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Is anyone naive enough to believe that newly build dense housing is going to bring down the cost of housing? It doesn't work that way. One of the biggest contr

Is anyone naive enough to believe that newly build dense housing is going to bring down the cost of housing? It doesn't work that way. One of the biggest contributors to high housing cost in San Francisco is rent control. It benefits some tenants, but it results in more and more rental housing being turned into TIC buildings under the Ellis Act. My wife's family had a four unit apartment building in SF and they had to sell it because with rent control, and de-facto vacancy control, it was a money-losing proposition since there was no way they could maintain the building and pay the mortgage with the rents they were getting. My wife may have married me for the free handyman services I provided to them. I'm sure that the new owner did a TIC conversion. In a way it's good that more people become owners rather than renters, but it does not increase the supply of housing or lower the cost. There are also a lot of houses in San Francisco with empty in-law units because the homeowners are scared to rent them out because of all the laws on rental housing, even in the cases where the in-law unit is not covered by rent control. So we're in the odd situation of having a housing shortage with tens of thousands of unoccupied housing units.

kspaans 10y ago
How long had the tenants been in those apartments? I'm just curious how costs rose faster than rents, since property taxes are pretty low. Was the high cost of labour for maintenance a big part of it?
- scharfstevenm 10y ago
  Maintenance and repairs were a lot when they had to pay someone to do everything. Then when I entered the family, suddenly I could repair appliances, replace plumbing fixtures, replace outlets and switches, install lighting, it never ends. Many trips to San Francisco from Silicon Valley for repairs. I think if they could have raised the rents when tenants changed, and have been allowed 3-4% annual increases, instead of 2% or less, then it would have been sustainable. But tenants passed on the apartments to friends and relatives, and the rent was delivered in cash to our house. A lot of apartment building owners in San Francisco aren't wealthy, and own just one small building. The lesson that was learned is that it's a really bad idea to own rental property in a city with such confiscatory rent control. And this rent control only on older properties ends up driving up prices on non-rent controlled properties because it constricts the market-rate supply.
  - kspaans 10y ago
    Are you saying that tenants who names weren't on the rent-control leases were living in the apartments? Forgive me, because I just moved to SF, but that doesn't sound legal to me.
    - scharfstevenm 10y ago
      Yes. But since they delivered the rent in cash, it was not possible to prove that the tenants had changed even though we knew they had. For us, it was not sustainable financially because we didn't have the resources or the will to challenge the "vacancy control." I'm sure the new owner solved the problem or converted it to a TIC. I like the Ellis Act and TIC concept since it makes more people property owners, and owners will maintain the property better than tenants or absentee landlords. OMG I sound like a Republican even though I am quite the progressive.
      - kspaans 10y ago
        OMG I sound like a Republican even though I am quite the progressive. No worries, blame Prop 13. ;)

kspaans 10y ago

How long had the tenants been in those apartments? I'm just curious how costs rose faster than rents, since property taxes are pretty low. Was the high cost of labour for maintenance a big part of it?

scharfstevenm 10y ago
Maintenance and repairs were a lot when they had to pay someone to do everything. Then when I entered the family, suddenly I could repair appliances, replace plumbing fixtures, replace outlets and switches, install lighting, it never ends. Many trips to San Francisco from Silicon Valley for repairs. I think if they could have raised the rents when tenants changed, and have been allowed 3-4% annual increases, instead of 2% or less, then it would have been sustainable. But tenants passed on the apartments to friends and relatives, and the rent was delivered in cash to our house. A lot of apartment building owners in San Francisco aren't wealthy, and own just one small building. The lesson that was learned is that it's a really bad idea to own rental property in a city with such confiscatory rent control. And this rent control only on older properties ends up driving up prices on non-rent controlled properties because it constricts the market-rate supply.
- kspaans 10y ago
  Are you saying that tenants who names weren't on the rent-control leases were living in the apartments? Forgive me, because I just moved to SF, but that doesn't sound legal to me.
  - scharfstevenm 10y ago
    Yes. But since they delivered the rent in cash, it was not possible to prove that the tenants had changed even though we knew they had. For us, it was not sustainable financially because we didn't have the resources or the will to challenge the "vacancy control." I'm sure the new owner solved the problem or converted it to a TIC. I like the Ellis Act and TIC concept since it makes more people property owners, and owners will maintain the property better than tenants or absentee landlords. OMG I sound like a Republican even though I am quite the progressive.
    - kspaans 10y ago
      OMG I sound like a Republican even though I am quite the progressive. No worries, blame Prop 13. ;)