A push to expand rent control in California is sending a chill through the stateâs apartment industry, prompting more investors to sell properties or hold off on buying.
Ben Lamson, whose family owned just under 100 apartments in the Inland Empire area in southern California, said he has sold about 70 units and is in contract to sell the remaining ones. He is taking all the money and investing it in properties in the Las Vegas area, he said.
âThese renter groups are starting to speak out and say, âThese rents are ridiculous.â Theyâve gotten more organized than they ever have been,â he said. âI started getting a little freaked out or a little scared or concerned [that] this could really happen.â
Mr. Lamson said he started reading news about the push for rent control a year ago and decided it was time to leave the state where he was born and has lived for five decades. He and his wife bought a home for themselves in Las Vegas, where they plan to retire in the next five years.
In late April, a coalition of housing advocates said they submitted some 595,000 signatures, more than enough to get a measure on the ballot in November to repeal Costa Hawkins, state legislation that prevents cities and towns from imposing rent control on buildings constructed after 1995 and on single-family rentals.
Both sides are gearing up for a fight and are expected to spend tens of millions of dollars on campaigning.
In Santa Monica, the number of properties on the market is at the highest level in 20 years, according to Tony Solomon, a first vice president at Marcus & Millichap based in southern California. Mr. Solomon said there are 90 properties on the market, about 80% more than normal.
He said developers are also holding off on bidding on land to build new developments.
Many of the buildings on the market are a direct result of the fear that if âthis were to pass, what this would do to the community againâ in terms of prompting landlords to stop investing in their buildings and creating widespread disrepair, Mr. Solomon said.
Data from property tracker Real Capital Analytics show a 22% increase in multifamily sales, to $4.5 billion in the first quarter of 2018, compared with the same quarter a year earlier. Prices have risen 8% during this time, which indicates demand is healthy.
Brokers and owners say they have become more spooked since the measure officially garnered enough signatures to be on the ballot, which wonât be reflected until the second-quarter data. The potential expansion of rent control is also having a bigger effect in places like Santa Monica and Santa Ana, where politicians and advocates are openly weighing expanding rent control.
Advocates are skeptical of ownersâ complaints that the push for rent control is having a negative impact on the market. Stephen Barton, who has a doctorate in city and regional planning from the University of California at Berkeley and is a former deputy director of Berkeleyâs rent stabilization program, noted that real-estate groups are pushing for loosening development regulations even though that can depress rents.
âItâs very self-contradictory to say we need an enormous increase in supply and then point to rent control and say this would be terrible,â Mr. Barton said.
Landlords said what is concerning to them is the uncertainty over how municipalities will react to the repeal of Costa Hawkins and how far they will go to limit their ability to raise rents.
A Santa Monica apartment owner with roughly 50 apartment buildings, who declined to be named because he said he was afraid of attracting additional scrutiny at a politically sensitive moment, said he was in contract to purchase two properties but decided to back out because he wasnât confident the measure would be defeated.
Buy on fear or there is a real fire?
Fear is realâŚNever underestimate the greed and stupidity of rentersâŚIf it passes the housing crisis will just get worseâŚRent control has driven up rents for the vast majority of cities. It adds no units and only benefits a fewâŚ
Lovely. I guess those activists will get what they deserve - higher rents. That Barton guy is s fool.
Rent control, gun control - people control. Why this state is getting less and less livable.
So if rent control actually drives up rents, then wouldnât it be a good thing for landlords? So why donât landlords welcome them with open arms? 
It drives up rents for apartments when they turn over, which may only be when the renter dies once his/her rent is way below market. They go up for anyone trying to move in or just change location withing an area by reducing turnover and inventory.
I wonder if large employers like Google or Facebook have weighed in on this. It would reduce their ability to expand by making it more difficult to bring in addional workers.
No sane person ever welcomes government interference in their businessâŚRent control creates distrust and hatred, government red tape, blightâŚIt is pure evilâŚMy mother in law has lived in a rent control apartment in Moscow since 1955âŚa total shit hole that hasnât been updated everâŚ
It is a real concern - rent control with just cause eviction, limited rent increases (below market for SF) and any tenants that rented for more than a few years WILL WANT TO STAY and the longer and longer they stay the more they want to stay since their rent will be less and less below market!
The worse part of it is when you want to move in even for yourself - you have to compensate for them to move out because they have been living below market rate for so long⌠Wow just wow.
Media articles building up in support of rent control.
If CA is serious about the housing crisis, they should kick out all the illegals. Itâd create a bunch of vacancy and lower rents. Itâd also save schools and ERs a ton of money.
Do you think if even the Rental owners are in favor of kicking out the illegals? 
Rental owners arenât a meaningful voting block.
When someone figures out rent control is inheritable, it gets wors for generations.
Democratic politicians in CA are convinced that they can win elections in CA forever by supporting illegals. Question is why.
As long as they believe that nothing will happen to illegals in CA as long as democrats are in power.
So, the illegal immigrant solution in CA will most probably not be implemented.