Cheap rent: A thing of the past

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photo by Trenttsd via creative commons

Surfed Craigslist for an apartment lately? Then you don’t need us to tell you that rent in San Francisco is too damn high. But what are the broader implications of this becoming a city where median asking rent is above $3,000?

Here’s an example. Today, District 11 Sup. John Avalos shared a story with the Guardian about his arrival to San Francisco in 1989. He had $1,000 to his name, enough to cover rent and a security deposit. He landed a job that paid just $8 an hour, but that was no big deal, since he split the rent for his $675-per-month, two-bedroom apartment in the Haight with a friend.

Translate those 1989 figures to 2013 dollars, and the dramatic rent increases the city has experienced really come into focus. With inflation factored in, that same two-bedroom apartment would cost $1,253 per month today. Noticed any Craigslist ads for two-bedroom apartments in the Haight going for $1,253 lately? (If so, be careful. It's probably a scam.) Rents for such units hover closer to $4,000 these days.

Avalos joined his colleagues on the Board of Supervisors in highlighting issues of affordability at Tuesday's meeting. “San Francisco needs to do something specifically to measure how people, particularly those on the bottom rung, are getting by in San Francisco," he commented just prior to the vote for board presidency.

District 9 Sup. David Campos echoed this sentiment. "I want a city that works, but I want a city that works for everyone,” Campos said. “We have to work collectively to make sure that happens ... We have great wealth in the city, but many people are being pushed out."

Comments

i said that more condo's get built. If you rent out a condo then, under Costa-Hawkins, you can raise the rent without limit each year. So it's much more attractive to buy a condo to rent out than a non-condo.

Posted by anon on Jan. 11, 2013 @ 1:34 pm

are rented out by their owners. I'm referring to the construction of new rentals, some of which were originally planned to be condos, but the developers changed their plans.

Posted by Eddie on Jan. 11, 2013 @ 1:49 pm

It pays a property owner to demolish an old building and replace it with new units. Why would we have a housing policy that encourages demolition?

Posted by Guest on Jan. 11, 2013 @ 2:11 pm

predominately downtown and in SOMA. Are you that dense?

Posted by Eddie on Jan. 11, 2013 @ 2:17 pm

But of course, the premise of this article is that rents are very high, so why does it shock you if people are building into that demand?

Even so, no developer or investor wants a life sentence. They might just get a smartass tenant "activist" like you who hoards the damn place for decades. With a condo, that cannot happen.

Posted by Guest on Jan. 11, 2013 @ 2:27 pm

There is definitely a resurgent trend for high-end rentals. An article in the Chronicle last March said the rent for a newly constructed 2 bedroom will be $4500/mon.

Posted by Guest on Jan. 11, 2013 @ 12:51 pm

A couple working in, say, law, IT or finance probably pull in 250K per annum between them. Net on that might be $15,000 a month or so, putting that rent at about a third of takehome pay - in keeping with usual guidelines.

Posted by anon on Jan. 11, 2013 @ 1:36 pm

Lets just hope that that couple never ever splits up or its eviction or yet worse... Roommate time for that yuppie hip sfer.

Posted by Guest on Jan. 12, 2013 @ 1:19 am

changes and you can no longer afford as much, then you can downgrade to a 1BR or a studio and pay only 3K or so.

But if you can afford the higher rent, then pay it and live somewhere better. For the rest, there's Oakland.

Posted by Guest on Jan. 12, 2013 @ 8:25 am

It's quite a subtle kabuki dance that you have to do to make the argument that letting landlords charge what they want will actually help... tenants!

At the end of the day, though, landlords don't believe their own tripe. They want the REST of us to believe it, but they don't believe it themselves.

Let's forget the whole kabuki dance and go back to some simple, basic truths that I think we can both agree on:
1. The landlord lobby is not stupid. The people who work to push legislation for BOMA, the realtors, big real estate investors... they're not morons. Right?
2. The landlord lobby, as everyone, works in their self-interest.
3. The landlord lobby hates rent control.

Sooo... if landlords WANT to make more money... AND landlords support laws that let them charge tenants more money... AND landlords want to weaken/get rid of rent control... THEN it follows, that if they succeed, tenants will pay MORE to landlords, and not LESS.

This isn't rocket science. Do I really need to explain this to you like a second grader?

Posted by Greg on Jan. 11, 2013 @ 12:23 pm

rent control was repealed, you saw that SOME tenants ended up paying more, because their rents were raised to market.

But the market rent went down, because lots more supply came on stream and there was more turnover, as there should be in a free market.

So the average rent for vacant untis went down. and it is the rents for vacant units that is $3,100, not the rent for occupied units.

It's fairly basic supply and demand. Oh, and LL's hate RC not because of the restriction on rents but because it gives them lifetime tenants.

Posted by anon on Jan. 11, 2013 @ 12:53 pm

Can you provide some evidence to back up your statements? Consider me skeptical, so prove me wrong.

Regardless, let me amend the old punk rock anthology title, "This Is Boston, Not LA" to "This Is San Francisco, Not Boston."

Posted by Eddie on Jan. 11, 2013 @ 1:08 pm

even Ted Gullicksen, who relocated here from Boston when they ditched Rc there, hasn't denied that there is more new build and turnover there now.

Posted by anon on Jan. 11, 2013 @ 1:37 pm

I just did the research about when Boston repealed rent control, 1994.

I moved to the Bay Area from Boston in 1989, and I knew that there was still rent control when I moved away. Shit, I was a low income housing tenant organizer.

I'm almost positive that Ted Gullicksen moved here before me, but certainly before 1994. I think you are perpetuating myths that rent control opponents spread about Gullicksen and rent control. Par for the course.

Posted by Eddie on Jan. 11, 2013 @ 1:56 pm

according to the linked article. He didn't flee Boston because the government there abolished rent control. Anon, you are intellectually dishonest and lazy.

http://www.sfgate.com/magazine/article/A-Moral-Education-Ted-Gullicksen-...

Posted by Eddie on Jan. 11, 2013 @ 2:15 pm

existing rentals became more expensive and new rentals became cheaper. so it equalized the market rather than rewarding those on the basis of incumbency. It also led to more new rentals being built.

That certainly seems logical and what we would expect in SF too. Abolishing rent control might be harsh on a few older tenants clinging tenaciously to their RC units. But it would be good for anyone new in town.

Posted by Guest on Jan. 11, 2013 @ 2:15 pm

I say beware of landlords bearing "gifts."

Posted by Greg on Jan. 11, 2013 @ 11:16 pm

different outcome than Boston, if rent control were abolished?

At least in Boston now it is much easier to find a place, and the new build thatw as thereby encouraged has ensured decent supply, availablity and prices.

And paying a little more in rent isn't as bad as being Ellis'ed.

Posted by Guest on Jan. 12, 2013 @ 8:23 am

is what really happened in Boston? Your only evidence so far has been lies about Ted Gullicksen.

Greg's logical argument doesn't work for you because logic contradicts your ideology based on slogan, misinformation and fantasy.

Back up the broad statements you make here. Maybe you can't because the evidence doesn't exist, or because you are too lazy or incapable.

Posted by Eddie on Jan. 12, 2013 @ 9:19 am

1) Some regulated rents will rise
2) New supply will be encouraged
3) There will no longer be an artificial differential between new tenancies and old
4) Rents will converge to an average which is below the controlled level buy below the market level

33 years of rent control has given us 3K per month studio apartments. If that is "working" then give me failure.

Posted by Guest on Jan. 12, 2013 @ 10:52 am

Landlords don't believe that.

If you are in any way correct about your contrived narrative about Boston, then existing landlords would lose money, because the market for their properties would go down. So why are all the landlord organizations, like SPOSF (Small Property Owners of SF), BOMA (Building Owners and Managers Association), SFAA (SF Apartment Association), all so anti-rent control? Clearly they don't want to make less money on their existing properties, even if their buddies the big developers get to make more money.

Getting rid of rent control would establish two counterveiling trends that even you acknowledge both exist:
1. Letting landlords charge whatever they want would push rents upwards because landlords want to charge more, not less. Duh!
2. Other "stuff" would happen (like tons of housing being built all over the place), and The Magic of The Free Market would push rents downward.

You believe that the first trend will be stronger. Or you're lying to try to fool renters into supporting something not in their interest, because you think we're stupid. That's what I think, but either way, this is what you say.

I believe this view is wrong, because not enough housing will ever be built to satisfy demand in this city, which is virtually inelastic due to constraints of space.

But hey, don't take my word for it. I think BOMA, SFAA, and SPOSF are more correct than some internet dude. They're smart folks. If they want to repeal rent control, you can bet your ass it's not to help us tenants.

Posted by Greg on Jan. 12, 2013 @ 7:19 pm

about the rents themselves, but rather the eviction controls that go along with that, which effectively means that LL's lose control of their property. In SF, a tenant can be a life sentence (or even longer, if they have children who squat there). And it's always the good tenants that leave - the ones that linger are invariably the ones you most want to go.

If you don't believe me, ask some LL's. Every LL I know says the same thing. and the fact that LL's Ellis evict entire buildings, even tho that means no rents and no possibility of condo conversion, should surely show you how they feel.

Posted by Guest on Jan. 13, 2013 @ 9:35 am

small-minded power-trippers who want to be able to pop the lock on other peoples' door at any time without notice and see what's happening insided -- or see a look of pain and fear come over someones face when their home is threatened.

Posted by lillipublicans on Jan. 14, 2013 @ 9:38 am

suspect that you must just bring out the worst in other people, which I can easily believe from your rants here and the fact that you seem to regularly get banned from websites.

Posted by anon on Jan. 17, 2013 @ 11:36 am

don't care even if it is absolute junk which always breaks: I'll just have the tenants pay for it!"

-- overheard at an appliance store

Posted by lillipublicans on Jan. 17, 2013 @ 8:50 pm

Lets end government subsides for jumbo mortgages. That will REALLY solve the problem.

Posted by Guest on Jan. 10, 2013 @ 9:37 pm

So that's a great way of making sure only the wealthy with large down payments can buy homes here. I'm all for it!

Posted by Lucretia Snapples on Jan. 10, 2013 @ 9:51 pm

Point being, the subsidy for jumbo loans reduces the cost of capital which bids up housing prices.

Posted by marcos on Jan. 10, 2013 @ 10:50 pm

The banksters get rich, *and* -- in many cases -- are the true owners of the real estate.

Funny how you can turn some things completely upside down and they make just as much sense.

What about income tax deductions for mortgage interest? Is it a middle-class tax break -- or Is it subsidy to the banksters to make their "product" more appealing?

Posted by lillipublicans on Jan. 10, 2013 @ 11:35 pm

to pay more tax anyway. Mortgage interest deductions are capped and so the very wealthy get relatively little benefit from it anyway. And homeownership is widely regarded as good for stability, community and prosperity.

You're barking up the wrong tree here and, moreover, if you make it more expensive for landlrods to buy rental properties, then that will have the effect of putting more upward pressure on rents.

Posted by anon on Jan. 11, 2013 @ 7:32 am

Trying to picture jumbo loans making real estate cheaper. The NRA would freak.

Posted by Guest on Jan. 11, 2013 @ 8:35 am

Jumbo loans carry a higher rate, but make larger amounts available to those who are in expensive markets like SF. Problem?

Posted by anon on Jan. 11, 2013 @ 8:48 am

Yeah my problem is I'm sick and tired of being bad mouthed by rich landlords who should be bankrupt if they had to live by the market rules they demand of renters.

Posted by Guest on Jan. 11, 2013 @ 1:36 pm

Maybe that will solve your problems, but it will create new problems - like more rentals going off the market. So maybe you will benefit at the expense of others. I guess you will be able to justify that.

Posted by Richmondman on Jan. 11, 2013 @ 10:37 am

Meanwhile, go to hotpads.com and look at the number of foreclosures for San Francisco:

http://tinyurl.com/akhv4an

I'm not sure how rents can be where they are (ridiculously outrageous) with so many foreclosures. Something is not making sense. I have a feeling this is all going to "hit" before too long. One can only shoot the bullshit for so long.

Posted by Guest on Jan. 10, 2013 @ 6:29 pm

really didn;t go down that much in SF compared with, say, Oakland where RE prices got killed.

Also, with rent control, because rents are so slow to go up then, when RE prices go down, rents do not follow.

With half of SF'ers making six figures, rents are not that much out of whack.

Posted by anon on Jan. 10, 2013 @ 6:41 pm

There have been "few foreclosures in SF?"

I take it you didn't click on that link to hotpads.com to see the "few" foreclosures I linked to. There's more than a "few." But don't let the facts get in your way.

Posted by Guest on Jan. 10, 2013 @ 6:52 pm

better for foreclosures than other parts of California, or Arizona, Nevada, Florida etc.

The continuing demand for SF property has kept prices up and we've probably only seen 10% falls overall in SF. We've made most of that back, as 2012 was a strong RE market with over-bidding and multiple bids commonplace again.

Which of course is why we are seeing a lot of Ellis evictions again, after a lull for a few years.

Posted by anon on Jan. 11, 2013 @ 7:35 am

Now Avalos owns real estate in the Excelsior. Hopefully he will work to create more homeownership opportunities for others.

Posted by Guest on Jan. 10, 2013 @ 6:49 pm

The less new build, the higher the prices of existing homes in SF.

Applies to Welch, Hestor, Daly, Redmond, Marcos and now Avalos.

Posted by anon on Jan. 11, 2013 @ 7:36 am

Ed Lee caused all this. Rarely can you point your finger at one man for the cause of a housing disaster such as what we are all trying to cope with now.

Posted by Guest on Jan. 11, 2013 @ 9:20 am

Ed Lee didn't cause the inadequate housing supply. That's been years in the making.

Posted by Guest on Jan. 11, 2013 @ 10:19 am

Ed Lie was a progressive housing activist back when he had principles, before he sold his soul to Rose and Willie, which means that he fought to limit the supply of market rate housing in favor of affordable, therefore blame for high rents rests entirely with Ed Lie.

Posted by marcos on Jan. 11, 2013 @ 11:16 am

If Ed Lee, in his earlier career, worked to restrict the supply of market rate housing, he does share some of the blame for the current problem.

Posted by Guest on Jan. 11, 2013 @ 12:14 pm

But Lee is giving support to many market-rate developments now, and that is to his credit. If we had a Mayor who supports less build and more rules, like Avalos, things would be much worse now.

Posted by Guest on Jan. 12, 2013 @ 8:21 am

If rents were cheaper back then, perhaps Avalos, Campos, Daly, Mirikirimi and Gonzalez would have stayed where they were, instead of here...

Posted by Richmondman on Jan. 11, 2013 @ 10:40 am

It's interesting to see so many people here defend the exorbitant hyperinflation in San Francisco housing simply on the basis of market forces and how "desirable" the city is. What this doesn't take into account, however, is how unregulated market forces frequently cause economic disaster for a huge proportion of the population - as we saw in the 2007 housing crash. Allowing hyperinflation in the rental/housing markets of American cities simply because of gentrification is ridiculous - it is bad for the economy and bad for our social fabric. It increases segregation, stunts economic growth in other sectors, and increases the distance individuals have to commute to work...

It's important to note, however, that this housing crisis - which is taking place on some level in "desirable" urban centers around the nation - needs to be addressed on a national scale. The Section 8 program is a a joke - it hardly covers anyone - and the United States has barely 1% of its population in public housing. The US government does virtually nothing to ensure housing remains affordable, instead preferring a "robust" housing market to prop up the economies of suburban and rural areas. But when a robust housing market means hyperinflation in American cities, government regulation should ensure that this hyperinflation is mitigated through *real housing subsidies*. Until the US government embarks on a real program for public housing, rental subsidies, or rent control, cities like San Francisco aren't going to be left with many options.

Posted by HeartTenderloin on Jan. 11, 2013 @ 12:24 pm

nor how much they should pay. Rents are what they are and vary enormously by location, meaning that there are always cheap places for those who cannot afford the expensive places.

Detroit is an urban area and you buy homes for a dollar in some parts of Detroit.

Posted by anon on Jan. 11, 2013 @ 12:54 pm

"We need a national policy..."

either that or Ron Conway took back the city.

Posted by Guest on Jan. 11, 2013 @ 2:11 pm