Re:Home Price to Income Ratio
by nradov on Monday September 20, 2021 @12:09PM
(#28595356)
San Jose limits annual rent increases to 5%. That seems reasonable (unless inflation gets out of control). Tenants aren't immediately forced out of their homes if the market rate jumps 20% in one year. But landlords can still eventually raise rents to market rates spread out over several years. There's no absolute limit on maximum rent.
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If it was inflation + 5%, I'd be fine with that - but a flat 5% limit only works so long as inflation stays low.
Re:Home Price to Income Ratio
by dragonwriter on Monday September 20, 2021 @06:30PM
(#28599885)
Technically, it only works if the (notional, I’m not sure this is an actual tracked category) PPI for rental housing is low, general (CPI) inflation may loosely correlate with that, but its not directly relevant.
Inflation may not be out of control yet, but certainly things like insurance, parts and labor for repairs and maintenance, and HOA dues are already increasing more than 5%/year. And property taxes alone are guaranteed to increase 2%/year in California. Not saying we should feel sorry for landlords, but when some parts of a market have price controls and other parts don't, distortions are inevitable.
Re:Home Price to Income Ratio
by dragonwriter on Monday September 20, 2021 @06:27PM
(#28599860)
> And property taxes alone are guaranteed to increase 2%/year in California
No, they aren't. Assuming no increase in property tax rate (which is a good assumption, since your local taxing jurisdiction almost certainly already charges the maximum nominal rate of 1% allowed under Prop. 13), your property taxes will increase only by the amount your assessed value for taxation increases, which is capped to the lower of 2% or the actual annual (trailing) rate of inflation.
For 2021/2022 the actual cap is 1.036%, based on the actual California CPI for October 2019 through October 2020.