Housing Destruction, the San Francisco Way
郭崇亮-102142 09/26 52894.0/1
Housing Destruction, the San Francisco Way
1992: Limit annual rent increase on rent-controlled units to 60% of CPI. Being guaranteed a life-time of low rent, just like hitting the “lotto”, tenants don’t want to move out. Vacancy goes down.
Since tenants no longer want to move due to guaranteed low rents, owners encountering bad tenants or rent scammers, needing to recover their units for their own use, or simply having to retire from the rental business due to financial or health reasons, no longer have an easy way; they have to resort to long and costly legal processes of OMI, RMI and Ellis Act.
Since 2006, just when baby boomers are reaching retirement age, owners have to pay lawyers (as much as $500/hour) to navigate a complicated process and pay tenants’ relocation fees up to $16,500 per unit. Furthermore, owner cannot rent out that unit for 3 to 5 years. Due to such hardship, low-income, senior owners are unable to retire or provide housing for their own families while tenants enjoy the protection of the law.
Recovering a unit from tenants who are disabled, senior or with children require an additional $3,500 move-out fee per person.
Later, additional law forces landlords to accept tenant’s family members to move in without additional rent. To recuperate the expenses, the landlords must follow a very strict, complicated process to pass through additional operating expenses…more time and lawyer fees and legal risk because if anything is slightly wrong, one can get sued by tenant for the intent of Wrongful Eviction and lose all the rent.
If a tenant’s family includes school-aged children, landlords can’t get their place back evict within the school year.
BTW, the relocation fees, or anything that the owners pay to tenants, are subject to full CPI adjustment, not 60%.
Effective 2014, Ellis Act relocation fees need to cover two years of difference between tenant’s old rent and market rent. Effective June 2015, owner has to keep track of whether the tenant is really using that fee for housing.
If a rental unit is illegal, landlords are usually sued and have to go through the legalization process. Landlords cannot collect rent during the legalization process, not to mention it is very expensive and tedious. During the process, landlords have to relocate to tenants and let them back in at the same rent after legalization. So, landlords are better off not to rent out that unit to begin with.
For a single family house, it will become forever (instead of temporarily)rent-controlled after legalizing an in-law unit, so landlords are better off not to legalize it.
Landlord cannot negotiate with tenant directly on move-out terms without first registering with the Rent Board…more lawyers’ fees effective 2015.
Now, are there any more landlords? If no, mission accomplished. If yes, make more laws until they all give up
renting…here comes Supervisor Jane Kim’s Eviction Protection 2.0 to protect bad tenants from increased rents or evictions. No! All San Franciscans must wake up and stop these bad laws from destroying our housing stock!
renting…here comes Supervisor Jane Kim’s Eviction Protection 2.0 to protect bad tenants from increased rents or evictions. No! All San Franciscans must wake up and stop these bad laws from destroying our housing stock!
More Destruction from Eviction Protection 2.0
Using just the July 2015 market average rent rate of $3,495 as backdrop for more restrictive rent ordinance is pure sensationalism and misleading . It would reflect luxury units and new constructions not covered by the rent
ordinance. Per the US census and to be relevant to the rent ordinance, it’s better to use median gross rent as a gauge for the rental market: (See 2005-2013 data from http://www.deptofnumbers.com/rent/california/san-francisco/.)
Unlike the “greedy landlords” picture that Kim’s proposal is trying to paint, the SF median gross rent is $1,435 in 2013. It closely reflects the true rent from rent-controlled units, which are the majority of the rental units, and tend to be stable due to low vacancy and long term tenants staying with low rent.
The median gross rent in SF only increased by 6.8% from 2005 to 2013, comparable to the 6.3% in California, but is significantly below the allowable rent increases totaling 11.4% and the Bay Area CPI of 18.9% accumulated over those 9 years.
The 2013 median rent as a fraction of median income is only 21.6% in San Francisco, more affordable than the
24.4% in California.
Vacancies available for rent in SF has been steadily declining from a high of 7% in 2006 to 3% in 2013. Kim’s
extremely tenant-indulging measure will speed further disappearance of rental units.
Using just the July 2015 market average rent rate of $3,495 as backdrop for more restrictive rent ordinance is pure sensationalism and misleading . It would reflect luxury units and new constructions not covered by the rent
ordinance. Per the US census and to be relevant to the rent ordinance, it’s better to use median gross rent as a gauge for the rental market: (See 2005-2013 data from http://www.deptofnumbers.com/rent/california/san-francisco/.)
Unlike the “greedy landlords” picture that Kim’s proposal is trying to paint, the SF median gross rent is $1,435 in 2013. It closely reflects the true rent from rent-controlled units, which are the majority of the rental units, and tend to be stable due to low vacancy and long term tenants staying with low rent.
The median gross rent in SF only increased by 6.8% from 2005 to 2013, comparable to the 6.3% in California, but is significantly below the allowable rent increases totaling 11.4% and the Bay Area CPI of 18.9% accumulated over those 9 years.
The 2013 median rent as a fraction of median income is only 21.6% in San Francisco, more affordable than the
24.4% in California.
Vacancies available for rent in SF has been steadily declining from a high of 7% in 2006 to 3% in 2013. Kim’s
extremely tenant-indulging measure will speed further disappearance of rental units.
Here are some questions and concerns for your consideration:
The minimum wages frequently received upgrading. Most owners are suffering from depressed rental income due to the limited annual rent increases at 60% of CPI since 1992. When can they expect an adjustment to keep up with inflation?
How will Kim’s proposal help to improve the housing stock?
“Tenant” by definition is subject to terms and period set by the landlord. With the SF ordinance , they are occupiers, not tenants.
If an additional tenant is unauthorized, how can owner enforce 6.14 notice?
If landlord needs to provide info in tenant’s language, tenant also needs to provide info in landlord’s language.
If the translation does not match English, will owner be legally liable or is the English version by default the official communication?
What’s not substantial violation of a rental agreement? A small offense often leads to serious issues:
- A tenant left belongings in our storage room; we asked them to remove and they agreed. Later, they installed a
lock on the room and claimed it belonged to them because we had cashed their rent check while their stuff was
still inside the storage room.
lock on the room and claimed it belonged to them because we had cashed their rent check while their stuff was
still inside the storage room.
- Tenant requested for repair of a window, but when we called multiple times to schedule, they never answered.
They then complained to Rend Board to request for reduction in rent due to reduced service.
They then complained to Rend Board to request for reduction in rent due to reduced service.
- Tenant sublet without permission. We only found out when sublessee complained to us for being evicted by
that tenant. Will owner be responsible for paying relocation fees to vacate unauthorized tenants? That will be
more headache and legal costs for owners.
that tenant. Will owner be responsible for paying relocation fees to vacate unauthorized tenants? That will be
more headache and legal costs for owners.
- Tenant is a serious hoarder, who was cited for health and fire hazard. When water overflowed from the bath sink,
the water soaked through the overwhelming debris which covered the hardwood floor, into the unit downstairs and
the basement . It took seven months for the tenant to clear out the debris in order to assess the damage. Who is
responsible for the damage?
the water soaked through the overwhelming debris which covered the hardwood floor, into the unit downstairs and
the basement . It took seven months for the tenant to clear out the debris in order to assess the damage. Who is
responsible for the damage?
With unauthorized tenants, how can one distinguish Airbnb rentals and subletting? Are main tenants free to evict unauthorized subtenants without relocation fees? How can owner pursue any damages with unauthorized tenants?
We teach children to call 911 when they see strangers in our house, but Kim wants us to let them in and service them?
We’ll continue to call 911.
We teach children to put away toys right away to avoid tripping, but need to give tenant 10-day notice for their stuff in common areas? Who is responsible for tripping hazard?
San Francisco California Residential Rent and Rental
Statistics
The median monthly gross residential rent in San Francisco, CA (the San Francisco-Oakland-Fremont metro area) was
$1,435 in 2013 according to the Census ACS survey.1 Average gross rent in San Francisco was $1,492 in 2013. The median
rent more accurately depicts rental rates in the middle of the distribution of rents and is thus preferred in the analysis below.
2014 San Francisco median and average rent data will be released in September of 2015.
Data is also available below for San Francisco rental vacancy rates, San Francisco rent as a percent of median income and the fraction of renters in San Francisco.
Statistics
The median monthly gross residential rent in San Francisco, CA (the San Francisco-Oakland-Fremont metro area) was
$1,435 in 2013 according to the Census ACS survey.1 Average gross rent in San Francisco was $1,492 in 2013. The median
rent more accurately depicts rental rates in the middle of the distribution of rents and is thus preferred in the analysis below.
2014 San Francisco median and average rent data will be released in September of 2015.
Data is also available below for San Francisco rental vacancy rates, San Francisco rent as a percent of median income and the fraction of renters in San Francisco.
Show dollars as: Nominal Real
Real Gross Rent in San Francisco California (2013 dollars)2
2013 1 Year Change 3 Year Change
US Median Gross Rent $905 +0.89% -0.55%
California Median Gross Rent $1,224 +0.49% -1.13%
San Francisco, CA Median Gross Rent $1,435 +1.06% +2.65%
Real Gross Rent in San Francisco California (2013 dollars)2
2013 1 Year Change 3 Year Change
US Median Gross Rent $905 +0.89% -0.55%
California Median Gross Rent $1,224 +0.49% -1.13%
San Francisco, CA Median Gross Rent $1,435 +1.06% +2.65%
San Francisco, CA Real Gross Rent Trends
At $1,435, real median gross rent in San Francisco was at its highest level in 2013 since the series began in 2005. At $1,492,
real average gross rent in San Francisco was at its highest level in 2013 since the series began in 2005.
At $1,435, real median gross rent in San Francisco was at its highest level in 2013 since the series began in 2005. At $1,492,
real average gross rent in San Francisco was at its highest level in 2013 since the series began in 2005.
Real Gross Rent in San Francisco: San Francisco CA Median, San Francisco CA Average, California Median, US
Median
Real Gross Rent History for San Francisco
Date US California San Francisco, CA San Francisco, CA
Median Median Median Average
2013 $905 $1,224 $1,435 $1,492
2012 $897 $1,218 $1,420 $1,464
2011 $900 $1,213 $1,389 $1,433
2010 $910 $1,238 $1,398 $1,443
2009 $909 $1,247 $1,406 $1,453
2008 $914 $1,260 $1,419 $1,475
2007 $875 $1,196 $1,342 $1,410
2006 $881 $1,189 $1,363 $1,415
2005 $862 $1,152 $1,344 $1,375
2013 $905 $1,224 $1,435 $1,492
2012 $897 $1,218 $1,420 $1,464
2011 $900 $1,213 $1,389 $1,433
2010 $910 $1,238 $1,398 $1,443
2009 $909 $1,247 $1,406 $1,453
2008 $914 $1,260 $1,419 $1,475
2007 $875 $1,196 $1,342 $1,410
2006 $881 $1,189 $1,363 $1,415
2005 $862 $1,152 $1,344 $1,375
San Francisco Rental Vacancy Rate
The rental vacancy rate is the fraction of homes for rent that are not occupied.3 In 2013 the rental vacancy rate for San
Francisco California was 2.99% according to Census ACS data.
Rental Vacancy Rate in San Francisco California
2013 1 Year Change 3 Year Change
US 6.49% -0.28% -1.68%
California 4.22% -0.29% -1.64%
San Francisco, CA 2.99% -0.29% -2.32%
The rental vacancy rate is the fraction of homes for rent that are not occupied.3 In 2013 the rental vacancy rate for San
Francisco California was 2.99% according to Census ACS data.
Rental Vacancy Rate in San Francisco California
2013 1 Year Change 3 Year Change
US 6.49% -0.28% -1.68%
California 4.22% -0.29% -1.64%
San Francisco, CA 2.99% -0.29% -2.32%
Trends in San Francisco, CA Rental Vacancy Rate
The rental vacancy rate in San Francisco peaked in 2006 at 6.97%. Since then it has fallen by 3.98% to 2.99%. Data records for this series originated in 2005.
Rental Vacancy Rate: San Francisco CA, California, US
Historical Rental Vacancy Rate data for San Francisco
Date US California San Francisco, CA
2013 6.49% 4.22% 2.99%
2012 6.77% 4.51% 3.28%
2011 7.40% 4.94% 4.10%
2010 8.17% 5.86% 5.31%
2009 8.43% 5.76% 5.46%
2008 7.86% 4.71% 4.72%
2007 7.87% 4.72% 5.67%
2006 7.70% 4.67% 6.97%
2005 7.74% 4.61% 6.10%
Date US California San Francisco, CA
2013 6.49% 4.22% 2.99%
2012 6.77% 4.51% 3.28%
2011 7.40% 4.94% 4.10%
2010 8.17% 5.86% 5.31%
2009 8.43% 5.76% 5.46%
2008 7.86% 4.71% 4.72%
2007 7.87% 4.72% 5.67%
2006 7.70% 4.67% 6.97%
2005 7.74% 4.61% 6.10%
Rent as a Fraction of Income
Using median household income data for San Francisco, we can calculate the fraction of income the median household would use to pay rent at the median monthly gross rent rate. For San Francisco, median monthly gross rent as a fraction of median household income was 21.63% in 2013 according to the ACS.
San Francisco California Median Annual Rent as a Fraction of Median Household Income
2013 1 Year Change 3 Year Change
US 20.78% +0.13% +0.28%
California 24.40% -0.29% +0.22%
San Francisco, CA 21.63% -0.78% +0.03%
Trends in San Francisco, CA Rent as a Fraction of Income
The fraction of median San Francisco household income required to pay median monthly gross rent peaked in 2011 (relative to the 2005 series origin) at 22.42%. Since then it has fallen by 0.80% to 21.63%.
Fraction of Income towards Rent: San Francisco CA, California, US
Historical Data for Annual Rent as a Fraction of Income in San Francisco California
Date US California San Francisco, CA
2013 20.78% 24.40% 21.63%
2012 20.65% 24.69% 22.41%
2011 20.70% 24.59% 22.42%
2010 20.50% 24.18% 21.59%
2009 20.12% 23.52% 21.18%
2008 19.00% 22.32% 19.97%
2007 18.66% 21.58% 19.73%
2006 18.90% 21.80% 20.10%
2005 18.89% 21.77% 20.83%
Renter Fraction in San Francisco California
You can calculate the renter fraction in San Francisco in at least two ways: by housing units or by population. I've gone with the housing units measure here. This measure looks at the number of renting households in San Francisco as a fraction of total San Francisco households. In 2013 46.42% of households were renters according to Census ACS data.
San Francisco Fraction of Renters by Household Units
2013 1 Year Change 3 Year Change
US 36.50% +0.41% +1.85%
California 46.21% +0.24% +1.85%
San Francisco, CA 46.42% -0.56% +0.85%
2013 1 Year Change 3 Year Change
US 36.50% +0.41% +1.85%
California 46.21% +0.24% +1.85%
San Francisco, CA 46.42% -0.56% +0.85%
Trends in the San Francisco, CA Renter Fraction
The San Francisco household renter fraction peaked in in 2012 at 46.98% and is now 0.56% below that level. The origin year
for the series is 2005.
Fraction of Renting Households: San Francisco CA, California, US
History of San Francisco Renter Fraction
Date US California San Francisco, CA
2013 36.50% 46.21% 46.42%
2012 36.09% 45.97% 46.98%
2011 35.42% 45.12% 46.34%
2010 34.65% 44.36% 45.57%
2009 34.13% 43.43% 44.46%
2008 33.36% 42.95% 43.11%
2007 32.80% 42.00% 42.18%
2006 32.73% 41.55% 41.56%
2005 33.10% 41.56% 42.18%
1. Gross rent is defined as contract rent plus the estimated average monthly cost of utilities (electricity, gas, water, and sewer)
and fuel (oil, coal, kerosene, wood, etc.). Because some rentals include utilities and others don't, gross rent is a way of
normalizing the variability. ↩
2. Real dollars are calculated using the CPI-U series. ↩
3. The rental vacancy rate is computed by dividing the number of vacant units for rent by the sum of the renter-occupied units,
vacant units that are for rent, and vacant units that have been rented but not yet occupied. ↩
