A follow up to Greg Larkin’s post yesterday about today’s Oceanside City Council meeting…
Mobile Home Rent Control doesn’t work
by Steve Gramm
It didn’t work in Cuba, or behind the Iron Curtain, but some politicians in San Diego County still think the government should be setting prices for one form of housing—mobile home parks.
It will come as no surprise to my conservative friends that mobile home park rent control has created all kinds of unintended consequences, including expensive litigation, unnecessary bureaucracies, and mobile home park closures. All in all, it’s a complete failure for everyone impacted.
With one exception of course – the politicians who run on a platform of “protecting” mobile home park residents. They’re able to maintain a system of dependency that produces a loyal block of votes for their reelection campaigns.
It’s a cynical bargain. Pro-rent control politicians provide an entitlement that mobile home residents come to expect and rely on. Mobile home residents organize and turn out the vote for these politicians, who then commit the public’s resources to defend the endless lawsuits and bureaucracy resulting from these policies. Park owners, frustrated by government interference in their business and investments, eventually look at other development options for their land, resulting in less housing supply and the disappearance of a housing option that many would otherwise benefit from.
Even worse, politicians allow their hand-picked appointees to sit in judgment, deciding how much a property owner can charge for rent, instead of letting the free market set prices through competition.
And how about taxpayers? Of course they foot the bill for all of this (NEWS FLASH).
It’s almost enough to conclude … wait …. ready for this? … that the government shouldn’t be interfering in the relationship between a landlord and a tenant in the first place.
Shocking, I know!
You would think so if you’ve watched the Oceanside City Council over the past few weeks.
Oceanside is once again ground zero in an epic struggle pitting free market principals and property rights against costly, invasive and ideological government policies promoted more to increase dependency and win votes than they are to serve any public good.
And like any good epic struggle, the battle over mobile home rent control in Oceanside has a super hero and a villain.
Once again, Councilmember Jerry Kern has taken on the good fight, backed up by Councilmembers Gary Felien and Jack Feller. Jerry Kern is standing in his cape with the flag waving behind him, telling a packed house of 300 angry mobile home park residents (aka high propensity voters) that city government neither can nor should require property owners to subsidize their rents. Talk about a profile in courage!
Specifically, Jerry Kern proposed — and Felien and Feller joined him in approving — vacancy decontrol, a reform which would phase out mobile home spaces from rent control as current residents move. Existing residents would continue to receive these benefits for as long as they live in the park.
And then we have Esther Sanchez. To conservatives and folks who believe in free markets, she’s the villain straight from Central Casting. Renowned for promoting her ideological no-growth agenda as an Oceanside Councilmember and member of the California Coastal Commission, Esther tells the crowd what they want to hear: Yes we can! (Make property owners subsidize your rent so you can live two blocks from the ocean for $166/month, regardless of your wealth or income levels.) Yes we can! (Spend another $575,000 on a referendum election to reverse this outrageous vote, just like we were forced to do with the unsuccessful recall of Jerry Kern in 2009.)
I know what you’re thinking … “If rent control benefits don’t end until folks move, then why are they so upset?” For Esther the answer is clear: who is she going to “save” if rent control gets phased out? Vacancy decontrol makes Esther Sanchez less and less relevant over time, and more vulnerable come election season.
But what about the residents who she will rely on to collect referendum signatures? Why are they so upset? In order to explain their motivation, we need to explain more about the unintended consequences created by mobile home rent control (aka “messing with the market”).
In Oceanside, a mobile home coach that was purchased 25 years ago for $2,500 may sell for $25,000 today. Why? A new buyer will pay a premium for the coach because of its location in a rent controlled park. Effectively, under rent control, the value of the underlying property gets transferred from the property owner to the value of the coach. Again, it’s almost as if … wait … price fixing has consequences and rent control doesn’t work!
In case you missed it, that was a teaching moment for politicians and students of economics.
The whole issue is a real study in the danger of entitlements. While a coach owner will always be able to sell his or her coach for its actual value, when you take away the artificial and unintended windfall created by rent control, it’s fodder for the revolution, especially in the hands of an expedient politician like Esther Sanchez.
Yep, another teaching moment provided by rent control!
The truth is that history provides endless teaching moments for those willing to listen and learn. None is clearer than this: Rent control doesn’t work, and we applaud the brave efforts of Councilmembers Jerry Kern, Jack Feller and Gary Felien to right a long-standing wrong.