San Diego Renters' Costs Increase While Homeowners' Plummets

San Diego homeowners who endured the Great Recession have seen their housing costs drop while renters’ burden has swelled.

From 2007 to 2014, homeowner costs — including mortgage and maintenance expenditures — have dropped 17.8 percent while renters’ costs have gone up by 3 percent, said a new study from Apartment List Rentonomics that adjusted data for inflation.

The trend reflects what has happened in much of the nation as homeownership numbers drop to their lowest level since 1965 as home building lags behind demand. At the same time, low interest rates, from either refinancing or buying, have kept costs down for homeowners.

In 2014, the median monthly rent for San Diego was $1,373, while a monthly mortgage payment was $2,261, Apartment List said. So the average San Diego homeowner paid $491 less a month in housing costs compared to 2007. The average renter paid $39 more a month.

Although renting was cheaper, the study said not owning a home has a sizable financial cost.

“This phenomenon may exacerbate inequality in our society,” wrote Andrew Woo, Apartment List data science director, “as those wealthy enough to invest in real estate benefit from lower interest rates, whereas minorities and younger Americans, hit by rising rents and student debt, risk being locked out of homeownership.”

San Diego homeowners enjoyed a bigger drop in costs than the rest of the nation. Woo attributed the gap to San Diego home prices falling more than the nationwide average during the housing crisis. Renter costs went up at about the same rate in San Diego as the rest of the nation.

About 52.2 percent of San Diego County residents owned their homes in 2014, according to the U.S. Census. The homeownership rate was about the same in 1950, but it rose to 58.6 percent in 1960 — the highest in San Diego’s recorded history of homeownership.

The rate slowly declined over the next few decades until it hit 58.2 percent in 2005 shortly before the housing crash. By 2010, as the recession was still affecting the market, homeownership dropped to 54.4 percent and continued to decline each year after that.

In 2014, the nationwide homeownership rate was 64 percent, 12 percent more than San Diego County. (Historically, the nationwide rate is always higher than San Diego.)

While affordability keeps some people out of the housing market, tight inventory is keeping others out. About 24 percent of San Diego County renters, who have strong credit scores and high incomes, can afford to buy a home but aren’t jumping into the market because of intense competition among qualified buyers for fewer and fewer properties, says a recent study from real estate website Zillow.

There are also lifestyle changes: Younger Americans are waiting longer than previous generations to get married and start families. And job market changes are allowing for, or requiring, more movement between cities than in the past.

“First-time homebuyers are renting longer than ever before even if they are qualified to buy,” said Svenja Gudell, Zillow chief economist.

Only San Francisco and San Jose had more renters who could afford a home. Cities with a lower share of renters who could afford a home include Los Angeles, New York City, Boston, Washington, D.C., Portland and Denver.

Zillow said Houston had the lowest share of renters qualified to buy at 6.8 percent

Read the original article from San Diego Tribune HERE