At night, in about a dozen area parking lots, Santa Barbara provides a look at California’s continuing affordability crisis. Known as the Safe Parking Program, the initiative provides a place to park and rest overnight. These lots form a network of temporary rest spots for low-income workers living out of cars and recreational vehicles. To prevent the growth of the Safe Parking Program some cities have acted. Palo Alto officials implemented a 72-hour rule for parked vehicles, after the number of RVs parked along area roads increased to more than 200.
According to the U.S. Census Bureau, the statewide rental vacancies equaled 4.3% of all units in 2017. That was the sixth tightest in the country, an improvement from a 3.6% vacancy rate in 2016, when California ranked No. 1. Empty rentals in California ran at 6.6% from 2005 to 2010, No. 8 in the U.S. Since the economic downturn, California vacancies have averaged 4.7 percent, No. 3 nationally.
In California, especially high-rent coastal areas and the Bay Area, many lower-income residents have moved inland to escape ballooning housing costs, leading to a spike in supercommuters. This adds stress to the already pressurized rental market in the Central Valley. A Pew study found the number of Californians traveling 90 minutes or more to get to work jumped 40% between 2005 and 2015. This is one of the factors that helped increase the rental rates in our region.
Political will for rent control and development of affordable housing seem to be increasing as evidenced by the introduction of SB 35 and SB 827 by Senator Scott Wiener and commitment of the three gubernatorial candidates in November saying they would create approximately 3.5 million new housing units by 2025 to alleviate the housing crisis.
Five California cities—Santa Cruz, Inglewood, Glendale, Long Beach, and Pasadena—have new rent control ordinances on upcoming ballots, potentially adding to the 15 cities with existing ordinances. A low-income housing advocacy group is gathering signatures to repeal Costa Hawkins, a state law that prevents rent control from being applied to newer units. Rent control is viewed by some economists as an inefficient policy, and there is a very real concern that expanding its reach could depress housing construction. But there is also increasing acknowledgement that it is a necessary protection in such an extreme housing market.
YIMBY (Yes In My Backyard) groups are focused on increasing the production of all types of housing. One of the most effective ways YIMBYs advocate for more housing is by invoking jobs-to-housing ratios. A healthy ratio is approximately two new jobs for every new unit of housing. Nearly all California metros are way above that, according to an analysis of census data by Apartment List. Between 2010 and 2015 San Diego had a ratio of 3.9 jobs per housing unit, Los Angeles’ was 4.7, San Francisco’s was 6.8, and the Central Valley’s Modesto’s was 11.4. At New Bridge Management, understanding these factors helps us better develop rental pricing that benefits both the investors and tenants.
If you have questions or wish to talk to a professional, please contact us at New Bridge Management.