East Bay Property Management and Consulting – Rent Control in Fremont California

No hot-button issue gets people arguing as much as rent control does. In November of last year, an Alameda city council meeting turned violent over rent control arguments that escalated until police intervened. As Bay Area cities debate whether or not to adopt rent control measures, it’s important to note that there’s no going back once rent control in Fremont California is in place.

The Battle Over Fremont Rent Control

California has become a popular target for progressives on issues like labor and housing. Given that California already passed a $15/hour minimum wage law, there’s growing support among voters for rent control laws to help fight escalating rents. Some of the highest rents in the country are right here in the Bay Area. And although Fremont places no caps on rent increases, the city stipulates that rents may be raised only once every year. Fremont city council discussions about rent control between tenants and landlords are ongoing.

Although both sides agree that strict zoning laws are to blame for the high rental prices seen in the Bay Area, the factions differ on how to tackle the problem of high rents. Landlords want zoning laws eased enough to allow for new housing supply to come online. With more housing units available on the market, the law of supply and demand would take over and bring rental prices down. While tenants agree that there isn’t enough supply, they don’t believe that the relaxation of zoning laws is going to solve the problem anytime soon. Because tenants need help now, they are instead hoping that the local government steps in with rent control measures to cap rents at a more affordable level.

Why Is Rent Control in Fremont California Gaining Popularity?

Rent control has become popular in part because politicians don’t want to be seen opposing it. Landlords are not very popular come election time, and they’re significantly outnumbered by the tenants who benefit from rent control. Once people get animated about a topic like rent control, they turn out to vote. Affordable rent, as a political topic, has an emotional appeal. People hear stories about people getting evicted and it strikes a base fear in them of not having a place to live.

Will Fremont Rent Control Work?

It’s a fair question to ask whether or not rent control lowers housing costs and increases the construction of more affordable housing. In a survey in The Economic Review, 93% of economists said that “a ceiling on rents reduces the quantity and quality of available housing.” These economists know that government imposed price controls (like rent control) inevitably lead to price distortions. In New York City, there are approximately 2 million apartments or other rental units. Because New York City is rent controlled, the city board votes on how much owners of rent-regulated apartments can raise the rents for the following year’s leases. The board members control the rent increase, not market mechanisms. So rent increases are in line with modest cost of living increases, which rise at a much slower rate than the rental price of market rate apartments. Cities in the Bay Area, like New York City, have a demand that far outpaces supply.

Because rent control units are below the market rate, rent control cities have some unfortunate consequences. Renters who enjoy these rent-controlled units end up staying in their apartment for a long time. Although some would be economically better served by moving out, they won’t because they don’t want to lose their below market rate apartment. And because rent-controlled units aren’t bringing in enough rental income, landlords can’t afford to make improvements (as they’re prevented from raising rents to market levels). The only way landlords can make a profit is by keeping their costs down as much as possible. As can be seen by looking at the housing stock in New York City, landlords have very little incentive to maintain their rent-controlled units.

Landlords also have no fear that their renters will move out. If the tenants do leave in a rent-control scenario, property management in Fremont will simply adapt to the new circumstances. There will surely be long waits for any new rent-controlled units that come online. But in a way, property management in Fremont will change if rent control gets enacted. The only new construction that will promise favorable returns will be units built for the very wealthy. As most of the new residential construction will be targeted at those who can pay rents above the controlled limit, the new housing stock will be out of reach for most of the renters in the market.