Sacramento is the fastest growing big city in the State of California.  The capital city has seen a 9.4 increase in rent, three times higher than the national average and double the states average.

With rents averaging $1700, the Capital city has become an attractive and lower cost alternative to renters in the San Francisco Bay Area and Los Angeles County.  The city has become popular with Millennials.  Sacramento, is the third most popular destination after Seattle and Nashville.

The new arrivals aren’t challenged by the rent prices

In Sacramento, fewer landlord are offering yearly leases ,opting for month to month agreements where they can increase rents with a 30 notice.     Many long term renters have experienced several rent increases this year.    After 16 years in a South Land Park Apartment, one tenant received 3 rent increases in less then seven months. Her dishwasher and disposal hasn’t worked in more than two year.  Today her rent is 62% of her income and she is not alone.    Sacramento’s eviction rate is more than twice the state average.

Fast Facts 

Don’t believe the Hype, not everyone is leaving California for Texas, Nevada, Oregon and Arizona, the state’s population continues to grow.  Nearly 40 million people call the Golden State Home.    There is a housing shortage in most population centers in state with Sacramento being one of the worst in the nation. According to Yardi matrix , Sacramento ranked 90 of the 96 markets. While Sacramento needs 2700 units annually to meet demand, only 593 apartments were completed in 2017.

While there has always been a need for affordable housing, the city eased requirements shortly after the Real Estate bubble burst and reduced funding for the program.

The Basic Myth 

Rent control will stop construction on new housing units……..

In most cities in California, (including Sacramento) apartment construction are at record levels.   Even in cities with existing rent control laws.  Developers set the rent on new developments,  once occupied, the cities rent controls would apply.   

Passage of Proposition 10 in November would allow California cities to place rent controls on new development. 

 (If the developer cant make a viable profit they may choose not to build.)

Tenants will not leave their rent control apartments, resulting in an shortages.  

The objective data, doesn’t support this.

 

Sacramento’s 

It very clear, Sacramento’s Mayor Darrell Steinberg’s and some members of the city council do not support any form of rent control.   His support of temporary measures disappointed many attending the rent control workshop last night.

Steinberg: “I do not favor permanent rent control in our city,” “I believe building more affordable housing is the best way to stabilize rents. 

  Funding for affordable housing may take 7 to 10 years. The reality for his constituents is they needed rent relief yesterday. They needed relief the first hour he took office.

(Government:   I want you to know we understand what your going through, needing shelter from the rain.  Currently there isn’t funding for umbrellas.   I have instructed my  has been instructed to locate funding.   Finding a source may take some time, but I assure you we will make this a top Priority. After a few necessary meetings with governmental agencies,  we should get funding for that umbrella you clearly need in two years, nine years tops! )  

Mayor Steinberg, supports a cap of 5% on annual rent increases that would expire after three years. The cap, would apply to apartments older than 20 years.

This is a slap in the face for renters in the city.  He has excluding more than a few thousand apartments units, built during Sacramento’s last building boom between the late nineties to 2007. What happens to rents after the cap expires? 

Council members Steve Hansen, Eric Guerra and Rick Jennings suggested mediation be available to tenants if a landlord attempted to raise the rent by more than 6 percent.  Their plan would also make it mandatory for landlords with more than five units to offer 18-month leases, which Jennings said isn’t as extreme as rent control and would help stabilize rental rates.“  According to their proposal, if a tenant who receives a rent increase of more than 6 percent within a 12-month period requests mediation, they must still pay rent, plus the 6 percent increase, until the dispute is resolved.

Mediation?  Rent control let talk about it?  This proposal is completely absurd! 

This was clearly written by individuals who a have close ties with developers or own property in the city.  Rent control isn’t a new language, there isn’t a code to crack.  Not only is there several resources available members of their staff could make calls to cities along I-80 as  Richmond, Berkeley and San Francisco have rent control legislation in place. There is nothing ambiguous in those cities agreements.  In San Francisco, rent increases are limited to 6% a year*  no meetings, the landowner would need to get permission from the city to increase rents beyond the cap.   (* The landlord can exceed the cap if capital improvements are required) 

 

 

Sacramento currently needs 2700 units of new housing annually.  In time, the demand  will only increase.  The city’s homeless population is growing by the hour. Sacramento has joined, San Jose, San Francisco and many other cities with employed individuals living in their cars, camping in our parks, because they cant afford housing.   According to the Sacramento County Coroner’s office, in 2016, 78 homeless people died within the county. But in 2017, 124 people died: an increase of more than 150%. One homeless person dies every three days.

This issue of housing and homelessness isn’t just a Sacramento problem its a national problem.  Its a national disgrace.  Ignored until it overwhelms.

The primary issue isn’t rent in the the new developments in Sacramento.  It is the exorbitant rent increases renters are experiencing all over the city.    Long term tenants are facing rent increases because the landlord can.   Resulting in fear, insecurity, and helplessness.

Proposition 10, may not be the answer to the state’s housing shortage. It is an reaction, to the inaction of local government .  The noise generated by the  renters of Sacramento have forced Mayor Steinberg and company to look at rent control.  Their proposed fixes won’t slow the bleeding Sacramento.

A genuine approach would be an ordinance that would immediately cap all rent increases to 6% city wide.   An ordinance that would prevent evictions without cause. (which would prevent landowner from evicting tenants to circumventing the law)

Tax incentives to those developers that include market rate housing in their projects.  Incentives to developers who add housing to their projects throughout these adding additional intensives for developer to build near light rail stations.  These projects could be managed thorough  Sacramento’s Housing Authority.   Returning to reality, none of these are likely to happen.

Renters of Sacramento,will have to make rent control a part of law.   There is no need to   have to re-invent the wheel as several templates   There are rent control advocates in the State that will participate in penning the law.

 

CityFella