California’s Quest to Push Housing Even Further Out of Reach
Renting Must be Part of the Solution By David Howard Make no mistake: It is a difficult time for homebuyers right now, and California stands out as one of the nation’s toughest states to buy a home. It’s not just that home prices are hitting an all-time high, and that California features some of the least affordable housing markets in the country. High interest rates mean that even families that have enough for a down payment will be left with expensive, budget-busting mortgage payments. Experts are declaring right now as ‘the worst time to buy a home.’ Millennials in California have growing families, and they are going to need more housing options — not less. But even as many families are locked out of buying a home, California policymakers are pushing for new laws that would also make it harder for them to find places to rent. Renting must be part of the solution. Daunting Numbers To keep up with its growing population, California needs to build 180,000 homes per year. However, over the last decade, it’s averaged less than 80,000 new homes per year. On top of this, California has less land available for development, meaning a variety of housing solutions are needed including multifamily and single-family rental properties. Across California, it is cheaper to rent than to buy. For young professionals and growing families, renting likely makes more sense from both a financial and a convenience perspective. Renting can save tens of thousands of dollars throughout a year in California where on average, the difference between renting and buying a home is $803 per month — not including insurance, taxes, and other homeownership expenses. By some estimates, California renters could save $112,000 or more over five years given the cost difference to rent versus buy. For higher cost of living areas like Los Angeles, San Jose and San Franciso the difference can be even greater. For decades, renting has been synonymous with apartment buildings. The truth is many growing families need more space, but the only pathway to renting a single-family home is dealing with mom-and-pop owners who may not be great caretakers. Today, housing providers are offering a new solution to California families: professionally-managed single-family homes in desirable neighborhoods where families can be close to their jobs and good schools. These companies make upfront investments to renovate homes; they stay in touch with residents through apps, and they employ teams of on-the-ground maintenance staff who can quickly respond for repairs. Companies also offer high quality amenities and features that are not typically available for a first-time home buyer. Families who rent with these housing providers are finding the right home that meets their needs, circumstances, and budget. For potential critics, it’s important to point out that single-family rental housing has no impact on the supply or cost of housing, a fact backed by research from the Philadelphia Federal Reserve and the University of Southern California. Additionally, research from the Urban Institute has found that roughly 574,000 single-family homes are owned by large companies or investors — just about 1% of the more than 46.6 million total rental properties available nationwide. AB 2584 and SB 1212 So, why are some California legislators doing their very best to limit single-family rental housing? AB 2584 and SB 1212 propose burdensome regulations to the housing market that are both anti-renter and anti-housing. By scapegoating single-family rental housing providers, it ignores the root causes for housing market issues in California and threatens to remove a vital housing option for those living in or interested in moving to the state. Despite the highly beneficial nature of single-family rentals, California is losing ground on this critical housing solution. Between 2017 and 2022, the number of single-family rentals dropped by 81,548 units, according to Census data. When combined with the prospect of proposed regulations, the result would exacerbate, not improve the housing situation in the state — limiting investment in rental properties and stifling new housing construction. Legislators should be laser-focused on making housing as accessible as possible, encouraging policies that make it easier to buy and easier to rent. Californians need access to more single-family homes, especially in growing and high-demand communities.
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