Housing rental rates in Santa Barbara increased 9% in 2022, at a time when there was a 1.7% apartment vacancy rate, according to Hayes Commercial Group‘s 2022 annual report.
“If vacancy stays under 2%, the scarcity of inventory could accelerate the rise in rents in 2023,” the Hayes report states.
At the same time, a group of tenant rights advocates spoke out at Tuesday’s Santa Barbara City Council meeting during the public comment session to protest “renovictions,” when a landlord evicts a tenant so they can make improvements to the property.
“These landlords, almost always large companies and not your good, local small property holder, mass evict under the guise of renovations, deregulate the rent, and resell,” said Stanley Tzankov, co-founder of the Santa Barbara Tenants Union and a renter.
Tzankov said “renovictions” are the “only legal, no tenant-fault way to evict people in large multifamily apartments.”
“Oftentimes, long-term tenants are then out facing rents that are often double what they have been used to paying,” Tzankov said.
The Hayes report also stated that apartment sales are flourishing.
While 2022 was an average year for the South Coast apartment market, with 20 transactions, the dollar volume of $141 million was the largest total since 2015.
“And the average 3.39% cap rate and 18.48 gross rental multiplier were both unprecedented values that indicate a great year for sellers,” the report states.
The average price per unit was also a record high $503,176, though this average was skewed upward by two five-unit properties in Montecito, according to Hayes. Excluding that, the average was $445,000 per unit.
The Hayes report noted that in 2019, an investor purchased an office property at 16 W. Mission St. and converted the buildings to “23 well-appointed apartments,” and sold the property in 2022 for what equates to $900 per square foot.
“Addressing the housing shortage in our community will almost certainly require some 60-foot-tall new apartment buildings, but ‘small-ball’ adaptive reuse projects like 16 W. Mission St. should also be part of the solution, while presenting opportunities for creative investors.”
Those who spoke at Tuesday’s meeting said rising rents disproportionately affect people by class, race, ethnicity, language access, disability and immigration status.
“Our skyrocketing rents and our dismal vacancy rate are pushing people out at an alarming rate,” Tzankov said. “It’s unrelenting and unjust. It’s unraveling the social fabric that makes our city and region vibrant, diverse, healthy and sustainable.”
Councilwoman Meagan Harmon, a longtime tenant rights advocate, said she wants to eliminate “renovictions.”
“I’m grateful for the willingness of these residents to come forward and share their stories,” Harmon said. “The problem of renovictions in Santa Barbara is real, and it is having a devastating impact on local families and on the fabric of our community more broadly. I believe that it is critical we move to address this loophole as soon as possible.”