Comment Detail

Comment

Director Thompson,

As a licensed CA real estate broker I mainly focus on sales, however I do property management for a small amount of properties for about 10 different clients. Clients who are just individuals who in most cases own only one rental property. These homes may be what the owners plan to live in once they return to CA after retiring or because they have jobs that have taken them to other states. In some cases it was because they are military servicemembers who have been stationed in other areas of the world. Even though I do such a small amount of property management, I have had two owners take their property off the rental market once tenants have moved out and sell the home because they do not want to contend with the "tenant protection" regulations that have recently come into effect across CA and even more restrictive ones that have been enacted in several cities here. They cannot take the chance that they would be unable to raise rents appropriately to properly maintain the property. They cannot afford to pay onerous amounts of relocation assistance to a tenant because they want to give notice of eviction because they want to live in their own property. They cannot take the chance that tenants are provided with several means to contest an eviction while they have to foot excessive legal costs to gain access to their own property. This particularly affects military owners who may not have the ability to pay an attorney or be present to represent themselves in court. The tenant protection ordinances that have swept through the state have caused owners that ordinarily kept their rents below market to now want to raise it yearly to the maximum amount allowed so they will not be caught in a lurch down the road with the added expenses of not only maintenance, but also having to save for paying out possible relocation or legal expenses. One of our clients has said that as soon as the current tenants leave voluntarily he wants to sell the property rather than contend with unfair restrictions on their own property and the potential for thousands of dollars in added expenses with future tenants who can take advantage of essentially being a "protected class". If my experience as someone who only does a small amount of property management is that owners are removing properties from the rental market because of excessive tenant protections in CA, then on a national scale it would be devastating to the availability of rental housing.

Thank you for the opportunity to respond to your Request for Input (RFI) on how the Federal Housing Finance Agency (FHFA), in its oversight of Fannie Mae and Freddie Mac, can best provide affordable housing opportunities for renters. Approximately 40% of the National Association of REALTORS®'s (NAR) 1.5 million members own at least one rental housing unit, playing a vital role in providing safe, quality, and affordable housing in neighborhoods nationwide.

As the FHFA examines ways to improve access to affordable housing, it is critical to acknowledge the most significant driver of housing unaffordability is the limited supply of available housing. According to NAR data, the United States has an underproduction gap of over 5.5 million units – a key underlying reason housing costs have increased. On top of this, inflation has increased the prices of goods and services for all Americans. As housing providers strive to provide affordable housing opportunities in their communities, they also contend with rising mortgage rates and increased costs for supplies, services, and maintenance. When inflation is high, the prices of materials increase. That means it becomes exceedingly more expensive for construction teams to build new homes or renovate existing ones. Ultimately, these high costs spill into the housing market and lift home prices for new builds and existing housing.

As REALTORS®, we are committed to upholding the very specific provisions of our contracts with residents, and we often go above and beyond what is required to ensure residents have safe, quality, and affordable places to live. Rental housing is a deeply complex issue that is unique to every community. Creating additional layers of policies to a space that is already heavily regulated by state and local governments will have severe unintended consequences for renters as housing providers are leaving the market in communities where affordable housing is sorely needed.

Affordable housing is pivotal to creating paths to upward mobility for people across the country. I appreciate your commitment to ensuring we achieve this goal without impeding the creation of much-needed housing supply. Dave Ragusa