Lately Ukiahans have been complaining about the lack of available rental housing in the area. Here’s a little perspective on why it’s tough to find a rental, and whether things are likely to change in the near future.
If we look at our recent past, it all started with the housing recession in 2008. While the number of Ukiah residents did not change, many homeowners could no longer keep up with mortgage payments and they changed from homeowners to renters. In some cases, adult children living with their parents were kicked to the curb as their parents were forced to downsize, so those young adults had to find rental properties of their own. Add to that the fact that Mendocino County really is a nice place to live and has been experiencing a mild population increase, both from an influx of new residents and from those returning to the area who are lucky enough to find employment here.
Bottom line: during the past decade we’ve had a reasonably significant increase in the number of households looking for rentals.
Right now, housing prices are at about 80 percent of where they were during the peak of 2006—before the bubble burst. Since then, the cost of construction has continued to increase, driven by the general cost of living, a shortage of land to develop, and additional government regulation on construction requirements. Put another way, we’ve had ten years of more people seeking rentals, higher costs to build them and a decrease in value of the finished product. And while rents have gone up during that time, they have not kept pace with new construction costs. This means there is and will continue to be a shortage of rental housing. This is particularly critical for people with a blemish on their rental history or credit report.
When there’s a shortage of housing, property owners can be picky. Do you have dogs? That’s a potential strike against you. How is your credit? Do you have glowing references from your most recent landlords or are they looking to collect on eviction costs? With so many qualified renters, property owners would be foolish not to gravitate toward the best tenants.
The only way we’ll see an increase in residential rentals in Ukiah is when the amount of rent collected increases to a level that makes existing rentals economically feasible, but also justify the cost of building new units. If we really want affordable housing, we should remove some of the strict building codes. I’m not suggesting we build unsafe houses, but I am suggesting that government regulation has gotten a little out of hand. For those who are homeless, a roof over their heads with a private toilet and clean bed would be wonderful. However, all new homes must have fire sprinklers, be ADA-compliant, and include a whole host of features that add cost.
I live in a 65-year-old house that could not be built today and comply with current building codes. Standards were very different then, and yet, my family of five lives comfortably and safely in our home. I’m not suggesting that all building codes are bad: GFI electricity codes save lives. Dual-pane windows are a good investment because they reduce utility costs. Requiring smoke detectors and carbon monoxide detectors just makes sense. Most of these are relatively inexpensive.
But here’s the thing, these incremental costs add up over time and when paired with government fees for permits and other red tape, it becomes financial suicide to construct rental housing.
If you have questions about real estate or property management, please contact me at email@example.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.