Implement Rent Control in San Diego

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It is time for San Diego to implement rent control to protect its residents’ quality of life.  Renters are experiencing substantial rent hikes that are not consistent with salary increases, and hard-working San Diegans face the stressful situation every year of being forced from their home if they don’t pay exploitative rent increases. 

When searching the rental market for a new place to live, people have some ability to compare options and even possibly negotiate with some success.  However, when they are already living in a rental unit and it is up for lease renewal, the landlord clearly has the upper hand.  Not only does the apartment management company have easier access to sometimes proprietary information about the market, but also they can substantially raise the rent because they know the cost and hassle of moving for the tenant can be substantial. 

Moving is time consuming, from the housing search, to packing, to hiring movers, and to settling into a new home and sometimes new schools.  In addition, the financial cost of moving can be quite high, it creates an unstable home life, and it can take an emotional toll from being uprooted from one’s own home just because the landlord thinks they can fill it with another renter willing to pay more. 

This system creates a lose-lose situation for renters – pay whatever the landlord asks or endure the hardship of a move.  Moreover, the current system discourages renters from making valid complaints for fear of reprisals at lease renewal time in the form of a higher rent hike.  This is not a system that ensures a good quality of life for renters.  Either they must give in to exploitative rent hikes that steal an increasing amount of their income or they must suffer from instability, lost productivity, and stress from moving frequently.  Housing is central to quality of life, and the system is currently favoring landlords over tenants. 

The rental market is also reducing the standard of living for San Diego residents.  Over 50% of San Diego households rent housing[1] and they spend 44% of their income on it (compared to 30% for the country).[2]   Rents have increased 25% over the past decade and are expected to increase by 19% in just the next 5 years.[3]  In 2014, rents in San Diego increased 5-6%, the highest rent growth in more than a decade, and 2015 has experienced 9% increases.[4]  Meanwhile, household income is rising only less than 1% a year and has even decreased a total of 6% since 2009.[5]  With some of the most expensive housing in the country (San Diego was recently labeled the least affordable city in America by Realtor.com[6]), buying a home is out of reach for most San Diegans,[7] and renting is the only realistic option.[8] 

While San Diegans are hurting, large corporations that own the apartments are winning big.  For example, Essex Property Trust that owns and manages 13 complexes in San Diego saw an annual increase in profit of 7.4% at its properties in 2013, a total profit increase of 14% in 2014 to over $200 million[9], and its top two executives receiving compensation of $3.4 million a year[10] (a 136% increase over the past 4 years).  Similarly, the Irvine Company, which owns and manages 12 complexes in San Diego, has seen recent annual growth of 8.7%,[11] and its Chairman Donald Bren has made $3 billion over the past three years (an increase of 25%)[12], making him the 30th richest American with a net worth of $15.2 billion.[13]

Rent control (or “rent stabilization”) is needed to remedy this inequality between landlord and tenant and to protect the majority of San Diego households who are renters.  Rent control laws exist in 15 other cities in California, including the three largest cities in the state besides San Diego – Los Angeles, San Jose, and San Francisco.[14]  Vacant units can still be subject to pure market forces (“vacancy decontrol”), but it is time to protect the renter from exploitative rent increases for their current apartment homes.

The San Diego County Apartment Association has used its deep pockets and team of lobbyists to effectively represent the interests of landlords to our local government, and it is time for us, the people of San Diego, to now petition our representatives – the City Council and the Mayor – to pass rent control measures.

10 Facts about Rent Control in California

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Footnotes
* Cover graph: CBRE Econometric Advisors and RealPage, Sept 2014, http://www.utsandiego.com/news/2014/sep/18/rents-housing-supply-downtown-units-forrent/#comments-module 
[1] http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_13_1YR_B25106&prodType=table
[2] http://www.zillow.com/research/q2-2015-rent-mortgage-affordability-10268/ 
[3] http://www.utsandiego.com/news/2014/sep/18/rents-housing-supply-downtown-units-forrent/
[4] http://timesofsandiego.com/business/2014/12/31/san-diego-rents-rose-average-55-per-month-2014/
http://files.zillowstatic.com/research/public/rental/ZRI.San%20Diego.395056.pdf
http://rebusinessonline.com/demand-for-apartments-grows-in-san-diego/
http://www.sandiegouniontribune.com/news/2015/aug/15/real-estate-housing-corelogic-zillow-midyear/

[5] http://www.kpbs.org/news/2014/sep/18/san-diegans-income-still-below-great-recession-lev/
[6] http://www.realtor.com/news/least-affordable-cities/
[7] http://www.kpbs.org/news/2015/apr/16/rising-housing-prices-stagnating-wages-are-harming/
[8] http://www.voiceofsandiego.org/2015/01/21/the-eternal-question-for-sd-businesses-should-i-pay-or-should-i-go/
[9] http://markets.on.nytimes.com/research/stocks/fundamentals/financials.asp?type=is&symbol=ESS
[10] http://www.bloomberg.com/research/stocks/people/person.asp?personId=20594349&ticker=ESS
[11] http://biz.yahoo.com/ic/40/40241.html
[12] http://www.ocregister.com/articles/bren-645922-county-irvine.html
[13] http://www.forbes.com/profile/donald-bren/?list=rtb
[14] http://www.dca.ca.gov/publications/landlordbook/appendix2.shtml
http://www.ci.berkeley.ca.us/Rent_Stabilization_Board/Home/Other_Rent_Control_Jurisdictions.aspx



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