How to Ease San Francisco’s Housing Crisis: New Vacancy Tax Report
- There are currently 40,000 vacant residences in San Francisco, according to a new report.
- A vacancy tax is intended to deter absentee landlords from helping solve the city’s longstanding housing crisis.
- Similar initiatives already exist in Oakland and Vancouver.
San Francisco city leaders are proposing a new measure to help ease the West Coast city’s notoriously expensive real estate market after learning that 10% of its total housing supply is currently vacant.
Members of the San Francisco Board of Supervisors, the city’s governing body, are proposing a lump sum “vacancy tax” to punish absentee landlords in the hope the measure will provide a much-needed boost to the supply of city housing.
There were 40,458 empty homes in San Francisco in 2019, with more than 8,000 “sold but not occupied,” according to a recently released report by the San Francisco Board of Supervisors. This means that no one has lived in these properties since they were last sold.
Investors could be to blame for the recent trend of pulling much-needed housing off the road, the report suggests. “Reasons for vacant homes range from occupants away for long periods for medical or other care, to investors ‘parking’ money in real estate for investment purposes, but not for use as a primary residence” , says the report.
The city is currently in the grip of an entrenched housing crisis and is falling short of its nationally set affordable housing targets by more than 10,000 units. The 2019 census estimated that there were over 8,000 homeless people currently living in San Francisco.
Although San Francisco ranks last on the Federal Housing Finance Agency’s list of metros with the greatest home appreciation between the third quarter of 2020 and the third quarter of 2021 with a price appreciation of only 2.1%, the housing is already prohibitively expensive for many families in the Bay Area. According to the latest figures from Redfin, the median selling price in San Francisco is $1.475 million.
San Francisco’s population also grew by 9.5% during the 2010s, while its housing stock grew by just under 8%, putting additional pressure on San Francisco’s real estate market. the city, details the report of the Board of Supervisors.
According to the report, neighborhoods such as SoMa, downtown San Francisco and the Mission district are the three areas most affected by vacant housing. Policymakers have reacted by criticizing absentee landlords, but are divided on potential solutions.
“It’s a part of the housing policy discussion in the city that never really gets addressed,” 5th Ward Democratic Rep. Dean Preston, who commissioned the report, told the San Francisco Chronicle. “[Absentee landlords] play in the market, but are not interested in providing housing. »
Preston argued that a vacancy tax, which has already been implemented in Vancouver and Oakland, would discourage landlords from keeping properties vacant and begin to ease the housing crisis in San Francisco.
A vacancy tax imposes additional fees on unoccupied homes and condos in an effort to deter absentee homeowners and investors. For Preston, it’s a quick and easy way to free up existing homes and generate income to spend on other initiatives.
“We see buildings in many neighborhoods that have just been abandoned,” Preston told NBC Bay Area in a recent interview. “They stay vacant not just for a year or two years – sometimes five, ten years or more.”
“One of the things a vacancy tax could do is change that calculation,” he added. “So now there’s a cost to keeping it vacant, and they’re going to be more interested in renting it out or selling it to a homeowner.”
But critics argue that a vacancy tax would simply serve to distract from the real solution to San Francisco’s housing crisis, which is to build more homes.
“A vacancy tax doesn’t make sense,” Randy Shaw, executive director of the Tenderloin Housing Clinic, told the San Francisco Chronicle. “It creates this false feeling that we don’t need more housing.”
The report’s authors acknowledged that a vacancy tax only works “as one of many policy tools to increase the supply of housing in San Francisco.” The city estimates that such a tax would generate more than $39 million in revenue, which it recommends be spent on housing construction in areas such as the SoMa and Tenderloin neighborhoods where homelessness is highest.
Vancouver and Oakland
If San Francisco residents vote in favor of a tax on vacant homes, they would follow the lead of two other West Coast cities — Vancouver and Oakland — in implementing such a measure. Vacancy taxes also exist in one form or another in Barcelona, Spain and Washington, D.C.
Vancouver imposed its empty home tax in 2016. The graduated tax is applied based on an estimate of the value of a vacant property. The city said 1,676 units were reoccupied in 2018, followed by another 220 in 2019, which the oversight board report said was “apparently a sign the tax is having the intended impact.”
As in San Francisco, absentee landlords have contributed to skyrocketing home prices and rents in Vancouver over the past decade. B.C.’s governing body justifies the tax as a way to “turn empty homes into homes for British Columbians and ensure that foreign homeowners and those with predominantly foreign income contribute fairly to the tax system of British Columbia.” British Columbia”.
Vancouver’s vacancy tax also raised $21 million in 2019, with the net proceeds being spent on affordable housing projects such as the city’s commitment to build 2,000 new homes on small lots across the city.
But the San Francisco report recommended the city adopt the flat tax approach pioneered by neighboring Oakland because it would be easier to implement and comply with state law. California on property value assessments.
Oakland charges absentee homeowners $3,000 or $6,000 per vacant property. In 2020, the city raised just over $7 million from the tax, which it used to fund affordable housing projects, such as its efforts to build 600 homes between Fourth and Fifth Streets where the Old Oakland, Chinatown and Jack London neighborhoods.