By Patty Ducey-Brooks / Presidio Sentinel / August 3, 2024
We continue to see news stories about how unaffordable is to live in San Diego County due to the cost of housing. Many of us have come to realize there are several factors causing this to occur, including the significant increase in vacation rentals and corporate landlords.A recent report found San Diego County is short 134,537 affordable rental homes.
To emphasize this point, this past month, advocacy groups the Private Equity Stakeholder Project (PESP) and the Alliance of Californians for Community Empowerment (ACCE) published an analysis of private equity giant Blackstone’s profit-seeking practices in California as residents suffer amidst one of the nation’s worst housing crises. “Helter Shelter: How Blackstone Contributes to and Profits from California’s Broken Housing System,” examines how Blackstone has profited from rent hikes and ramped up evictions, and even depends on the continuation of the affordable housing crisis for sustained profits. According to the report, Blackstone has touted to investors multiple times how the firm’s real estate investments benefit from declining new supply of housing, a key driver of the affordable housing crisis.?
In 2021, Blackstone acquired 5,800 rental units in the San Diego area. Since then, the report shows, Blackstone has increased the rent at these properties 38 percent — almost double the 20 percent average rent increase for all apartments in the San Diego market during this period. The increase at some Blackstone-owned buildings has been especially high – up to 79 percent.
The report also outlines how Blackstone used over $14 million of investor capital – including from California public employee pension funds and the University of California – to lobby against regulation to limit rent increases in California.
“For me as a single mother I’ve been heavily affected by high rents,” said Iraides Gonzalez Soto, a Blackstone tenant living in Pacific Beach and a member of ACCE. “It’s forcing me to get a second job because I either pay rent or pay to put food on the table; butwith high rents you can’t have both. I am having to limit my groceries now to pay for my rent. We must organize and protest for Blackstone and other corporate landlords to notice our pain. We cannot give up until we see results and they stop jacking up rents and stop funding campaigns against strong tenant protections.”
Notably, the report analyzes evidence pointing to Blackstone’s use of RealPage’s YieldStar, a controversial real estate software that allegedly enables landlords to inflate rents in a cartel-like manner. RealPage has been the target of multiple lawsuits and a criminal investigation by the Department of Justice. According to the report, ads for revenue management positions with Blackstone require experience with the software, and the Vice-President of Revenue Management at Blackstone’s multi-family properties has been featured as a RealPage expert on at least three RealPage webcasts about revenue management. Additionally, FPI Management, which Blackstone contracts with to manage its San Diego properties, is a named defendant in several of the lawsuits involving YieldStar.
“Californians and tenants across the United States deserve far better from Blackstone,” said Jordan Ash, director of Housing at PESP and lead author of “Helter Shelter.” “Housing is a human right, not an abstract commodity. No corporation should depend on or profit from a housing crisis that has left hundreds of thousands unhoused or struggling to choose between food and rent. Blackstone must clean up its act and do better as the largest landlord in the U.S.”
In June, Blackstone expanded its housing footprint with the finalization of its acquisition of AIR Communities, adding nearly 30,000 units to its portfolio. The AIR Communities inventory includes 6,000 units in Southern California.
Those of us who have met with Assembly member Chris Ward this past year emphasized the fact that San Diegans are being priced out of the market for the reasons stated above. He said he understood this fact. However, he has made no effort to resolve what is happening.
Unfortunately, San Diegans are being forced to raise their voices with elected officials who continue to do their part to forever change and destroy the character of San Diego, including the latest Blueprint San Diego. This effort will increase the density of urban communities by corporate developers, like Blackstone, who only care about big profits, which ultimately drivesup the price of housing.
We need for all elected officials, especially councilmembers, assembly members and the mayor of San Diego, to accept responsibility for what they are doing to make San Diego unaffordable.
In closing this Op-ed, it was appropriate to mention that our elected officials are responsible for their actions or lack of actions in the effort to make San Diego affordable. Corporate developers, like Blackstone, only care about big profits. Let’s face it: this is why corporate developers are in the building industry and housing providers’ business. The only elected official who has publicly taken a stand against this greed is the Board of Supervisors’ Terra Lawson-Remer. Our representatives, who we voted into office, seem more concerned with increasing density than affordability. We see this playing out with San Diego’s ADU and JADU programs. To say that San Diego’s ADU and JADU policies have created affordable housing would be false. There has been little effort by our Councilmembers to prevent or limit this type of corporate greed. If anything, our Councilmembers aim to destroy the tapestry of our single-family neighborhoods. The voices opposing corporate greed, both large and small housing providers, are that of the people. Let us remember this in November.
Where is the state’s AG on this?
We want to bash Blackstone, but let’s look at something here. Is downtown affordable? Most people would say not. But yet, the city wants to establish little downtowns on Uni City and Hillcrest/ North Park with moderate high rises, limited parking, bike lanes, mass transit, etc. and yet think this will lead to affordable housing by mass units available. An over saturation of the market. Builders don’t care and developers won’t let this happen in a return on equity world. A Blackstone can also come in and buy these buildings off. It may not matter today but it might tomorrow. For example, if I can squeeze 9 out of 10 of you to pay more and cover my vacant unit, what does that tell you? I have cushion to not need full vacancy. The highlight in the story is the affordable rental home shortage, but convoluted it with what mayor Toad is doing. This all just plays into what Blackstone does.
This is happening in Nevada as well. FPI raises rents, promises to raise rents again and again, and forces the elderly to find another place to live, which doesn’t exist. Why aren’t the owners, Kennedy-Wilson, investigated also?
Did you know? San Diego is among the top five U.S. cities with the highest percentage of renters, according to a new report from residential real estate web broker Redfin.
We are second behind Los Angeles, which has a rental percentage of 53%. San Diego’s share of renters versus homeowners is 52.4%. Nationwide the rate is 34.4%. https://timesofsandiego.com/business/2024/08/06/tom-york-on-business-san-diego-ranks-second-in-u-s-for-highest-percentage-of-renters/
In reading this article I was humored by the final sentence, “We need for all elected officials, especially councilmembers, assembly members and the mayor of San Diego, to accept responsibility for what they are doing to make San Diego unaffordable.” As if any of our elected officials actually care about what their constituents want, or about the affordability of living in San Diego. What a joke! We need to throw these bums out on their ears come next election, I am talking primarily to you Todd Gloria!