Reaching Potential Relief for the High Cost of Rent

August 30, 2018 | Steve Hable

Photo of a family in their new home purchased with a Mission Fed loan.

Previously, I’ve written blogs about the current housing cost crisis, how we got to this point and ideas being discussed to alleviate the problem throughout San Diego County, which is still one of the most beautiful places to live in the US. With the increased possibility of rent control in some areas of San Diego, we explored the positives and negatives by looking at other cities that established rent controls. We found that economists almost unanimously concluded rent control was not the proper avenue to relieve the high cost of housing over the long term. Recently, San Diego has started researching other ideas to relieve the high cost of rent.

One idea already in existence is the micro or mini apartment. Smaller units should result in lower rent for residents. These buildings have studio apartments ranging from 188 square feet to about 350 square feet. Clearly, these small units are designed for individuals or couples and not families. To gain an idea of the size, the specified minimum parking space in San Diego is 162 square feet (9 feet by 18 feet). Therefore, living units in a micro apartment building would range from the size of 1½ parking spaces to just over 2 parking spaces. These types of apartments contain a toilet, standup shower and small cooking area. The living room is also the bedroom, so you will need a sofa that converts to a bed.

After some online exploration, I found a project in Downtown San Diego offering this type of unit. The units range from 202 square feet to 386 square feet. According to their website, rents range from $1,844 to $2,294. One of the limitations on building more of these units is that the City of San Diego requires 1 parking spot for every unit built unless the entire project has been designated for low income housing. The maximum household income for this designation in the City of San Diego is $54,500. At the rents listed above, residents would still spend over 40% of their gross income for rent for a micro unit without an onsite parking space for their vehicle. And of course, this solution won’t work for everyone.

A recent proposal is for the federal government to give renters a tax deduction or tax credit if they spend more than 30% of their incomes on housing expenses, including utilities. For renters, this proposal would act very similarly to rent control by limiting the actual out-of-pocket expense for housing. Renters essentially would receive a tax refund for any amount over 30% of their income that they spent for housing. They would still pay market rent for their apartment, but would receive a tax refund the following year. Finding political support and available funds in the government budget have not yet been resolved.

Regardless of the proposal to help provide some relief for the high cost of rent in San Diego, one thing stands out—living in San Diego requires careful monitoring and controlling your expenses. You need a financial institution that will work with you to help you save money, meet your goals and achieve financial independence. You need Mission Fed. You can learn more about Mission Fed on our website. Plus, you can apply for a Checking Account or loan online, visit us at any of our 32 local branches or call our Contact Center to speak with a local representative. San Diego County is our home, too, and we’re here to assist you.

The content provided in this blog consists of the opinions and ideas of the author alone and should be used for informational purposes only. Mission Federal Credit Union disclaims any liability for decisions you make based on the information provided. References to any specific commercial products, processes, or services, or the use of any trade, firm, or corporation name in this article by Mission Federal Credit Union is for the information and convenience of its readers and does not constitute endorsement, control or warranty by Mission Federal Credit Union.

Steve Hable

Steve Hable

Steve Hable is Mission Fed’s 1st VP Member Business Lending and has been in the real estate finance industry for over 30 years. His experience includes all facets of residential and commercial real estate finance, including loan origination, loan underwriting, servicing, secondary marketing (plus establishing private mortgage-backed securities on Wall Street), and property management of commercial properties.

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