San Diego's 'Naturally Occurring Affordable' Housing Sees Rent Soar By 80% In Three Years

As county leaders move to limit private equity firms from buying up properties, a new report sheds light on the impact of one corporate landlord on San Diego’s housing costs. The analysis, released by the Private Equity Stakeholder Project and the Alliance of Californians for Community Empowerment, focuses on Blackstone Inc., which acquired nearly 6,000 rental units in San Diego County in 2021.

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The report reveals that Blackstone increased rent prices for its San Diego units by an average of 38%, or $600, since its acquisition. This rise is nearly double the 20% median rent increase for the county. Some Blackstone-owned buildings, especially in low-income areas like San Ysidro and National City, saw rent hikes approaching 80% over three years. Units previously renting for $1,500 per month now exceed $2,500.

Jordan Ash, housing director at the Private Equity Stakeholder Project, explained that these units, known as “naturally occurring affordable housing,” offered reasonable prices for low or middle-income renters without government subsidies. However, corporate acquisitions often lead to renovations aimed at higher-income renters, thereby driving up rents and pushing out existing tenants.

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In response to FOX 5/KUSI, Blackstone cited improvements to living conditions in the nearly 70 buildings it owns in San Diego and that average rents in their San Diego communities are actually 20% below market average.They reported a 40% increase in resident review scores, higher retention rates, and $100 million invested in improvements. They also claimed that during the pandemic, they were one of the only major landlords to not evict any tenants for non-payment, and having addressed over 44,000 repairs.

With traditional rental investments becoming less affordable, alternative real estate investments, such as fractional real estate, are gaining popularity. This approach allows investors to purchase shares in properties, earning passive income without the responsibilities of full ownership. Diversifying portfolios through fractional ownership can help mitigate risks and capitalize on the real estate market.

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Current mortgage rates also influence real estate decisions. As of now, the average mortgage rate for a 30-year fixed loan in the U.S. is about 6.5%, impacting affordability and investment strategies. Staying informed about these rates is crucial for prospective homeowners and investors.

Real estate investment, whether through full ownership or fractional methods, can generate passive income, providing financial stability and growth. As San Diego grapples with rising rents and housing affordability, exploring diverse investment avenues becomes increasingly important.

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San Diego County officials are exploring measures to mitigate the impact of corporate landlords. Proposals include easing restrictions on new housing units and improving transportation infrastructure. Additionally, tenant advocates call for statewide rent control protections to curb excessive rent hikes and preserve affordable housing.

In this evolving landscape, innovative investment strategies and robust policy measures are essential to balance the interests of investors, tenants, and the community.

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