RentalManIt is no secret to anyone who has considered moving to Santa Monica that finding a place to live here is not cheap.

A person in 2013 looking to rent in Santa Monica – and about 70 percent of the 90,000 people who live in the seaside city are renters – could have expected to pay on average about $2,300 a month.

The 8.3-square-mile city, in fact, had the highest average rent last year in Los Angeles County, according to a report by USC’s Lusk Center for Real Estate.

While the cost of housing rises and falls based on a wide variety of factors, the the twin pressures of high demand – Santa Monica and most of Los Angeles are desirable places to live, after all – and a low supply of housing throughout the region have pushed market-rate rental prices up to record levels.

Simply put, rents are going up and housing isn’t, at least not fast enough, and the result is a rental crisis throughout L.A. County. There are many parallels between what is happening in San Francisco’s housing market and in Southern California’s, but we also face a unique set of circumstances.

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Santa Monica and its roughly 90,000 residents are only a small part of the sprawling region, which is currently home to about 10 million people and is still growing.

With about 36,000 rental units in the city, Santa Monica’s housing stock accounts for about 2.4 percent of the County’s total multifamily rental units.

As the region’s population grows and increasing demand for housing pushes its costs higher than ever before, Santa Monica struggles to maintain its decades-old commitment to making sure that people from all walks of life can afford to live here.

Why is Rent So High In Santa Monica?

City governments can control, to a certain extent, what gets built and where it gets built through zoning codes. City planners can control a number of factors about new construction which directly impact the amount of housing gets built in the city, like how tall or dense a building might be, and what its use will be.

They cannot control whether people have children (or how many), or whether people will choose to move to their city.

Much of the County’s current housing stock was built decades ago, when the population of the region was about half of what it is today. That is especially true in Santa Monica.

A map of Santa Monica and its neighbors. The various shades of blue indicate buildings constructed before 1970. (image from Property Shark)

Since 2000, Santa Monica’s population has actually been growing at a faster rate than neighboring cities, except for Los Angeles.

From 1980 to to 2000, Santa Monica had a net decline in residents from 88,314 to 84,084.

But in 2010, Santa Monica was home to nearly 90,000 people, a 6.7 percent increase over its 2000 population. (Editor’s Note: This piece originally stated that Santa Monica’s 2010 population was 6.7 percent more than the population in 1980. In fact, it is only 1.9 percent more than its 1980 population. The major growth has been between 2000 and 2010 after the city experienced a decline in the number of people living here in between 1980 and 2000. – Jason)

And yet, as of 2010, about 83 percent of the city’s housing was built before 1980, according to the City’s Housing Element.

That means, since 1980, only about 8,600 new housing units (that’s gross, not net) have been produced and despite the lack of housing construction, Santa Monica has not become any less of a desirable place to live.

“The market rates are decided by supply and demand and the demand is very strong… and the supply is what it is,” said Andy Agle, Santa Monica’s director of Housing and Economic Development.

As a region, “we’re not producing enough housing. That’s why housing… is expensive pretty much everywhere,” he said.

Santa Monica is experiencing population growth at a higher rate than its immediate neighbors (from the City’s Housing Element)

Santa Monica has begun updating its zoning ordinance – last updated in 1984 – to allow for more housing production along transit corridors, in the Bergamot Area, the city’s former industrial quarter, and in its thriving Downtown district.

“Housing prices are also impacted by expectations,” said Agle.

If someone hoping to move to Santa Monica gets the impression that new housing isn’t going to get built any time soon, that person might be willing to pay a higher rent for the certainty of getting an apartment.

Say, for example, if a high-profile project with about 500 housing units and about 370,000 square feet of office space planned for a transit-adjacent parcel in Santa Monica’s former industrial corridor were suddenly stopped, it could cause a prospective renter to worry that it might be a while before new housing in Santa Monica gets built.

Instead of opting for a higher rent, that person might also consider moving to a nearby neighborhood where rents are lower. If it is close enough, that person could enjoy much of what Santa Monica has to offer without paying the high prices. Thus begins the process of gentrification.

But even with Santa Monica’s updated zoning ordinance pending, it is unlikely that property owners in Santa Monica could build enough market-rate housing to meet demand and, therefore completely stabilize rents.

As a result, over the years, Santa Monica has developed several strategies to help counter the vagaries of the free market, which we will discuss in our next segment.