By Hina Shah.
While Mayor Ed Lee and the city of San Francisco offer much-needed solutions to stem the housing-affordability crisis, the measures are not bold or innovative enough to address the growing income inequality that is the root of the housing problem. A high-income family in San Francisco earns 15 or 16 times more than what a low-income family does. It is no surprise, then, that a study by the Brookings Institution found that San Francisco has experienced the greatest increase in inequality in the nation.
The discussion about the housing crisis has focused exclusively on how the burgeoning tech industry is affecting low-income residents. However, middle-class, moderate-income families like mine are also being squeezed out of the city.
My family lives in a non-rent-controlled unit in the Mission-Bernal Heights district. My husband and I moved into our apartment 10 years ago, when we were still dating. Since then, we got married and had two children. When it was time for our daughter to go to elementary school, we chose our neighborhood public school. We occasionally considered buying a place but, with our incomes as nonprofit and public-sector workers, owning seemed like a financial stretch.
In January, however, our commitment to raising our children in the city was severely tested. We were notified that our rent would increase by $600 a month. To accommodate such a drastically high increase, we reduced our contribution to our retirement account, stopped saving for college and cut out perks like gym memberships. To be sure, we are not in the same boat as low-income residents, who are one step away from being homeless. Yet, our situation also needs to be addressed in the affordability crisis because cities need middle-class families like ours to stay and invest in our communities.
As we and others our age started having children, most of our friends migrated to the East Bay or the Peninsula. Housing affordability was one of the top reasons why they left.
Moving was not an option because my husband and I both work in the city and we love our neighborhood public school. So, we immediately started looking for a cheaper rental, but two-to three-bedroom apartments in our neighborhood rent for $3,500 to $5,000 a month. We had no choice but to start looking to buy, with generous help from our families for the down payment.
Our neighborhood was not even an option, as in the last three months homes have sold for over $1 million. There is a buying frenzy consuming this city, and all-cash offers are permeating the market. We looked at a modest, three-bedroom home in the Excelsior, a working-class neighborhood. The owners bought the home in 1998 for $300,000. The listing price was $700,000, and it sold for $915,000, all cash. How can middle-class families, like mine, compete with this reality? Not even the increase in down-payment assistance from the mayor’s office will beat out all-cash offers.
For my family, the story has a happy ending. Through friends, we learned about cooperative housing apartments in Japantown. In a housing cooperative, all the residents are shareholders in a corporation that owns the property, and we have exclusive use of the unit we buy. For all practical purposes, it is similar to buying a condo. The co-op is market-rate housing but much more affordable than a single-family home or a condo.
But the story for San Francisco is less happy: We are on our way to being a stratified city, with no middle class. To ensure economic diversity in our communities, the city must embrace nonmarket solutions, such as:
Increase city-owned land that can be developed into subsidized housing for all income levels. Vienna offers an excellent model for how San Francisco could be a major player in social housing. In Vienna, the city controls 25 percent of the housing stock and indirectly controls another quarter of housing built and owned by limited-profit, private developers. Housing cannot be controlled solely by the private market, as irrational exuberance is once again overvaluing housing and pushing long-term residents out of the city. Here in San Francisco, the city must become a key player by owning and managing housing stock.
San Francisco’s Housing Trust Fund should be used to build affordable housing units, with a mix of diverse price points, limited equity units and rental units.
Induce tech giants such as Google to invest in community land trusts or other funds to help build more affordable housing. Google’s recent gift to fund free Muni passes for youth for two years is inconsequential. The public and the city officials who represent us should demand more from our tech neighbors.
Preserve and expand rent control: Units constructed after 1979 (like mine) are exempt from rent control. The state’s Costa-Hawkins Rental Housing Act exempts from rent control single-family homes and condominiums where the tenancy began on or after January 1996. The act also removed vacancy controls, allowing landlords to set new rents when a unit becomes vacant.
Change the Ellis Act to stop speculator evictions of rent-controlled tenants. Preserving and expanding rent control will need full public engagement and the city’s muscle, as it did in 1979 when the city passed emergency legislation to stem the tide of quadrupling rents in the Mission District.
We must stay committed to an inclusive and vibrant city by making San Francisco a home for all income levels.
Op-ed originally published by the San Francisco Chronicle and republished here with permission of the author.
Hina Shah is an associate professor of law and co-director of the Women’s Employment Rights Clinic at the Golden Gate University School of Law.