As county leaders seek to limit private equity firms’ purchase of real estate, a new report sheds light on the impact of one corporate landlord on housing costs in San Diego. The analysis, published 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 shows that Blackstone has raised rents on its San Diego apartments by an average of 38%, or $600, since the acquisition. That increase is nearly double the 20% average rent increase in the county. In some Blackstone-owned buildings, particularly in poorer areas like San Ysidro and National City, rents rose nearly 80% in three years. Apartments that once cost $1,500 a month now cost over $2,500.
Jordan Ash, housing director at the Private Equity Stakeholder Project, explained that these units, known as “naturally occurring affordable housing,” offer reasonable rates to low- and middle-income renters without government subsidies. But corporate takeovers often lead to renovations that target higher-income renters, driving up rents and displacing existing tenants.
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In a response to FOX 5/KUSI, Blackstone pointed to improvements in living conditions in the nearly 70 buildings it owns in San Diego and that average rents in its San Diego condominiums are actually 20% below the market average. They reported a 40% increase in resident assessments, higher retention rates, and investing $100 million in improvements. They also claimed that during the pandemic, they were one of the few major landlords not to evict a tenant for nonpayment and made over 44,000 repairs.
As traditional rental investments become less affordable, alternative real estate investments such as fractional ownership are gaining popularity. This approach allows investors to purchase shares in properties, generating passive income without the responsibilities of full ownership. Diversifying portfolios through fractional ownership can help mitigate risk and profit from the real estate market.
See also: Will the upswing in property prices continue or decline? People are learning about risk-free real estate investments where you can cash out at any time.
Current mortgage rates also influence real estate decisions. Currently, the average mortgage rate for a 30-year fixed loan in the U.S. is about 6.5%, which impacts affordability and investment strategies. It is important for prospective homeowners and investors to stay informed about these rates.
Real estate investing, whether full or partial ownership, can generate passive income and provide financial stability and growth. As San Diego struggles with rising rents and affordable housing, it is becoming increasingly important to explore different investment opportunities.
Tendency: If there was a new fund backed by Jeff Bezos offering a target return of 7-9% with monthly dividends Would you invest in it?
San Diego County officials are currently considering measures to mitigate the impact of commercial leasing. Proposals include easing restrictions on new housing units and improving transportation infrastructure. In addition, tenant advocates are calling for countywide rent controls to curb excessive rent increases and preserve affordable housing.
In this evolving environment, innovative investment strategies and robust policy actions are critical to align the interests of investors, tenants and the community.
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This article, “San Diego’s ‘naturally emerging affordable’ housing causes rents to rise 80% in three years,” originally appeared on Benzinga.com
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