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A Way To Make Housing More Affordable

Rent-or-BuyAbout eight years ago I was unemployed for almost two years. A friend of mine told me that I wasn’t unemployed, but that I made $40,000 per year. I looked at him and shook my head. That made no sense, but he pointed out that because I had been lucky and inherited my parents home I didn’t have to pay rent which [at the time] would have worked out to about $40k/year.

While that number has increased nowadays, it hit me hard. There are some things that many people don’t understand about owning a house that is different than renting and I feel that should change. While it’s a change that should happen nation wide, it’s something that makes a lot more sense in San Francisco.

If you own a house you must pay property tax. The thing that some of you might not know is that property tax is tax deductible. I met a woman who recently bought a house and is paying over $11k/year just in property tax. All of that is deductible from her tax return every year as a living expense. With rental rates at an all time high in San Francisco this is a bit of a drop in the bucket, but getting to cut $11k+ off your yearly income is still nothing to sneeze at. She can also claim her mortgage payments as a living expense and deduct them from her income.

This is why I believe that rent should be tax deductible as a living expense. I recently saw an article where an elderly couple in the Sunset District who were paying $2100/month in rent had their new landlord remove an in-law apartment from their house thereby making the home a single family dwelling. The landlord was then able to increase their rent because the home was no longer under rent control to $8900/month.

San Francisco is one of the few places in the United States where something like this could happen, but there are places where it is happening more often. Most of the Bay Area is quickly approaching the rental prices of San Francisco because when you leave San Francisco the homes are bigger thus demanding a higher price. Even the apartments are larger outside of San Francisco.

So why isn’t this happening? I can only make a guess, but let’s use San Francisco as an example. If residents were to be able to deduct their rent from their income as a living expense San Francisco would look like a very poor city. Yes that new techie family that’s paying $10k/month for a house in the Mission would suddenly have a $120k deduction from their income each year which would probably qualify them for financial aid unless they were pulling in closer to $200k/year in salary. This also probably wouldn’t help reduce rent because hey, it’s a tax deduction.

Overall, San Francisco has for a long time been difficult to live in due to the increasing rental prices and that also increases expenses in the Bay Area. To make this change so that rent was tax deductible would probably make a large number of people in the U.S. look much poorer than we realize, in California where Proposition 13 is in effect so that property tax can only increase by 1.1%/year, home ownership even with these high purchase prices currently has advantages over other parts of the country. Perhaps this is more of a state wide thing, but I believe it’s something a lot of our politicians should start talking about.




Affordable Housing In San Francisco

Hunter's Point Open SpaceThere has been a lot of talk lately about building affordable housing in San Francisco. I’m not exactly sure what the right answer is [although my suggestion is below], but so far I’m not sure it’s going in the right direction.

Out in the Sunset District there is the Sloat Garden Center. It’s currently the largest of it’s locations and now the owners are going to sell it. I can understand that since they can get a good deal of money for that, but the problem is that it has been labeled as the perfect spot for affordable housing to go in and by affordable housing they’re talking about a ten to possibly twelve story building in an area that is zoned as NC-2 which is mixed commercial/residential with a height of no more than three stories.

Here’s where it gets interesting. I can’t prove they want to build a ten to twelve story complex, but there is a height limit code of A100 which I can’t get a definition for and everyone seems to believe that means 100 feet. I can see that, but there comes another problem with what is defined as a story. Typically in the past a story was defined as twenty feet, but now through the process of downsizing a story is being redefined as ten feet. This is another part where that could mean that 100 feet could represent a five story complex or a ten story complex. The twelve story came from someone who has been pointing out the requirement of 20% low income housing to all building in San Francisco, but misses the point that that doesn’t allow them to add on.

My overall thought is that while yes, there are few buildings that somehow got past the strict coding over the years and are more than three stories they are the exception rather than the rule. To build a 100 foot building out by the beach would be ridiculous in my opinion because it just would not fit with the character of the other buildings around it. They might as well relocate Coit Tower to the Sunset District if that height is fine for a spot in San Francisco that after it was just a bit of sand had been dubbed, the suburbs of San Francisco.

Candlestick ParkSo what is the answer? OK, just bear with me for a moment because this is going to sound a bit NIMBY, but it’ll make sense…Hunter’s Point.

Yes, I’m suggesting if they want to build affordable housing that they look into Hunter’s Point. They’re already planning on building a shopping center, or at least they’re seriously talking about putting one where Candlestick Park used to be so it makes sense. It especially makes sense when you look at the picture in this article. There’s is tons of open land in the Hunter’s Point area [and Bayview as well] where you can even see the former foundations of buildings.

Hunter’s Point was always considered a bit of a scary place in San Francisco, but with the influx of people to San Francisco there are a lot more people that are buying homes and new condos that are being built in the area and it’s starting to come up…albeit slowly, but it IS happening. I am more frequently having to drive in that area and I’m pretty surprised at the changes I’m seeing. San Francisco isn’t seeing how much of a clean slate and lack of opposition or at least much less opposition that they would get from a currently populated part of San Francisco.

There is no reason for our politicians to destroy the character of San Francisco’s existing neighborhoods when there is a good amount of open space in the city where they could develop a whole new neighborhood from the ground up.

Don’t Move Here!

Talk-to-the-handAs I was spending my day surfing the web I came across a few articles about people who’ve moved to San Francisco like this one. My suggestion is don’t move here. Most of the people who were complaining about San Francisco have lived here for 3-5 years at the most, tend to be hipsters from the Mission, and shop at Whole Foods. They don’t understand that there’s more to San Francisco and I’m going to tell you some of the only reasons you should move here.

First, you’ve got an Aunt Gladys who bought her house in the pre-Prop 13 days and stayed there. Then she died and left you the house. Depending on the size of the house you’ll get stuck with paying between $800-$1500 a year in property taxes and the bit of house upkeep. Having a house handed you means that you have the equivalent of $42k/year income a year since you don’t have to pay rent. If you’re rich buy away. Once your house is paid off you’ll be paying per year less than what you’d pay per month to rent. I have a friend who bought a two bedroom house about 10 years ago and his mortgage is less than what he could get for renting the place plus it has a built in bar.

Second, if you choose to rent and now isn’t the best time you pretty much missed the boat by about 15-20 years. If you do decide to rent try to stay there. We’ve got a thing people refer to as rent control. My wife and I rented a two bedroom house 10 years ago that we payed $1200/month. Mind you we moved in there in 1997 before the dot com 1.0 pushed rental prices up to a ridiculous rate. If we stayed there we might be paying $1500/month…for a two bedroom house. When I first moved out to the Mission and that was around 1991 I split a two bedroom house with a full living room, full dining room, big kitchen, two huge bedrooms and a sun room for $400/month and that was my share. Our rent never went up while we stayed there and any fix ups the house needed we got to take off the rent.

Other than that, don’t move here. Rents are high and some of the employers are paying stupidly low wages. People who work in grocery stores and the like are here because they live with there parents, inherited their house from their parents or are section 8 disabled. Seeing guys in their 50’s who live with their aging Mom or Dad isn’t something to look down on here because they’re able to live here and go out to dinner at a nice restaurant every once in awhile while working for $17/hour. If you don’t already own and have your house paid off you need to earn about $35-$50 an hour to live like you would in other parts of the country. I don’t understand why some people move here and work long hours and then go shopping on the weekends for prepared foods because they don’t have time to cook or they go out to eat for half the week at an overpriced eatery when they could make enough food on the weekends at home for the whole week if they just made the effort, but that’s not my place to judge. I did used to shake my head when I worked with a girl who made $14/hour, lived in the upper haight with several roommates and would go to Whole Foods to buy her lunch. I would go around the corner for a $2 taco and bring a soda from home if I hadn’t brought my lunch and this was last year.

If you move here you don’t know the City well enough before you move here and don’t understand things like you can get the best and cheapest burrito outside of the mission because there aren’t those kind of hipsters where this place is located. You can get good food cheap if you know where to look [hint alley ways], but you’ll only know that once you’ve moved here and been around the City for about six months.

PBR is not what cheap San Franciscan’s drink. It’s Budweiser. PBR also tells everyone you’re a broke hipster and you’ve just labeled yourself even if you weren’t trying. While there aren’t that many born and raise in SF people left they’re the ones with the money in this city. Face it, until you’ve got 30 years under your belt here you’re going to have a rough time of it.

By all means though, come and visit us. We have a lot to offer. Great parks and museums and as others have noted great food. Affordable housing just isn’t one of those things.