It's common knowledge that people are staying in their homes longer than ever before. It used to be 5-7 years someone would live in a home, but now that time frame has almost doubled. Lately, both homeowners and renters have begun to feel trapped in their homes for many reasons.
In this two part series, we will be discussing two of the main issues causing why people are staying in their homes longer than they would like.
L.A. Rent Control. That's a good thing, right? It keeps rents low for tenants! You don't have to worry about your rent going up like crazy every single year. Gives you a little security.
But there's a downside to Rent Control:
If you live in the same place for three or four years, rent goes up around you, and it stings a little when you have to move and pay the NEW market rate.
But what if you live somewhere for 20 years? Rent didn't just "go up" around you for the last two decades... you've been living in an alternate reality of what things cost. You're completely out of touch.
It's not just going to sting when you have to move... it may literally change your way of life because rent has most likely tripled or quadrupled in most neighborhoods since you signed a lease.
We hear about this all the time, and it breaks my heart:
An elderly couple renting out a one-bedroom apartment for 30+ years paying $500 a month. An investor buys the apartment, kicks everyone out. They're on a super fixed income. Where are they supposed to go? Who can we blame? ... and is that going to help anyone?
The end of the status quo...
The more rents go up, the harder we cling to our leases. And worse, our landlords do less and less to maintain our living space. Less than the bare minimum in most cases. For the landlord, taxes go up, cost of maintenance goes up, and rents basically stay the same.
A tight market:
The more people cling to their cheap rent, the fewer spaces come available. That's not a low housing supply, that's a housing famine... To everyone's surprise, real estate values skyrocket. To a landlord, looking at the rising real estate prices, the home is not worth the hassle anymore for marginal monthly income. So they sell, and tenants get "relocated" (evicted).
(In some cases, tenants can be compensated for being "relocated" from their home. And even though the amounts can be quite large, it might only help them adjust to the newer market rent for about a year.)
Rent control was created with the best intentions... to protect tenants from high rents, but as the saying goes, "The road to Hell is paved with good intentions." In reality, rent control creates scarcity, and as we've seen, scarcity gets ugly.
There Are Only Two Options
Move frequently so you are less sensitive to increasing rents.
Buy a home and take control of your rent. (Graduate to First World Problems)
Option 1 may seem insensitive. However, it keeps the pressure on you to constantly improve the status quo. When you are constantly improving, your opportunities are endless, and you can live anywhere you want.
Option 2 may be more realistic than you think. Can't afford a single family home? What about a condo? What about an investment property like a duplex or triplex? Try your luck at being a landlord and have your tenants help you with the mortgage.
If only there were people whose jobs were to help people buy homes. That sure would make it easier. Speaking of help, you can have the State of California help you with the down payment.
No more excuses.
Los Angeles rent control is a sinking ship that leaves people clinging to deflated life rafts that will eventually go under... and you can't tread water forever.
Next time, we'll talk about how homeowners are feeling trapped in their home.