This Study Examines the Impact of Rent Control by Taking Mobile-Home Rent Control As Example

The Impacts of Rent Control: An Examination of Mobile Home Prices in California

This study examines the impacts of rent control by considering mobile-home rent controls in California. Mobile homes are worth studying because there is separation of ownership between the pad, on which the coach rests, and the coach. Coach owners rent the pad but can sell their (actually immobile) coach. Coach sales are, therefore, expected to include the capitalized value of pad rent control. With access to mobile home resale records for seven California counties between 1983 and 2003, we assembled an extensive and timely data set and thus, have been able to test more carefully specified econometric models than had been employed in prior mobile home rent control studies. We found that the nature of the rent control regime differentially impacts mobile home prices: a rigid regime with rent control without vacancy decontrol, where rents cannot be raised to market when a the coach changes owners, leads to higher growth rates in resale prices, while a flexible regime, or rent control with vacancy decontrol, results in lower growth rates in resale prices; growth rates are also higher after 1993, a date coincident with the beginning of the economic recovery in the California real estate market and a significant change in the California legal- regulatory environment. Moreover, communities with lower median income levels or with a lower percentage of older population, as expected, have the biggest discrepancies between resale prices under different rent control regimes. The examination of mobile-home rent control provides us with a better understanding of the impacts of rent controls in general.

Key words: Rent Control, Mobile Home, Vacancy Decontrol