SANTA BARBARA, Calif. - The cost of living in paradise is rising at an alarming rate as renters battle it out over the city's limited supply.
Dawn Dyer runs Dyer Sheehan Group, a real estate consulting firm that analyzed the south coast rental market for the 2014 UCSB Economic Forecast Project.
"We are seeing an exodus of young, educated people who can't afford to stay in a community like this," Dyer said.
In Santa Barbara rent is escalating faster than the Consumer Price Index.
"In the six months between April of 2014 and October, we saw overall rent jump 5.6 percent in six months alone. Rent was up 8 percent from year to year in October. It's particularly true in high cost of living areas and areas with high barriers to entry for the creation of new housing like Santa Barbara," Dyer said
Renters like Jennifer Stroh are paying more than half their income on rent and end up settling on a place that may not be worth what they are spending.
"I haven't been able to find anything that is well maintained for the value that I think $12,000 to $14,000 per month would pay for," Stroh said.
Experts say renters should spend no more than 30 to 35 percent on rent. But, many people in Santa Barbara can't follow that recommendation.
"In order to afford to rent the average one-bedroom apartment, you need to spend $1,458 a month. You'd need to earn $50,000 a year. That is $25 an hour," Dyer said.
Many local businesses can't afford or won't pay those salaries.
"We are seeing a change in the character of jobs in Santa Barbara as many of our manufacturing and higher wage jobs have relocated to other geographic areas. A lot of our job growth has been in retail, hospitality and service sectors which tend to be lower paying jobs," Dyer said.
People end up cramming into houses, apartments or sharing rooms.
Experts say in order to stabilize the market, Santa Barbara needs to start building.
"Even at a very modest growth rate you need to be creating new housing to accommodate new people and replace housing that has become obsolete or is no longer functional," Dyer said.
The nationwide vacancy rate is at it's lowest point in 15 years at about 4.7 percent.
Experts consider a 5 percent vacancy rate to represent equilibrium in the market where renters have enough choices and owners see strong economic returns on their properties.
Santa Barbara is far below what is considered a healthy vacancy rate.
"What we're seeing in Santa Barbara based on October 2014, the vacancy rate was 1.35 percent in the city. That's up from 0.68 percent last April. Quite frankly, it's been below 1 percent for at least two years," Dyer said.
The low vacancy rents give landlords and property owners more freedom to raise rents and slack off on repairs.
"People who are renting bedrooms for $1,000 a bedroom, completely blows me away. I've seen ads where people have RVs in their driveways that they are renting out as studios right now for $1,700 a month. Other places with a kitchenette with a hot plate are renting for $1,700 a month." Stroh said.
The Housing Authority of the City of Santa Barbara said the rental crisis in impacting its operations.
"We currently have on our waiting list over 11,000 unique applicants here in our community that need affordable housing and because of the lack of housing whether it is affordable or not really creates a big constraint on us to be able to serve those most in need. When people of means cannot find housing in the community you can imagine how difficult it is for those who are of little means who really need the help," deputy executive director Rob Fredericks said.
Fredericks also believes the thousands of foreign students who attend local language schools and Santa Barbara City College are flooding an already impacted market.
"It's a great college for students. It's one of the highest ranked local community colleges in the nation. But what that does is it brings in a lot of outside students outside of the community. That impacts the housing since neither of those institutions provide housing, those students are looking for housing solutions and it's further constraining the availability of units for those who are already here in the community," Fredericks said.
Santa Barbara City College tells KEYT/KCOY/KKFX 64% of its students came from Santa Barbara County during the last academic year.
The following is a partial statement from City College:
"While the college does not own or operate student housing, we provide resources, including a public Web site, of available homes, apartments, roommates, and student residential living facilities. SBCC places a high priority not only on educating our students but being a good neighbor in the community. The college is committed to partnering with the community and other entities to address the housing problem collaboratively. We see our contribution from the framework of public/private partnerships and are pursuing potential opportunities along that line."
The Dyer Sheehan Group will start studying rental trends again in April.
"We're seeing rents continue to climb. If anything, they are climbing faster than they were last year because we've got more strength in the economy. I would unfortunately expect rents to climb another 4 to 6 percent this year," Dyer said.