Wall Street Journal
By The Editorial Board
Sept. 11, 2019
If every regulatory instinct Democrats in Sacramento have is wrong and counterproductive, maybe they should take Jerry Seinfeld ’s advice to George Costanza and do the opposite. Consider a statewide rent cap that Democrats rushed through the legislature this week.
California already boasts the highest housing costs in the country, and even liberals have come around to acknowledging that not enough homes are built to meet demand. The state has added about half as many housing units as needed to accommodate population growth, and more than half of Californians spend 30% of their income on rent. …
Last year state regulators mandated solar panels on new homes. Cities are increasingly prohibiting natural gas hookups as they try to block fossil fuels. The San Luis Obispo City Council voted last week to charge developers a $6,000 fee for every new housing unit that isn’t all electric. …
Mr. Newsom and Democratic legislators are pushing a law to limit annual rent increases across the state to 5% plus inflation. Rent increases have been slowing, but nearly 50% of units in San Francisco and the East Bay would have been capped in 2015 and 40% in 2016. …
The rent cap could encourage landlords to increase rents up to the limit each year rather than respond to the market. Landowners might also decide it’s more profitable to convert buildings to condos, which would further limit the stock of rentals. The biggest harm so far has been to increase uncertainty for developers. Building permits in the first seven months this year have fallen 17% compared to 2018 despite an increase in state subsidies. The only other times permits have plunged by this much were during recessions.
… More than 700,000 residents have left since 2010, and many more will head for the exits if progressives have their way and the cost of living in sunshine keeps rising.
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