An Examination of the Impact of Rent Control on Mobile Home Prices in California

This study examines the impact of rent control of mobile home parks in seven counties of California between 1983 and 2003. We assembled an extensive and timely data set and, thus, were able to test more carefully specified econometric models than had been employed in prior studies of California mobile-home rent control. We find that the nature of the rent control regime differentially impacts mobile home prices: the imposition of rigid rent control, rent control without vacancy decontrol, 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. This is consistent with economic theory, suggesting that the imposition of rigid rent control will lead to the capitalization of future rent savings when a coach is sold. That is, the buyer will not only pay for the coach but also for the net present value of the expected savings associated with the future legally constrained pad rent obligations to the landlord.