On today’s City Council agenda is an item requested last year by Councilman Jose F. Moreno, when the District 3 councilman dragooned city staff into compiling a study of “rent affordability” in Anaheim, as well as rent control/rent stabilization policies being used by some cities.
According to the staff report, Orange County is one of the state’s least affordable counties in terms of rent. Not exactly news. The report cites a November 2018 OC Register article, which in turn cites findings by RentCafe, reporting the median rent in OC as being $1,786, and paid by an average tenant making $61,503. According to this article, both rents and incomes in OC rose by 25% between 2011 and 2017.
The staff report also cites data from Yardi Matrix – which tracks rents at apartment complexes larger than 50 units – showing the average rent in Anaheim as $1,787. That’s a 3% increase from last year, and puts Anaheim at number seven in OC. Irvine has the highest average rent at $2,391.
According to a CoStar report cited by staff, “Anaheim rents sit near the bottom of the metro at around $1,76o/month, a reflection of the stock, which consists primarily of older 2 and 3 star communities.” CoStar uses a 1-5 star ranking system for apartments: newer apartments with more amenities falling in the 5 star range, and the oldest apartments in the 1-2 star range. $1,549 is the average rent in the latter categories, which comprises the largest segment of Anaheim’s rental stock.
According to CoStar, average rent increases in Anaheim have been modest and that modest growth is projected to continue through 2023 – from $1,808 in 2019 to $1,903 in 2023.
What Is To Be Done?
What can be done so rent in Anaheim is more affordable, i.e. more people can reduce the percentage of their income spent on rent? Keep in mind that the primary drivers are beyond the scope of any public policy solution crafted by City Hall.
A thicket of state regulations, taxes and fees dramatically increase the cost of building housing of all kinds in California. According to this recent story in Yahoo! Finance, the same house costs $500,000 more to build in California than in Texas:
Fees alone have a significant impact:
“Additionally, California’s development fees are exorbitant. Homebuilders have to pay $25,000 to $75,000 in fees for a single home to be built in some areas of the state. Of course, that expense pushes prices higher for homebuyers.”
The same dynamics apply to the construction of new rental units, resulting in higher than necessary rents. This is the direct result of public policy decisions made by a state government that has been dominated for decades by liberal Democrats, and which reflect progressive political goals.
The rational public policy response would be pare back government involvement and reduce, reform and/or eliminate the regulation and fees that make housing in California less affordable. Instead, progressives want more government intervention in the form of price controls – i.e. rent control/rent stabilization.
Councilman Moreno, for example, was reportedly heard at Democratic fundraiser saying Anaheim ought to emulate Inglewood and impose an emergency rent freeze.
The problem is such price control strategies do not work. They do nothing to address the factors driving rising rents, and provide incentive to increase the supply of rental units – the only realistic way to reduce or at least stabilize rents.
Democrats who part ways with progressive orthodoxy and oppose rent control can expect to be castigated as sellouts. Former LA Mayor Antonio Villaraigosa – a bona fide liberal Democrat – opposed Proposition 10, the November 2018 ballot initiative to would have ended the prohibition on rent control on apartments built after 1995.
At a “Feel The Bern Democratic Club of Orange County” meeting earlier this month, Moreno singled out Villaraigosa for scorn for this stance, calling him a “false prophet” and ridiculing him as a “brown Jesus”:
The free market produces a panoply of affordable goods. People at the lower end of the socioeconomic spectrum still have money to spend and consumer needs – and the market responds to those needs with appropriately priced goods. Does the progressive Left think the housing market is magically exempt?
Rent control has been tried for years, and there is ample data that it doesn’t work. It doesn’t result in the creation of a greater supply of housing that is within the price range of those on the lower end of the economic spectrum. Government subsidies in the form of housing vouchers and direct subsidies for the construction of rental projects, such as the 102-unit, all-affordable project by Jamboree Housing, make a dent in the need – and are certainly more effective policy strategies than rent control/rent stabilization.
Anaheim can help at the margins by doing everything in its power to streamline the permitting process in order to bring residential projects online as quickly as possibly. In the residential building business, time is literally money.
And Anaheim does more in the area of affordable housing than any city in Orange County.
However, at the end of the day, the real solutions must come from Sacramento, where the policies that artificially inflate the cost of residential building were created and imposed.