There’s a push to pass a law that limits short-term investors from buying up homes and rental properties, then selling them at higher rates.
Economists believe this practice has contributed to driving up San Diego’s housing prices more than 18% in the past year.
Trisha Cortez is a Scripps Health pharmacy technician. Since October, she and her partner have been trying to buy their first home. They’ve been outbid 33 times.
“I was done. I was ready to move back in with my parents,” Cortez said.
Cortez finally closed on a home last week in Talmadge. It’s a 500-square-foot condo she paid $400,000 for. Cortez said she paid $70,000 over the asking price.
“It’s really frustrating," Cortez said. "It would be really amazing, you know, to not be consistently outbid or underbid by people that have deep pockets.”
Lawmakers, economists and city leaders believe something needs to change.
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California Assemblymember Chris Ward recently introduced the California Housing Speculation Act. It would impose a 25% tax on an investor’s net capital gains from the property's time of purchase until final sale or exchange.
This could deter housing investors from sitting on properties, which drives up home prices and reduces inventory.
“The thought of buying a home today is painful to these families, it’s depressing for the next generation and it’s an outright failure of the housing market,” Ward said.
Exemptions from the tax include first-time home buyers, affordable housing properties, relocating military personnel, long-time homeowners and homeowners who subdivide a lot on which they will live.
“The corporations and investment companies that are doing this are nothing more than economic bullies,” San Diego Council President Sean Elo-Rivera said.
AB1771 could create an estimated revenue of $4.02 billion. That money would be put back into the community, benefiting infrastructure, schools and affordable housing, according to the bill.
According to the Case-Shiller index report, San Diego’s median home price is $764,000. That's eight times the current median income.
University of San Diego economics professor Dr. Alan Gin believes there should be some sort of moral responsibility.
“Capitalism, there’s a lot of good things about it, but one thing is, it doesn’t look in terms of equity, and so it doesn’t look at people being sort of priced out of housing here in San Diego,” Dr. Gin said.
Dr. Gin said high-bid activity also impacts local businesses that have trouble getting workers to San Diego because it’s too expensive.
The legislation could go up for its first vote in about a month, Ward said.