The polity that is Oregon

Oregon Gov. Kate Brown signed into law a first-in-the-nation rent control bill Thursday and called on the Legislature to turn its attention to funding new housing initiatives.

Because of an emergency clause, Senate Bill 608′s rent control and eviction protections go into effect immediately.

The details are somewhat less bad than that may sound at first:

The law caps annual rent increases to 7 percent plus inflation throughout the state, which amounts to a limit of just over 10 percent this year. Annual increases in the Consumer Price Index, a measure of inflation, for Western states has ranged from just under 1 percent to 3.6 percent over the past five years.

The rent increase restrictions exempt new construction for 15 years, and landlords may raise rent without any cap if renters leave of their own accord. Subsidized rent also is exempt.

Here is the full story, via Mike Tamada.

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White elites talk a good game but they are hypocrites. If you are sitting on something they want they'll kick you out in a heartbeat - especially if it's a neighborhood "white people like". Check out things white people like and you'll find a hornet's nest of elite hypocrites.

Ask the blacks that used to live in Portland.

Here's some elite penance - too little too late.

https://www.google.com/amp/s/amp.theguardian.com/cities/2018/mar/01/portland-anti-gentrification-housing-scheme-right-return

It's a hard to find a bigger talker than Trump and as far as white elites go, he's about as white and elite as it goes. Ask him about the illegal immigrants he hired and then fired. I agree they are all hypocrites.

You realize he didn't directly hire them himself, right?

It is the definition of fascism; where you maintain private ownership of property and businesses but the state tells you how you manage your business.

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"Check out things white people like and you'll find a hornet's nest of elite hypocrites."

Uhm, you . . . you know that site is satire, right?

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That doesn't sound too bad, for a rent control law. The local Oregon landlord association wasn't protesting too much on it, because a 10% margin for increases is fine.

And more importantly, it lets them increase the rent if the tenant moves out. IIRC the literature on rent control has "vacancy control" (i.e. the rent can not be increased even if the tenant vacates) as by far the most destructive form of rent control in terms of rental housing construction and availability.

Agreed - but I think the high limit is much more effective in limiting the bad effects than even vacancy decontrol - with a limit like that, it's really a smoothing function. The biggest problem with Proposition 13 in California is that the limit is 2%. With a rate like that, you will never catch up to fmv assessment.

For the sake of fairness. In addition to making it all but impossible for the landlord to evict a tenant they should have required that the tenant also must stay until the landlord lets him go. Why just a one sided regulation???

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A smoothing function which changes very few actual prevailing business conditions, but which prevents short-term extortion of long-term renters that the landlord may not want seems like a sort of regulation that we should all be able to get behind. There are significant deadweight costs involved in people moving from apartment to apartment, particularly on short notice.

Why are you moving on short notice? You have a lease. The lease has an expiration date, the property owner will let you know well in advance that he doesn't want to renew. Hell, you'll probably know that notice is coming well in advance of receiving it - property owners don't kick people out for the hell of it. They kick them out because they're bad tenants.

I generally oppose rent control, but I could imagine a landlord finding out that a tenant has just had a life crisis of some kind and deciding to increase the rent by 50%, knowing that the tenant doesn't have the attention load to go shopping around for a new place to live.

Like I said, generally oppose RC, but if it were my life mission to destroy it everywhere, I expect I would die long before I had to scrape at this policy.

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@Rusty: good point. I wonder if Prop 13 could be improved by increasing the 2% limit, say to 5%?

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@Brett - this is communism my friend, NYC style, thin edge of the wedge, foot in the door.

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"And more importantly, it lets them increase the rent if the tenant moves out. "

*If* the tenant moves out. Except they can't kick out tenants except for 'good cause' - as determined by a city board. And we've seen how these things go. Tenants can destroy the property and the board will still say that you have to just fix it back up again and let them continue living there - or else face fines and jail. Good luck trying to sell or renovate the building.

And, if other rent control cities are examples - and they are - tenant won't move out. For decades.

Not only does this impose pointless restrictions on what an owner can do with their property, its there to solve a problem *CREATED BY THE STATE* in the first place - remove the build boundary. And it even disincentives the most vulnerable from being mobile - one of the most important things the 'low-skilled' need to be in order to improve their economic standing.

Tell me how you really feel!

https://www.imdb.com/title/tt0100318/reviews

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The question is whether this is the edge of a wedge. I don't think Progressives will be impressed one bit, although their leaders may want to bask in the glory of victory.

For a sense of proportion, here are average 1 BR rents (in January) in Portland since 2011: 768, 946, 1051, 1138, 1148, 1493, 1463, 1476, 1511. That's roughly 9% annualized increase; 14% over the early years, not much since.

Source: https://www.rentjungle.com/average-rent-in-portland-or-rent-trends/

Tip of the wedge was my first thought. Once the mechanism is on the books, “adjustments” will be easier.

Perhaps next they can add mandatory solar panels for new construction ala California.

But at least it’s more time and dollars devoted to legal compliance and virtue signaling, and less to increasing actual construction - so a success by progressive housing standards.

Once the mechanism is on the books, the demand for a catastrophically worse mechanism may abate. Engineers tend to be pretty lousy at democratic politics.

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Funny, that a pro-monopoly guy like Peter Thiel gets upset that most of his venture capital money goes to pay monopolist landlords in SF. Kettle pot black.

https://finance.yahoo.com/news/peter-thiel-vast-majority-capital-give-companies-just-going-landlords-134709786.html

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Not sure about Oregon, but in my low country community the shortage of long-term (annual) rentals and the commensurate high rents is the result of airbnb: why rent long-term when one can rent weekly at four times the rate. This is a second home market, and buyers of houses are seeking gains from rising prices while renting short-term using airbnb in order to pay the mortgage, taxes, etc. Developers, bankers, brokers, and others who benefit from housing think it's great; full-time residents, not so much because it's turning single-family homes into hotels with lots more congestion, noise, etc. The congestion is partly the product of two, three, or four families renting and sharing one house: sometimes up to 20 people staying in the house, with every adult bringing a car. It's mayhem.

From time to time the full-time residents seek to have the county enforce the zoning laws, the county will conduct public hearings on the question, and nothing happens. This being a vacation destination there are lots of jobs available in the resort, restaurants, etc., but the employees have no place to live, so they are forced to live many miles away and commute. Indeed, the shortage of rental housing creates a shortage of qualified labor. The resort solved that problem by buying a hotel and using it to house its employees, which the resort imports from eastern Europe, South America, and the islands.

Of course, this isn't prosperity, it's an illusion of prosperity. In the next downturn, it all falls apart, as short-term renters stay away, the supply of short-term rentals spikes (owners trying to hold on to their houses), housing prices collapse, and foreclosures abound. During the great recession, the number of foreclosures was so great that the Saturday edition of the local newspaper had a very large insert of foreclosure notices - page after page after page after page. Indeed, the insert was larger than the newspaper. While I have no sympathy for the owners of second homes caught in the maelstrom, I pity the poor sap who lives in his home full-time and must sell it and move elsewhere because of her job or family obligations or whatever. I suppose the "disruption" is something a certain economist might find appealing, but it's not so appealing for those who must suffer through it.

Of course, this isn't prosperity, it's an illusion of prosperity.

Some sectors are procyclical and some aren't. This isn't a problem for people who save and prudently manage their debt.

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But it sounds from your mental model like the "poor sap" can sell today and get a mega-valuation, then move to a part of the country that's not afflicted by this "problem". You would have to prove that long-term rental in a tourism area is less likely to be bubbly than short-term rental. Very hard.

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"Not sure about Oregon, but in my low country community the shortage of long-term (annual) rentals and the commensurate high rents is the result of airbnb: why rent long-term when one can rent weekly at four times the rate. "

No its not. If you could rent short term at 4 times the rate *and there were no government roadblocks to new construction*, new buildings *catering* to AirBnB would be springing up everywhere.

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Seems like you could only blame AirBNB for the amount of time it would take to build new units. After that, you have to blame government restrictions.

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Gov. Brown is a lawyer. Big f*cking surprise.

Years ago, the writer Cathy Seipp spoke to an elderly teacher at her daughter's elementary school about some silly exercise in pedagogy and asked why it had been instituted. The teacher explained, "That's where we are in the cycle". She was about to retire, she said. She tells Miss Seipp that she'd been around long enough to see an array of fads come, go, and then come back again. Thomas Sowell has been maintaining for years that bad ideas in public policy are commonly a recrudescence.

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The bill you would pass if your base is screaming for "rent control", but you know some economics.

Politicians ignore public sentiment as a matter of course, and, in any case, 2/3 of the population lives in owner-occupied housing. Another bloc live in non-metropolitan rental housing where these sorts of price dynamics aren't a concern. It isn't that 'the public' wants this or even an attentive public whose discontent could be a real threat on the margin. This passed because the sort of people who matter to bourgeois Democratic pols are inconvenienced by the price dynamics of the local real estate markets. It also generates more opportunities for grift and graft in the form of 'affordable housing', or housing provided at concessionary rates to a privileged few (and called 'awardable housing' by some wags). It's the Democratic Party. The pretension and the corruption suffuses everything they do.

Politicians really don't ignore their voters. That is a very 2000s view. Have you seen the world at all lately? You can't get away with ignoring voters any more in any country, especially if you are not really in power yet.

Oh, yes you can, especially if you're a state legislator, because reportage on the state legislature is commonly truncated because activities in the state capital are neither national news nor local news.

About 1/3 of the population who vote regularly do not follow public affairs and half of those who do are 'news junkies' who don't remember much from one week to the next. The 12% or so who are the most attentive to public affairs are the 12% who are least likely to be swing voters.

A politician is in danger when he's in a constituency which is both closely divided in its biases and also has an active opposition party. He can be in danger if he does something which mobilizes voters who are ordinarily marginally attentive. That means doing something which has an impact on their daily life or doing something which causes you the pol to lose face. Property tax hikes, contaminants in the ground water, mismanaging an ice storm or blizzard, or making an ass out of yourself in a road rage incident are the sort of things which cost you your career. Tabling a rent-control ordinance, no. The smart money says Gov. Brown and gatekeepers in the legislature have friends and relations bi*tching about rents in Portland (e.g. their semi-adult children), and perhaps have NGO funded 'community activists' tromping through their offices kvetching about rents in peri-slum neighborhoods.

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As a landlord in Portland, this is not too big of a deal. More concerning is efforts by Portland City Council to disallow most crimes and many causes of bad credit from disqualifying tenants. Also the poor fiscal discipline, and how they use bond measures to circumvent the maximum property tax limit set in the Oregon constitution. I expect property tax plus water/sewer to exceed my mortgage payments within the next couple of years.

We have our own local ignorant Marxist on the city council, but unlike late 20s AOC, they're not cute anymore in their late 40s.

https://en.m.wikipedia.org/wiki/Chloe_Eudaly

Here is a discussion about a proposal much worse than the Oregon rent control.

https://www.oregonlive.com/opinion/2018/09/editorial_eudalys_proposed_ten.html

Portlandia Rules. I expect that will really have the developers/operators lined up to invest and build new capacity in that market.

There's a well known aphorism - "Never attribute to malice that which can be explained by incompetence" - credited to Napoleon among others. But at some point incompetence enthusiastically inflicted on others is pretty hard to distinguish from malice.

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Yeah, after Eudally got elected (she ran as basically a single-issue candidate, for renters' rights, in the 201

Oops, hit the wrong button. Re-starting:

After Eudaly got elected (she ran as basically a single-issue candidate for renters' rights in the 2016 election and won an AOC-style upset over a veteran incumbent) as expected she agitated for various restrictions on landlords in Portland. But the City Council has not moved much in that direction.

What I wasn't expecting was the state legislature to get involved. The Democrats won a super-majority in both state houses in the 2018 election, but I wasn't expecting the state legislature to take on rent control as worthy of a state law. Portland's by far the largest city in Oregon but although it's important in state politics it doesn't dominate, and the towns and small cities in the rest of Oregon mostly don't share Portland's urban issues.

It will be interesting to see what happens in the next few years. As some of the comments here say, it's not the world's worst or most restrictive rent control statute. But as other commenters say, this could merely be the first step.

The problem with the slippery slope objection is you can use it to basically block any changes to anything. Can't make any changes, because it's really only the first step to much larger and undesirable changes. So can't even make small desirable ones. Kind of childish.

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efforts by Portland City Council to disallow most crimes and many causes of bad credit from disqualifying tenants.

IOW, white liberals condemning your values and imposing the pecuniary and other costs of their values on you and black nationalists incensed that a mere landlord would have the audacity to run his business in his own interest and not pay his respects to one of the liege's vassals.

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Prediction: landlords in popular destinations will opt for short term rentals like airbnb, further reducing the supply of housing.

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So that is the solution for America's problems: bolshevism!! Such is life innTrump's America.

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So.....what I think is missing from this conversation is that the Oregon ordinance is only the initial round in the rent control ordinance ultimately sought by rent control advocates. Stay tuned as progressively more elements of rent control and eviction prohibitions propagate in Oregon and across Oregon cities. Be patient as this will take many years to unfold. For examples of how this works, see the multi-decade history of how rent control ordinances unfolded in New York, San Francisco and Oakland. They always start with somewhat reasonable ordinances, then morph from there.

Speaking as a progressive in favor of substantial amounts of redistribution - I think rent control as a method of wholesale redistribution is a toxic policy relative to other methods of redistribution. We have an enormous long-term under-investment in our cities in both infrastructure and new housing, and existing landowners reap the rewards of the latter.

Rent control does not help at all, it just front loads a prospective balance sheet and taints market efficiencies in order to do so.

I'm not opposed to this particular implementation because the percentage is high enough to protect against certain rare bad behaviors without being significantly redistributive. I would expect the number of actual people taking advantage of this policy at any one time to be tiny and frictional.

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The fact that the left would like to confiscate property owned by the wrong type of people is bubbling under the surface of these progressive proposals.

What is also not mentioned, is that the urban growth boundary, a leftist idea, has succeed in making cost of living much higher.

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This doesn't sound much like rent control at all, but perhaps calling it that will please some noisy groups?

IIRC the east-coast American city I lived in capped increases at 15% a year, pretty similar. Once you moved in, you could be certain to afford the rent next year, but if you wanted to be sure of living there in 10 years time, then you should buy not rent.

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Not quite the full story, one of the other things that's been happening in Portland the last couple of years is the city government, in response to rising rents and a scarcity of housing, has taken steps to directly battle against NIMBY-ism and to encourage an increase in the quantity of housing.

They're doing this by mandating higher housing density at transit stations and along major transportation routes; by permitting construction of "ADUs" (auxiliary dwelling units, primarily garages converted to housing, attic spaces, tiny houses in the backyard, etc.); and proposing to override local zoning and permitting housing as dense as quad-plexes (tetraplexes?) throughout the city.

There's plenty of NIMBY-ism going on in Portland but the municipal government is to at least some extent trying to directly battle against it with supply-side policies.

Portland tends to be more liberal than the rest of Oregon, so I am still a bit surprised that Portland's resisted Eudaly's calls for rent control and is pursuing supply-side measures instead. But the state government has been the one to install rent control.

" mandating higher housing density at transit stations and along major transportation routes"

That, however, is not because they started watching MR University videos. They're just trying to rescue their failed transit system and transportation policies. It's really more of the same arrogance and folly if you think about it.

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