The weight of Proposition 10 hung over the multifamily investment sector in San Diego last year like the sword of Damocles.
Initial voter polling suggested the proposition, which called for rescinding California’s law that limits rent control, would likely pass. It wasn’t until late in the year that the tide shifted and public sentiment turned against the proposition, which voters overwhelmingly rejected during the November 2018 ballot.
But by then the damage had been done. The chilling effect of the proposition on potential investors, combined with slowing NOI growth, lower rent gains and fewer value-add opportunities, all led to decreased sales of multifamily properties in San Diego last year.
Total multifamily sales volume barely nudged above $2 billion, the lowest annual total since the $1.6 billion traded in 2014, and a remarkable change from 2017 when sales volume reached a record high of $2.9 billion. In fact, multifamily was the only property sector in San Diego that saw a decline in total sales last year.