Prices are a signal, and price changes are how market participants can determine which way supply and demand curves are moving.
By legislating prices and price changes, the signal is muddied, and market participants cannot take action to match the movements of the supply and demand curves.
Prop 13’s property tax rate increase cap is also price fixing. These kinds of laws are mostly ways to enrich and reward those who got or were born somewhere first, and run counter to the vaunted meritocracy that a so called free market can encourage.
Edit: The most helpful thing the government can do is maximize price transparency, so the smaller entity can be on equal footing with the bigger entity about which way prices are moving. Tenant agreements should be public record, like land sales are, and that would not only help cops with kicking out squatters, but also give renters more power in negotiations.
When people are trying to afford living, “price transparency” is not the most helpful thing a government can provide.
I agree that Prop 13 is god awful.
These side effects of these dynamics are not going to be evident or resolved in the short term. It took decades for prop 13’s (and other effects) to compound and become visible, and it will take decades to undo.
There is no shortcut though, the incentives have to be set right, and there has to be patience for the results to show. Unfortunately, long term benefit at the expense of the short term is a core weakness in democracy.
I don't think that's true. Prop 13 for example is priced into the market. Buyers bid higher because their taxes are frozen. This doesn't take decades to correct.
Market reactions are instant. Once the policy is fixed we don't have to wait for a generation
Buyers bid higher because sellers are giving up their low property tax, not because the buyer will have a low property tax in a decade or two. Sellers are hesitant to sell because they are giving up a lot, California had to pass a special law just to let old people downsize without losing their low property tax on the big home they raised a family in.