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Buy a luxury building, then lower the rent: A housing fix for California’s middle class?

In hopes of plugging the state’s affordable housing shortage, some California government agencies are purchasing buildings, usually luxury ones, and doing the opposite of most real estate buyers. They’re lowering the rent.

…“Why should we collectively spend … to create another apartment that’s not even cheaper than what they can get on the existing market?” said Matt Schwartz, chief executive of the California Housing Partnership, a nonprofit that advocates for subsidized housing and consults affordable housing providers.

The partnership analyzed the rent prices CalCHA and CSCDA told bond investors they would charge, and compared them to the average local rents. In most cases, the analysis found that the new rent, even when reduced, was higher than the citywide average for an apartment with the same number of bedrooms.

Schwartz said the analysis suggests many people renting through the programs could find cheaper housing not funded through public subsidy that could otherwise go toward schools, police and other services. He added that the higher quality of homes on offer is “nice, but it shouldn’t be the standard for using public funds in our view.”…