By Zalman J. Orloff
As Housing Prices Rise, Renters’ Fortunes Decline. Action Needed from Cities.
In some ways the wider Bay Area has never been a more desirable place to live, but for low or middle income students and renters, that may be coming at a price.
By most measures the Bay Area economy is booming, with municipalities like San Francisco and Oakland adding thousands of jobs every quarter. According to the San Jose Mercury News, in the last year San Francisco added 47,500 new jobs, while Oakland metro added another 20,900.
This economic boom, while certainly encouraging in many respects, has come at a steep cost for renters because housing supply has not been able to keep up with this influx of new workers.
According to the Paragon Real Estate Group, rent in the Oakland Metro area has increased by an average of 88% since 2010, from $1,490 to $2,807. These figures should be deeply concerning to the economically marginalized. Students and working class families may see their rents rise suddenly and find themselves scrambling for the exit.
For students at institutions like BCC, Laney, or C.O.A. who work part-time as well as go to school, this leads to fewer options, and less neighborhood selection, and forces more compromises in terms of commuting. This massive cost increase has led many residents of the Bay Area to call for an increase in the minimum wage and the housing supply. (See “Berkeley to Increase Minimum Wage to $19” on page 3 of this issue.)
These concerns have been important components of campaigns for ballot initiatives in Berkeley, Oakland, and San Francisco to raise the minimum wage from the California figure of $9.00 per hour (rising to $10.00 in 2016) to a heftier sum. For an area concerned about the economic outcomes of its lower-waged workers, this is an excellent start, but the true solution lies in increasing the number of housing units available.
If competition for limited available housing is causing prices to rise, it stands to reason that increasing the supply will help alleviate the problem to a certain degree. Faced with increased competition from other landlords or housing agencies, the current crop would be hard-pressed to get away with steep price increases and still find themselves with tenants. Unfortunately, this is easier said than done.
Many housing development companies cite zoning restrictions, environmental regulations, and rampant not-in-my-back-yard attitudes (NIMBYISM) as issues preventing housing development from keeping pace with the growth of the workforce.
This is not to say that no effort has been made to increase construction levels. Due to the intense demand, most cities in the Bay Area have seen a rise in new construction, but if rents are ever going to level off or come down with the intense influx of workers, cities need to take a multifaceted approach to encourage more development, in addition to using more cumbersome and controversial policy tools like rent controls to keep costs down.
With even the East Bay now under threat of losing its unique charm as residents are forced out, we need swift action. It’s time for our municipal governments to stand up for their city’s renters, students, and the broader working class over NIMBYISM, landlords, and real estate speculators who benefit from high demand.