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Prices Climb, Turnover Persists for Rent-Controlled Units, Report Finds
By Jorge Casuso
April 20, 2023 -- Move-in prices for Santa Monica's rent-controlled units -- which have seen a high turnover rate -- climbed to record levels last year as fewer tenants moved out, according to annual Rent Control data released last week.
Starting rents set a record high for all unit sizes except 3-bedroom and larger units, which were higher only in 2020, according to the 2022 Annual Report presented to the Board last Thursday.
"The forces that suppressed the market in recent years seem to have ended," the report said. "One factor may have been the unusually high number of units rented in 2021 (3,693 units), resulting in fewer units available for rent in 2022.
"The number of new tenancies established and registered with the Agency in 2022 (2,139 units) was the lowest in recent years. Market demand and a relatively lower number of units offered for rent may have fueled the rise in initial rents."
Almost half of the 27,581 rent-controlled units are occupied by tenants who moved in between 2016 and 2022, according to the report.
Meanwhile, less than a quarter of the total units -- 6,083 -- remain occupied by "long-term" tenants who moved in before 1999, when vacancy decontrol allowed landlords to rent vacant units at market rates.
Those "long-term" tenants paid a median rent of $1,082, far lower than the $2,542 paid by those who moved into units renting at market rates, according to the report.
"With starting rents at rates that would not be affordable for many tenants, and without deep roots in the community, recent tenants appear more mobile," the report said.
"Tenants who have been renting in Santa Monica for a longer time likely feel connected to the community and realize the financial benefits of remaining in place.
"Additionally, they may not be able to afford to move given overall housing unaffordability in the Los Angeles area," the report said.
The median starting rent for a studio in Santa Monica increased $70 to $2,020 last year, $200 to $2,500 for a 1-bedroom unit and nearly $400 to $3,400 for a 2-bedroom unit.
Units with three or more bedrooms increased by $377 to $4,372, which was still below the record $4,600 set in 2020.
Units rented at market-rate were common throughout all city, with the Downtown and northeast part of the city having the highest percentage, while the lowest percentage was in the Pico Boulevard corridor.
The number of units occupied by tenants with Section 8 waivers dipped from 194 units in 2021 to 182 units last year, according to the report.
Last year, a total of 22 units were given notice that owners intended to withdraw them and evict existing tenants under the state Ellis Act -- down from an average of 98 units a year from 2015 to 2019.
There were 114 complaints and petitions for rent decreases filed by tenants who alleged that their rental units needed repairs or maintenance or that their housing services had been reduced.
The Rent Board held 79 mediations, inspected 98 units, held 75 hearings and issued 43 decisions, according to the report.
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