Cheap rent: A thing of the past

01.10.13 - 4:15 pm | Rebecca Bowe |

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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

Rebecca, what Avalos conveniently forget to mention to you is

that almost nobody pays 3K a month rent for such flats because of rent control,

So yeah, rents are 3 times what they were 20 years ago. It's called inflation.

But the price to buy those rental builds is also 3 times as much to buy. And while there is rent control on the rents, there is no rent control on the price to buy that building.

So the real loser here is the guy who took a risk to buy that rental building and then found that every year he fell further and further behind.

Market rents are irrelevant in a city where there is no turnover. and Tim is on record as saying that we should allocate housing base on "seniority". Well, nothing rewards seniority than rent control (and Prop 13, of course - rent control for the others).

Posted by Anon on Jan. 10, 2013 @ 4:51 pm

Rebecca Bowe translated 1989 dollars into current

dollars to account for inflation.

Posted by Eddie on Jan. 10, 2013 @ 5:16 pm

Rebecca claimed to factor in inflation but it seems fairly

apparent to me that she did not. If something costs 3K in 2013 and it cost 1.2K in 1989, then that is merely keeping up with inflation meaning, in turn, that her whiney allegation of rent inflation is unfounded.

Posted by Guest on Jan. 10, 2013 @ 5:25 pm

You misread the article.

She wrote that a $675 2-bedroom apartment in 1989 is equal to a $1273 2-bedroom apart in 2013, and that the market rent for a 2-bedroom is $4000 now.

Posted by Eddie on Jan. 10, 2013 @ 5:41 pm

Eddie, so what you are really saying is that some national

generic measure of inflation does not apply in certain parts of the nation that have seen higher than average demand?

Well, er, gee, you think?

Posted by Guest on Jan. 10, 2013 @ 5:54 pm

100% inflation?

100% inflation?

Posted by marcos on Jan. 17, 2013 @ 1:05 pm

"It's called

"It's called inflation."

Actually it's called government subsidies through jumbo mortgages and tax write offs, plus it's no secret that the Feds mationalized the real estate market through Fannie and Freddie.

Posted by Guest on Jan. 11, 2013 @ 8:23 am

Mortgage interest deductibility is capped and so it helps

the average SF'er to buy a home (good, right?) while not helping much for a billionaire to buy a place for millions - they usually pay cash anyway.

In fact, one third of all homes in the US are owned free and clear, with no mortgage. Doesn't quite suit your opinions, does it?

The feds already ran Ginnie Mae and FHA, so taking Fannie and Freddie on board was hardly a radical move. It was necessary, though.

Posted by anon on Jan. 11, 2013 @ 8:29 am

Fannie and Freddie take over

Fannie and Freddie take over the real estate market and renters are the ones called communists.

Posted by Guest on Jan. 11, 2013 @ 8:38 am

FNMA and FMAC didn't take over anything.

They were quasi-agency corporations which wnet astray due to slack regulation and supervision by the government. The government therefore had to pay up to cover it's own mistakes.

The important point is that homeowners were not affected and the loans continued to be serviced. Shareholders got hosed completely but i imagine you don't care about that.

Posted by anon on Jan. 11, 2013 @ 8:50 am

I don't think there is much

I don't think there is much debate that without total government financing of the mortgage market real estate values everywhere would become quite reasonable again like it was for our parents and grandparents.

http://www.propublica.org/article/weve-nationalized-the-home-mortgage-ma...

Posted by Guest on Jan. 11, 2013 @ 1:32 pm

Destroying wealth and prosperity isn't a coherent

economic policy.

Posted by Guest on Jan. 12, 2013 @ 8:26 am

"Destroying wealth and prosperity" isn't a coherent *comment*!

-- but it does seem to be the incoherent ranting of some sort of simple-minded "free-market" true-believer.

On the other hand, the propublica article Guest linked-to above is very cogent:

http://www.propublica.org/article/weve-nationalized-the-home-mortgage-ma...

It also calls to mind Harvey Green's "The Uncertainty of Everyday Life: 1915-1945" in which he devoted one chapter to housing and the changes in the mortgage market which began around that time. Interesting reading.

http://books.google.com/books?id=ud4p3bmrj0cC&pg=PA91&source=gbs_toc_r&c...

Posted by lillipublicans on Jan. 12, 2013 @ 9:17 am

No it's called scarcity.

It's actually called scarcity. Housing units in the city have increased only by about 20% since 1970, but the population of California has nearly doubled. Scarcity caused by a lack of new housing units in a high demand urban center like San Francisco has resulted in these out of control rental prices.

I'm not a facts of modern economics and how they leave out OBVIOUS factors in economic equations (like the true cost of strip mining a mountain), but the supply/demand curve is at play here in San Francisco. If you are a NIMBY blocking every new development out of concern for the poor, you should consider that you could actually be hurting the poor more than any developer could.

Posted by Guest on Jan. 14, 2013 @ 2:30 pm

meant "not a fan of modern

meant "not a fan of modern economic teachings..."

Posted by Guest on Jan. 14, 2013 @ 2:31 pm

I agree with you, Guest, that's it's a supply problem

But comparing the growth of SF with the growth rate of SF isn't entirely fair, since SF hasn't seen the huge population growth that CA has.

What's happened more in SF is that weathier, knowledge workers have replaced the blue-collar workers of yore. The demographic is changing and the new guys have the means to pay more, displacing the rest.

That's only a problem if you think the city should never change. And I figure a high-rent SF will have more of the facilities that I want, and less crime and blight.

High rents are a sign of success, not failure.

Posted by Guest on Jan. 14, 2013 @ 3:05 pm

The investor/speculator who buys a rental building

should know the real estate and rental laws before buying the property. If not, he or she is being quite irresponsible with his or her money. It's a funny thing about speculation, you might lose. (Of course, the government protects the really big players, like the financial industry.)

So for the "real loser" in your comment, I have a three word message: boo fucking hoo.

Posted by Eddie on Jan. 11, 2013 @ 8:29 am

Eddie, I wasn't suggesting sympathy for investors but simply

explaining why it turns out that buying a rental building can turn into a loss-making venture unless you get a lucky turnover of rent-controlled tenant.

You might think that doesn't matter because speculators are evil. But the point is that it can affect tenants too, EITHER because the rents for vacant units have to be set much higher OR because the landlrod gives up and Ellis'es his way to profitability.

If you thought about this more, you'd realize that it is in the best interests of tenants that investors are willing to own and run rental buildings. The idea that landlords and tenants are "enemies" only seems to arise with rent control. They are actually natural allies who should be keeping each other happy.

Posted by anon on Jan. 11, 2013 @ 8:44 am

Landlords can and usually do charge whatever the market

will bear for rents in vacant units. Your point about the effect of rent control on rents in vacant units is bogus.

Did the tenant that you evicted for an OMI eviction consider you a natural ally?

"Shared sacrifice," "common interest," "natural ally" are all slogans of propaganda the ruling class uses to try to dupe the ruled.

The preamble to the IWW Constitution is a far more accurate representation of the relations between landlords and tenants, employers and employees, than your fairy tale version:

http://www.iww.org/en/culture/official/preamble.shtml

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

I'm comfortable with demographic transition driven by economic

necessity as long as the consensus is that those displacing yesterday's people contribute more revenue and dynamism to the local economy than those who are better suited elsewhere..

It's not as if SF is short of penniless lesbian activists, eco-warriors or atrocious poets. Nor do we need more poor people, homeless people and bad artists with nasty tattoo's.

Posted by Guest on Jan. 10, 2013 @ 5:09 pm

Guest, you need some new material.

The rap about bad artists, tattoos, etc. was never funny. Now, it's unfunny, irrelevant and stale, like most of your contributions.

Posted by Eddie on Jan. 10, 2013 @ 5:28 pm

Eddie, you kneejerk protests are growing tiresome.

Exactly what kinds of people do you think SF needs?

Those who add value, or purple-haired lesbian activist.artists?

Posted by Guest on Jan. 10, 2013 @ 5:37 pm

I'll make a deal with you.

Stop posting insulting, classist, homophobic, racist comments about groups that don't meet your economic or conformist standards, and I'll stop responding to them so you won't be so tired.

I don't think you can do it, since you appear to be angry, bitter, and vindictive bordering on unhinged.

Posted by Eddie on Jan. 10, 2013 @ 6:38 pm

Right-on!

Right-on!

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

I agree. I think it was last

I agree. I think it was last year on here, someone suggested that there needs to be a National Troll Convention held somewhere (I guess it hasn't happened yet) where they hand out new troll material to those in attendance because their current/past troll material has become so dated, tiresome, stale, stagnant and overused that it's become extremely predictable. As you say, the comment you responded to is a perfect example of that.

Posted by Guest on Jan. 10, 2013 @ 6:48 pm

You're still responding to those "trolls"

So they must be at least a little compelling to you.

Posted by Lucretia Snapples on Jan. 10, 2013 @ 7:58 pm

Corporate memes are hardly compelling

The truth is, the only purpose of trolling is to spread DISINFORMATION like a disease. It's unfortunate that we must waste our time responding to your crap, but if we don't it could morph into a supermeme (like calling Social Security "entitlements" instead of the more accurate "earned benefits"). But there is a certain class of trolls who don't feel they exist unless they're getting a reaction from someone...anybody! (which appears to be your type, Ms. Snapples) One can only pity them, and pray that they get the psychiatric help they so desperately need.

Posted by Meme Buster on Jan. 12, 2013 @ 1:47 pm

Got a reaction!

Thank you :-)

Posted by Lucretia Snapples on Jan. 12, 2013 @ 3:12 pm

I perceive a cycle: sometimes coyly troll-like, then

perfidious and berzerk, then back again.

Posted by lillipublicans on Jan. 12, 2013 @ 3:57 pm

I perceive a mole-troll

It's named lil' lilz and it's known for outlandish postings designed to discredit the progressive movement. It raises the red flag to oppose the red flag.

Posted by Lucretia Snapples on Jan. 12, 2013 @ 4:21 pm

Social Security - "entitlement", "earned" or both?

SocSec is both and 'earned benefit' AND an entitlement. The part that is "earned" is when the Govmt was taking 7% of your minimum wage pay ($1.40/hr). Continued thru your lifetime - up to your middle class ($50K?) retired salary - which then pays you ~$2000/mth. If you calculate your SS withholdings, you would quickly (2-3 yrs) run out of the savings+interest of the lifetime of your 'earned benefit'. After that, from 68 until your death @ 85? -- THAT is the 'entitlement' portion (along with yearly COLA adjustments), which are basically taking from the current working population to give to the retired (and voter-heavy) group.

When Bismark first came up with the SocSec scheme, he set the retirment age @ 65, with full knowledge that most people didn't average living past 67. If we were to actually pay on retirement the expected earning+interest for the expected current lifetimes, that $2000/mth would look more like $600/. And that would be for the MIDDLE CLASS. Poor workers would see a double-digit monthly check. That is, for their "earned" portion.

If you don't beleive me, try to buy a private annuity with the amt of your lifetime SS withholdingts (+interest). You will be quickly disappointed in the return amt of your "earned" portion.

Of course, w/ current set-up, SocSec is reasonable assured to be in equilibrium to mid-century (if not later). The REAL crisis is in Medicare (and the totally unfunded Bush-era Part D [drug benefit]) with is contending with health-care inflation of 15-25%/yr. V little of Medicare is "earned" - most is entitlement, and without a cap to boot.
-P

Posted by Guest on Jan. 13, 2013 @ 8:41 am

The problem with health care inflation

can be solved by expanding Medicare to cover everybody. The for-profit private healthcare system is largely inefficient with non-medical costs (administration, high executive salaries, profit) ranging from 15% to 25%. Medicare spends a mere 3% on administrative costs.

Private health care equals profits for the owners, higher prices for consumers, and inferior health outcomes.

Posted by Eddie on Jan. 13, 2013 @ 9:07 am

Extending MediCare to everyone would be prohibitively

expensive and, by increasing demand for healthcare, would further drive up it's cost. We cannot even afford MediCare on it's current terms.

That's why Congress rightly rejected that idea, along with the ill-fated "public option"

Posted by Guest on Jan. 13, 2013 @ 9:37 am

Single payer universal health care

will be cheaper than the existing system with better health care outcomes.
That's what has happened in the rest of the similarly situated (ie, "rich" industrial) countries that have universal health care.

Your statement about increasing demand for healthcare hints at a problem in the existing for-profit system--uninsured, or poorly insured people don't get the healthcare they need, so when they finally seek treatment, the overall costs are unnecessarily higher and the outcomes worse (if they seek treatment at all instead of just dying prematurely.)

The failure of the public option has nothing to do about its superiority as a health care system, but is a result of the capture of the political system by private corporate interests.

Posted by Eddie on Jan. 13, 2013 @ 9:54 am

The "public option" failed to get support because the

majority were not convinced by the argument that it would be cheaper. Even the Dem's didn't buy that, and Dem's ran both the House and the Senate at the time.

Indeed, it seems inconceivable that giving free medical care to an extra 45 million could possibly "save" money. It would in fact lead to higher rprices, excess demand and waiting lists.

It was the threat of the public option that directly led to the rise of the Tea Party and the GOP takeover of the House in 2010.

Posted by Guest on Jan. 13, 2013 @ 10:37 am

No one said that health care would be free.

Under a public system, the funding mechanism would be different (through taxes rather than insurance premiums.) It's not that complicated; it works in every country where it exists. The private interests that skim profits off the existing system are fighting hard to keep their place at the trough.

Your understanding of the realities of the political system and of economics is amazingly superficial.

Posted by Eddie on Jan. 13, 2013 @ 10:56 am

Wrong, Eddie, if healthcare is paid from taxes then those

who don't pay taxes (Romney's 47%) would effectively get free healthcare.

That's why the public option was rejected - because it would raise taxes for everyone but the poor.

Of couse, you probably think the 53% should pay more taxes. Fine, but don't claim that healthcare wouldn't be "free" for the rest.

Posted by Guest on Jan. 13, 2013 @ 11:15 am

Everybody who has a job

pays payroll taxes; ie, FICA. You might want to check into having the Fox News implant removed from your brain.

Posted by Eddie on Jan. 14, 2013 @ 8:41 am

Eddie, there is no FDIC on gains, dividends, interest or

stock options, so it is entirely possible to have a job as, say, a Day Trader, who pays no FICA.

Posted by Guest on Jan. 16, 2013 @ 11:46 am

What does day trading

have to do with the low wage workers who pay FICA and other payroll taxes, but who have their withheld federal income tax refunded because their incomes are so low?

You refer to the investor class who can afford adequate health insurance under the current for-profit, pay or die system.

Divert and shift, ad nauseum.

Posted by Eddie on Jan. 16, 2013 @ 11:55 am

I was just giving you an example of a job with no FICA

You said that wasn't possible.

There are other examples too e.g. property flipper.

Of course, if you are defining the word "job" to cover only those cases where FICA is paid then, sure, you're correct, albeit in a technical, trivial, tautalogical and totally uselss way.

Posted by Guest on Jan. 16, 2013 @ 12:18 pm

You gave me an example and

then proceeded to contradict it. My point about payroll taxes refers to the 47% (sic) figure that you like to cite. Few day traders or property flippers or wage thievers are part of that 47% (sic) unless they are also tax evaders.

Posted by Eddie on Jan. 16, 2013 @ 12:37 pm

Don't Feed the Trolls.

Don't Feed the Trolls.

Posted by marcos on Jan. 16, 2013 @ 12:48 pm

Imp Troll

Imp Troll

Posted by marcos on Jan. 16, 2013 @ 1:04 pm

I said nothing about the 47% who rely on the government

I said that not everyone with a job pays FICA, which you now appear to admit.

Posted by Guest on Jan. 16, 2013 @ 12:55 pm

Sorry Marcos, but I can't let idiocy go unanswered.

Even if 47% of people don't pay income taxes (I suppose that figure includes children,) how do they rely on the government since many, if not most, are employed any more than you rely on the government to protect you from "arab terrorists and the unwashed here?"

And everyone pays regressive sales taxes to local and state governments, except in the uncommon jurisdictions that don't have sales taxes.

Don't let facts get in the way of your fantasy. You are so ridiculous that you have forced SFBG staff to respond to your falsehoods.

Single Payer Now.

Posted by Eddie on Jan. 16, 2013 @ 1:15 pm

Living off unearned income, such as

capital gains, dividends, interest and stock options is not a job. Nor is day trading unless you define it as self-employed.

Self employed people are responsible for FICA under the self-employment tax. Why wouldn't it surprise me if you know a lot about tax evasion?

Posted by Eddie on Jan. 16, 2013 @ 12:02 pm

Day trading is definitely a job

The IRS have specific rules for whether someone is defined as self-employed.

and actually it's a desirable thing because, altho it means you pay FICA, you can deduct a whole host of expenses. For that reason, the IRS often reject requests to be taxed as self-employed.

You could learn so much, Eddie, if you only listened more and talked less.

Posted by Guest on Jan. 16, 2013 @ 12:19 pm

I appreciate the lesson in the IRS definition

of day trading as a job. Of course, you just contradicted your argument that day traders don't pay FICA taxes.

Posted by Eddie on Jan. 16, 2013 @ 12:31 pm

Some day traders pay FICA and some do not.

But only one of them has to not pay FICA for your blanket assertion to be false.

Posted by Guest on Jan. 16, 2013 @ 12:52 pm