Property Value?

The committee says a rental cap would raise our property values. There is no evidence of this 

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However, what is certain is that a rental cap would reduce the buyers pool when it comes time to sell. There would be no interest from:

• Buyers who want the option to rent in the future (job transfers, life changes, flexibility, economic hardship)

• Buyers with estate planning in mind, who want flexibility of use through inheritance

• Buyers who can't afford to wait years, on a waitlist, before their unit can be rented

• Buyers from the military who anticipate deployments, assignments.

• And, frankly, investors in one of the most desirable markets in the country. 

 

A narrower buyer pool produces lower sale prices and longer time on market. At least 5-10% lower according to multiple sources. It just makes economic sense. 

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The cap committee retorts, "well... some people don't want to live with a bunch of renters." We aren't. Laurel Bay is 45% rentals but the trend is dropping. Only 30% of units that have sold in the past 5 years are rentals today. 

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In conclusion, this is a basic matter of supply and demand. A smaller pool of potential buyers places downward pressure on unit prices, while a larger inventory of available units further contributes to price declines.

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To read an even deeper analysis including studies of values affecting rental caps from various states and Canada: Rental Caps Lower Resale Values. In the PDF at left or in our Deep Dives.