Despite stringent rent control laws, the affluent city of Santa Monica, CA is plagued with rampant homelessness. Part of the reason might be that wealthy tenants are abusing rent control, illegally retaining their rent controlied apartments -- not to live in, but to price-gouge subtenants.
This was recently posted on
DoctorHousingBubble.com:
"A yoga instructor/model/single
mom I know has a rent-controlled one bedroom in Santa Monica
that’s
a walk to the beach. She has outgrown the apartment but knows
that on
AirBnb that one bedroom will bring in ~$4500 in income. Her
neighbor
only pays $600 in rent and will not rock the boat. She plans on
taking the $3000 in profit and using that as income to rent a
house
in nearby Mar Vista. The three bedroom house will run ~$4500.
Her
logic is that her monthly cash flow of $1500 stays roughly the
same."
Was this the purpose of rent control? To protect the rights of (very lucky) tenants to price-gouge subtenants on AirBnB? Here's another post, from someone else:
"I have a friend in SM [Santa Monica] Canyon who turned his garage into a 1 bedroom unit and was renting it out for about $1800 per month. Then when the tenant left a few years ago, he posted it on AirBnB and is now fetching about $5K per month to vacationers with 1 week minimum stay. He intimated this to his neighbor one day in a moment of trustful conversation and guess what -- his neighbor told him he was doing the same thing with his garage."
No wonder traffic is an increasing
nightmare. As if over-development wasn't enough, every other
house,
garage, condo, and apartment is being turned into a vacation
rental.
Santa Monica Code Enforcement, are you
listening?
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