December 31, 2017 – Real Estate Market Numbers
By Glen Bell (510) 333-4460
Here are some highlights for the 38 East Bay Cities that I track:
- As anticipated, we repeated the dramatic drop off in inventory at year end, following our normal pattern for December, typically our low point. However, our current inventory is even lower than last year’s. I’ve been tracking SF East Bay real estate markets since 2006. This market is the tightest I’ve ever seen it. I’ve haven’t seen our market dip below a two week supply. We’re now sitting on a 12 day supply of homes. Furthermore, considering that 63% of the active homes are sitting for 30 days or longer, fresh new inventory is hard to come by. This makes for a very competitive market for many buyers that are starting to come back into the market.
- Our monthly supply is now 12 days. Last year, our months’ supply at this time was 15 days. As a reminder of what we mean by “months’ supply;” If no more homes come onto the market, and homes continue to sell at the same pace as they have been over the last 12 months, then the “months supply,” (in this case 12 days), tells us that’s how many days it would take to sell the remaining number of homes we currently have available for sale in any given market.
- It’s hard to predict how much tax reform will play into this. We are seeing interest rates starting to go up. Prices continue to rise, but at a slower pace. More and more, affordability, the high cost of living and our traffic woes are coming into play for those, especially in the “middle class,” who may now be considering leaving the Bay Area.
- Typically, we see a steady increase on a month by month basis to occur before finally peaking in September.
- The number of pendings, (homes that are in contract), decreased as well, also reaching a low level that I have not seen before. The pending active ratio increased to 2.11. This compares to last year at the same time of 1.73. This supply and demand ratio signals whether we’re in a sellers’ or buyers’ market. Typically, a number well above 1, (more inventory with less pending) favors sellers. A number below 1 favors buyers.
- The percentage of homes “sitting” has increased to 63% of the homes listed now remaining active for 30 days or longer, while 37% stayed on the market for 60 days or longer. This is roughly what we saw last year at this time.
- The “distressed” market, (foreclosures and short sales) are no longer a factor representing less than .05% of the market with only.
- The month’s supply for the combined 38 city area is 12 days. This is the lowest level that I’ve seen since I started following SF East Bay real estate markets, (going back to 2005). Historically, a 2 to 3 months supply is considered normal in the San Francisco East Bay Area. As you can see from the graph above, this is normally a repetitive pattern over the past four years. However, we are below supply levels compared to last year at this time, of 15 days.
- Our inventory for the East Bay (the 38 cities tracked) is now at 868 homes actively for sale. This is below last year at this time of 1,241 or (30% lower). We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales decreased to 1,830, lower than where we were last year at this time of 2,147 or (14.8% lower).
- Our Pending/Active Ratio is 2.11. Last year at this time it was 1.73.
- Sales have decreased from the last (4 month period) now at 8,295 for the 38 cities tracked. This is slightly lower than what we saw last year at this time (8,319).
- Sales over the last 4 months, on average, are 3.8% over the asking price for this area, greater than what we saw last year at this time, 2.3%.
By Holly Amaya, Realtor.com, Jan 4, 2018
Figuring out when to plunge into the real estate market can be quite intimidating—especially when prices are high, choices are limited, and history urges restraint.
“We’ve seen two or three years of what could be considered unsustainable levels of price appreciation, as well as an inventory shortage that resulted in a record-low number of homes for sale across the country,” says Javier Vivas, director of economic research for realtor.com®. “When you factor those together, you have a market that has to either explode or see some relief.”
Comforting, right? Well, take heart: Experts agree that relief is indeed on the horizon.
New predictions for 2018 forecast more moderate gains in home prices and rising inventory levels, while low unemployment and record levels of consumer confidence mean more buyers are feeling good about their finances.
A lot depends on where you live (and how much you plan to finance), but these factors combined could mean 2018 will be your year to take the buying plunge.
1. Rates are going up
After years of record-low interest rates (hello, 3%!), the Fed is finally making some noticeable increases: The rate for a 30-year fixed mortgage broke the 4% mark last year. And with economic growth continuing to carry momentum, Vivas predicts we’ll see at least two to four more rate increases throughout 2018. Rates are anticipated to hit 5% by the end of the year.
“The big story there is that those increases will further constrict affordability,” Vivas says. “The more buyers wait, the more expensive it will get to buy—not just because of home prices, but because of inflationary pressure.”
In other words, if you want in on the American dream, now might be the time.
2. Prices are climbing, but not crazily fast
Home prices have soared over the past few years, pricing otherwise well-positioned buyers out of high-cost areas and leading some experts to cry “bubble”. But in 2018, price increases are expected to moderate.
Vivas forecasts a home price increase of 3.2% year over year, after finishing 2017 with a 5.5% year-over-year increase. Existing-home sale prices are predicted to increase 2.5% year over year.
Of course, it all depends on where you live. While red-hot markets such as San Francisco are predicted to finally lose some steam, sales numbers and home prices are poised to climb in Southern states such as Texas and Florida, where economic momentum continues chugging along and new construction is happening in the right price points.
So what does that mean? Basically, home prices will still increase, but not at the same pace as they have over the past few years.
3. Inventory levels will begin to increase
An inventory shortage has plagued the U.S. housing market since 2015, forcing some buyers to settle (a tiny house with linoleum floors for $1 million, anyone?) and keeping others out of the buying game entirely. But by fall 2018, the tides will begin to turn, with markets such as Boston; Detroit; and Nashville, TN, recovering first.
The majority of inventory growth will happen in the middle- to upper-tier price point, in the ranges of $350,000 and $750,000 and above $750,000, Vivas predicts.
New home construction is also expected to expand. But that will happen slowly, thanks to a constricted labor market, limitations on the amount of lots and land that’s available, tight bank financing for building loans, and a run-up in building material prices, says National Association of Home Builders chief economist Robert Dietz.
“It’s been a slow climb back from the recession, and now we’re confronting all of these limiting factors and supply-side constraints,” Dietz says.
It’s particularly tough, he says, for builders to break ground at the entry level for first-time buyers, particularity in high-cost coastal markets such as California. That means it will take longer for those inventory levels to recover.
But there’s a bright spot: Builder confidence is at its highest level since 1999, according to the NAHB. And that means hope is on the horizon.
“As we head into 2019 and beyond, we expect to see the inventory increases take hold and provide relief for first-timers and drive sales growth,” Vivas says.
The wildcard: Taxes and politics
When the Republican tax plan was introduced, the proposed elimination of the mortgage interest deduction was all anyone could talk about: While the new limitations on the deduction will affect only 2.5% of all existing mortgages in the U.S., it will have a disproportionate effect on Western markets, where 20% to 30% of mortgages are above the new threshold, according to Vivas.
Across the board, experts agree that the new tax plan decreases incentives for homeownership and reduces the tax benefits of owning a home—particularly in highly taxed, expensive markets such as California, Illinois, New York, and New Jersey. But on the flip side, that means that if fewer folks are motivated to buy, then there’s less competition for those who want in the game. Plus, some taxpayers—including renters—will see a tax cut. That increase in buyers’ disposable income could spur demand from folks who are looking to build equity as a homeowner, rather than flushing away their savings in rent.
“Buying remains the more attractive option in the long term—that remains the American dream, and it’s true in many markets where renting has become really the shortsighted option,” Vivas says. “As people get more savings in their pocket, buying becomes the better option.”
By Jeff Collins, Orange County Register, January 5, 2018
After nearly six years of rising home prices, what’s next?
Will 2018 be the seventh year home prices go up? Or the year the market stalls? Will this be the year that tenants get the upper hand over landlords? Or will rent hikes just keep coming?
In other words, will the seller’s market of the past 69 months continue in 2018?
We interviewed 10 economists and reviewed nine forecasts to find an answer to that question. It can be summed up in one word.
Yes, home prices and home sales are projected to keep rising in the year ahead, although the gains will be smaller.
Yes, the supply of homes for sale will fail to keep pace with demand, fueling more cutthroat bidding wars.
And yes, rents will keep rising while apartment vacancies stay near all-time lows.
The economists all cite the same reason: “As long as the economy keeps growing, that’s going to give a push to the housing market,” said Anil Puri, director of the Woods Center for Economic Analysis and Forecasting at Cal State Fullerton.
Jerry Nickelsburg, director of the UCLA Anderson Forecast, put it this way: “When you have increases in employment, you have increases in household formation, and that increases demand for housing. That’s what we’ve been seeing.”
To get a grip on the year ahead, we highlighted five topics: Prices, sales, mortgage rates, number of homes for sale and rent.
The picture that emerges shows a market that still has more room to grow.
Ultimately, we ask the question on the minds of those still seeking to buy a home but are worried they missed their chance: How long will this crazy, runaway train of a market last? Is it too late to buy a home?
Here’s what we learned.
Home prices still rising
- Southern California home prices are expected to rise at about the same pace as California: 4.2 percent, according to the California Association of Realtors. That would put next November’s median price of an existing house at about $525,000.
- Orange County home prices are projected to rise 5 percent to 6 percent, according to forecasts by Chapman University and Cal State Fullerton. Metrostudy, a market intelligence and research firm, foresees a 3.2 percent gain in Orange County home prices. By comparison, Orange County house prices were up 6.9 percent in the year ending in November, according to CAR.
- Los Angeles County home prices will rise 3.1 percent, according to Metrostudy. UC Riverside’s Center for Economic Forecasting and Development has a more optimistic forecast, predicting gains of 5 percent to 10 percent. CAR reported L.A. County house prices up 9 percent in the year ending in November.
- Inland Empire home prices will rise 3.9 percent, Metrostudy predicted. UC Riverside forecast a price gain of 8.9 percent in Riverside County and 7.3 percent in San Bernardino County, with prices possibly getting back to record levels set before the 2007 housing crash. By comparison, Riverside County prices rose 8.7 percent in the year ending in November, and San Bernardino County prices rose 12 percent.
Home price gains will continue in the year ahead, just not as fast as in 2017, economists said.
On the one hand, rising demand and a shortage of homes for sale create upward price pressure. On the other, those are offset by an expected increase in mortgage rates and fewer buyers who can afford today’s home prices (called “low affordability” by economists).
“It’s slowing down,” economist and former Chapman University President Jim Doti said of price appreciation. “The main reason is (low) affordability.”
Some also worry the new tax overhaul will slow home sales and sap prices.
A county-by-county analysis by Moody’s Analytics shows home prices in Orange, Riverside and San Bernardino counties will be at least 3.6 percent lower than where they would have been in 2019 without the tax law. In Los Angeles County, prices will be nearly 5 percent lower than previously expected growth rates. The National Association of Realtors projected the tax law will curtail California home price growth by nearly 1 percent.
Sales flattening out
- Southern California home sales rose 2 percent to 208,250 transactions through October 2017, according to CoreLogic. But 2018 sales likely will only rise about 1 percent in California and the region, Realtor forecasters said.
- Orange County sales are projected to increase 2.7 percent this year, according to Chapman.
- Sales forecasts were unavailable for Los Angeles, Riverside and San Bernardino counties.
Sales have plateaued across the state and region, said California Association of Realtors Chief Economist Leslie Appleton-Young.
Which is a bit of a mystery, given the state’s robust job growth and still-low mortgage rates in 2017.
“You have to wonder why aren’t we seeing more sales activity,” said Robert Kleinhenz, executive director of research at the UC Riverside Center for Economic Forecasting and Development. “The population is much bigger, and all else being equal, you would expect to see a larger number of sales.”
The answer to that riddle, said CAR’s Appleton-Young, is a lack of inventory and prices starting to get out of reach for some.
“The lack of inventory and affordability are really … keeping a lid on the California housing market,” Appleton-Young said. “We have fewer transactions … today than when we had 10 million fewer people living in California.”
The nation also has become less mobile, said Richard Green, director of USC’s Lusk Center for Real Estate.
“That’s depressing sales,” he said. “I don’t expect sales to go down. I don’t expect them to go up either.”
Headwinds from rising mortgage rates
- Interest for the benchmark, 30-year fixed-rate mortgage will average between 4.3 percent to 4.6 percent in the year ahead, according to CAR, Chapman and CoreLogic.
Mortgage rates have averaged 3.8 percent over the past three years, with just two brief periods when rates got above 4 percent.
Now, economists say, rates are heading up again, and likely will stay above 4 percent for the coming year.
Federal Reserve hikes in short-term interest rates will directly impact adjustable-rate mortgages and home equity lines of credit, CoreLogic said. They also will drive up long-term rates, to which fixed mortgages are tied.
Combined with higher prices, that translates to a 15 percent increase in monthly principal and interest payments for first-time homebuyers, said CoreLogic Chief Economist Frank Nothaft.
Buyers will have too few homes to choose from
- With just 27,550 Southern California homes for sale, 2018 started with the lowest for-sale inventory in five years.
The lack of homes for sale that has plagued the region and the nation for the past five years will continue in the year ahead. Southern California’s for-sale listings fell to 27,550 in December, the lowest number since the spring of 2013, according to ReportsOnHousing.com.
Why are there so few homes?
People are staying put longer between sales — 11 years, twice the 2009 average, according to CAR. Homeowners also are reluctant to sell because they can’t find another home in which to move.
Homeowners also stay put to avoid capital gains taxes or higher property taxes on a new home. Those who got mortgages when 30-year rates averaged 3.5 percent also are “locked in” because they don’t want to give up their lower house payments.
Because of the newly passed tax legislation, homeowners with home loans greater than $750,000 will stay put to keep their mortgage interest tax deductions.
“For-sale inventory will stay lean because homeowners are not going to move, (and) that’s going to limit the inventory that’s for sale,” CoreLogic’s Nothaft said.
Renters to pay more, too
- Orange County rents are projected to rise 3 percent to 3.6 percent in 2018, according to apartment data firm RealPage and the USC Casden Multifamily Forecast.
- Los Angeles County apartment rent will rise 3 percent, both forecasts show.
- Inland Empire apartment rents will rise faster: Up 4.1 percent to 4.4 percent, according to the two forecasts.
- Most Southern California apartments will be full. Vacancy rates in the region will be around 3.5 to 3.6 percent, according to RealPage.
Low vacancy rates will keep apartment rents high, economists said.
“As long as the buildings are full and the new development fills up, that’s going to allow rent growth to continue,” said Greg Willett, RealPage chief economist.
Rent hikes will continue so long as vacancy rates stay at 4 percent or lower, added USC’s Green.
“Most places, usually at 5 percent is when rent flattens out,” he said.
When will rent go down?
“We don’t have that in the near-term forecast in the Southern California market,” Willett said. “Usually, you’re talking about a recession and big job cuts for rents to go down.”
Should you buy a home?
- Yes, but only if you plan to live there awhile to ride out any potential downturns.
After almost six years of home-price gains, people are asking how much longer will this trend last? Is it too late to buy a home?
Southern California single-family home prices have risen $239,000 or 91 percent over the past 69 months, according to CAR.
How much longer can this go on? How soon will prices start falling? Is it safe to buy a home today?
Most economists say this bull market still has some legs, lasting a year or two more at least, if not five.
“It’s debatable whether we’re in a bubble,” said Chapman economist Doti. “(But) is it a bubble that’s about to burst? No.”
First, economists note the last crash was preceded by a buildup of homes sitting on the market without selling. Currently, few homes stay on the market long, and as mentioned earlier, Southern California listings are at a five-year low.
Demographics also could keep the housing market afloat since millennials are expected start reaching first-time homebuying ages over the next five years, CoreLogic’s Nothaft said.
“We have a demographic tailwind going forward,” he said.
So, is it a good time to buy a home?
“Yeah,” Doti said. “The sooner the better. Get it while interest rates are low. If you can afford a home, now is a good time to buy.”
But there are some precautions you should take first, added USC’s Green.
“If you like the house, if you could afford it, and would live there five years, yes. Otherwise, no,” he said. “In the long run, you’re fine. But if you have to sell (in the short term), you could be in trouble.”
Real estate brokers waiting to see whether new tax law alters trend
KATHLEEN PENDER, San Francisco Chronicle, December 29, 2017
The median price paid for a new or existing Bay Area home or condo hit a record $787,000 in November, up 1.5 percent from a revised $775,000 in October and up 12.6 percent year over year, according to a CoreLogic report issued Thursday.
Some say that could turn out to be a high-water mark until buyers and sellers sort out the impact of the federal tax overhaul, which eliminates some tax benefits of homeownership. Others say the bill won’t put enough downward pressure on the seemingly insatiable demand for Bay Area homes to cause prices to fall.
“I think it’s going to be wait and see in January and February,” said Michael Barnacle, managing broker of the Zephyr Real Estate office in Pacific Heights. “We have had some evidence in recent weeks of people deciding they weren’t going to sell as a consequence of the new taxes.” They might be worried that they will have to pay higher property taxes on a new home, yet be able to deduct less of them, if any.
Buyers, especially first-timers, “are probably going to hold off until they can entirely figure out the whole rent-versus-own situation as a consequence of the tax changes,” Barnacle said.
Ultimately, most people he talks to expect “lower but steady appreciation,” but in the short term, prices may plateau “until people figure this out,” he said.
President Trump signed the tax bill only a week ago and almost all of the changes don’t take effect until 2018.
The new law generally lowers tax rates, but some people could still pay higher taxes if the loss of deductions and exemptions pushes their taxable income higher.
There are two big changes directly affecting homeownership. Under the new bill, homeowners can deduct interest on up to $750,000 in mortgage debt used to buy or improve one or two homes. That’s down from $1 million under the old law. The new rule applies to mortgages taken out after Dec. 14, 2017. Older loans are grandfathered in under the old limits. (Homeowners can refinance these older loans up to $1 million and still deduct interest as long as the balance on the new loans is not bigger than the balance on the old one — in other words, if you’re not doing a cash-out refinance.)
In addition, the final bill repeals the itemized deduction for up to $100,000 in home-equity debt not used to buy or improve a home, including existing home-equity loans and lines of credit.
Starting next year, taxpayers who itemize can deduct a total of $10,000 in all state and local taxes combined. This includes state income and property taxes. Today, taxpayers who itemize can deduct all of their state and local taxes, unless they are in Alternative Minimum Tax, which disallows the deduction.
People who can afford to buy a home in the Bay Area could easily pay more than $10,000 a year in state and local income and property taxes combined. The tax on a newly purchased $1 million home would be more than $10,000 by itself.
In a win for homeowners, the final bill preserved the existing rules that apply to capital gains tax on a primary residence. Homeowners pay no tax on the first $250,000 of capital gains ($500,000 for married couples) as long as they have lived in the home as their primary residence for at least two of the past five years before the sale date. The Senate version of the bill would have changed that to five of the past eight years, but it was stricken from the final bill.
If the tax bill has an impact, it’s most likely to be on homes priced between $900,000 and $2 million, said Andrew LePage, a CoreLogic research analyst.
Above $2 million is speculation, but below $900,000, the loan amount with 20 percent down would be less than $750,000 and the interest would be fully deductible.
For each California county, LePage looked at what percent of home-purchase mortgages taken out in the first 11 months of 2017 exceeded $750,000. The counties with the largest shares were San Francisco (54.3 percent), San Mateo (51.5 percent), Marin (43.9 percent), Santa Clara
(40.2 percent), Alameda
(22.1 percent) and Contra Costa (16 percent). The average for all counties was 10.6 percent.
From this it’s clear that the tax bill could hit some counties harder than others. “We might be seeing a high point for the foreseeable future,” LePage said.
He added, however, that the Bay Area’s record high price posted in November could go still higher if there is a change in the market
mix. A median price is the point at which half of homes sold went for more and half went for less. If more sales in a particular month take place at the higher end of the market than in the previous month, this shift can cause the median price to go up even if prices overall have not changed.
Almost 40% of working adults in the Bay Area are ‘doubled up’ with roommates in order to afford rent
By Riley McDermid – San Francisco Business Times, Jan 8, 2018
Close to 40 percent of working adults in the Bay Area have a roommate in order to afford the region’s increasingly high rent, a study from housing site Zillowhas found, raising more questions about California’s housing crisis and the viability of living locally in the long term.
The East Bay Times has chronicled the stories of multiple renters at various income levels across the Bay Area, and all repeat the same theme: The housing stock they’ve found is limited, what is available is usually too expensive for them to afford on their own and many are enduring brutal commutes just to find places to live that are still within driving range of their jobs.
A separate study from housing tracker Apartment List found that rents across the area range from $2,550 for a two-bedroom in San Jose up to $3,080 for a two-bedroom in Walnut Creek to $4,910 for the same sized apartment in Cupertino. That high cost of rent and limited housing stock has forced many renters to add roommates to households to afford a place to live — and pushed many others to give up entirely on the dream of owning a home in the Bay Area, the paper reports.
‘[I feel] trapped,” Gabriel Rodarte, who grew up in San Jose, told the paper. “That’s where I’m at — I feel like I’m the working poor. It’s just ridiculous when you can’t afford to live in the place where you grew up.”
One way or another, two words are likely to dominate the complicated politics of California’s housing crisis in 2018: rent control.
Next week state lawmakers will hear a proposal from Assemblyman Richard Bloom, Democrat from Santa Monica, that would allow cities to dramatically restrict what landlords can charge tenants year-over-year. The bill couldn’t even get a hearing last year amid intense opposition from landlords.
But looming over legislators’ heads this time around is a potential ballot initiative supported by tenants’ rights groups that would do much of the same. If the bill stalls, experts say there’s a good chance you’ll see rent control on your November ballot.
What should your average Californian know about a rent control debate poised to gobble up so much political oxygen? Here are five key points:
1. Under current state law, a wide swath of California’s housing stock can’t be placed under rent control.
Rent control or rent stabilization policies come in different shapes and sizes depending on the city you may find them in. Some place a hard cap on how much a landlord can raise rents year over year, others may be indexed to inflation. Currently 15 California cities have some form of rent control on the books, including major population centers like San Francisco, Los Angeles and Oakland.
But current state law prohibits any locality in California from imposing rent control on properties built after 1995. That’s the year the state passed the Costa-Hawkins Act, which also prohibited cities that already had rent control laws on their books from updating them for new properties. Thus in Los Angeles rent control only applies to buildings constructed before 1978, and in San Francisco, rent control only applies to buildings built before 1980.
A bit of background: After some cities responded to tenants’ concerns about rising rents in the 1970s and 80s by adopting rent control ordinances, real estate interests first tried to stop them in the courts. Unsuccessful there, they focused on the Legislature. Bills to preempt local rent control would routinely pass the Assembly and then die in the Senate, held up by then-Senate President Pro Tem David Roberti, a West Hollywood Democrat. The year after he was termed out of office, Costa-Hawkins passed by a one-vote margin.
Both Bloom’s bill (as it is currently written) and the initiative would fully repeal Costa Hawkins, massively expanding the number of properties on which cities could impose rent control. That includes single-family homes, which Costa-Hawkins also excluded from rent control protections.
2. Most economists—left or right—think rent control is bad
Economists have a hard time agreeing on most things. But regardless of partisan leaning, most economists would say rent control is not great policy. Even prominent progressives like Paul Krugman have expressed opposition to it.
Rent control is quite literally the textbook example of a “price ceiling”– undergrad economics textbooks will often feature problem sets with questions about what’s wrong with rent control. The classic microeconomic downsides include killing the incentive to build more housing, causing landlords to neglect maintenance and repair, and inflated prices for non rent-controlled units. A poll of ideologically diverse economists found that only 2 percent agreed with the statement that rent control had had a positive impact on housing affordability in cities like New York and San Francisco.
3. Scholars in other fields are generally bigger fans. And if you took away rent control, the results could be disastrous for affordability.
Many urban planners and other scholars studying gentrification and displacement cite rent control as an effective policy to keep long-time residents in the communities in which they live and work. And because rent control has become so deeply embedded in the housing markets of some cities, taking it away—no matter how economically inefficient it may be–could spell disaster for current residents.
The Bay Area Council Economic Institute–a business-aligned policy think tank–ran a simulation of 20 policy changes that could improve or worsen housing affordability in San Francisco. The policy that would make things worst? Getting rid of rent control, which they found would plunge 16,000 households into an unaffordable housing situation.
4. One of the best studies of rent control shows that it primarily benefits older households at the expense of households without rent control
There actually aren’t a ton of empirical studies looking at how rent control plays out in practice. But a groundbreaking Stanford University study released last year on San Francisco’s rent control experience has shed new light on who wins and who loses from the policy.
Looking at a roughly 20-year span of proprietary rental and migration data, the study authors found that rent-controlled tenants age 40 or over saw average savings of nearly $120,000 from rent control; by contrast, younger rent-controlled tenants only saved an average of $40,000.
That’s because younger households were more likely to move out of rent-controlled apartments because of various life milestones—a new job, a new family, buying a house in the suburbs, etc.
5. The study also found that rent control paradoxically fueled gentrification, as landlords converted units to condos
The Stanford study also found that rent controlled buildings were 10 percent more likely to be converted to a condominium or some other type of non-rental property, as landlords searched for ways to evade the law. Those units being drawn off the market partly drove up rental prices for tenants searching for apartments in San Francisco. In this sense, the study authors argue, rent control paradoxically contributed to the well-publicized gentrification the city has experienced over the past few decades.
While the study also found that rent-controlled tenants were more likely to stay in the city than tenants without rent control, the gap may not be as wide as you think. After 10 years, about 11 percent of tenants without rent control were living at the same San Francisco address. Tenants with rent control? Thirteen percent stayed put.
How to participate in the debate: The rent control bill will be heard by the Assembly Housing and Community Development Committee on Thursday, Jan. 11 at 9 a.m., and will include a public comment period. You can watch the hearing—which should be pretty lively as far as legislative hearings go—here.