Ed Lee's State of the City: What evictions? What displacement?

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Mayor Ed Lee punctuated his State of the City speech with a nice little quip: "Every San Franciscan deserves a clean, safe place to call home." I agree.

So why, in a speech lasting more than an hour, did the mayor not once mention that thousands of San Franciscans are facing the loss of their homes -- and will be forced out of the city -- because of the same policies that he's proudly promoting?

These things are always self-congratualtory and full of the requisite bullshit. But Lee's description of the State of the City was nothing more than a fantasy to the two-thirds of San Franciscans who live in rental housing, many of whom are living with an unacceptable level of insecurity. Much of the city's rental stock -- and the effectiveness of rent control -- is at risk at speculators are buying up properties, tossing the tenants out with the Ellis Act, and converting them to tenancies in common. This is a massive civic crisis, brought on in part by the boom in tech jobs and the consequent boom in high-paid young people who want to live in a city that has virtually no vacant housing.

We saw this before, under Mayor Willie Brown; we called it the Economic Cleansing of San Francisco. It was awful, and it's happening again.

But you wouldn't know that to hear the mayor completely ignore the issue.

Oh, Lee gave it a toss-off line; gee, the rent is too high, but we can't ignore the laws of supply and demand. Gee, we're going to build 45,000 new housing units, and that will fix everything.

But Lee, of all people, ought to know that housing in San Francisco has never followed the laws of supply and demand. This is a highly irregular market, because demand is essentially unlimited. Housing fills us as fast as you build it. And none of the new housing that's currently under construction or in the pipeline will be affordable to current SF residents who live in rent-controlled units and are at risk for eviction.

When you're evicted under the Ellis Act in San Francisco today, to make room for someone with more money, you wind up having to leave the city. That's the bottom line. And everywhere you turn, tenants are facing that ugly prospect.

The mayor spent much of his time talking about jobs. That's fine; he's proud that the unemployment rate in the city has fallen to 6.5 percent, but he insists he won't rest until everyone has a job. Actually, most economists would say that's impossible; capitalism, by its nature, exists with a structural unemployment rate that rarely falls below 4 percent. In fact, 4 percent is generally considered "full employment."

More important, the overall rate is 6.5 percent, but it's way higher for people without college degrees, for youth, and for African Americans. (It's above 50 percent for transgender people.) The tech boom isn't providing jobs for all of the unemployed current San Francisco residents; a lot of the jobs are going to people who don't live here and are moving here for employment. They are putting pressure on the existing housing stock. That always leads to displacement.

None of this is to say that tech jobs are bad or that we shouldn't have companies that pay high wages locate in San Francisco. What it means is that the city first has to protect its existing vulnerable populations -- and that's not happening.

I would encourage Mayor Lee to talk to the Housing Rights Committee, or the Tenderloin Housing Clinic, or any of the other tenant lawyers who are fighting desperately every day to state off evictions. He'd get a very different picture of the state of the city.

Comments

You need to come up with:

1. Proof that you understand the difference between correlation and causation. Post hoc ergo prompter hoc.

2. Proof that you understand the word "proof." This is especially difficult in a multifactor system with recursive dynamics. When you state, "If rent control really worked, there would not be $2,000 a month studio's and $3,000 a month 1BR's," you must show that higher rents are not the result of any other economic factors.

I do not need to refute every point, only to show that the Cato paper did not present proof. Since economics is a marginal science that deals in patterns and opinion - not proof - my work is done.

Posted by Guestest on Jan. 31, 2013 @ 1:53 pm

A good start would be showing that you even understood what Cato was saying. It's not evident from your snow job.

Posted by Guest on Jan. 31, 2013 @ 2:20 pm

Since you provided no reference, the burden of the Cato paper is on you.

All I had to do was show that economics is not an endeavor that deals in proof, and that is done. Economists show patterns, they do not prove causative laws. What they call "the law of supply and demand" is merely idealized fantasy, not real-world rules that humans must obey. In real science, laws are not laws if they can be altered, subverted, folded, spindled or mutilated.

All I need to show that it is not a law is a counterexample. I give you three:

In the golden days of Reagandom, the military was buying $400 toilet seats. They could have gone to the hardware store and bought them for $20, yet the government contracting process had eliminated the "demand" side of the equation by separating the decision makers from those who pay the bills.

Similarly, speculation in a commodity alters neither supply nor demand, it just drives up the price by postponing the demand into the future where it creates an artificial demand bubble. People hold off on buying corn because the price is high, hoping that it will fall. If the speculator is good at his job, he sells at the height of the market and makes many times more than he would have on an open market. Basic commodities are hard to replace with other goods, so the only reduction in demand comes from population reduction. Consumers end up paying far more than supply and demand would dictate because the speculator has cornered the market.

And the most relevant for this discussion is the SF rental market. Since there are few units affordable at the rate affordable by residents at or below the median income, the poor and middle class are exiled to Richmond and Stockton and Oakland. This is not the market responding to the demand of the local population, it is altering that population by removing those with lower incomes and replacing them with wealthier people from outside the system. People who talk about the "SF rental market" are being intellectually dishonest if they refuse to accept that it is not, in itself, a market. It is a highly manipulated system that depends on inflows of capital and cost-free disposal of the less desirable.

QED.

Posted by Guestest on Jan. 31, 2013 @ 3:32 pm

indication that you read the report.

Summarise the top ten points, and then refute them.

Posted by Guest on Jan. 31, 2013 @ 3:44 pm

Hear Hear!

Posted by Troll Killer on Jan. 31, 2013 @ 3:50 pm

be subsidized so they can? If there a constitutional right to live in Aspen, La Jolla or Pacific Heights?

Posted by anon on Jan. 31, 2013 @ 4:12 pm

People who live here can afford it.

QEDumbass.

Posted by Eddie on Jan. 31, 2013 @ 4:22 pm

You refer to it often, but never provide a link.

Posted by Eddie on Jan. 31, 2013 @ 3:25 pm

Denmark, Norway and Sweden all have price controls on numerous products and services. Norway is particularly strict with salary ranges. These countries not only have much lower volatility, they are much more economically stable and socially cohesive than the US. The effects of the recession there were much milder, requiring non of the "austerity" (read: banker enrichment scams) of the rest of Europe. They still offer free college education, national health care, pensions and infrastructure that are all world class. Scandinavians are consistently polled as being highly satisfied with their economic system.

As a counterexample, I give you Spain. They deregulated their real estate market to allow for much more foreign investment and speculation, leading to a boom in the building of luxury accommodation and homes for retirees from wealthier European countries. When that collapsed, the investors were bailed out with taxes from Spaniards who can neither find jobs nor afford the artificially inflated rents.

Google, Cisco et al will either offshore the "knowledge worker" jobs or continue to dismantle any restriction to the H-1 visa programs to the point where they just bring in people from abroad for $10 an hour. Expect to see sysadmins living eight to a room like farm laborers, and just like them, threatened with dismissal and deportation when they protest.

Posted by Guestest on Jan. 31, 2013 @ 1:09 pm

a shining example of the virtues of having a bureaucrat micro-managing the economy.

I've never met a H-1 worker who gets paid less than about $50 an hour. you must be thinking of H-2's.

Posted by Guest on Jan. 31, 2013 @ 1:19 pm

1. You are wrong. Norway, Denmark, Iceland and Sweden all have lower suicide rates than the US according to the WHO (12.9, 11.9, 11.3 and 15.3 per 100,000 pa vs. 12 respectively).

Further, countries that provide far less social support have higher suicide rates than Scandinavia: South Korea, Lithuania and Guyana are the top three for suicide (31.7, 31.6 and 26.4 per 100,000 pa), while their Gini indices place them at 108, 85 and 43 for family income inequality compared to 132, 132, 120 and 136 for the countries listed above.

I now laugh in your general direction.

2. Reading comprehension is important. Reread my post and then reply with the quote where I say that this is the existing state and not a speculation of future.

Posted by Guestest on Jan. 31, 2013 @ 2:48 pm

So because Sweden's suicide rate is lower than some basketcase banana republic in the shitpits of Africa, that's a vindication that the US should adopt a socialist system?

That the best ya got?

Posted by Guest on Jan. 31, 2013 @ 3:03 pm

Facts - ain't they pesky?

Posted by Guestest on Jan. 31, 2013 @ 3:34 pm

is, is going to prove relevant to the point at issue.

Posted by Guest on Jan. 31, 2013 @ 3:50 pm

You brought up suicide. Bringing up an irrelevant topic and having your facts wrong about it do not combine to make you right, though I hope whining about it makes you feel better.

Posted by Guestest on Jan. 31, 2013 @ 4:29 pm

Speaking of facts, you might want to take a remedial geography class.

Obviously a post-prop 13 kid.

Posted by Guestest on Jan. 31, 2013 @ 3:36 pm

Education doesn't cure idiocy.

Posted by Eddie on Jan. 31, 2013 @ 4:23 pm

Thank you. I agree with many of your points.

The self-deluding trolls are boring, though. They only repeat their bleatings of entitlement and justify greed with the prosperity gospel of "God loves the rich more - the proof is that He rewarded them with money." It's a tired Romneyesque argument that shows how shallow people desperately seek reassurance that their dumb luck is due to personal merit while others with less are morally inferior. Those with less self-absorbed values like working hard, sacrificing personal comforts to raise great kids and spending their spare time making the City the fun, magical place of my childhood can just fuck off to Modesto.

It really was a great city when there were neighborhood characters and cultural hangouts, street theater and free events. Now it is just the same chain stores as any other burb but with crappy parking. There isn't even anything in foodie culture there that you can't get within ten miles, and that used to be one of the City's proudest badges. It is truly the bloodless, empty shell of a once-great city.

Like California real estate, San Francisco itself is an enterprise that has groveled itself into yet one more bubble economy. It depends on an inexhaustible supply of gullible strangers taking part rather than nurturing the loyal customers who personally invested in its success. Like snake-oil salesmen in the old west who had to roll from town to town to make a living because no one would buy a second bottle, it advertises miracles while producing nothing more than repackaged booze and the aftertaste of dirty socks. A good businessperson knows that success is measured by reliable repeat customers that are the result of good service, not by exhausting a limited resource and getting out at the top of a bubble market.

For those who do leave, do not despair. The East Bay is great for diyers; theatrical types will find more opportunities to get creative where they are not relegated to being temp support for touring shows that only people with trust funds can afford to see - or would want to. Portland gets good reviews from some urban gardening friends. The important thing is community, and SF has decided to eat that seed corn. In ten years, the only people visiting will be ignorant tourists looking for hippies in tie-dye behind every light pole, but better to fleece the idle rich than those who work for a living. If you choose your next home well, you will get the satisfaction of schadenfreude from a safe distance.

Good night. Thanks to all for the entertainment.

Posted by Guestest on Jan. 31, 2013 @ 8:38 pm

Thanks for taking the time to be coherent.
It's easy to get get caught up replying to the Trolls
insults rather than stating a case. As an SF native (Stanford U.
Hospital, now Pacific Megabucks Corp.), I have watched
the museums go from being free to $25; hideous skyscrapers
blotting out the Eastern skyline, MUNI go from the best to the
worst transit system in the nation, and an influx of Know-Nothing
carpetbaggers with more money than taste or class. I think we need
immigration reform to exclude trend-followers and speculators, and favor
people who actually understand what this place is about.

Posted by Troll Killer on Feb. 01, 2013 @ 7:44 am

Facts can suck when you don't like them. Like when you throw out some opinion as reality and then end up being wrong.

Or when you can't even place a country the right continent.

Thank you for reinforcing my conviction that we really must increase education spending in this country.

Posted by Guestest on Jan. 31, 2013 @ 3:42 pm

pay less than you. And if you feel guilty about that, you could offer to sign a new lease paying 450 more if the LL will give the new tenants a new lease for 450 less.

But of course, you'd never want to pay anything to help another tenant, would you? you want someone else to do that.

Posted by Guest on Jan. 29, 2013 @ 7:29 am

Why don't you donate some of your money to Bill Gates or to new residents living near you who paid more for their house than you paid for your house? I am sure the bank would allow you to renegotiate a higher mortgage payment.

Some of my taxes (unfortunately a small part) help tenants through rental subsidies and subsidized housing development.

In what world, will a landlord reduce someone's rent in a boom market? They could probably get close to $500 per month more for that same apartment in less than the year since our neighbors moved in.

You are an entitled asshole, exactly the type of person created by the propaganda you consume uncritically.

Posted by Eddie on Jan. 29, 2013 @ 10:15 am

vary so much?

If rent control went away, you'd be paying 450 more but they'd be paying 450 less. Rent control doesn't help the poor; it helps the lucky.

Luck works for LL's too. If a LL is 2lucky" his tenants move out.

Otherwise, Ellis.

Posted by anon on Jan. 29, 2013 @ 10:25 am

is total bullshit. Landlords charge whatever the market will bear.

Posted by Eddie on Jan. 29, 2013 @ 10:38 am

would be more than what you are currently paying but less than the current market rent.

Why? Because there would be far more turnover.

Posted by anon on Jan. 29, 2013 @ 12:13 pm

refresh your memory.

http://en.wikipedia.org/wiki/Price_elasticity_of_demand

Housing prices in San Francisco are inelastic, something to which Redmond referred in his article.

Posted by Eddie on Jan. 29, 2013 @ 12:31 pm

you would not get it.

The market determines the pirce but, right now, rent control distorts the market, creating winners and losers based on nothing more than luck.

Posted by anon on Jan. 29, 2013 @ 12:50 pm

Pure speculation. All we know is that were rent control to be repealed the levels of displacement as the market "settled" would be sufficient to change the human character of the City which is the end goal of these housing battles.

Posted by marcos on Jan. 29, 2013 @ 12:32 pm
Posted by Eddie on Jan. 29, 2013 @ 12:49 pm

But it is fairly intuitively obvious that if rent control means little voluntary turnover, then the price for vacant units will rise, simply because they are in short supply.

Posted by anon on Jan. 29, 2013 @ 12:54 pm

Alas, high turnover drives rents up, not down. Even with no regulation, it is easier to raise the price on an empty unit than risk alienating an existing tenant and incur the expense of finding a new one. In an environment of impotent enforcement and high demand, there is really no downside to flipping through tenants to inflate the rental price.

A chaotic market with a great deal of economic and political imbalance favors the powerful. They use their resources to acquire more power. This is as true in San Francisco real estate as it is on Wall Street - and nowadays, they are virtually indistinguishable.

Posted by Guestest on Jan. 31, 2013 @ 8:33 am

and tries to make them happy with providing the best possible accommodation.

But with rent control, landlords resent tenants who don't move on, and do nothing they do not have to. That is a big part of why SF's rental building stock is in such a bad state of repait - there is no incentive to improve it while rents are artifically suppressed.

Posted by Guest on Jan. 31, 2013 @ 9:40 am

This is contradicted by fact. Cities with and without rent control have slumlords who charge high rents while failing to meet their responsibilities.

San Francisco had this problem before rent control was enacted.

Posted by Guestest on Jan. 31, 2013 @ 10:01 am

or ignore the property. If you want good landlords you have to give them a respectable ROI.

Posted by Guest on Jan. 31, 2013 @ 6:11 pm

or ignore the property. If you want good landlords you have to give them a respectable ROI.

Posted by Guest on Jan. 31, 2013 @ 6:11 pm

that you claim to love so much that you moved here was formed and forged in a time when there was no rent control.

Rent control inhibits mobility and ossifies the populace. If you think that is a good thing, then I don't know what to say to you.

Posted by anon on Jan. 29, 2013 @ 12:56 pm

San Francisco, it was better before you got here.

Posted by Eddie on Jan. 29, 2013 @ 1:19 pm

managed that without anyone subsidizing me or bailing me out.

Posted by anon on Jan. 29, 2013 @ 1:58 pm

evicting people from their homes. Economic terrorist. San Francisco was better before I got here also..

Posted by Eddie on Jan. 29, 2013 @ 10:07 pm
Posted by anon on Jan. 30, 2013 @ 3:15 pm

No one is forced into immobility by rent control: If a tenant cannot afford a market rent, rent control is what allows him to have housing at all; if he can, he can choose to move. It is high rents that reduce people's choices to leaving the City or joining the homeless.

Posted by Guestest on Jan. 31, 2013 @ 9:50 am

Apologies. This was meant in reply to another post.

Posted by Guestest on Jan. 31, 2013 @ 9:52 am

No one is forced into immobility by rent control: If a tenant cannot afford a market rent, rent control is what allows him to have housing at all; if he can, he can choose to move. It is high rents that reduce people's choices to leaving the City or joining the homeless.

Posted by Guestest on Jan. 31, 2013 @ 10:51 am

I find it amusing that you think I moved here. Projection much?

You are absolutely right that the city has always been changing. Had you been here in the 1970s, '80s and '90s, you would remember that we once had heavy industry, banking and military bases that supported a much more diverse economy than just the tourists that come for a weekend at Ghiradelli Square or a year at Google.

Since you acknowledge that SF real estate is a complex and ever-changing thing, it is thigh-smacking funny that you attribute all ills to rent control. This fixation will only discredit your arguments and make you look like a tinfoil hatter similar to those who are convinced that the Masons are secretly behind every recession and plane crash.

Posted by Guestest on Jan. 31, 2013 @ 11:54 am

So it is natural that the population changes and that lower-paid folks get replaced with higher-paid folks. Most cities want that but we actually have it.

Housing may now cost more but not as a multiple of earnings. The average home sells or rents very quickly indicating that plenty of people find our housing to be "affordable". It's just not affordable by you.

Posted by Guest on Jan. 31, 2013 @ 1:23 pm

Correction: Most developers and their cronies in government want that. When you are the city, it will be as dead and boring and plastic as Aspen. And just as irrelevant.

High rents just manipulate the local population by externalizing the poor and middle class and replacing them with wealthier people from outside the system. This is like UC Berkeley, who claim that because they are full to capacity, so their charter obligation to educate Californians is done. In reality, they have chosen to increase the number of foreign and out-of-state students because they pay more. It sounds like a fine idea until you have a kid in high school, or you want to change careers, or you want to hire a local engineer and find that the only ones from Cal settled here after college. Exiling qualified Californians to other UCs, CSUs and the community college system forces students to get second-class degrees based entirely on wealth. Those who believe that this will produce a sound economic or social structure should move to Haiti, where such ideas are at least honestly stated as policy.

Housing costs much more now as a multiple of real income of the overall population because rents have risen dramatically while wages have been stagnant since 1970.

Posted by Guestest on Jan. 31, 2013 @ 4:25 pm

I find it amusing that you think I moved here. Projection much?

You are absolutely right that the city has always been changing. Had you been here in the 1970s, '80s and '90s, you would remember that we once had heavy industry, banking and military bases that supported a much more diverse economy than just the tourists that come for a weekend at Ghiradelli Square or a year at Google.

Since you acknowledge that SF real estate is a complex and ever-changing thing, it is thigh-smacking funny that you attribute all ills to rent control. This fixation will only discredit your arguments and make you look like a tinfoil hatter similar to those who are convinced that the Masons are secretly behind every recession and plane crash.

Posted by Guestest on Jan. 31, 2013 @ 11:56 am

Were your logic correct - that frequent turnover lowers rents - you would be arguing that rent control lowers market prices.

I kinda wish it were true, as I favor rent control. But not for this reason.

Posted by Guestest on Jan. 31, 2013 @ 1:13 pm

in a housing market that doesn't reward seniority over need, there would be more natural turnover, a higher vacancy rate and so less price pressure on vacant units.

If rent control went away, the market price for vacant units would decline. and evictions without cause would rarely happen.

Posted by Guest on Jan. 31, 2013 @ 1:24 pm

You confuse need with ability to pay. A slam-dunk case could be made for the need of a poor family to continue living in their home of decades being greater than the need of a single contract "knowledge worker" for a condo near the Googlebus stop who will have moved on in a year.

But you bring up an excellent point: What are we rewarding, and why? Who gets to decide? Is a person deserving because he provides an essential but modestly compensated service, or because she is able to pay more? Should a cult that abuses children be favored with tax-free property ownership in a secular state? Does someone who has kids in the local schools deserve the consideration of waiting until the end of the term to be forced out of the district? Do people deserve reward beyond a warm fuzzy feeling for reading to the blind or volunteering at the animal shelter?

Many who want a moral justification for inequity seem to find this too complex a question and revert to wealth as a metric for personal value, so don't feel alone in your error.

Martin Luther King, Jr. called a budget a moral document, and public policy that affects private budgets is just as responsible for the effects it has.

Posted by Guestest on Jan. 31, 2013 @ 5:47 pm