For starters, the most recent US Census Bureau estimate (2014) concludes that about 57% of San Francisco’s population are renters.  That’s reason enough, especially when housing affordability is perhaps the major social and economic challenge that San Francisco faces over the long-term.

Rent and Condo Conversion Control.  With strength in numbers comes political power: San Francisco’s Rent Control ordinance applies to the vast majority of San Francisco’s housing stock, regulating everything from the rental increases that landlord’s can charge to existing tenants to how much interest owners have to pay renters on their security deposits.  Other ordinances have severely restricted the ability of owners to “remove” units from the rental market by converting them to condominiums.  Regardless of whether you think these controls are a good or bad idea, they have created an incredibly complicated legal landscape.  Whether you’re a tenant or an aspiring landlord, it pays to know your rights.  Here’s my favorite cheat sheet, courtesy of the Law Firm of Bornstein & Bornstein.

Click image to view

Home Prices:  Chicken and Egg.  Furthermore, the correlation between the price of renting and owning is well-known, as this fascinating article from the Economist  shows. All things being equal, high rental rates tend to make buying – for those who can – a more attractive option.  When rents fall, home prices may fall too due to less demand.  Conversely, high home prices may swell renter demand while falling home prices may entice more renters into buying.  Of course, other factors are at play too:  rents and home prices will fall if employment drops, interest rates increase, wages fall, etc.  This is a complicated “chicken and egg” cycle – my guess is that while we can say there’s a correlation, it’s probably impossible to say which comes first.
Continue reading →