According to the 2018 Santa Monica Rent Control Board’s Annual Report, market-rate tenants paid more than twice as much as long-term tenants irregardless of the unit’s size or location. This has resulted in a great rental divide between tenants living side by side in almost identical units that is depriving Santa Monica rental property owners of billions of dollars a year in property resale value.
Here’s how. On page 17 of this report, market-rate for a one-bedroom rental was $2,015, compared to $859 that was the cost for a tenant who moved into the unit before 1999 when vacancy decontrol took effect. That’s approximately a $1200 difference.
However this discrepancy becomes even greater in the downtown area that has seen a lot of growth since 1999 with the median rent of $2,687 for a one-bedroom unit being more than triple the $811 paid by a long-term tenant – or almost a $1,900 difference!
Rental properties on the Westside – Los Angeles County area typically sell for nine to eleven times annual rents. The effect of this great rent discrepancy for property owners is to reduce the value of Santa Monica rental properties city wide by some estimates of over 4 billion dollars!
Although some would have you believe the majority of Santa Monica rental property owners are large, greedy real estate developers, in fact a significant proportion of landlords are individual owners whose rental property represents a significant amount of their total net worth. Their ownership of these units is the result of a lot of hard work and effort over years – not some sort of get rich quick scheme lining their pockets with overnight riches.
Fact is, renters who have freely entered into a market-rate rental contract do so voluntarily, whereas the depreciation of a rental property’s resale value where there is such a great discrepancy as two to three times the rents the property can generate is forced upon the property owner without choice.
This represents a massive transfer of wealth by the force of government from Santa Monica rental property owners to supposedly “Needy” tenants based upon a misguided belief it is “Morally superior” – as though the confiscation of wealth from people who have worked hard for it is somehow morally superior to allowing them the full benefits of their hard work and responsibilities!
