Rent In San Diego Is Soaring And There Are No Signs Of It Slowing Down
San Diego has always been a pricey place to live due to the “sunshine tax” we pay in exchange for perfect weather and pristine beaches. Rent here is now double the median in the United States and there is no sign of the surging prices slowing down. Many long time residents are struggling to stay in their neighborhoods as the city’s unregulated rent structure allows increases that force some to reluctantly relocate outside of the city.
Regardless of the price tag, students and recent college grads have flocked to San Diego for decades, and in years past many struggled to find adequate work. In just 12 months the local job market grew 2.9% (outpacing LA and most of the USA) and has led to increasingly more professionals relocating to San Diego for work.1)https://www.bisnow.com/san-diego/news/technology/heres-why-san-diegos-job-market-is-booming-59525 Ryan Ratcliffe, a Professor of Economics at SDSU, has reported that the increase in jobs is polarized with low paying wages in hospitality and high earning positions in biotech.2)http://ourcitysd.com/business-economics/san-diego’s-economy-up-or-down-in-2016/ With little growth in the middle, there are not many households in San Diego that are feeling the “job economy boom”, but most are taking notice of the rising price of real estate. Economists advise that your annual rent should not exceed 30% of your annual income. A recent report published by Zillow found that San Diego residents are over spending at an average of 39.5% of their income.3)http://www.zillow.com/research/housing-affordability-q4-2015-12111/
Rent in San Diego has been increasing 8-10% overall, but some areas like North Park and Hillcrest have experienced 20% hikes!4)http://www.sandiegomagazine.com/San-Diego-Magazine/March-2016/San-Diegos-Next-Hot-Neighborhoods/Rent-Uncontrolled San Diego Tenants United has been hosting public meetings about tenants’ rights, and has a petition online proposing rental control, which they intend to take to the City Counsel and Mayor’s office. The issues around affordable housing are already a hot topic with our local government. Just last week the San Diego City Council unanimously voted to let residents decide if the city should implement a 35% increase in the number of affordable housing units that are eligible for assistance from public entities. If approved on November’s ballot the 10,000 additional units would bring the total up to 38,680.5)http://www.kpbs.org/news/2016/jul/26/san-diego-city-council-to-consider-placing-two/A recent study performed by the University of Southern California determined that rent in San Diego County is expected to continue rising and will increase quicker than the rest of Southern California due to anticipated employment and population growth, and a lack of new construction.6)http://www.sandiegouniontribune.com/news/2016/apr/12/rents-increase-usc-2016/ This past winter the Union Tribune reported that “San Diego’s Centre City has more than $6.4 billion in 63 projects under construction, approved or under review — an amount equal to more than 40% of the 1,600-acre community’s entire $15.5 billion in assessed valuation”.7)http://www.sandiegouniontribune.com/news/2015/dec/27/downtown-development-office-retail-residential/ Last year nearly 6,300 building permits were approved for new residential units. Still many experts feel that the new construction projects in San Diego will not produce enough new housing to alleviate the pressure on the housing market.
Bonded Inc. has been a leading provider of new flooring installation in San Diego for 42 years and partners with many large developers and construction companies such as Jamboree and Chelsea Investment Corp. Mitch Adler, President of Bonded Inc, feels that “There is absolutely a need for more rental units in San Diego! The industry has really picked up the pace to add more inventory and our company’s flooring installation business for new construction and remodeling projects has more than doubled this year. The demand for expert installers is so high that I am constantly hiring more to join our team!”
In May San Diego Magazine published an article about uncontrolled rent that said “With the average price of a one-bedroom unit at $1,634 and a two-bedroom at $2,033, San Diego lays claim to the ninth most expensive metropolitan rental market in the U.S.—100.3 percent above the national average—despite our U.S. Census ranking as 27th in median income”.8)http://www.sandiegomagazine.com/San-Diego-Magazine/March-2016/San-Diegos-Next-Hot-Neighborhoods/Rent-Uncontrolled/ While the cost of rentals in San Diego drastically increases, some tenants are frustrated and feel that their landlords are not on par with the maintenance of their properties. For example, a tenant that has lived in an apartment for 6 years, and has dealt with the same old carpet since they moved in, has every right to be upset when the rent is increased $300 a month and the owner still doesn’t replace the carpet.
With the vacancy rate at less than 4% it is a “landlords’ market” due to slim pickings for renters. When shopping a limited inventory, prospective tenants may see more value in professionally managed rental properties as they typically guarantee proper maintenance and secure apartments. Mr. Adler explained that “Many Property Managers that we work with will have carpets professionally cleaned when a tenant renews their lease, and will replace carpet approximately every 5-7 years, dependent on the wear and tear.” Some landlords will cut corners by trying to repair things themselves or by hiring an unexperienced handyman instead of a professional tradesman. When moving into a new apartment that is professionally managed tenants can have more “peace of mind” and trust that the unit and building will be well maintained by licensed and insured contractors like Bonded Inc.
Many people argue that the popularity of AirBNB has also affected the rental property market, especially in the beach communities like Pacific Beach and Ocean Beach. The mobile app provides an untraditional, yet very popular platform for “hosts” to rent their house or apartment as a short term / vacation rental. The California based company provides rental insurance and handles financial transactions, and hosts are able to review the guests’ profiles (which include reviews written by their previous hosts) before approving their trip. AirBNB has made the rental process simple, and an increasing number of property owners have found that they are able to collect more money renting out units on a short term basis.
As with any market, supply and demand determines the price we must pay. While some long time San Diegans will have to pack up and move out, there will always be new transplants eager to fill the vacancies. A strong job market and competitive property market support a healthy local economy, and those who can keep up with the costs will be able to keep living in our sunny beach city.
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