rent – Baghdad By The Bay

November 4, 2017December 18, 2021

The First Affordable Housing In San Francisco

Hello everyone. It’s been a long time hasn’t it? Sorry for the delays, but if you remember my article on the Purge of 2016 it has continued in high gear in 2017 so I’ve been a little busy. So without further ado, here’s an article that’s been on my mind for awhile.

I’ve seen people talking about San Francisco’s need for affordable housing to be built so that, well, people can afford to live here. I agree that affordable housing in necessary and thought I’d share a bit of history about the Sunset District where I live.

My Grandparents and Mother bought the house I’m living in back in 1954. They chose the Sunset District because there were seven or eight contractor families that were building houses like crazy out here that were — affordable. Between the 40’s & 50’s post WWII during the Golden Years as people refer to them the US was living large after the war. The Sunset District was mostly sand dunes and nothing else so the city figured building houses would be a good way to get more residents and make them look more prosperous by being able to own a home. The houses in the Sunset were built so that working class families could afford a home and then become a part of middle class America.

I remember my Mom telling me that back then they looked at houses they could have bought for $9000, but they were pretty quickly assembled and didn’t look like they’d hold up over the years. The house they chose was asking $23k and they managed to talk the builder down to the ridiculously low price of $18k for a four bedroom with a full backyard. For 1954, that was a lot of money, but not unaffordable like houses in San Francisco have become today. My Dad used to tell me that when he and my Mom were first married that he used to toss her dog over the three foot back fence and let him run in the sand dunes that stretched out to the beach until more houses were built behind ours. The backyards when the houses were built were pretty much a joke. It was a fence holding in sand and nothing else. You can still find a couple of houses like that out here if you look real hard from above with Google maps.

I occasionally meet someone who can beat my price story. I met a guy who had just sold his Grandmother’s house that his grandparents had purchased in the 40’s for…$6000. It was a simple two bedroom with nothing special about it and it had the short [keylot] backyard. The selling price…$1.2 million.

Back then San Francisco had 100,000 less residents than it does today and room to grow. It was easy back then to quickly build houses that people could afford. Today, not so much. There’s no room to grow anymore unless they build in Hunter’s Point which I’ve mentioned previously, but all of the open space has been taken up so if they can’t build out they can only build up. I won’t go any further on this part because that would be another article entirely.

I remember being a kid and hearing my Mom tell my Dad in the 70’s, Did you know the house up the street just sold for $50,000? Who would pay $50,000 for a house…HERE! If my Mom were alive today and knew how much houses go for she’d probably have another heart attack and die a second time. There has been talk about the housing bubble bursting for years. Not just since 2000, but well before that and sometimes it does, but it always comes back with a vengeance. The Sunset District now is seeing many more houses selling for closer to $2,000,000 well up from the $800k median when the prices fell in 2011.

The newspapers and hip websites never pay attention to the Sunset District either because they don’t want people to know about it or because they think it’s an uncool urban suburbia. I think that might be part of the reason the real estate is getting so hot out here. You’re in the city, but not and no one knows you live here. Oh, and Karl the Fog is always your next door neighbor. Next time you make a wrong turn and end up in the Sunset District take a look at the houses and just think for a second about this article and how much you wish you had been here in the 40’s or 50’s.

October 3, 2013December 18, 2021

What’s Wrong With Housing In San Francisco, Part 2

Buying a house in San Francisco. That’s a whole new world now a days that is a far cry from when the houses were first built. Just to give you a little idea, my parents bought their house in 1954 when it was first built. Back then the rubric was that you earned in a week what you spent in a month and you put the excess aside to come up with a downpayment on a house. Back then a 20% downpayment was around $5-8k believe it or not. You continued on those same lines after purchasing the house so that you could use your excess money to pay off the mortgage on your home. Then when you had paid off your home and you were in your 50’s you could spend the some of the excess money on you and your wife [think back to the Cleaver family here]. When retirement came along you could sit back in your house living comfortably with a nice little nest egg to supplement your Social Security and when you died you would give your kids the house so they could sell it to get down payments on houses they would buy or if you only had one kid they would get the house.

Then in the 70’s though the market started to go through the roof and the houses that were bought in the 50’s suddenly were selling for 3-4 times the price they were bought at and the property tax started to go up. Every year you’d have to shell out more and more money to stay in your house until Proposition 13 passed. It actually wasn’t just for homeowners at the time as it is still in effect today, but since there aren’t that many people who’ve held on to their houses for 40-50 years you don’t see as much savings from it. If you buy a house today you won’t see the benefit for another 3o years unless there’s a huge housing market crash.

So let’s look at today. Houses from the time I was talking about have increased by 50%-100% depending on what part of town you’re talking about. There are a few parts of town where you can get an $800k house, that is if you aren’t going to push a $20k incentive on top and pay it all in cash like a few of the big techies can do today. 20% down would be $160k and your monthly payments would be about $4700. Add to that a property tax of $15,200/year and you’ve got to earn $71k just to pay off the mortgage and property tax. If you continue to pay it off for the next 30 years your property tax will increase a bit, but let’s say it stays at $15,200 for the sake of argument. When you retire at age 70 and you’ve put in the maximum amount possible to Social Security you’ll be getting $3,350/month. Hopefully you’ll have some set aside because more than one third of your SSI income will be going to pay off your property tax [that will probably increase a little in 30 years, but not much]. It’s not a very easy way to retire and keep your house anymore even if you’re a rich techie who bought it all in cash from day one. You still have that $15,200 every year until the tech bubble bursts and you have to find another job which may or may not be offering anywhere near the salary you’re making now. If you decided to buy one of those nice $1.5 million dollar homes you can pretty much double all the costs, but now you’ll be paying out three quarters of your SSI just to cover your property taxes. You better have a pretty huge nest egg tucked away because if you retire earlier your SSI income drops significantly.

The housing market has been artificially inflated due to the fact that there are people with more money who aren’t thinking ahead and are willing to throw it at things they thing they need now instead of looking down the road. Unless you’re planning on selling and retiring to a lesser expensive place like Costa Rica and can get a significant payback on your investment real estate isn’t a good long term investment anymore in San Francisco.

October 2, 2013December 18, 2021

What’s Wrong With Housing In San Francisco, Part 1

This took me awhile to put together so that’s why there’s been a delay. I’ve been talking with people over the past few weeks, many of whom have been in San Francisco for less than a year. As you all should be aware renting in San Francisco is ridiculous right now and it looks like it might only get worse over time.

I have heard people are paying anywhere from $1k-$5k for rent in this town and the difference really just depends on the number of roommates and the size of the closet you’re renting. I have to smirk when people say, I love living in Pacific Heights as they walk out of an unmarked door next to the garage that isn’t even ornate enough to be an entrance to an legal in-law or servants quarters on one of these mansions, but it’s more of a room built off of the garage that’s not fully furnished. A good deal for $2k-$3k in Pacific Heights I suppose. Many of these people have to make anywhere from $24k-$52k/year just to afford rent. That’s a pretty stiff bill when you think about it and many of them are resorting to credit cards which just brings them to a time when they run out of money after a year long spring break party where they end up owing a huge amount of money that they haven’t made since they weren’t making that to begin with.

These people are not rich. Last time I checked you didn’t move to San Francisco and move into Pacific Heights. It was a place the rich people of San Francisco earned, not bought. Most of the new renters I meet are 20 somethings with a job that might pay $25/hour that are supplementing their income from help from their parents or whoever can lend them some some money until they can get a better job. These people push up the rental prices, but don’t stay long. Most of these people aren’t even renting an apartment, but usually as mentioned above a room off a house…a very small room.

Then you have the people that have been renting for 10-20 years which due to rent control makes their landlords want to move them out. It’ll cost the landlord around $8k [or more] per person and the landlord will have to occupy the house for three years to successfully get an Ellis Act eviction to go through. That can be kind of costly in my neighborhood where a 3 bedroom house is renting for $5k, but has a fourth person living in the dining room and a fifth person living in the living room. Sometimes a couple or two will share a room pushing the price to get the renters out from $40-$56k. That’s almost a year’s rent and they have to live there for three years meaning the cost to the landlord can be in the $240k range.

If the landlord decides to flip the house and profit off the sale they better be sure they bought the house at least 10 years ago to make a decent return on their investment. Many of the landlords that I know of in my neighborhood haven’t owned the homes they purchased that long yet so they actually would do better just holding on and renting unless they’re going to pull an illegal Ellis Act eviction.

Even when renting was actually somewhat reasonable in San Francisco I always thought of it as a temporary sort of thing and I think that is part of the reason why most of the people I meet today have been in San Francisco for less than a year. San Francisco going back to the 1800’s was a happening place and if you look back on articles from the news back then you’ll see people complaining about how expensive it was to have to pay $3/month to rent a house and how San Francisco was turning into a town for only the rich.

People will always want to live here, not Daly City, not Oakland, but San Francisco proper. Sure a few might take the outlying areas and say they live in San Francisco, but they know full well that they don’t. If you’re seriously thinking of staying here longer than 10 years, renting at this point in time isn’t the best option anymore in my mind. If you’re lucky and you’ve got a landlord that likes you and isn’t trying to get rich [is there really a landlord like that anymore?] You might be able to work things out, but that’s a slim chance. For the long term you probably want to buy a house, or do you? See what I have to say tomorrow to find out what’s on my mind.

January 21, 2013December 18, 2021

Don’t Move Here!

As 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.

October 17, 2011December 18, 2021

Home is where the equity is…

I was a boomerang kid before the term came out. I didn’t move out of my parents house until I was 28 because I didn’t see a reason to. Neither did my mother who cried for two days even though I only moved 15 minutes away. I lived on my own visiting twice a week for twelve years and then after my wife and I got evicted from our house we were renting and seeing that we couldn’t find anything acceptable within our price range and the fact that my mother was in her 70’s with health problems we moved back in with her.

My heart sank because I heard the stories of the loser 40 year old living in his mom’s basement. Which is exactly what we did. We were living in the downstairs rooms, but because my Mom occupied so much of the four bedroom house I had to turn the garage into my work place, so I was in effect, living in my Mom’s basement at 40. People don’t always run the numbers as they say, but if you have a minimum wage job you don’t have enough money to afford a one bedroom apartment in the city which requires $21k-25k/year in San Francisco. Minimum wage doesn’t cover that let alone food and utilities. If you’re unemployed and getting the highest pay out you can afford a one bedroom and have $200 extra for food and utilities, still not enough.

People shouldn’t be surprised that kids in their 30’s are moving back in with their parents. My old roommate moved in to his Mom’s house after she died because it was his, free and property tax compared to rent was way less. My Mom died over a year ago and if we had to rent this house we would have to plunk down close to $50k/year. People like to blame Prop 13, but when it comes to rent Prop 13 has nothing to do with it. It has to to do with the fact that San Francisco has water on three sides and no room to expand. There’s also the fact that there’s the San Francisco mystique that helps keep prices up. You simply are not going to find a place in San Francisco to rent for under $1500/month and if you do it’s called tenement housing.

Our parents were the smart ones. They worked hard during a good time and were able to buy a house that they hopefully passed on to their kids which hopefully they didn’t have too many of. I was lucky being a single kid. I didn’t have to sell the house to invest in my own. My name was already on the lease so we were golden. People talk about not wanting all the hassles that come with home ownership, but if you run the numbers the hassles [meaning costs] are less than renting. Say you have to replace your roof every year [which you don’t] that’s still less than rent for the year. Want granite counter tops? That’s less than two months rent. If you start to look at how much per year you have to pay in rent here you’ll begin to understand how people making $75k/year are barely getting by. I suspect that home ownership in San Francisco will become more reasonable when home prices start to drop into the $500k range. Then the monthly mortgage costs will begin to equal rental costs. Oh how I wish I had run the numbers back when my roommate and I had the chance to buy the full five we were living in for $209k. Ah, the early 90’s, the good ole days.

May 11, 2011December 18, 2021

Owning a Home in San Francisco

There’s been lots of articles in the paper recently about owning a home being a bad thing. I was always scratching my head about this until I realized I’m one of the few people left that was born and raised in San Francisco and is STILL HERE. Most of the people you’ll find in San Francisco are lucky to have lived here for twenty years at most, so it’s time I gave you a little history lesson about San Francisco real estate.

Now for most people here they don’t remember the time when a house was affordable because they aren’t, well, old like me. I was born in 1962 and my parents had bought their four bedroom house in the Sunset in 1954 for a whopping $18,300. Yes, you saw that right, there isn’t a couple of extra zeros on that number. The builders, McKewan Construction were asking $23,500 and my parents underbid the asking price and got it. The early 50’s was a buyer’s market.

My parents never thought of selling the house and moving on. It was a home to them and you didn’t sell it every couple of years to turn a profit only to move into a bigger home that you’d again turn and sell at a profit a few years later again.

My Grandmother was always the business savvy one in the family and she consulted her lawyer who worked out a deal that because I was living in the house when I turned 18 that I could have my name added on the the title as an owner so that when everyone was gone there would be no inheritance. Smart move and if you have kids you should think about doing this. There’s nothing illegal about it and it gives your kids a pretty priceless place to live in California what with Prop 13 and all that.

Now housing prices rose a bit over the years, but it wasn’t until around the late 80’s that the prices started to soar. In the 70’s you could get the same house for around $50,000. That’s pretty much close to the cost of a Lexus today with add ons and closing costs. Somewhere around the mid 80’s the prices started to skyrocket. When my wife and I got married you could get a two bedroom for around $215,000 out in the Sunset. I know, we were looking into the idea at the time. Our first landlord got a two bedroom house with a 1 bedroom cottage house in 1994 for $205,000. It wasn’t a fixer upper either.

Prices kept going up and right before the dot bomb of 2000 my Mom’s best friend who was in real estate told us we could easily get $1.5 million for this house. Great, we were millionaire, but still trying to struggle to pay the bills. I remember having to write the check for my Mom for the property tax that year and it was $650. We were paying twice that for our two bedroom house we were renting at the time.

My friends from High School, the few that stayed around and ended up in a similar situation to myself are all doing pretty good. I’m happy for them. We had parents that thought ahead. Others can’t fathom this and the fact that the people writing for the Chronicle and Examiner never take this into account shows that they aren’t either. Probably because they weren’t born and raised here. There are lots of people who want to do away with Prop 13 so that the state can get more money from home owners, but I’m not going to stand with that group. I plan on dying in this home, probably not literally, but I want to pass this house on to our daughter when we go.

I used to hate the crotchety old guys who would sit out in front of their houses in a lounge chair watering their lawns talking about why, I remember back when we… fill in the snide comment of your choice. I want to be that guy when I’m in my 70’s. I guess it’s all because I’m a Sunset redneck at heart and I want to be around to remind people about that.

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