WHY IS RENT SO HIGH IN CALIFORNIA?

The chart below explains it all. It tells the whole sad story. We need to build 180,000 new housing units in California every year to keep up with population growth, but we are only building 80,000, and this has been going on for 20 years. All of the housing problems we have in California, all of them, can be traced back to this one simple fact. Every year, our housing shortage gets worse, and this ever-worsening housing shortage explains why rents keep rising faster than inflation, why the vacancy rate is so low, why people are doubling up in apartments and houses, why people are paying a higher and higher percentage of their income on housing, why college graduates in California move back home with their parents after they graduate, and why thousands of people in the Bay Area are living in RVs, tents, cars, and trucks. Unless we build enough housing to keep up with population, all of these problems will just get worse.

California’s Population Explosion. In 1945, the population of California was 8 million. Today it is 40 million. That means that for every 1 person who was living in California at the end of World War 2, there are now 5 people living here. I live in a house that was built in 1902. In 1902, the population of California was 1.5 million. That means that for every 1 person who lived in California when my house was built, there are now 26 people living in this state. Like most people in the Bay Area, I am not happy about this tremendous population growth. I too wish that fewer people were moving to California, but they are coming here whether we like it or not. And its easy to see why they are coming. This truly is the Golden State! Suppose you were living in a city in a Rust Belt state full of closed factories, where the unemployment rate was 20% and the minimum wage was still $7.25 an hour. Wouldn’t you want to pack your bags and move to California? The unemployment rate in California is 4%, and the minimum wage in California will soon be $15.00 an hour.

America’s Black Hole. My sister Judy once called California ‘America’s Black Hole.’ I never forgot that because it’s true. What she meant was that moving to California is like entering a Black Hole. Nothing that enters a Black Hole comes back out. Once people move to California, they never go back to where they came from.

Adios Baltimore! I grew up in Baltimore, a Rust Belt city. The population of Baltimore peaked in 1950 and has been declining ever since. The heavy industries that once supported Baltimore’s prosperous working class are gone. Baltimore’s shipyards that once employed 50,000 people are gone. The Glen L. Martin aircraft factory that once employed another 50,000 people is also long-gone. The Bethlehem steel mill that once produced 10,000 tons of steel a day is gone. As the jobs dried up, so did Baltimore’s population. Thousands of row houses in Baltimore with their famous white marble stoops are just rotting away. All of Baltimore’s once-fashionable downtown department stores are now abandoned. There are dozens of cities just like Baltimore all over this country, once bustling industrial centers that have been in decline for generations. Without the jobs, what is to keep people in Baltimore? Baltimore is hot and muggy in summer and can be bitterly cold in winter. There are no interesting geographical features in Baltimore like mountains or waterfalls or palm tree lined beaches. We can’t stop people from leaving places like Baltimore and moving to California, and it is a fantasy to imagine that people won’t come here from places like Baltimore if we just don’t build housing for them.

Not In My Back Yard. We need more housing, a lot more housing in California, housing that ordinary working people can afford, but we’re not building it. Most of the city councils around the Bay Area are dominated by NIMBYs. (Not In My Back Yard). These politicians and the voters who elected them support laws that discourage new housing from being built, like downzoning, height limits, and and inclusionary housing laws. They also support laws that encourage landlords to remove existing rental units from the market, like rent and eviction control laws. Rent control gives owners of rental properties, particularly small rental properties, a financial incentive to get rid of their tenants and sell their properties to owner-occupants or to use their rentals for other purposes, like turning apartments into AirBNB rentals or offices. We need to accept this one fact – a lot of people are coming to California whether we like it or not. We are only hurting ourselves by discouraging developers from building new housing and by encouraging landlords to go out of business.

Tenants Will Get One Second of Free Rent in 2016. Is That Fair to Landlords?

The year 2016 will be one second longer than most years. The U.S. Naval Observatory will add one ‘leap second’ to its atomic clock on December 31, 2016. All time zone clocks in the U.S. base their time on the atomic clock at the Naval Observatory. The reason for this is that the speed at which the Earth rotates on its axis varies slightly depending on climatic and geological conditions, and the Earth is slowing down. Every year, it takes the Earth a fraction of a second longer to go around the Sun than it did the previous year. As a result, a ‘leap second’ has to be added to the calendar every 500 to 700 days. That, in turn, means that if you rent your home, you will be getting one second of free rent this December! Now it seems to me that we landlords would be justified in raising our rents for the month of December this year since our tenants are going to get to live in their apartments for one second longer than they did last December. I haven’t heard of any landlords planning to do that, but it wouldn’t surprise me if some did. We landlords do not like to give away free rent, even its just one second every few years.

Do Landlords in Berkeley Discriminate Against Irish Students?

The short answer is No. There have been a lot of claims in social media and the press that landlords in Berkeley will no longer rent apartments to Irish students because of the balcony collapse at Library Gardens downtown that resulted in the deaths of 6 Irish college students. These stories are untrue. I have been a landlord in Berkeley for over 40 years, and nearly all my tenants are U.C. Berkeley students. I know a lot of other Berkeley landlords, and none of them blame the victims for this tragedy. It is true that there were far more people on that balcony when it collapsed than was prudent; however, engineering reports showed that the cause of the collapse was poor construction resulting in wood rot and that had the balcony been properly built, it could have supported the weight of those students. The sympathies of all the landlords I know are with the families of these students. Yes, it is hard for Irish students to rent apartments in Berkeley for the summer, but not because they are Irish. There is a severe rental housing shortage in Berkeley, and because of our local rent laws, most leases in Berkeley prohibit sub-leasing. The Irish counsel general in San Francisco has investigated claims of discrimination against Irish students in Berkeley and has concluded that these stories are baseless and has said so publicly.

Should Landlords Be Required To Enforce Immigration Laws?

In 2006, the city of Hazelton, Pennsylvania passed the ‘Illegal Immigration Relief Act.’ This law made it a crime for landlords to rent apartments to illegal immigrants. Hazelton landlords objected to the law. The law was was declared unconstitutional in U.S. District Court. Hazelton appealed the decision and took the case to the 3rd U.S. Circuit Court of Appeals, which also ruled the law was unconstitutional. The court said that the Constitution clearly states that the right to make and enforce immigration laws is reserved exclusively to the Federal government and cannot be transferred to private citizens like landlords. The U.S. Supreme Court declined to review the case. Cities in Nebraska, New Jersey, Missouri, and Texas passed similar laws to the one in Hazelton, and at about the same time Those laws were all declared unconstitutional as well in various U.S. District Courts around the country.

Today, the city of Hazelton (population 25,000) in serious financial trouble as a result of the ‘Illegal Immigration Relief Act ‘. The city may have to raise property taxes significantly in order to pay the city’s mounting legal bills connected with this law. The city estimates that they spent $500,000 defending the law. The plaintiff’s attorneys, representing the ACLU and other organizations that fought the law, are seeking millions of dollars in legal fees. A decision on the plaintiff’s claim will be made by U.S. District Judge James Munley, who has already ruled that the city of Hazelton is culpable in the case for knowingly usurping Federal jurisdiction.