California Makes Housing Scarcer
Hostility towards landlords results in many dwellings being left vacant rather than housing a needy tenant. Would-be landlords won’t rent out, for fear that they can’t get rid of a tenant who turns out to be obnoxious. Such vacancies are widespread in some cities that sharply restrict evictions or have rent control, like San Francisco. (It has rent control only for older units built before 1979, but landlords fear that rent control will be extended to later-built units, too). As the R Street Institute’s Greenhut notes,
In San Francisco, where typical rents are above $3,000 a month, there are 30,000 vacant apartments. Who would forego such enticing profits to leave units to languish? Owners who know just-cause evictions and rent control mean they can never get rid of tenants, even bad ones.
As he observes, many small landlords will just stop renting to avoid the hassle of rent control and restrictions on their ability to not renew a lease to disagreeable tenants:
Margins can be small after paying for repairs, mortgage, taxes, insurance, property management, any utilities and government fees. One roof replacement at $10,000 can obliterate a year’s profit in a flash. Many landlords will sell their properties to single-family buyers and put the money in a mutual fund. It doesn’t take many of these decisions to reduce a city’s housing supply. That mutual fund never calls at 2 a.m. about a stopped toilet, nor does it trash the living room.
