San Diego Union-Tribune (Sunday)
12TH HIGHEST IN THE NATION
San Diego median rent for a single-family home is $3,400 with a 10 percent increase in a year, but prices are going up much faster in Florida, Georgia, New Jersey and parts of the South
The cost to buy a San Diego single-family home is out of reach for Pam Anderson, but renting one isn’t easy either. A 38-year-old mother of two, Anderson started renting a single-family home in the Clairemont area about two years ago amid pandemic lockdowns. The 1,236-square-foot, three-bedroom home was perfect for her 7-year-old daughter, 9year-old son and a rambunctious chocolate Labrador named Hurshey.
“There were still lockdowns and I needed a yard for the kids to play and get some energy out,” she said. “And I wanted a room for each of my kids because they are a boy and a girl, and they need their space.”
When Anderson, a paralegal, moved in, the rent was $2,900 a month. After her first year, her landlord said rent was going up $275 a month. She recently found out they were raising it again, by $325. Panicked about a $3,500 monthly payment — along with rising prices for gas, food and other essential items — she called and wrote a letter to her landlord to see if they would reconsider raising the rent, or at least come down a bit. Instead, she got a letter back saying they were “keeping up with market rates.”
Anderson isn’t alone in trying to rent the American dream, with the median rent for a three-bedroom house in the first quarter of 2022 at $3,400 a month in San Diego County, said Attom Data Solutions. That is an increase of 10 percent in a year. San Diego metro area — which includes all of San Diego County — had the 12th highest monthly price in the nation (tied with Middlesex County in Massachusetts), ahead of places you might expect to cost more: Washington, D.C., Honolulu and nearby Orange County.
If you’re a renter looking for a house, there might be some comfort in knowing prices are going up much faster in Florida, Georgia, New Jersey and parts of the South. For instance, Atlantic County, N.J., has seen rents increase 66 percent in a year, to $2,495 a month. Monthly rent might be less than in America’s Finest City, but a rent hike that high can’t be fun either.
Anderson said she could probably afford a monthly mortgage payment if she had enough for a down payment. But, she said saving money with high rent is nearly impossible. Anderson said moving out of San Diego isn’t an option because she shares custody of her children.
“I feel like the rental market has me so trapped. I can’t save for a (down payment),” she said. “Unless you inherit money, or somebody gives you it, I think
it is really hard to save.”
Anderson’s landlords are not some investors in an ivory tower on Wall Street, but a local mom-and-pop landlord likely dealing with rising costs of their own.
Renting single-family homes has become a big business for institutional investors, but the focus for those companies is mainly in the South and Southeast. Corporate landlords are estimated to own 1.5 percent to 2 percent of single-family homes in the United States, according to the National Rental Home Council and other industry watchers. Housing analysts say that isn’t enough to sway prices in a heated housing market, but it hasn’t stopped considerable criticism of Wall Street firms nabbing up properties.
In an interview with “60 Minutes” on investor purchases, Gary Berman, CEO of Toronto-based corporate landlord Tricon Residential, said the American dream of owning a house has now changed.
“Well, if we think the American dream is embodied in a suburban home with a yard and a white picket fence — then I think we’re making the American dream much more accessible,” he said. “You can rent the American dream.”
Berman’s comments were shared widely on social media and criticized as being out of touch and greedy. He has sought to clarify his comments, telling the Toronto Star that his company is fixing homes that are in bad shape and giving an opportunity to live in a house, something that many people would otherwise not be able to afford. Tricon now owns about 30,000 single-family homes in the United States.
Tricon does not have any rentals available in San Diego and it does not own any properties in the region, according to property records. That is in line with a larger trend of investors avoiding costly Southern California.
The Charlotte metro area, making up parts of North and South Carolina, saw 17.1 percent of homes in the first quarter purchased by institutional investors, Attom said. At the same time, San Diego County saw 3 percent of homes sold to investors, a 30 percent drop in a year. An Attom study earlier this year found San Diego County would have one of the smallest returns on investment for landlords because the purchase price is so much higher than other parts of the nation, particularly the South.
That’s not to say investors are absent in San Diego County. Invitation Homes, a Dallas-based publicly traded company that has around 80,000 single-family rentals nationwide, has several properties throughout the region. For example, it is renting a three-bedroom,1,513-squarefoot home at 9 L St. in Chula Vista for $3,585 a month.
Qualification requirements for renting the home are a household gross income of three times the monthly rent, no record of evictions, no felony convictions and a “favorable credit history,” the company said.
The property is undergoing renovations before it is available to rent in early July and its last publicly listed rent was $2,420 a month in 2017. It’s not a case of the home being sold to an investor away from a family that wanted to buy it: The L Street home has been used as a rental since the early 2000s; it was previously owned by a company called Treehouse Group that was folded into property giant Blackstone and renamed Invitation Homes.
Actually getting a rental could be difficult. Lucinda Lilley, president of the Southern California Rental Housing Association, said the countywide vacancy rate is 1.25 percent for all rental types. She said single-family rentals are popular, but it’s important to remember all rental types are in high demand — not just houses.
Lilley is also the vice president of FBS Property Management, which manages roughly 425 single-family rentals in San Diego County. She said there is no vacancy, with all homes rented out (with the exception of a handful that are undergoing repairs).
“As soon as we list it, it’s rented. Seriously,” she said. “That’s why we need to make sure it is completely move-in ready. Because people want to move in quickly.”
Nathan Moeder, a local housing analyst, said San Diego’s main problem is not corporate landlords, but a lack of single-family homes. He’s been a longtime critic of homebuilding locally, and throughout California, which seeks to maximize the number of housing units with apartments.
He said it’s understandable that denser development is needed because of dwindling land options. Yet he said the statewide push for more housing units — with no distinction of what kind — ignores the fact that a lot of people still want to live in a traditional, singlefamily house.
“We are building the wrong type of housing. Period,” he said.
Moeder, a principal with real estate analysts London Moeder Advisors, said families renting single-family homes — at significant cost — is evidence that California policy should encourage different types of housing.
“You are forcing families into one-bedroom and studio units,” he said.
The last big year for single-family home construction in San Diego County was 2004, during the housing boom, when 9,555 were constructed, said the Real Estate Research Council of Southern California. In the last 10 years (2011 to 2021), the region has averaged 2,896 single-family homes built annually.
National homeownership rates have fallen during the pandemic, with 65.5 percent of Americans owning homes at the end of 2021, said the U.S. Census, compared to 67.9 percent when the pandemic first hit. West Virginia had the highest homeownership rate to end the year at 79 percent. California, tied with New York, had the lowest at 54 percent.
phillip.molnar@sduniontribune.com