Opinion: Big Real Estate Is Wrong — Rent Control Won’t Stop Housing Construction

A rental sign outside a North Park apartment complex

There is no doubt that California faces an existential affordable housing crisis. More than 171,000 Californians are homeless, and 3.2 million — 56% of tenants — are rent-burdened.

The Golden State’s image is severely tarnished by our inability to make any real dent in the problem. And it won’t get any better if we ignore it. We are at a fork in the road. If we keep doing what we have been doing, there’s no question that things will get worse.

Nearly 50% of households in California are renters, the second highest rate of renter-occupied housing in the United States. Between 2010 and 2019, rent has gone up by an average of 66% in California’s major urban areas. Home affordability rates are at rock bottom, and about 725,000 people have fled the state since 2020.

The California Dream is hanging in the balance. How many people need to leave our state for us to get a wake-up call?

While there are many factors that contribute to the affordable housing crisis, the root problem is very clear: Rents are unaffordable. A starting teacher, fireman, or police officer paying more than half of their income in rent is unsustainable. Having people on Social Security and disability living on our streets, or one rent increase from ending up there, is barbaric.

Big Real Estate will tell you that the marketplace can take care of it all, while accusing rent control of “depressing the development of new housing.” But there is no legitimate evidence that rent control actually leads to a reduction in housing supply. Virtually all existing rent regulations, including new statewide laws, exempt new construction.

Plus, empirical studies in New Jersey and Washington, D.C. have found no relationship between rent control and new housing development. According to the nonpartisan Urban Institute, “Even when rent control suppresses rent and property values, it has a negligible effect on new construction.” According to corporate landlords, however, building housing of any kind will somehow solve the housing affordability crisis, and they display the best academic studies that money can buy to give themselves credibility.

Big Real Estate’s theories are built on two fallacies. First, that there is only one market for housing, rather than a luxury market and an affordable market. No matter how many Ferraris you build, it won’t help people who can only afford a Chevy.

Second, housing is not merely a commodity; it is a necessity of life. The marketplace has not and cannot guarantee that everyone has a home. If it could, our streets wouldn’t be teeming with homeless people while luxury units remain empty.

The price of electricity and other utilities are regulated because everyone must have access to power. States have universally decided that, without regulation, too many people couldn’t heat their homes, cook their food, or wash themselves. And yet, utilities are guaranteed a reasonable profit. Utility companies survive and thrive in the U.S. economy.

There is no reason that housing should be any different. Indeed, we have had limited rent control in this country since 1918. It is as American as baseball and fireworks on the 4th of July, and it doesn’t prevent real estate companies from turning a profit — not one bit.

Big Real Estate may spend more than $100 million over the next year to convince you that a new ballot measure on rent control would be disastrous. The airwaves will be flooded with scary ads warning you to vote “no” on rent control. Corporate landlords will tell you not to believe your own eyes — what you see on the streets of Los Angeles or San Francisco. They will tell you that we can solve the affordable housing problem their way.

Why believe Big Real Estate? Why should you believe the very same people who have squeezed California dry while profiting off a luxury real estate boom? Why should you take advice from the same greedy interests who have blocked significant renter relief? Why should you be afraid to try a more progressive approach? You shouldn’t.

You’re better off believing the housing justice organizations, trade unions, and hundreds of other community groups that are directly experiencing the pain of the housing crunch. We should put our hope in the hands of the nonprofits working to make things better, not the greediest industry in existence.

In 2024, will you support the Yes on 33 Act or those who oppose it? Will you vote with corporate landlords or the people in need?