California's New Rent-Control Law: More States to Follow
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What is the main topic discussed in this episode?
Here's your money briefing. I'm J.R. Whalen at The Wall Street Journal in New York. California has taken a giant step toward putting a lid on rent increases and cutting down on homelessness. We'll ask a Wall Street Journal reporter in a moment how other states are trying to keep rents in check. First, some money in market news you should know. The online brokerage price wars are heating up again. Robinhood is trying to get more customers into the investment game by offering high-yield cash accounts. It'll pay over 2% on uninvested cash to start, but that rate will fluctuate as interest rates rise and fall. Robinhood isn't the first so-called fintech to move into traditional banking. RoboAdvisor's Betterment and Wealthfront have launched similar programs.
The company's move comes a week after online brokerages Charles Schwab, TD Ameritrade, and E-Trade announced they would match Robinhood's fee-free stock trading model.
What recent California rent-control law did Governor Newsom sign and what does it aim to do?
Robinhood first announced a high-yielding cash account last year, but hadn't cleared the idea with regulators. And those surprise resort fees that show up on your hotel bill could soon be a thing of the past. House lawmakers have introduced a bipartisan bill that would require hotels to be more transparent in their rate advertising. The bill would abolish mandatory daily charges on a guest's hotel bill for things like fitness center access, in-room safes, and Wi-Fi, which can be charged whether they're used or not. The issue of transparency in resort fees has been on the government's radar for years.
California Governor Gavin Newsom signed a rent control law this week capping rent increases in an effort to curb the state's homeless problem. But tight housing markets leading to skyrocketing rents is not just an issue in the Golden State. And this California bill could give a national rent control movement a jumpstart. Wall Street Journal reporter Alejandro Lazo joins us with details. So Alejandro, what does this new law say?
This law is pretty straightforward. It just caps rental increases at 5% annually plus inflation.
How does the new law specifically limit rent increases and protect tenants from eviction?
And it gives some protections to people living in rental housing. Basically, you can't just be evicted without cause.
How bad is the housing problem in California?
The housing problem in California is pretty bad. I mean, pretty much across the board for, you know, I guess from everyone who you would consider moderately wealthy, who, you know, still have to pay quite a bit to buy a home on the coast where they have their jobs that employ them and give them high incomes to, you know, the poorest among us here in this state, which has a very high homeless population, as we noticed in the story. California has... its homeless population has grown in recent years. You can visibly see what people describe as unsheltered people living on the streets and really suffering, living in tents. And yeah, it's a bad situation.
And California ranks number one in the country in homelessness. About 130,000 people were homeless in 2018. And it's not just about homelessness. It's also about affordability, right?
Affordability has dropped quite a bit in California since the housing bust, both for people who are looking to own a home and as well as those who are renters.
How severe is California's housing and homelessness crisis with renters spending over 30% of income?
More than half of renters in California spend more than 30 percent of their incomes on on rental housing. That number can be further broken down and you can look at people who are quote unquote severely burdened in the state of California. That's 28% of renters in California who pay more than 50% of their household incomes on rent. Those are pretty substantial numbers nationally.
This is an issue in other places also, New York and Oregon especially. How are they dealing with it?
Those two states are the ones this year that have passed some measures of rent control measures as well. New York tightening up some of its legislation and New York being the first state this year to pass a statewide rent control measure. So these are states that are controlled by Democrats and Democrats.
Which other states are adopting rent-control measures and how do their policies compare?
Certainly, the Democratic Party is turning to price controls as a way of sort of alleviating the cost issue in what are obviously very expensive housing markets.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:59
2
What recent California rent-control law did Governor Newsom sign and what does it aim to do?
0:59–2:15
3
How does the new law specifically limit rent increases and protect tenants from eviction?
2:15–3:39
4
How severe is California's housing and homelessness crisis with renters spending over 30% of income?
3:39–4:34
5
Which other states are adopting rent-control measures and how do their policies compare?
4:34–5:38
6
What alternatives to rent control, like building more housing or SB 50 rezoning, are being considered?
5:38–6:39
7
How has the real-estate industry responded to rent-control proposals and what influence do landlords retain?
6:39–7:16
Speakers
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