Issue 5 - Renoviction

On Tuesday, March 11, the Santa Barbara City Council will debate renovation eviction policies — in which restrictions are placed on the ability of landlords to vacate tenants to perform renovations and subsequently raise rents.

These policies create a cascade of negative consequences for housing markets. While ostensibly intended to protect renters, these “renoviction” policies ultimately harm the very populations they aim to serve.

When landlords face excessive restrictions on renovation-based evictions, several detrimental effects emerge.

Primarily, fewer new apartments will be built as developers recognize diminished returns on investment and increased regulatory hurdles.

Investment capital naturally flows toward markets with reasonable regulatory frameworks, leaving restricted markets with housing shortages.

Simultaneously, existing apartments receive inadequate maintenance.

Property owners, unable to recoup renovation costs through appropriate rent adjustments, often defer necessary maintenance and improvements.

This leads to a gradual degradation of the rental housing stock as buildings deteriorate without proper reinvestment.

This deterioration makes finding affordable rentals even more challenging for lower-income residents.

As the quality housing supply shrinks, competition intensifies for remaining units, driving up prices across all segments of the market.

Those most vulnerable — typically lower-income individuals and families — face the harshest consequences of these well-intentioned but counterproductive policies.

The situation creates a lose-lose-lose outcome.

The situation creates a lose-lose-lose outcome.

Renters lose access to quality housing and face higher costs for diminishing quality. Landlords lose the ability to maintain their properties properly and earn reasonable returns.

The community loses through declining neighborhood quality, reduced property tax revenues and diminished housing options for workers essential to the local economy.

Blaming landlords for high housing prices in places like Santa Barbara misplaces responsibility.

Just as grocery stores aren’t responsible for high egg prices (which reflect broader supply chain and production costs), landlords don’t control the fundamental market forces driving housing costs.

Land use restrictions, construction costs and geographic constraints all contribute to housing shortages and subsequent price increases.

Regulatory overreach produces another troubling consequence: many property owners opt to sell their apartment buildings entirely.

Market data indicates that vacant properties often command higher sale prices than occupied ones. This incentivizes owners to leave units empty as tenants gradually vacate, deliberately reducing available housing stock during the transition period.

The result is a further constriction of rental supply, precisely when more units are desperately needed.

Originally published on Noozhawk on March 10, 2025.