Some San Francisco Affordable Housing Units Renting For More Than Market-Rate Units

SAN FRANCISCO (KPIX 5) — Tenants living in so-called affordable housing units are now in many cases paying more than their market-rate neighbors.

These affordable units are not tied to the traditional real estate market fluctuations and hopeful tenants like Christine McDow say they should be.

McDow is about to graduate from Middlebury College from the comfort of her childhood bedroom in North Carolina where she also just landed her first full-time job.

“I’m going to be working at a consulting non-profit and the financial district,” McDow said.

Her new role will bring her to San Francisco if she can find an apartment she can afford. McDow qualifies for affordable housing, but while searching the city’s website she realized some of the affordable housing units are more expensive than some market-rate units.

“I think the furnished one-bedroom was actually cheaper than the unfurnished one,” McDow said.

According to Apartment List rents in San Francisco are down 27% since the start of the pandemic. A one-bedroom used to average $3,500 a month; now it’s down to $1,983.

Below Market Rate (BMR) units haven’t seen rent drops; in fact, in Dave Osgood’s building, they’re seeing rent increases.

“The so-called below market and market-rate seem to be merging,” Osgood said.

There are 76 below-market-rate units at The Towers at Rincon Apartments, Osgood says all year he’s seen people move out as cheaper market-rate units become available.

“There may be as many as 20% of them empty,” Osgood said.

Studios on the city’s Dahlia website range from nearly $1,200 a month to more than $1,700 a month. One-bedrooms can go as high as $2,800 a month.

At the Avalon on King Street BMR tenants are locked into one bedroom leases at more than $2,700 a month, but now in that same building a market-rate unit of the same size rents for less. The city’s affordable housing portal is filled with units that are more expensive than similar market-rate units.

In a statement, the Mayor’s Office of Housing said: “The City has rent procedures in place that ensure affordable housing is in compliance with Planning Code and other regulations that keep below market rate rents between 10 and 20% below market. The DAHLIA system does not allow a building owner to solicit rents that are above market. Avalon at Mission Bay is an outlier… MOHCD will be contacting the building owner at Avalon, strongly encouraging them to use the DAHLIA affordable housing portal to fill their waitlist and lower their affordable rents to below their market rate units.”

“Places like San Francisco are becoming cheaper but they’re by no means affordable,” Rob Warnock a Research Associate for Apartment List said.

Warnock explains BMRs aren’t tied to the real estate market and therefore their prices aren’t as volatile, instead they’re tied to income levels set by HUD which haven’t dropped.

Warnock says if anything, more people qualify for affordable housing because of the pandemic.

“It’s putting a lot of downward pressure on the market that’s putting more attention on the cheaper units,” Warnock said.

Tenants say they want to see the city re-evaluate how it determines affordability.

“I think the city needs to recalculate what market rate is,” McDow said.


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