In the first week of September, David Woo, VP of the Haight Ashbury Neighborhood Council, assured readers of the HANC newsletter that despite what they might have heard, there is no housing crisis in San Francisco.
The crisis is entirely “manufactured,” Woo wrote. His evidence: “There are 40,000 vacant housing units in San Francisco,” enough for every homeless person in SF with tens of thousands to spare.
This is a critical piece of NIMBY gospel: Not only should we not build more homes; if anything, we’ve already got more than we need.
When backers of Proposition M, which would tax delinquently vacant homes, put the measure on the ballot earlier this year, those 40,000 empty units also founded the bedrock of their rallying cry, dubbing vacancies a “hidden housing crisis.”
The campaign has raised nearly $130,000, with affordable housing operator TODCO ($30,000) and Sup. Dean Preston ($20,000) the biggest contributors. (TODCO recently had another tax measure struck from the ballot; it was crafted so badly it would have exempted the company, Amazon, that it tried to target.)
If passed, Prop M would level extra taxes on SF buildings with three or more units that stay empty for a stretch of six months or more, starting at $2,500 for apartments up to 1,000 square feet, and increasing for larger homes and longer vacancies.
Unusually for a tax measure, backers like the San Francisco Democratic Party don’t tout Prop M’s potential revenue. Instead, they hope wayward owners avoid the tax by putting their units on the market.
They also hope to crack open 4,500 backlogged units in the first year. The measure exempts single family homes and duplexes; buildings with three or more units made up more than 50 percent of the city housing stock in 2021. The SF Apartment Association calls the measure “cynically written.”
A few weeks ago, a U.S. Census update seemed to give Prop M fresh ammunition: The number of vacancies in SF in 2021 had climbed past 61,000. That same count also registered just over 412,000 homes across the city; that would mean nearly 15 percent of SF homes are lying fallow.
Backers make several arguments in favor of Prop M or similar policies to fill vacant apartments and stick it to real estate speculators, who are about as sympathetic as double-parkers in this day and age.
But a vast chunk of vacancies shouldn’t be part of the argument because of this truth: There are not 61,000 empty homes in San Francisco. It’s a statistical illusion, one that has been an extremely annoying bugbear in SF’s housing politics for years now.
Debunking this myth is complicated, but luckily it can be done in just a few minutes.
Empty words
The term “vacant homes” brings to mind condos and houses sitting dark and neglected, on the balance sheet of a faceless absentee landlord plotting a flip for easy profits.
That’s the language the Prop M campaign uses on its site, promising to wrest valuable homes “out of the pockets of corporate landlords hoarding multiple vacancies in large apartment complexes.”
But “vacant home” is a technical Census term referring to a diverse spectrum of properties that are usually just temporarily empty for ordinary reasons.
Although we think of statistics as “hard numbers,” they’re almost always tricky. “I’m sure most folks would assume defining a vacancy rate is quite straightforward, but in fact there are various nuances in how the term is used,” says Chris Salviati, an economist with the SF-based rental platform ApartmentList.
Based on the government numbers, here’s the breakdown of the 61,000 units:
– More than 18,000 are currently on the market seeking renters or are for sale.
– More than 11,000 are listed as rented or sold but “not occupied,” meaning that the new renters or owners had not moved in as of the day of the Census interview.
– More than 10,000 are “occasional use” homes, which could be vacation homes, pied-a-terres, or in many cases short-term rentals.
– More than 21,000 fall into the broad “other vacant” category: Some are foreclosed, some belong to people who for various reasons (family, work, very long vacation) are out of town most of the time. There are also homes locked up in probate or inheritance limbo, homes getting fixed up but not yet listed, homes that are condemned or waiting for demolition — the list goes on and on.
Most of these categories are temporary and inoffensive. Still, we don’t know how many are being held empty in bad faith: Some housing watchers vilify “occasional use” properties as wasteful luxuries, while others like Preston point the finger at homes that are rented or sold, but not yet occupied, as a symptom of a sick housing market.
Is an empty home one that’s just waiting on paperwork or for the moving vans to arrive? Or an investment property sitting empty until flipped? The data is not that granular.
Preston aide Kyle Smeallie says not all vacancies will be treated equally under Prop M, and to hear him tell it, a big part of the measure’s utility is to give us data to sort the “good” vacancies from the “bad” ones.
But if we don’t know that much already, then how can we be sure we need something like Prop M?
No matter how the numbers shake out, “the ACS data shows there’s clearly a huge issue,” Smeallie says, referring to the U.S. Census’s interim American Community Survey. “You can parse it however you want and eliminate certain categories and highlight others, but it’s clear policy intervention is necessary.”
Urbanist legends
There’s a local ghost story about the old Chambers Mansion up on Sacramento Street. After silver baron Robert Chambers died in 1901, his two nieces feuded over the house for years, eventually splitting the property in two so they didn’t have to cohabitate.
In a gruesome twist, one of the pair ended up murdered, her body cut in half just like the house. Ever since, the Chambers Mansion has supposedly been haunted by the ghost of one sister or another.
It’s a good story, but it’s not true. Chambers did have a pair of nieces, but they didn’t inherit the home; nobody was murdered on the property, and any ghosts floating around haven’t scared away many multimillion-dollar sales over the years.
Whatever the facts are, it’s easy for housing myths to spread when they’re appealing. In the past, I’ve sometimes made the mistake of repeating the big, scary vacancy number without context. More recently, I and other housing reporters have tried to explain the nuances instead.
That doesn’t seem to matter; emails always come in claiming that the “real number” must be higher than what I wrote. Sometimes this claim is based on a misreading of the data. Other times it’s more of a feeling.
“People anecdotally report seeing ‘almost no lights on’ in the new construction condominium and apartment buildings in the city,” a 2018 report on vacancies from Paige Dow, a master’s candidate at UC Berkeley notes. Yet “the Census Bureau shows a less than a 1 percent vacancy rate in new construction buildings, suggesting a mismatch between the existing data and people’s perceptions.”
It is inevitable that some people will buy SF residential properties as investments rather than dwellings. According to real estate data, the median sale prices of SF homes has declined, year over year, only four times between 2001 and 2021, and three of those were tied to the mortgage crisis of 2008.
An average home that sold for $530,000 in 2001 (about $811,000 in today’s dollars, after inflation) would go for more than $1.42 million this year. It’s an idiot-proof investment if ever there was one.
Dow writes that in 2017, absentee buyers scooped up as many as 17 percent of homes sold in SF some months. However, it’s hard to tell what effect, if any, this had on vacancies, because “we do not know how many of these units purchased by absentee buyers in the Bay Area may be held vacant” or for how long.
Maybe the problem is semantic: Should the Census consider abandoning the “vacant homes” label in favor of something more clear? The vibe when we talked to Census professionals was something akin to “Well, that’s one possible solution.” Another might be for cities to stop being so fixated on this one factoid.
“The generic categories commonly asked in the ACS” — the interim Census report — “have been standardized to be accurate at the national level,” says Tina Glover, a Sacramento demographer. Asked whether Census officials have ever discussed tinkering with the vacant homes definitions, Glover adds: “I don’t believe vacancy rates have been on their radar anytime in the recent past, [and] the type of vacancy isn’t an issue that I’ve seen many news providers dive into.”
In other words, no, the Census doesn’t sweat whether people are misusing their vacancy statistics, because they’re blessed to live in a universe where few people would even care. In short, they don’t live in San Francisco.
Propped up
For decades, the Sword of Damocles-style solution to this problem (assuming one believes it’s a problem) has been to suggest a tax on vacant units, always with the reviled absentee owner in mind.
But wait a minute, why does this class of homeowner even exist? For those looking for investment gains, it makes sense to sit on an SF property for a few years and flip it for a profit; but why pass on the chance to collect on the city’s obscene rents in the meantime?
Despite money to be made, certain landlords will keep those investments empty because tenants are a liability when you’re looking to resell a building, according to Anthony Navarro of Harper Real Estate. “Owners would rather keep the property vacant,” he says, than risk an eviction fight down the line.
The new tax will put more units on the market and raise funds for other housing solutions. But it will not make a huge swath of homes magically appear, because that secret surplus, like a dragon’s hoarded treasure, just doesn’t exist.
Navarro, echoing landlord lobbies, suggests SF could cut down on vacancies by loosening renter protections — but for anyone at City Hall thinking of a political future, that’s like popping a Trump-branded cyanide tablet.
The vacancy tax is the policy proposal that has best adapted to the Darwinian environment of SF politics. “I want a vacancy tax to pass just so we can stop talking about a fucking vacancy tax,” says Sam Moss, executive director of the Mission Housing Development Corporation, which builds affordable housing in the city. Moss notes that he and his peers are having trouble filling vacant units these days for all kinds of reasons, including city bureaucracy.
If passed, the new tax will likely put some additional units on the market and raise funds that go to other housing solutions. There’s no question about that.
But it will not suddenly make 61,000 or 40,000 or another huge swath of homes magically appear from behind a gate held fast by greedy landlords or investors, because that secret surplus, like a dragon’s hoarded treasure, just doesn’t exist.
That’s why, even though Prop M’s ballot arguments cite tens of thousands of “vacant homes” in SF, a detailed discussion of predicted results produces a more realistic 4,500 instead.
There is never one magic solution to housing, because a long-standing and complicated problem never has a quick and easy fix.