Rent Control is not for everyone.

I was recently asked about whether a home was covered under rent control or not. In the City of Los Angeles the Rent Stabilization Ordinance (RSO or rent control) covers many properties that were built prior to October 1978. However, it does not cover single-family homes as indicated on their website and in the ordinance itself. Many of the regulations in the ordinance provide a good guideline of best practices for a landlord, but the limits on increases do not cover all properties based upon type of property or year of construction.

There is also a lot of useful information about landlord/tenant law on the state’s website and in the guidebook produced by the state.

Investors shouldn’t shy away from properties that fall under the RSO jurisdiction. They should simply consider the limitations on rental increases in the pro forma cash flows. Tenants often don’t care about rent control, because most are not in a unit long enough for the rental increase limit to benefit them. If you are a renter and plan on living in a unit for 10 or more years, then it may benefit you to look for a rent controlled unit, but if you are like most people and you move a 3-5 years, then rent control likely will not provide any benefit in limiting future rent increases.

Home Inventory is Artificially Low – July HUD Scorecard

The home buying is frantic in the San Fernando Valley. Supply is still low and homes are selling with multiple offers. But does this mean that the market is getting better??? NO!

The limited amount of housing inventory in the San Fernando Valley, and in many places, is artificial and is causing a shortage of homes. Demand hasn’t tripled and the economy isn’t much better. The latest HUD Scorecard has the following chart which helps to show why prices are rising and why everyone is fighting over scraps of homes.

Until banks do the right thing and start releasing these homes, as well as work with people to stay in their homes or short sale, we will have an unhealthy housing market. This means that we can’t move forward and have an economic recovery for a long time.

Limited housing supply

All over the news we have been hearing stories of shrinking supply of housing on the market. The Los Angeles real estate market is no exception as told in this LA Times story. The problem of a shortage of housing supply is especially true in the San Fernando Valley. I just ran a report on all the available town-homes and condos in Granada Hills (91344) and found only 7 listings. Of these properties 5 are newly constructed condos starting at around $340,000. This is hardly a steal for a first time home buyer. This is a big change for just a few weeks ago when you could pick up a 3 bedroom condo for about $150,000 in the same area.

Unfortunately, this is not a sign of a recovering housing market. It is simply a sign that banks are not releasing foreclosed homes as fast as they should be. The banks should also be helping people to short sale or modify their homes so that the housing market can return to a normal state sooner.

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