Lo Los Angeles rental housing Loading... : Investor Sentiment and Bull/Bear Views

The Los Angeles City Council voted 12-2 to limit annual rent increases to 90% of CPI, with a 1% floor and a 4% cap. Friedberg's read as an investor is that this caps the equity upside on an apartment building: the cash flows the asset can generate are now limited by statute, which removes the incentive to buy buildings, to spend money upgrading them, or to build new ones, leaving only small-yielding investments with no upside. Layered on top are decades of city, state and federal rules that make housing slower, costlier and harder to build, plus Prop 13, which discourages owners from selling and drains liquidity from the market. His conclusion is that every time government intervenes in this market it distorts it and blocks capital from flowing into new supply.