Mercedes Shaffer l Published in AOA Magazine
“HUGE PRICE REDUCTION!!! $285,000 BELOW RECENT SALES COMP.” This headline marked the introduction to the listing description of a 4-plex in Santa Ana. After several price reductions, ultimately, the property sold for $1,440,000, reflecting a $335,000 decrease compared to a strikingly similar property across the street that sold earlier in 2023—prior to the implementation of the 2.54% rent cap and mandated rental registry. This serves as a vivid example of how city policies can detrimentally influence property prices. These policies in Santa Ana have hurt small family-run rentals in which the owners have invested for decades into the city, because there are special exclusions for newer properties and large-scale investors.
While one might be tempted to attribute this disparity to general market conditions, it's crucial to note that in many areas in Orange County, where there are not the same restrictive local rent control laws, property prices experienced an upward trajectory throughout the year. Take for instance, a fourplex in Costa Mesa on Coriander, situated in the 'spice streets' area. It sold for $1,995,000 in just 44 days at the beginning of 2023. Concurrently, just as the Santa Ana 4-plex was losing value and going through multiple price reductions, in Costa Mesa another 4-plex sold on Coriander in just 28 days for $2,225,000. This was a $230,000 increase in property values on the ‘spice streets’ in Costa Mesa during that same time period. This starkly contrasts with Santa Ana, where prices saw a significant drop. As policies were destroying values and harming businesses in Santa Ana, the more enlightened free market allowed businesses to prosper and created value for its citizens and business community.
Despite the challenges faced in Santa Ana with local rent control laws, matters may escalate further as city council members contemplate extending voting rights to non-U.S. citizens. This could pose additional challenges for property owners, creating a scenario in which the taxes contributed by property owners support the local government, while the majority voter population is comprised of renters, which could precipitate more policies that are unfavorable to rental property owners, causing property values to drop even further.
Even if you don't own property in Santa Ana, it's essential to recognize that these policies could spread throughout Orange County, mirroring the trend in Los Angeles County. To safeguard your property rights, proactivity is key—attend city council meetings, engage with council members, and articulate how these policies directly impact your business and the long-term value of the community.
The challenges faced by property owners in Santa Ana highlight the critical need for collective action. Your experiences and insights matter, and I invite you to share them directly. Email me with your thoughts on how local policies have impacted your rental property's value in Santa Ana or anywhere in CA. Together, we can amplify our voices, protect our property rights, and foster a community that advocates for fair and informed policies. Thank you for being a part of this important conversation.
If you have stories, comments or questions, contact me at InvestingInTheOC@gmail.com or 714.330.9999. I’m Mercedes Shaffer, a real estate agent with Coldwell Banker Realty, helping you build wealth one door at a time. DRE 02114448