Despite historically staunch opposition from the multifamily industry, rent control is unquestionably gaining traction in municipalities around the country. Multi-Housing News interviewed New Standard Equities Founder & CEO Edward Ring on the silver lining of rent control in California but how poorly written laws could have adverse consequences in other jurisdictions.
“Rent regulation and the COVID moratoria helped keep rents from soaring out of control in California in recent years. This has forced cap rates down to unprecedented levels in the trendier markets,” commented Ring. “It may help the state stabilize through the next recession and a faster pace given the nature of tech employment and a persistent lack of housing supply. California doesn’t have that far to fall and recovery won’t take long.”
If cap rates compress by 250 points in the Sun Belt, it may cause pain for those who bought at peak pricing. California investors who bought similar product—but at a cap rate that compressed by 100 points, as the evidence suggests—may be rewarded for their investment in the Golden State, especially as wages are higher than average in California and supply tends to be constrained.
Despite these potential results, operators in cities that are implementing new rent control laws or make their laws too strict, may struggle to work under these constraints, explains Ring.
Read the full story “How Rent Control Ballot Measures Are Mounting,” here.