Recent Rent Hikes on 1 in 15 California Rentals Would Have Exceeded Newly Passed Cap

About 6.7% of properties listed for rent in California last year saw rent hikes larger than what would be allowed under a rent-cap measure approved recently by California's legislature, according to an analysis of for-rent listings.

The average amount over what would be allowed was $85 per month. But that's a big drop from just two years ago, when rents were climbing more quickly. In 2016, 16.4% of listed units saw rent hikes larger than 5 percent plus CPI, with an average "over" amount of $78.

The analysis, which looked at the impacts in nine California metro areas using HotPads and Zillow data, shows that more than a third of rentals in the Vallejo area saw rate hikes larger than that last year, as well as nearly 30% in the Sacramento (down from more than half in 2016) and Riverside areas. The Bay Area saw about 12% of its rent hikes pass that threshold in 2018.

It’s true that analyzing increases for on-market rentals isn't apples-to-apples with tenants renewing leases (about which there is a lack of available public data). But measuring the share of listed units that saw rents rise faster than the proposed limit is our best estimation of the share of renewed lease rent increases above the same limit.

We know from previous research that rent generally grows more slowly when you renew your lease since the landlord saves from not having a vacant unit while turning over tenants. But a bulk of those listed units are in a segment that has seen a flood of higher-end apartment buildings, and so the segment's rent pressure has recently subsided. It's unclear if these two dynamics cancel each other out, but it's fair to say this at least is a reasonable ballpark, a way of getting much closer to the answer.

While most housing experts recognize that the real problem is our inability to meet the growing demand with sufficient supply (i.e. more housing), some think the immediacy of the problem requires an immediate fix. Rent control measures come in many forms, but the most common format is to limit the rate the rent can rise for the tenant when they renew their lease.

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