There is a drive to adopt legislation prohibiting short-term speculators from purchasing homes and rental properties and then reselling them at a profit.
Economists estimate this behavior has contributed to a more than 18% increase in San Diego property prices over the last year.
Trisha Cortez is a pharmacist technician at Scripps Health. She and her boyfriend have been looking for their first property since October. They’ve lost 33 bids.
“I was finished. I was prepared to return to my parents’ house,” Cortez explained.
Cortez eventually closed on a property in Talmadge last week. She spent $400,000 for the 500-square-foot unit. Cortez stated that she paid an additional $70,000 over the asking price.
“It’s quite aggravating, “Cortez said. “It would be quite remarkable not to be continuously outbid or underbid by wealthy individuals.”
Legislators, economists, and city officials agree that something must happen. Assemblymember Chris Ward of California sponsored the California Housing Speculation Act recently. It would levy a 25% tax on an investor’s net capital gains from the moment the property is acquired until it is sold or exchanged.
It may dissuade investors from holding onto homes, increase property prices, and reduce availability.
“The prospect of purchasing a house today is excruciating for these families, sad for the next generation, and an absolute failure of the housing market,” Ward explained.
First-time house buyers, affordable housing properties, moving military members, long-time homeowners, and homeowners who partition the property on which they will live are exempt from the tax.
“The businesses and financial firms who are doing this are nothing more than economic bullies,” said Sean Elo-Rivera, president of the San Diego City Council.
AB1771 has the potential to generate $4.02 billion in revenue. According to the law, the money would be reinvested in the community, improving infrastructure, schools, and affordable housing.
According to the Case-Shiller index, the median house price in San Diego is $764,000. That is equivalent to eight times the current median household income.
Dr. Alan Gin, an economics professor at the University of San Diego, feels that moral responsibility should exist.
“Capitalism has a lot of positive attributes, but one of them is that it does not consider equity, and hence does not consider individuals being priced out of homes in San Diego,” Dr. Gin said.
Dr. Gin stated that high-bid activity also affects local firms that cannot recruit personnel due to the high cost of living in San Diego. Ward said the proposal might be put to the vote for the first time in roughly a month.