Comment by jlarocco

They can only increase rents as much as the next guy. If you're charging $2500 but next door is $2400, then nobody will rent from you. But if everybody's charging $2500, then that's what people will have to pay.

You're right that some people will get squeezed out, but in high demand markets there are enough people willing to pay that it doesn't matter. The number of properties available for rent in California isn't growing as fast as the total population is growing. Property owners will eat the 5% increase for a while - at least until the existing leases expire - but eventually they'll incorporate that 5% increase into the rent.