Cities Ignore Data, Economists and Continue to Push for Tighter Rent Controls

Renter Groups Use Misleading Data on “Average” Rents to Push Radical Agenda - Written by EBRHA - Posted Oct 26, 2016

EBRHA-Oakland-Lake-Merritt-ApartmentsDespite overwhelming evidence from leading economic experts that rent control hurts low-income and minority residents and recent market indications that rents in the region have leveled off and begun to decline, cities across the East Bay are moving forward with even more draconian restrictions targeting small rental property owners.

In Alameda, Oakland and Richmond, voters are being asked to impose strict renter-backed limits that threaten the livelihoods of small mom-and-pop property owners. In addition, Oakland City Council has imposed its own brand of property restrictions that will make it difficult, if not impossible, for small property owners to afford upgrades and repairs. The result will be further blight in poorer neighborhoods, less tax revenue, and a tightening of the rental market.

“Rent control and property restrictions fail to add one unit of housing and are not based on economic need,” said Jill Broadhurst, Executive Director of the East Bay Rental Housing Association. “Economists agree that rent control hurts the very people it is supposed to help by restricting housing availability and driving up housing costs, yet the facts get ignored.”

Renter groups continue to push misleading data to justify tighter restrictions. Recently, for instance, Zillow reported that Oakland’s rent index surpassed $3,000 a month for the first time. But as Socketsite correctly points out, the Zillow Rental Index is based on estimated, not actual, rents. And while it includes the estimated rents for single family homes and condos, it does not include apartments. A Socketsite sampling of over 200 active listings for rentals in Oakland, including apartments, found current asking rents in Oakland actually declined 3.5 percent year over year.

“This kind of phony information is being used by rent-control advocates to push a radical housing agenda down the throats of unsuspecting voters,” Broadhurst said. “And it’s the small property owners who are going to suffer the most as a result.”

A recent story on rent control in the San Francisco Chronicle quoted Peter Tatian of the Urban Land Institute as saying academic research on rent control found “very little evidence that rent control is good policy.” And Christopher Palmer, an assistant professor of real estate at UC Berkeley’s Haas School of Business, told the Chronicle that rent control “puts the burden of housing affordability on the backs of a few people.”

Meanwhile, an increase in the number of rental units coming on the market and a decline in job growth have combined to stabilize the rental housing market. In some parts of the region, developers have been forced to throw in new-renter concessions such as reduced deposits or a month of free rent in order to attract new tenants, even for modestly priced units, according to the Chronicle.

Nonetheless, radical tenant groups continue to justify the anti-property owner measures by claiming thousands of renters are being evicted each month – 12,000 to 13,000 in Oakland alone, annually. But an analysis commissioned by EBRHA of hard data provided by Alameda County found those numbers to be overstated by an incredible 300 percent.

No one can be evicted in Oakland without court approval, and the analysis found the annual number of court-approved evictions in the city has actually dropped 43 percent since 2009, with almost 90 percent for failure to pay rent.

“Rather than pass sound, fact-based housing policies, local politicians allow themselves to be swayed by anecdotes from renter advocates and tenant lawyers who have their own agenda,” said Broadhurst. “They then punish small rent-controlled property owners for no reason other than they’re easy political targets.”

The EBRHA eviction analysis also found nearly 20 percent of the total court-approved evictions in Oakland last year were from rental units owned or managed by non-profit housing organizations, such as the Oakland Housing Authority, the East Bay Asian Local Development Corporation, Oakland Affordable Housing Preservation Initiative, Operation Dignity, the John Stewart Company and others. This further dispels the myth promulgated by renter-support groups that evictions are being carried out by “greedy” private property owners out to line their own pockets.

“Non-profit housing agencies aren’t even under rent control restrictions yet they face some of the same realities as private property owners – how to manage rental units in a region overburdened with government regulations,” said Broadhurst.

“Voters need to act on the realities of the current housing market and not support public policy based on misinformation from renter-support groups,” Broadhurst said.

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