San Diego's New Short Term Rental Ordinance

San Diego's New Short Term Rental Ordinance

  • Robert Sayler
  • 06/6/22

The San Diego city council approved an ordinance capping the number of short-term vacation rentals. The new regulations, which could go into effect in the fall, place a cap on whole-home rentals at 1% of the 540,000 housing units in the city. There is an exception for Mission Beach which will have a cap of 30% of the total housing units in the community leading to 1,100 licenses for that area. Altogether there will be 6,500 licenses available. This will cut the total number of short-term rentals in half. Homeowners will need to enter a raffle to obtain one of the licenses, which will be valid for 2 years. Only one license will be available per person, so if someone owns multiple properties they will only have a license for one of the units. The city will hire 16 code enforcement officers to assure that properties are in compliance with the new regulations and that properties don’t have disruptive parties. Properties that are considered nuisance properties are at risk of losing their license. 

Homeowners who are afraid that they won’t get a license have a couple of options available to them. The simplest option is to convert the property into a full-time rental with long-term leases. This may decrease the overall revenue coming in since short-term rentals can command higher prices. However, long-term rentals have the benefit of a steady revenue stream with less maintenance as there is no need to prepare for new guests on a regular basis. San Diego also has a very hot rental market at the moment. Rents are up approximately 20% since last year.

Another option to consider is selling. On average, San Diego single-family homes are selling 20% above what they were this time last year. Condos are also up over 10% on average. The market has cooled slightly recently; however, 75% of homes have an expected market time of 30 days. This indicates a very hot seller’s market. A balanced market would see expected market times from 90 to 120 days. We cover statistics in greater detail in our bimonthly State of the Market email, which you can sign up for by emailing us here. Just because you elect to sell doesn’t mean you have to be out of the short-term rental space. Selling your property within the city limits could allow you to find another unit outside of the city of San Diego with more favorable rental policies. AirDNA has an interesting article that details the top markets for short-term rentals. By selling your current short-term rental property and purchasing a new one, you can take advantage of a 1031 exchange. This is a way of deferring taxes on capital gains from the sale of the property. If that is something you are interested in, feel free to reach out to us so that we can explore the different options available.  

Yours in real estate,

Griswold Group


Disclaimer: The materials are provided for informational purposes only and does not constitute legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an agent-client relationship between any agent and any other person, group or entity. Furthermore, no representations or warranties whatsoever, express or implied, are given as to the accuracy or applicability of the information contained herein. No one should rely upon the information contained herein as constituting legal advice. The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader’s facts and circumstances.

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