a targeted group of its rights is wrong, full stop”

        …compared to Dave in comment #3 above when it’s the other party that’s affected:

        “… you have a point … but the gulf between that and … ”

        “… you do have a point … but again, I think you vastly overstate that effect …”

        “ideologically purity” for others, but “special considerations and minute differences & details” for them?

        Comment by brock — July 29, 2016 @ 5:50 pm

        • I’m not demanding ideological purity from you so much as a clear argument.

          There is ample evidence that such programs had very little effect on home prices, as the results vary widely between markets. This suggests that supply & demand in local markets was a much greater influence on housing prices, as would be expected.

          It is difficult to understand just what your beef is with said programs. You seem to feel they ripped you off, but in addition to the evidence for that being thin, nothing ws taken from you and you were not forced to transact in that environment. Property is being taken from landlords, who can forced to transact no matter what (they do not have the option to exit a contract, the lessee does).

          Comment by dave — July 29, 2016 @ 6:05 pm

        • You’re right, I was not forced to purchase in that environment. I guess I could have just lived in my car.

          On the other side of the coin, landlords are not being prevented from selling their properties if rent control passes. Don’t like rent control? Sell your rental and stop transacting in the rental market!

          Comment by brock — July 30, 2016 @ 11:18 am

    • First paragraph:
      Unlike the labor market? The Socialists cry with a cacophony of outrage for a minimum wage that steadily increases with the volume of their, whatever the moment of outrage about social justice is. What universe are you living in?

      Second paragraph:
      Re “ideological hurdle. Apparently a self proclaimed dichotomy that is constructed on argumentum ad populum that relies on an affective fallacy and logical failure ie: my feelings are valid, so therefore you have no right to criticize what I say or do, or how I say it or do it.

      Third paragraph: the fallacy that an argument, standpoint, action or conclusion no matter how questionable must be accepted as final or else the point will remain unsettled, which is unthinkable because those affected will be denied “closure.”

      Fourth paragraph: The fallacy of urging an audience to “root for the underdog” regardless of the issues at hand.

      Comment by Jack — July 29, 2016 @ 7:09 pm

  7. “rest of the universe” that is

    Comment by dave — July 29, 2016 @ 4:27 pm

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