San Francisco ‘Values’ Pricing Poor Out of the City
29th November 2013
With the area economy rebounding, San Francisco is in the midst of a housing crisis as many residents are evicted from their apartments. “It is a situation rooted in limited housing stock and surge in demand that has pushed the median rent up from $2,968 in 2010 to $3,414 this year…,” reported the San Francisco Chronicle.
Sounds like New York.
The median home price has soared to nearly $900,000, which helps explain why nearly two-thirds of the city’s residents are renters. So the rent hikes are particularly acute—and have put the city’s tough rent-control laws in the spotlight. As property values have rebounded, an increasing number of San Francisco owners are getting out of the rental business and cashing out their properties to turn them into co-ops.
Sounds like New York.
While the city’s rent-control ordinance places strict limits on the ability of landlords to increase rents, a state law called the Ellis Act allows property owners to take their property off the rental market after providing tenants with a 120-day notice (and much longer for elderly or disabled tenants).
Sounds like New York.
“Speculative investments in housing has resulted in the loss of thousands of affordable apartments through conversions and demolitions,” according to a recent statement from a tenants’ rights coalition. Yet landlords ask whether further regulating and even prosecuting them in some instances, as the tenant groups propose, is the best way to encourage more people to get into the rental-housing business, which is what’s needed to increase supply and reduce rents. It’s an old economic rule that you get less of whatever you punish.
Just like New York.
In cities where the market reigns, people tend to be mobile, but in places such as San Francisco tenants stay put in their apartments given that they don’t want to leave their rent-controlled units. So few apartments become available. Restrictions on rent prices diminish the incentive of landlords to improve the buildings, thus leading to more substandard buildings, rent-control critics argue.
Just like New York.
San Francisco is a sought-after city on a tiny peninsula, which leads to a tight supply. “But the biggest problem with the Bay Area is 75 percent of the land area is off limits to development so you can’t build your way out of this,” said Lawrence McQuillan, senior fellow at the libertarian Independent Institute in Oakland. Even for cities without rent control, such as San Diego, these basic “supply and demand” lessons are useful for anyone whose “values” include affordable housing.
San Francisco: New York without the Mafia and the subways.