Adventures in Unintended Consequences: San Francisco Edition
August 1, 2011 5:16 P.M.
By Reihan Salam
Aaron Glantz’s article in the Bay Citizen on vacation rentals in San Francisco, which I found via the great @marketurbanism, is fascinating. The secret message of the piece? Rent control and rigid zoning laws have kept a tight lid on housing supply, and vacation rentals allow property owners to do an imperfect end-run around them. It’s a second-best world, my friends.
nationalreview.com
Surge in SF Vacation Rentals Squeezes Residents
Largely illegal practice of turning homes into hotels is widespread
By Aaron Glantz on July 21, 2011 - 5:43 p.m. PDT
Last year, Pamela Kelley went to her landlord with a business proposition: She would move out of her rent-controlled apartment in the Russian Hill neighborhood of San Francisco if the owner agreed to turn the unit into a vacation rental and pay Kelley to manage it.
“Tourists are our bread and butter in this city, and many want that real San Francisco experience, not a hotel,” said Kelley, 48, who previously ran a cleaning service and a trophy engraving business.
The arrangement has been lucrative for both Kelley and the landlord, Harold Wong. As a tenant, Kelley paid $2,100 a month for her one-bedroom apartment. It now brings in $225 a night for Wong — more than $6,700 a month if the unit is fully booked. Kelley receives a 10 percent commission.
“It’s just better utilizing your assets to get a better return,” Wong said.
He has since turned over to Kelley a second apartment to manage as a vacation rental, and he is exploring additional conversions at the 13 properties his family owns throughout San Francisco.
Such conversions are largely illegal under San Francisco’s rent-control laws, but according to census figures released last month, the practice of converting private residences into what are effectively hotels is widespread. In some popular San Francisco neighborhoods, there are now more housing units dedicated to “seasonal, recreational or occasional use” than there are available apartments for rent...
...Kelley said she doubted that the city would ever enforce laws against short-term rentals as long as property owners continued to pay the hotel tax. And Kelley predicted that more units would be turned into vacation rentals as landlords sought to avoid rent-control laws available to long-term tenants.
“The city has made its bed with restrictive rent-control laws,” she said, “but with a vacation rental you can avoid that.”
Fred Waldman, a professor at the University of California, San Francisco, who owns one of the Green Street properties managed by Kelley, agrees, saying, “It certainly avoids some of the downsides of long-term rentals. Waldman’s 2,088-square-foot condo, with breathtaking views of the Golden Gate Bridge, rents for $650 a night.
“Pamela does everything” to make the unit suitable for vacationers, he said. “All I had to do was go in once and fix the Wifi, and the income more than covers my mortgage payments.”
baycitizen.org |
