Aug 13, 2024
A report published Aug. 1 has accused corporate landlord Blackstone of being a major contributor to the San Diego rental crisis.
The report, compiled by the Private Equity Stakeholder Project, a private equity watchdog, and the Alliance of Californians for Community Empowerment, a community advocacy group, is titled “Helter Shelter: How Blackstone Contributes to and Profits from California’s Broken Housing System.” It aims to show how it’s possible the investment management company imposed huge rent increases — at nearly double the rate of the market average — across a set of rental properties over three years.
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Here are some key takeaways from the report, plus what you can do as a tenant in the face of massive rent hikes.
Rent increases
Blackstone purchased 66 rental properties with 5,800 units in the San Diego area for over $1 billion in 2021, according to the San Diego Union-Tribune. Since then, the company has increased rent at most of these properties by 38% — from an average of $1,696 a month to $2,339 a month — the report states, citing data from real estate research firm Yardi Matrix. One building’s rent prices increased by an average of 79%, while another experienced a 71% jump.
Meanwhile, the report says the average rent increase across all apartments in the San Diego market was 20% — from $2,259 a month to $2,706 a month — during that time.
Many of the units purchased by Blackstone were considered “naturally occurring affordable housing,” according to the report, meaning they were affordable but not subsidized by government housing initiatives — and vulnerable to large rent increases upon ownership change.
According to the report, in late 2022, the company ended a self-imposed moratorium on evictions for non-payment on rental units across the country — a policy the company says was put in place in light of the pandemic. While rent hikes in California are capped at 10% a year for most residential tenants, the law doesn’t apply to a new tenant’s rent price, meaning an eviction can lead to a potential windfall for the property owner.
Blackstone released a statement to CBS 8 San Diego on Aug. 2.
“The reality is that average rents at these San Diego communities are 20% below the San Diego market average,” a spokesperson said. “We have invested approximately $100 million to improve living conditions for thousands of San Diego residents who live in our communities; we have already completed over 44,000 repairs, including those that were previously unaddressed.”
In addition, the report states “there is ample evidence” of Blackstone using property management software company RealPage to set rents. One program produced by RealPage is called YieldStar. Multiple lawsuits have been filed naming RealPage as a defendant, and it’s alleged that YieldStar enables “landlords and property managers to collude to inflate rents above competitive levels in a cartel-like fashion,” according to the report.
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The report says that, while a number of property managers contracted by Blackstone are named as co-defendants in lawsuits, none of them cite Blackstone-owned companies, and no lawsuit alleges specifically that property managers engaged in price fixing at Blackstone properties.
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What can tenants do?
Investors have been snapping up affordable housing across the country in an attempt to make a profit. A Redfin report published in May says that investors bought a record 26% of low-priced U.S. homes that sold in 2024’s first quarter.
The investor housing market is popular because it can be a great return on investment. Redfin’s report shows that the typical home sold by an investor in March went for 55.2% more ($174,616) than they bought it for. That’s up from 46.3% ($146,586) a year earlier. (The report neglects to mention the average length of time these properties were held.)
With big corporations and investors taking over more and more real estate, it might make tenants feel a little small.
Tenants in some communities have come together to fight against rent increases. For instance, 42 families living in a Miami Beach, Florida, apartment building this summer were issued eviction notices dated July 2 informing tenants they needed to move out by the end of August. No reason for the eviction was given at the time, however, at least one resident believes it was be due to a redevelopment project. The story, which was reported on by local media, caught the attention of the city’s commissioner, who in turn contacted the landlord. CBS News Miami reported that tenants were given an extra 30 days to leave their homes.
In Ohio, some residents have protested against trailer park owners and state officials, calling for an end to repeated, unaffordable rent hikes in front of the statehouse. Rent control was outlawed across the state in 2022.
And while it might be a longshot, you can also speak with your building’s owner and ask for a reduced rent hike. If you’re a long-time tenant with a good track record, they may be more willing to negotiate — especially if the owner is a single person or family and not a corporation.
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Sabina Wex is a writer and podcast producer in Toronto. Her work has appeared in Business Insider, Fast Company, CBC and more.
