By Brook Turner, Coalition for Better Housing
Prop 10, the measure aimed to reverse California’s approach to rent control, was voted down by an overwhelming margin. The campaign damage was bruising but real estate firms are starting to put it behind them and work on the solution: More supply.
It’s a proven formula, putting the law of supply and demand to work. ApartmentList.com reported in January that U.S. apartment rents continued a downward trend that began in July 2018, dropping another 0.1% this month. In New York, a surge in construction helped fuel notable declines in rents and prices, according to Bloomberg, and CNBC said significant declines in apartment rents last year in Portland and Seattle are due in large part to a flood of new construction.
In January in San Francisco, RentJungle.com reported rents were flat in latter 2018 including dropping one percent in November. Over the past six months, the average rent increase was $18.
But trouble looms ahead as regulatory and cost-constraints continue dampening supply in the Bay Area. The San Francisco Business Times reported multi-family construction took a “nosedive in 2018” with about 2,300 units built versus 4,895 in 2016. All of which pales in comparison to estimates of the need and the demand, including Mayor London Breed’s goal of 5,000 units per year.
Voters understood rent control doesn’t solve housing problems and crushed Prop 10. They also understand the need for supply and endorsed housing bond measures to create thousands of units.
State Proposition 1 authorizes $4 billion in bonds for affordable housing and veterans’ programs. Proposition 2’s $2 billion in bonds will fund the construction of housing and support services for mentally ill homeless people. In San Francisco, Proposition C, once it passes legal hurdles, will create a dedicated source of funding for affordable housing in San Francisco, with $150 million annually to build more than 600 units of permanent supportive housing per year. In L.A, the 2016 Proposition HHH $1.2-billion bond issue is creating housing, but rising costs and delays are threatening fulfillment of its goal to create 10,000 units.
Over $100 million went down the tubes of campaign spending, not building housing. And negative tactics went beyond the norm.
In L.A., marchers utilized popular strategies of marching on City Hall and disrupting traffic. But campaign materials attacked funders of the No on 10 campaign as ‘evil landlords’ and ‘rent gougers.’
In San Francisco, activists took things to new lows in going after Veritas Investments. Demonstrations in front of apartment buildings are part of politics, but they angrily disrupted a hospital’s charity fundraiser Veritas co-sponsored.
Veritas, like the other Coalition for Better Housing member landlords we represent, are nowhere near the image that proponents of Prop. 10 were trying to create. Let’s hope the vitriol and wasteful campaign spending won’t be repeated.
The November elections put housing front-and-center, and it’s time for the real estate industry, elected officials, community groups and all Californians to work together and catch up on our decades-long shortage. Let’s focus on what’s productive — housing production — and put the rancor behind us.
Brook Turner is President of the San Francisco Coalition for Better Housing, a business-sponsored group that believes government and the housing industry must work together for successful housing policy.