CA Rent Control Statewide

[Jordan Moorhead]

CA just passed a Statewide Rent Control ordinance as part of their renter protection plan, Minneapolis is working on similar regulations.

How will this affect how you invest in California? I’m curious as Minneapolis probably won’t be far behind and this seems to be the trend in larger metrics across the country. I think we all need to seriously consider how we’re going to deals with controls like this.

[David Barnett]

@Jordan Moorhead Very interesting discussion and hopefully Minneapolis doesn't follow California down this road.  I think it would be a terrible idea to follow California in this regard.  There was a very interesting write-up in today's Wall Street Journal (in the Editorial section) discussing just this subject.  Assuming that the figures and research are correct, if the rent control was in effect for this year, something like 40-50% of rentals in the Bay Area wouldn't keep up with the annual increase cap (based on fair market value).  If Minneapolis goes the same direction as California, I would expect capital flight, shortage of housing and all of the items that were cited in the article.  Landlording is a business and if business owners can't recoup their cost plus make a desirable return, there will be market shortages.