Rabby
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Desolation to follow. If I could short the CA rental market, I would pour gobs of money into the short position (or put options). Maybe I'll think of something yet (evil grin).
Two things will happen, at least:
1) Young families will become crowded into smaller spaces as older couples with no children hang onto large spaces. This will happen because there is no economic incentive to vacate the larger spaces, with rent controls in place.
2) Landlords will cease to maintain properties well. With less ability to make profit, the worst landlords will win in the now fixed game of "spend as little as possible." Landlords who attempt to maintain property in peak condition will be unable to do so and will remove their money from residential real estate, investing it elsewhere. New residential construction will rapidly decelerate as markets correct for the artificial controls. Over time, there will be too little housing because nobody is willing to invest with caps on their income that are determined by the political rhetoric of the day.
There is a lot of literature on this. I highly recommend Thomas Sowell's, Basic Economics for cause/effect principles like this. Or his earlier work, Knowledge and Decisions... excerpt:
View: https://www.youtube.com/watch?v=Gs4js9Go6Qc
Two things will happen, at least:
1) Young families will become crowded into smaller spaces as older couples with no children hang onto large spaces. This will happen because there is no economic incentive to vacate the larger spaces, with rent controls in place.
2) Landlords will cease to maintain properties well. With less ability to make profit, the worst landlords will win in the now fixed game of "spend as little as possible." Landlords who attempt to maintain property in peak condition will be unable to do so and will remove their money from residential real estate, investing it elsewhere. New residential construction will rapidly decelerate as markets correct for the artificial controls. Over time, there will be too little housing because nobody is willing to invest with caps on their income that are determined by the political rhetoric of the day.
There is a lot of literature on this. I highly recommend Thomas Sowell's, Basic Economics for cause/effect principles like this. Or his earlier work, Knowledge and Decisions... excerpt:
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