Why I oppose Prop 10

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Want to add my voice to those urging people to vote against Prop 10.

Oh, you say, what a surprise! A real estate guy who dislikes rent control! Shocking!

But, honestly, we’ve learned how to make money for ourselves and our investors under rent control. The more buildings that are subject to rent control, the more opportunity there will be for us.

It’s not just that there will be more buildings to buy. Rent control “locks up” units, because people who are paying under market rents very rarely move by choice. The more units locked up by rent control, the fewer units available at any one time in the spot market, where rents are actually determined.

So, since demand isn’t going to decrease by a commensurate amount (and, in fact, is likely to keep rising), expanding rent control means rents for those few units that become vacant will increase. That’s good for us, too.

If Prop 10 is likely to benefit me, why do I oppose it?

It’s terrible public policy, because it favors the status quo over the future. Why?

Say you’re a company looking to expand in Los Angeles. Because rent control focuses the intense demand for new units on a tiny sliver of the total apartment stock and, therefore, pushes asking rents to the moon, you have to pay your new hires extremely high wages in order for them to be able to live in the city. That means you’ll hire fewer people, decide not to expand, or expand elsewhere.

Or, suppose you’re a kid who has grown up in LA. You finish highschool or college and want to find a place here. Bad news: You can’t afford to live here, because you’re competing with higher-paid people for that same tiny sliver of the apartment stock that’s available.

If we want a growing, thriving city, we need policies that favor growth and dynamism, not ones that lock in place the way things are now.

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