Amid a ‘rent-burden crisis,’ will tenants vote yes on Prop. 10, expanding rent control?
By Jeff Collins
With a major rent control vote just 2½ weeks away, financially strapped Southern California renters face continued rent hikes into the foreseeable future, a new forecast shows. The region, said one expert, is in the grip of a “rent-burden crisis.”
Yet, some renters are getting a measure of relief in that rent increases are getting smaller, figures from a half-dozen apartment trackers show. “To say (renters) are catching a break would be too strong a statement,” said Richard Green, director of the USC Lusk Center for Real Estate, which released its annual “Casden Multifamily Forecast” this week.
It’s more accurate “to say it won’t be quite as bad as it was for the last few years,” Green said. “But (it’s) still bad.” And low-wage earners are not the only ones in the region facing an affordable housing crisis after eight years of steadily rising rents, according to the forecast, produced in conjunction with Beacon Economics.
The forecast compared renters at various income levels with comparable-level rents, finding “affordability issues across the board.”
For example, if a Los Angeles County household with income in the lower 25th percentile paid rent in the 25th percentile, about 58 percent of its income would go to rent, the forecast said.
Median income households paying median rents would spend about 40 percent of their income on rent.
When looking at renters by occupation and education levels, the report still found affordability issues. The only exceptions were for renters working in scientific, computer mathematics and architectural engineering fields.
“What we find is depressing,” the report said. “Particularly striking is that even when we look at people at different educational attainment levels, every group has an affordability problem.”
RENT HIKE
Reports from four apartment trackers show that while rent hikes appear to be diminishing, they still were up on a year-over-year basis during the July-through-September quarter.
Average rent hikes ranged from 2.2 percent in Orange County to 3.9 percent in Los Angeles County and 4.2 percent in the Inland Empire, according to third-quarter data from Reis Inc., RealPage Inc., Yardi Matrix and Kidder Mathews. Zillow’s September report showed median rents were up 0.8 percent in the Los Angeles-Orange County region and up 3 percent in the Inland Empire.
Those rent hikes are small compared with the pace of increases seen in 2015.
USC’s Lusk center, which blended figures from the U.S. Census and Axiometrics, showed this year’s rent is up about 1 percent or less, compared with increases in the 5-7 percent range three years ago. Rents in Los Angeles, Orange, Riverside and San Bernardino counties will rise in the 1-3 percent range in the next two years, the forecast said.
“It’s slowed down in the last year or so, and we think it will slow down in the next year or so,” Green said.
Forecast highlights show:
- Los Angeles County: The average rent is projected to rise 1.7 percent to $2,305 a month in 2019 and 2.3 percent more to $2,358 a month in 2020. Vacancy rates are projected to rise slightly to 4.3 percent in the next two years, but still will remain low enough to continue pushing up rents, the forecast said.
- Orange County: The average rent is projected to rise 1.8 percent to $2,071 a month in 2019 and 0.8 percent more to $2,087 a month in 2020. Vacancy rates are projected to increase to 4.3 percent next year and 4.6 percent in 2020.
- Inland Empire: The average rent is projected to rise 3.1 percent to $1,501 a month next year and 2.3 percent more to $1,535 a month in 2020, while vacancies will decrease to 3.7 percent by 2020.
RENT CONTROL VOTE
So with affordability falling and rent still climbing, will more renters vote to expand rent control provisions by passing Proposition 10 on Nov. 6?
According to the Lusk forecast, more than half of Southern California renter households are “rent burdened” — that is, they pay more than 30 percent of their income on rent, the level deemed affordable by economists.
“What is happening is people are having more and more financial pressure placed on them because rents are going up,” Green said. “If you want to say there’s a rent-burden crisis, I would not dispute that.”
Proponents say Prop. 10 could provide some relief. If passed, it would repeal existing limits on rent control, allowing local governments to cap rents on houses, condos and newly built apartments — forms of rent control now banned in California. The measure also would allow limits on rent hikes after a tenant moves out, a currently banned provision called “vacancy control.”
Opponents say the measure would harm the very tenants it’s meant to protect, diminishing the number of rentals while causing property values to plummet. That, in turn, will cut into tax revenue generated for state and local governments, they say.
Two recent polls show the measure trailing among likely voters, however.
A SurveyUSA poll of more than 700 likely voters found 46 percent opposed to Prop. 10 and 35 percent supported the measure. A Sept. 26 poll by the Public Policy Institute of California found 48 percent of likely voters opposed vs. 36 percent in support.
“One would think severely rent-burdened people would be turning out in force to vote for this,” Green said. “But traditionally, renters don’t vote as much as homeowners relative to their share of the population. Will they turn out and vote? … That’s a political science question.”
The original article can be found here.