Saturday, October 24, 2020
News + Politics New reports show massive housing fail in SF

New reports show massive housing fail in SF

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Housing dashboard and quarterly report show massive loss of affordable housing — and too much housing for the rich, not enough for everyone else, in the pipeline for the future

Limiting short-term rentals would be a step forward in addressing the attack on rent-controlled housing
Limiting short-term rentals would be a step forward in addressing the attack on rent-controlled housing

By Tim Redmond

JULY 13, 2015 – The city’s report on affordable housing for the final quarter of 2014 finally came out last week – and it’s bad news for anyone who thinks we can build our way out of the crisis.

The report says, in essence, that the city is losing existing affordable housing almost as fast as it’s creating new units.

That reflects the point that tenant advocates have been making for years: In a crisis, the most valuable affordable housing is the housing that already exists, and stopping the evisceration of rent-controlled housing stock is just as important as any plans to build new housing. Saving existing housing is also a lot cheaper.

The report shows that the city built 6,559 affordable units between 2004 and 2014. That’s only about 650 a year.

And in the meantime, no-fault evictions – that is, tenants thrown out so the landlord can make more money in another way – have destroyed 5,470 affordable units by removing them from rent control.

That means 83 percent of the gain the city has made by building new affordable housing has been offset by evictions.

That’s a staggering number, and suggests that preventing tenants with rent control from getting forced out of their homes is such a priority that the city needs to spend a whole lot more money on it.

The supervisors refused to fund more eviction defense this year, after Sup. Mark Farrell said that too many of the groups getting that money were coming to City Hall and fighting for things that he didn’t like.

The supervisors will have a chance to taken step toward ending the loss of housing tomorrow (Tuesday/14) when a measure by Supervisors David Campos, Eric Mar, and John Avalos to limit short-term rentals by outlets like Airbnb and VRBO. The measure shares two key points in common with a ballot initiative that is likely to be in front of the voters in November: Both would bar hosting platforms from listing short-term rentals unless those units were registered with the city – and would require the hosting platforms to share with the city basic data on how many nights each registered unit is rented.

That way the city can begin to enforce the law. Without that authority, hundreds of units can be taken out of the rental market and turned into hotel rooms, and the city, with a terribly short-staffed planning enforcement division, can’t seem to do anything about it.

At the same time, the city’s latest Housing Balance Report is out, and it adds some critical perspective.

The report compares the city’s Regional Housing Needs Analysis – that is, the amount of housing that local and regional officials say the city needs to build – with what is actually getting constructed.

Check out the numbers that show how out of whack the city's housing policy is  right now
Check out the numbers that show how out of whack the city’s housing policy is right now

Over the past seven years, the city’s own General Plan states that the city should have built 31,193 housing units. Instead, we built 20,455 – just 65 percent of the need.

But when you break it down by category, it gets even more interesting.

In the category of “above moderate income” – that is, market-rate housing, most of which has been aimed at very wealthy buyers – the city had a need for 12,315 units and built 13,391. We are overbuilt in high-end housing.

For all moderate and low-income housing, the need was 18,698 units; only 7,064 were built. That’s 38 percent of need.

To summarize: The city has built too much housing for the rich, and only about a third of what it needs for everyone else.

Now let’s look to the future.

The report shows a RHNA of 28,869 housing units. The city has already approved and entitled 13,860 units, or 48 percent of that need.

But again, when you break it down, the numbers are dramatic: Of the 12,536 units market-rate units needed by 2022, 11,966 have already been approved for construction. That means the city has approved 95 percent of all the market-rate housing it needs for the next seven years. There’s really not much need for any more housing for the rich.

On the other hand, of the 16,333 units needed for low- and moderate-income households, only 1864 – that’s 11.4 percent – has been approved.

That, folks, is an admission of a failure of housing policy. A huge failure.

Oh and by the way: Advocates for building more market-rate housing point to Seattle as a great example of how allowing the market to build housing has kept prices down. Apparently not any more.

“We will be like San Francisco in five years,” said Lili Shang, the Realogics/Sotheby’s International Realty agent who represented the buyers of Moyer’s house. “It’s a new era.”

 

Tim Redmond
Tim Redmond has been a political and investigative reporter in San Francisco for more than 30 years. He spent much of that time as executive editor of the Bay Guardian. He is the founder of 48hills.

25 COMMENTS

  1. The comment about “Seattle becoming like SF” is impressionistic. Nobody knows how Seattle and SF rents will compare in 5 years. The social impacts are becoming quite comparable, though: people and businesses priced out, demolitions, lots of market-rate (i.e. pricy) units, and not enough cheap ones.

    Are you saying that we need to wait for a crash before all that construction will make the city affordable? Last time we had a mini-crash, in 2001, things became somewhat affordable without this level of construction, and again in 2007. What I see is that the prices are set by changes in upper-end demand, not in supply. Anyway, whether the next downturn will happen in 10 years or 50 years, waiting for it is not the base for sound economic policy.

    Finally, if you want to argue numbers and models, I’m totally into it. If you want to have a put-down contest, I’m not interested. So save the “anyone with passing interest”, “proved hilariously wrong” etc. comments. What is this, an online forum or something?

  2. Since when is it the responsibility of private citizens to provide affordable housing? No landlord wants to be constrained by SF’s draconian rent control laws. No surprise they are taking these units off the market.

  3. l think the term “rent control” leads to a basic misunderstanding of the affordable housing issue. San Francisco does not have true rent control – it has rent stabilization. An existing tenant’s rent can only be raised a prescribed amount per year. Once that tenant is out, there are no limits on the rent the landlord charges the next tenant.

    For example: a long term tenant has been in a flat for 10 years and pays $2,000 in rent. The landlord evicts the tenant in an OMI. After the required amount of time passes, the owner rents the unit again. The owner can charge market rate rent, which could be $3,000 or $4,000 or more. What was an affordable unit for the previous tenant is now a market rate unit, so you have lost an affordable unit.

    If the unit – whether lost to OMI or TIC – is subject to rent control when it’s rented in the future, the starting rent will be market rate. If a tenant stays in the unit long enough, the unit may become affordable again, but that could take years.

    Bottom line: helping existing residents stay in their current affordable units is a terrific way to preserve affordable housing in San Francisco and throughout the Bay Area.

    One thing this article highlights is the lack of affordable housing for those with moderate income. There is federal money to build low-income housing (not nearly enough, but some). I think there is a huge shortage of housing that is affordable for families with moderate incomes that is going to get worse if governments don’t take action. Unfortunately, federal and state funding (both of which are considerably less than they were historically) are key – I think this problem is too big for cities to solve on their own.

  4. then you aren’t going to be very satisfied here. Tim plays fast and loose with all facts to support his narrow agenda.No new housing, no new anything unless its non profit, less for profit anything.

  5. Did you seriously link to an article showing that Seattle’s rents are less than half of SF’s in order to prove to me that Seattle is becoming like SF??

    And yes, Seattle rents have been accelerating quite quickly lately, which is the signal for developers to build – in fact, Seattle approved a metric fuckton of housing in 2014, more than in any year since records started being kept nationally in 1980. And 2015 is on track to be another record breaker in terms of permitting activity.

    But the true test of whether supply induces rents to fall comes after the crash – as anyone with a passing familiarity of markets and market cycles knows, you have to compare peak to peak, trough to trough. Acceleration *during* a boom means nothing, it’s the velocity of prices changes across market cycles that shows the true impact of supply.

    Housing prices increased rapidly in NYC in the 1920s, and if Tim Redmond or Y. were alive in 1928, they’d point to massive supply increases and massive price hikes to “prove” that supply was not helping. And of course they’d be proven hilariously wrong a few years later when the bottom of the market fell out and the weight of all that new construction was finally felt.

  6. While I would agree with you that that is a simple fairness issue, it won’t do much to reduce Ellis. What might help is to return all new rental leases to be price/eviction control-free.

    However, that is probably only going to bring on extra in-laws and vacant units. Its probably not going to reduce Ellis. The market is such now that TICs are priced at 95% of Condo units. So that a relatively cheap Ellis is a better bet than even condo-converting.

  7. Interesting to note that Tim is at least resigned to no new people of the kind that he prefers moving here. His ambition appears to be limited to preserving as many of those already here as he can.

    However, even if successful, those here will eventually all die off. And since no new people like him can afford to move here, apart from the odd McElvoy/Daly trust fund repugnant, he must know that his dream is doomed. He just hopes it will last as long as he does.

  8. lol, your single piece of evidence that Seattle is becoming like San Francisco is a…luxury residential broker? Who of course has no incentive to exaggerate future home price hikes, right?

  9. Yes, I made a similar point below. If you count all the RC units that are removed from long-term rentals as a result of natural turnover or at-fault evictions, I suspect SF has lost more RC homes than it has built affordable homes.

    With some work it might be possible to determine the real number. We know the units that are theoretically covered by RC and we can estimate (but not know) the number of long-term rentals. Making some assumptions (like how many of those rentals are of uncontrolled units) we can perhaps come up with a loss number. It’s certainly higher than that stated.

    We are heading for a situation where uncontrolled units are gleefully rented out while controlled units are switched to other purposes. That law of unintended consequences, again

  10. The housing doesn’t disappear. It becomes owner-occupied housing on the more affordable side. In most places outside crazy-town SF this would be deemed a good thing. Simple way to cut – down or eliminate Ellis Act evictions? Just let rent-controlled rents rise modestly in pace with the overall inflation rate. Right now, the purchasing power of the rental income diminishes by 40% per year. If the purchasing power of the rent remained constant by keeping pace with inflation owners would not need to exit the market.

  11. Ok, I’m going to edit, or comment on, my own comments, thanx to a Chron editorial.

    While the 5470 “no fault” evictions may (or may not) represent a “loss” of RC units (grant me ‘RC units’ are not the same as “affordable”), there is another unreported loss of units in many of the TIC conversions that have only vague statistical substance; these resulted from buy-outs or ‘natural’ vacancies that were subsequently not rented out (lets include purposeful vacancies also).

    While the stats typically say there are (Progs use “he have”) 170,000 RC units, that is really only an extrapolation of all units in all bldgs that are built pre-’79. I wonder if there is a better way to count and calc how many truly RC units there are – being occupied as RC units. Leaving aside the fact of potential future control (if the units were to somehow be re-rented) this would exclude current owner-occupied, vacant units, TIC units, de facto offices & storage units. So, is there really a way to get a count on exactly how many units are under Rent Control today? If you are going to talk about “loss of RC units”, I think we deserve to get an accurate count.

    Maybe the leaseholder of every unit under rent price controls – as a condition of continued price controls – should be required to report to the City his status and current rent. We certainly can’t rely upon landlords to honestly report how many tenants they have and what they pay. This would also give us an idea of actually how “affordable” those controlled units are, in aggregate.

  12. I really liked how this article started until he said “That means 83 percent of the gain the city has made by building new affordable housing has been offset by evictions.”

    He clearly does not understand stats or economics. Which is a bummer. You lose credibility when you start using numbers incorrectly. You can’t just assume almost all evictions were for luxury units. And others called him out in the comments here.

    It’s unfortunate because tenants (hi! me!) need people who can properly wield stats and understand economics to be able to present workable solutions to the supervisors and mayor.

  13. The RHNA numbers (calculated in 2007) don’t account for 100k new jobs SF created. We actually WAYYYY under built for expensive housing as well while we added all those tech jobs. Stop pretending you don’t know this.

  14. Yes, Tim thinks that, we should turn people away at the gates. He’s in favor of strictly enforced immigration rules for the city of San Francisco, but applicable only to people of a certain color, class, or citizenship status (U.S.). Those people will have to take a number and wait their turn in Tracy. No sanctuary for you, suckers.

  15. Tim’s real concern isn’t housing. He’s got his nice million dollar home in Bernal.

    His concern is demographic change and, in particular, that the people moving here and/or taking those liberated rent-controlled units will not vote as progressive as the people moving out. And then Tim might eventually be out of a job. Luckily his wife is a lawyer so he can just take early retirement, but still it irks him.

    And of course those thousands of controlled units would not be taken out of the market if rent control were not so punitive on property owners. Rent control will always have the effect of deterring owners from long-term rentals. That much is quite obvious. And in fact Tim’s number is on the low side since it excludes all the controlled units where the owner gets a vacancy through natural turnover or at-fault evictions, which often end up not being re-rented just to get them out of rent control

  16. No, if we had built too much market-rate housing then some of them would be sitting vacant. There are not.

    SF cannot have “too much” of any kind of housing. the demand is there at all price points.

  17. ok Tim, so building housing is not going to get us out of this crisis.. So what will? hunkering down and turning SF into a museum ? Turning new people away at the gates? Do you seriously even listen to yourself? You are a great example of the complete vacuum of thought leadership among those who count themselves as “progressive” in SF. Lets just turn this city in an official theme park already!

  18. “no-fault evictions – that is, tenants thrown out so the landlord can make more money in another way – have destroyed 5,470 affordable units by removing them from rent control.”

    Tim – this is not entirely true. If you look at the No-fault evictions (http://www.socketsite.com/archives/2015/07/where-them-evictions-at-in-san-francisco.html#comment-233374), out of 5470, 1% were for Condo conversions, 10% were ‘demolitions’ (whatever that was for – so, yes, “lost”).

    40% were OMI – which does not necessarily mean they are lost to RC. Sure, some may be in duplexes which then may be eligible to convert, but if they don’t convert for whatever reason, they are still “rent controlled” – just not currently in control of renters.

    The 1853 (30%) of units which were Ellised are also not necessarily lost to RC. Even if TICd, if for any chance re-rented in the future – guess what! – are STILL SUBJECT TO RC!!

    And of course, rent controlled units that are recently rented are not – typically – “affordable”, unless $4500 for a 3Br is “affordable”.

    Tim – stop being such a cynic. Go ahead and rent out a room or two in your house. You’ll get a totally different perspective, I Guarantee it!

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