Background: Housing affordability has become a hot issue in California. Several bills and propositions have been proposed to try make housing more affordable and to provide more affordable housing. As of January 1, 2020, California has a statewide rent control law. AB 1482 (Links to an external site.), the "Tenant Protection Act of 2019," prevents landlords from raising rent in one year by "more than 5% plus the percentage change in the cost of living, ...or 10%, whichever is lower." This will apply to buildings that are at least 15 years old. There was also a push to get cities to build more affordable housing near transit stops (SB50 -- it did not pass). Discussion topic: Using what you have learned in this unit, what do you think the result of the new rent control law will be in terms of housing affordability (i.e., price) and housing availability (i.e., quantity)? From an economic standpoint, is this rent control a good solution? Might other solutions be better at achieving the goal of more affordable housing? Don't get caught up in the details of the bills--focus on the main points, the overall idea of rent control vs. building more housing vs. other solutions you might think of. Some other considerations: Why do you think newer buildings are exempt from the rent control? Do assumptions about the market affect your analysis? For example, if you assume a very steep demand curve vs a very flat demand curve for housing? Are there other factors that are not considered by our simple economic models that may affect the analysis and/or outcome? Are there unintended consequences? You don't need to address every single question posed above. Lots of questions were given to get you thinking, and to give you more aspects to write about so there will be some variety in the posts. DO express your thoughts in economic terms and concepts, as the main point of this discussion is getting you to apply the economics concepts you've learned and to show you understand them. Please keep things civil and avoid getting into political arguments.
Background: Housing affordability has become a hot issue in California. Several bills and propositions have been proposed to try make housing more affordable and to provide more affordable housing. As of January 1, 2020, California has a statewide rent control law. AB 1482 (Links to an external site.), the "Tenant Protection Act of 2019," prevents landlords from raising rent in one year by "more than 5% plus the percentage change in the cost of living, ...or 10%, whichever is lower." This will apply to buildings that are at least 15 years old. There was also a push to get cities to build more affordable housing near transit stops (SB50 -- it did not pass).
Discussion topic: Using what you have learned in this unit, what do you think the result of the new rent control law will be in terms of housing affordability (i.e., price) and housing availability (i.e., quantity)? From an economic standpoint, is this rent control a good solution? Might other solutions be better at achieving the goal of more affordable housing? Don't get caught up in the details of the bills--focus on the main points, the overall idea of rent control vs. building more housing vs. other solutions you might think of.
Some other considerations: Why do you think newer buildings are exempt from the rent control? Do assumptions about the market affect your analysis? For example, if you assume a very steep demand curve vs a very flat demand curve for housing? Are there other factors that are not considered by our simple economic models that may affect the analysis and/or outcome? Are there unintended consequences?
You don't need to address every single question posed above. Lots of questions were given to get you thinking, and to give you more aspects to write about so there will be some variety in the posts. DO express your thoughts in economic terms and concepts, as the main point of this discussion is getting you to apply the economics concepts you've learned and to show you understand them. Please keep things civil and avoid getting into political arguments.
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