Rent stabilization is a necessary tool
It’s an old story: housing costs in our region are among the highest in the country. It’s a story we share with other desirable coastal communities. Demand is inevitably going to be high, and supply is inevitably limited by the limitations of natural resources like water, and by the need to protect the beauty – and appeal – of this place.
Today, however, we are experiencing an unprecedented housing affordability crisis. The real estate market is unprecedentedly “hot” – single-family homes are selling above asking price, rental prices are soaring. Well-paid telecommuters want a place here. Wealthy retirees too. Student groups can share rental costs; apartments are available for seasonal rental. At the same time, corporate investors seeking profit maximization make up a significant portion of the owner population. These trends, in the context of zero vacancy, mean that the private market cannot provide adequate housing at affordable prices for the local workforce.
Decades later, Santa Barbara’s housing affordability crisis has been greatly exacerbated since the onset of the COVID-19 pandemic, which has driven home prices up from already out-of-reach highs and brought no relief to rapidly rising rents. The median home sale price in the city of Santa Barbara increased 30% in 2020-21 and another 34% in 2021-22 to $2.2 million. Already sky-high rents have continued to rise, averaging $2,400 a month, far outpacing household incomes which, after decades of stagnation for middle- and low-wage workers, have only recently begun to rise. . With average rents over $2,000 in Santa Barbara and Ventura counties, commuting from anywhere in the area is neither a viable option nor an environmentally sustainable option.
The impact of these out-of-reach prices is felt most acutely in renter households, where housing costs absorb an increasing share of monthly income. As the Central Coast Regional Equity Study points out, recent census data shows that Santa Barbara is one of the most rent-burdened—and least affordable—metro areas in the country, given the large proportion of households paying more than 30%, and a considerable number paying more than 50% of their monthly income in rent. Communities of color have been disproportionately affected by these burdens, experiencing higher rates of overcrowding, eviction and substandard conditions than their white counterparts.
The future of our community requires a large-scale, multi-faceted program to increase the supply of affordable housing – a reality recognized in recent cycles of the Regional Housing Needs Assessment (RHNA) goals mandated by the government. ‘State. The RHNA’s goals, which have expanded significantly since the last allocation cycle, tell us what we need to aim for over the next decade to increase the availability of affordable housing.
Implementing a program to address affordable housing supply needs will take many years – and the financial and policy framework for such a program does not yet exist. Forging this framework is a very important priority.
But some immediate steps to protect affordability and stability are possible. Rent stabilization – along with other tenant protections – are viable and necessary tools to alleviate the current crisis.
Reciting the mantra that “rent control has never worked” inhibits rational discussion of policy choices. Part of that mantra is rent control models that are no longer relevant. In California, state laws — the Ellis Act of 1985 and the Costa-Hawkins Rental Housing Act of 1995 — place legal limits on how communities can protect tenants and regulate rents. Importantly, Costa Hawkins provides that newly built rental units – that is within 15 years – are exempt from rent regulation and require vacancy monitoring – allowing landlords to hand over rents. legally vacated and rent-controlled apartments at market rates. Strict rent control is simply not legal in this state. In addition, rent stabilization measures generally provide that landlords are entitled to a fair rate of return and put in place means for landlords to seek rent increases to pay for necessary capital improvements or maintenance.
In comprehensive and authoritative surveys of rent regulation in California and the United States, researchers from the University of Southern California, the Center for Urban and Regional Affairs at the University of Minnesota, and the Urban Institute , based in Washington, DC, offer careful assessments of what well-designed and implemented rent stabilization measures can accomplish. Far from “never succeeding,” these studies and others report that rent stabilization helps promote residential stability at the household and neighborhood level, control rental housing costs, and reduce vulnerability to unjust evictions, among other laudable goals.
As Professor Manuel Pastor and his associates at USC conclude:
Although more research remains to be done, evidence suggests that the strident debate over rent regulation may be driven more by ideology and self-interest – on all sides – and that public policy would benefit from discussion. more measured. What this review of the literature suggests to us is that rent regulation is a tool for coping with steep rent increases. They have less deleterious effects than is often imagined – especially if we are talking about more moderate rent stabilization measures – and seem to favor the stability of residents and can therefore contribute to slowing down the displacement dimension of the gentrification.
A comprehensive report conducted at the Center for Urban and Regional Affairs at the University of Minnesota concludes that:
Empirical research indicates that rent regulation has been effective in achieving two of its main objectives: maintaining below-market rent levels and moderating price appreciation. Generally, places with stronger rent control programs have been more successful in preventing strong price appreciation than weaker programs. There is broad consensus in the empirical literature that rent regulation increases housing stability for tenants living in regulated housing
These reports and others make it clear that rent stabilization is not in itself a solution to the affordability crisis, but that smart rent regulation can help people who work here live here. And it provides a framework for tenants to protect the livability as well as the affordability of their homes.
Rent regulation does not need to be funded from existing budgets. Most cities with rent control pay for the program by assessing a small annual registration fee for each rental unit. Concern about the administrative cost of rent regulation is not in itself a justification for refusing to undertake it.
In short, a smart program to promote rent stabilization is a necessary and feasible tool in the long-term effort to meet the housing needs of the local workforce and all who contribute to the health, the vitality and stability of our community.
Alice O’Connor is professor of history and director of the Blum Center on Poverty, Inequality, and Democracy at UC Santa Barbara. Richard P. Appelbaum is Emeritus Professor Emeritus and former MacArthur Foundation Chair in Global and International Studies and Sociology at UCSB and currently a Professor at Fielding Graduate University.