— By Kevin Montgomery (@kevinmonty) |
Ever since the artisanally-located 299 Valencia sold out, I've been in the market for a new development to scowl at.
NeMa looked promising, with all their egregious and dated hipster appropriation, but their Mid-Market address was far too downtown for my decidedly tony Mission palette. And there was whateverthefuckthey'rebuilding on the corner of 19th and Valencia, which will assuredly charge 650,000+ dollars (also payable in not-Zygna stock options) for a doghouse-sized studio, but, alas, it's hard to roll my eyes out of their sockets over a building still in the plywood phase.
However, I think I found my dream pariah: Vara, the soon-to-be-launched Mactastic crash pad at 15th and Mission, with studio apartments going for The Totally Not Dogshit rate of $2675/month. Curbed SF has all the alluring details:
The wave of gentrification continues in the Mission. Vara, a 202-unit apartment complex with 40 below market rate units, readies to hit the market. The location at the corner of 15th and Mission streets is close to BART and several Muni lines, as well as the very popular Valencia Street. The studio, 1-, 2-, and 3-bedroom units will feature gourmet kitchens, in-unit washer/dryers, free Wi-Fi and walk-in closets. Building amenities include on-site carsharing, fitness center, and a clubhouse. Cats and dogs are also welcome, although breed restrictions apply. The units will start at $2675 for a studio, and up to $4830 for a 3 bedroom.
Curbed rhetorically asks, “Will this new rental building in the Mission face scrutiny?” With reclaimed wood, the aforementioned Totally Not Dogshit rents, and wall art celebrating the basement's “Internet Ready Worker's Union” (which, ugh), we in turn answer, “Sure?”
[Curbed]
Comments (35)
40 BMR spots is no joke. Let’s hold them to actually renting these to deserving people/families.
I was just recently telling someone that I had to stop reading Curbed because it just made me depressed or irate – usually both at the same time. Excuse me while I go say a prayer at the altar I have built to my landlord. “Please dear Mr. Ray, I love you, do not ever die or evict us. Amen.”
At least they’re finally building new rentals in SF again. I’m not sure it will reduce the pricing pressure on the older rentals though, as most of the smaller buildings are becoming owner occupied.
Adding hundreds of studios at $2500/mo will not lower rents. It will raise rents, as landlords see the average rent in their neighborhood skyrocket, they will jack up their rents.
Think about it: if a company making cheap cars suddenly starts selling expensive cars, that will raise the price of the cheap cars. Merely supplying more of a product doesn’t automatically lower the price of all price points of that product, and it doesn’t have a magical trickle-down effect, either.
It’s depressing how most people incorrectly see supply and demand as a simple black and white truism, and don’t inspect how it actually functions in the real world.
Uhhh….what? Is the car company no longer selling the cheap cars? When Toyota started selling Lexuses they didn’t jack up the price of Corollas. Coors Light didn’t get more expensive when Coors started selling Blue Moon.
Maybe you have some sort of coherent argument about market conditions changing, but this analogy doesn’t make any sense. If studios in the Mission can rent for $2500, landlords will figure that out whether there is a big new development with a billboard saying “Studios $2500/month” or not.
Of course the analogy makes sense. Scarcity is one of the underlying principle of economics.
If Toyata stopped selling cheaper cars, there would be fewer cheap cars, and they would get more expensive. Coors can keep making cheap beer in addition to more expensive beer.
But there is a limited supply of property, and how you allocate it has consequences.
You can build a lot of affordable housing or a lot of expensive housing; you can’t have both on the same plot of land, because they occupy the same space, i.e. it’s a question of allocation of a scarce product. The profit is obviously in expensive housing. Affordable housing doesn’t get built, and old people get evicted and their affordable rental becomes an expensive TIC.
Rents don’t suddenly, magically become $2500/studio. It’s not a question of “landlords figur(ing)” it out – each additional expensive unit raises the average rent for a neighborhood, and every landlord will jack his rates up, and the cycle continues, until the bubbles collapses.
It’s so simple and obvious, that most people don’t see it: building expensive housing raises average rates, and causes all housing in a neighborhood to rise. The MORE you build expensive housing, the MORE expensive housing gets!
The only way to keep rates affordable is to build AFFORDABLE housing.
Exactly.
I have to agree TWO BEERS more on this supply demand real estate market. “rental cost in THE neighborhood will go up”
But at the time the overall rental market in the city will not be as agressive
Exactly right two beers. There are so many recent examples, it’s amazing that people just type the trope of ‘supply and demand’.
Property owners are looking for maximum profit, not just money. And most of the bigger ones watch the real estate blogs, and have meetings and associations. They act like a herd. During the late 90’s dot com bubble for ‘office space’…every available space in the mission that was zoned for commercial suddenly jumped up…..even though …the bubble was bursting while their rents were sky high. It took two years, for commercial rents to drop 50%. It didn’t happen the month after the burst. I know. I was looking for a small commercial space during that whole time. And I was reading the broker blogs.
This is also why there is so much residential space empty. The lords must have market rate or they won’t rent. No matter that this
is a bubble, and most of the twitter, google etc people will not have jobs in five years. They want immediate max profit. That’s how corporations work. That is capitalism. It is not a ‘market’ correcting itself. It is the gentry and the rich creating price and thus demand.
Anyway, there is no history of affordable housing in any american city for one hundred years that was satisfied by ‘new development’ in a good jobs area!!!!! The only housing working class people could EVER afford was the old and run down in boom areas,where there are jobs. The gov’t, and so much more in europe, had to build housing. Or do massive subsidies to private developers. Americans are so brainwashed, they think this means the concrete block prisons that we built in the 50’s for the destitute and have no idea of the massive govt subsidization of mostly white working class people in sub metro and suburban areas. There was NEVER a city for one hundred years in the USA that could give affordable housing in a rich job area with only free market private development. Housing is not cans of different fucking soup.
Yup. Well said.
Magical landlord pricing powers aside, it is true that increasing the supply of high end rental properties will have little effect on the demand for or supply of reasonably priced rental units. For a more considered analysis of this topic, this paper put together by SPUR does a decent job. The data points are from December, 2012, but the low interest rates & high rent dynamic attracting development remain in place.
“On the supply side, over the past 20 years San Francisco has built about 1,500 units per year on average. But the city would have needed 3,000 to 5,000 units a year to allow supply to keep up with demand — a number that similarsized cities manage to provide. In 2011 housing production reached a historic low — with only 269 new units.[11]
High rents are bad for the people who have to pay them, but they also signal to investors and lenders that new apartment construction is justified by the projected returns. That means that developers can get projects financed.”
http://www.spur.org/publications/library/article/san-francisco-boom-back
Given the favorable economics of building rental units in San Francisco, the continued failure of the market to meet the demand has to be chalked up the unfathomable pain in the ass of endless delays, bureaucracy, NIMBYs, protests, hearings, EIR reviews, and other assorted bullshit that the voters have seen fit to shackle themselves with. Or if you’re cynical, that landowners favor to keep rents and property values high. The current building boom will not resolve the shortage of rental units. So even after this “boom” rents will remain high unless the city’s politics get out of its old ways and starts trying to solve this problem instead of telling itself stories about evil landlords who make up prices out of thin air.
Landlords don’t make up prices out of thin air. That’s a strawman, and it’s crap. Landlords follow average rents in their neighborhood, pure and simple. As rent goes up, rent goes up. Building more market or above-market units NEVER lowers rates. Can you disprove that?
Do you think the Victorians that make up a big chunk of the city’s housing stock were built as they are today? Carved up into 9-12 apartment sized units with bathrooms that used to be closets in a past life? They started off as large single-family homes, and eventually converted to multi-family housing. It’s the opposite of gentrification in a certain sense, and the term for it is “filtering down”. It can happen for any number of reasons - the neighborhood or style isn’t in vogue anymore, property owners allow the building to deteriorate, etc
I want to be clear that I don’t think we can fix our mess by building nothing but high-end housing, in fact I think it’s comprised a disproportionately large percentage of what little new housing construction the city has seen recently. But it would be foolish to try to ban it outright.
If you want to get serious about this, I think the question you need to ask is “why isn’t anyone building new housing that’s affordable?” and I think that’s what Salsa was getting at. It’s not because all developers are greedy bastards, it’s because our zoning laws make it very difficult for anyone to turn a profit on anything less than high-end construction. Parcels have maximums on the number of units that a building can contain. There are minimums saying developers must provide X units of off-street parking per housing unit.
It’s not like developers are categorically opposed to building affordable housing, but with the way we’ve structured things it’s rarely going to make economic sense for them to do so. The good news is that it’s totally possible to work at this, to change things so that social good and economic self-interest of developers aren’t completely at odds with each other.! But it’s going to take public support for un-sexy things like reforming zoning codes, not empty “BUILD AFFORDABLE HOUSING NOW” chants.
Vibrant Bay Area is a local urbanism blog aggregator of sorts, and a good portal into looking at the problem from this angle. Here’s a pretty good post on the subject: http://vibrantbayarea.org/2013/03/markets-are-the-best-path-to-affordabl…
This building will be more interesting in a few years post boom when the rents to earth. That’s an expensive studio. And the 40 BMRs are a drop in the bucket but its better than nothing I suppose.
Are you guys ever going to get over the fact that this (NOT JUST THE MISSION) is a desirable place to work and live?!
It’s not going to be if the only place we can afford to sleep is the sidewalk.
Its supply and demand – someone’s willing to pay for it!
“Whatever the market will bear” is not a just or sustainable approach to housing. Much of the world understands this.
Why not? Rich Guy A rents the shiny new expensive apartment which leaves behind maybe a slightly renovated older unit that Moderate Income Guy B rents, which leaves behind an unrenovated older unit that Lower Income Guy C, and so it goes. Not everyone gets to have the newest, nicest apartment/car/clothes/etc. If not allocated to those who can afford it, how would you suggest the spectrum of nice to shitty is apportioned out?
That’s a cute world you live in.
Jesus. Those prices are insane. Guh.
Actually I think economic models do address your points, but it is covered in the Econ 300 series of classes.
Meant to be a reply to two beers.
it’s hard to build ‘affordable” housing on expensive dirt. period. build as many rentals as you like, the rents will NOT GO DOWN. They didn’t go down significantly after Dot Bomb 1, ask any residential landlord and they’ll tell you then never snapped back to the pre Bomb rates. same thing will happen here.
Don’t forget also that those mini apartments the Chronicle got a big boner for cost more per square foot than a real studio. All they did was just make the base rate for studios and 1 bedrooms higher. Look around, and try and find something not-shitholish for under 2500 bucks a month.
When’s the last time 40 BMR units came on the market in the Mission? Never?
It’s a seriously low income ceiling (I don’t qualify, dammit), and the rents are cheap: http://www.vara-sf.com/bmr/Vara%20BMR%20Unit%20Info.pdf
Holy shit, that is cheap! I would love a $900 studio. I would have qualified too, had I not *just* accepted a new job that pays too much… I knew I should have stuck to my current job, hah. Guess I’m staying in my $1100 room just a block away.
Our whole 2 bedroom apartment is $2300 though, and that’s a July 2012 lease, so not even long ago. Can’t believe it would be $200 more to rent a studio at Vara. I guess you can say that new buildings are worth more than ones from 1901, but I would much rather live in a six-unit Victorian than a 200-unit complex.
Concur.
If your current $2300 2 bedroom is in a building built before 1979, it is most likely rent controlled. The apartments at VARA aren’t. Even if you qualified for the BMR apartment, won the lottery and moved in there, you would have needed to be careful about the future.
What if you income increases and you no longer qualify for BMR? Does your rent increase to whatever the owner thinks he can get? How long are the BMR restrictions in effect? What will be the future rent increases in those units? Etc.
Lots of question. You are probably better off where you are, especially if you get along with your flatmates.
Until you grow up and start wondering why you still have flatmates. Hopefully by that time you’ve saved your money for a downpayment on a home you own.
Everyone writing about rental costs in SF seems to be ignoring the fact that there’s rent control on units built before ‘78. Any market with an artificial prop is skewed by that aspect of the market. There are thousands of unoccupied units in the City, because being a landlord in SF is much different than in places without rent control and rigorous tenant’s rights. If a landlord can only raise rental rates when a unit is vacated, they are always going to raise them as high as possible.
I’ve been incredibly fortunate and found a great house in Potrero Hill six years ago. My landlord, understanding he has a great tenant, finally brought up raising the rent and let me pick a price that’s fair to us both. These relationships don’t typically occur in multi-unit buildings and it takes landlords with heart – not money grubbers – to make it happen.
Has the landlord owned the building for a long time? Real estate prices are so high that most property these days is purchased for the owners to live in. Very few are bought as rentals.
Bullshit. That old lie that Rent Control somehow magically raises rents has been disproven over and over again wherever rent control has been scrapped.
Let me guess: you’re one of the lucky few who pays a rent way below what everyone else has to pay.
These rent prices are out of reach for a lot of us. We live in a city that’s been overtaken by tech company employees, most of whom are overpaid. These people unintentionally gouge the renting market. Want a nice spot in Hayes Valley or the Mission that doesn’t cost your entire monthly salary? Good luck. Thankfully, the financial pricks act as butt plugs and clog the asshole of San Francisco, also known as the Marina.