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A statewide initiative to repeal limitations on local rent control policies will disincentivize builders and strip private property rights in the San Diego area.
If voters across California pass Proposition 10 in November, every homeowner in San Diego with a single-family home, condo or townhouse would be open to local rent control policies. Housing groups are championing the ballot measure, but by repealing the Costa-Hawkins Rental Housing Act, a 1995 state law that limits municipalities’ control over rents, Prop. 10 is poised to harm some of the same people it’s intended to help.
This new and unnecessary layer of bureaucracy will enable the government to dictate the dollar amount for which homeowners can rent their personal residences and how much they can increase their rent, and it will expand the terms on which a landlord can cancel a rental agreement. In essence, Prop. 10 will strip away a significant layer of private property rights from homeowners in the San Diego area.
At the same time, National City voters are also being asked in November whether they want to limit annual rent increases at 5 percent.
Experience with rent control in other parts of California shows that contractors don’t want to build there. Instead, they seek out other cities where profits are better, and the result is a further tightening of the housing and rental markets.
As a Realtor, I also know that managing the responsibilities of a home can be overwhelming to seniors, so many who need assisted living care opt to sell or rent their homes for the extra money. The average cost for assisted living in San Diego is approximately $3,500 per month and the average rent in San Diego is $1,887 a month. Rental caps would prevent these senior homeowners from having enough rental income money to move into assisted living, and thus drastically decrease their quality of life.
Repealing Costa-Hawkins might seem to be an easy and practical solution to combat high rents in San Diego, but it is a short-term fix that would only add to the housing shortage. As with most government-imposed short-term solutions, there will likely be unintended consequences that are worse than the problem they are attempting to fix. For instance, imposing rent control on a homeowner could result in properties falling into disrepair as landlords defer much-needed property maintenance due to a lack of sufficient income from their rentals.
The rental crisis is a supply and demand problem that could ultimately be fixed by substantially increasing the amount of properties on the market, thereby stabilizing rent. One way to increase the number of properties on the market is by approving the development of manufactured home parks in San Diego — as Japan did. Knowing it was entering a housing shortage, Japan began to use manufactured housing decades ago to help solve its housing crisis. The Union-Tribune reports that the cost to build a semi-detached modular house is about $90,000, and they last 60 years, making manufactured homes a very affordable and practical solution.
A Point Loma Nazarene University study determined that building regulations are a significant factor in San Diego’s high housing costs, accounting for approximately 45 percent of the total expense. Local government needs to reduce costly permit fees and work with developers on solutions to the housing shortage — because a shortage in housing contributes to a shortage in rentals.
Another way to combat the rental shortage is to encourage the building of accessory dwelling units. In an effort to address the shortage of affordable housing, the San Diego City Council recently voted to waive fees associated with construction of these units, commonly referred to as granny flats. Historically, homeowners have paid $30,000 or more in government fees before even beginning construction on a granny flat. The City Council slashed those fees by more than 60 percent, incentivizing homeowners to build granny flats. If possible, these fees could be reduced even more or eliminated completely, making granny flats even more attractive.
Stripping away personal property rights and imposing rental restrictions on homeowners are ill-advised attempts to solve the rental crisis that are punitive in nature. Worse, their long-term results will do more harm than good to San Diego’s volatile rental market. Rather than knee-jerk reactions, real solutions — such as reducing costly permit fees accompanied with incentives — are needed to address the rental crisis.
Proponents and opponents of Prop. 10 appear to want the same thing: an increase in the affordable housing inventory and rent stabilization. Let’s get these two parties in the same room and use the $36 million raised opposing each other on innovative solutions.
Mark Powell is on the board of directors for the San Diego Association of Realtors and a San Diego County Board of Education member.