Since the proposed “anti-speculation tax” on multi-unit buildings in San Francisco qualified for the November ballot in June, the number of buildings with more than one unit listed for sale on the MLS has increased by 68 percent to 151.  While that’s not an overwhelming number of listings in the absolute, it is the most we’ve seen on the market at any point in time since 2012.

And while seasonality is in play, the number of single-family homes and condos listed for sale in San Francisco has increased by 21 percent over the same four months and is currently running 10 percent lower on a year-over-year basis, versus 27 percent higher for listings of multi-unit buildings, year-over-year.

Comments from Plugged-In Readers

  1. Posted by soccermom

    Too late to conduct any due-diligence prior to a sale.

    Thanks Eric Mar!

  2. Posted by Xman

    Progressives shooting themselves yet again and pricing themselves out of the city. A win win for landlords.

    • Posted by HowToHelpPoor

      Can you explain how this will benefit landlords? It seems to hurt property owners without benefiting anyone.

      • Posted by Xman

        It reduces the total amount of inventory on the market. Lower inventory, more demand, higher prices per unit, higher rent. bang bang!

    • Posted by Michael

      More inventory and less competition from developers should drive multi-family prices down, not up.

      • Posted by Charles

        More inventory? How do you figure? This will further constrain inventory and raise the rents reaped by those landlords who stay in business. It’s an incentive to restrict supply not increase it. Demand keeps rising, supply is further whittled down.

        [Editor’s Note: “…the number of buildings with more than one unit listed for sale on the MLS has increased by 68 percent to 151 [since Prop G qualified for the ballot]…the most we’ve seen on the market at any point since 2012.”]

        • Posted by san FronziScheme (formerly known as lol)

          A last minute burst before the dramatic flatlining this will bring.

          • Posted by Charles

            The asset price might go down, but my guess is that the higher rents buoy it nevertheless.

        • Posted by SFrentier

          Higher inventory for the next month or two, big whoop. Then inventory plummets.

          Also, higher rents mean rental props are worth more, not less.

          Xman has it right, this will restrict supply and hence increase property values. Perhaps it may shift the ability to buy 2+ units to wealthier landlords and investors- those ok with holding for at least 5 years. The market will become more elite, and more expensive.

          You reap what you sow folks!

          • Posted by soccermom

            Will be interesting to see. Normally price is the adjustment mechanism for solving supply and demand imbalances.

            I would suspect the that the outcome is marginally higher cap rates and marginally lower asset prices.. The asset value of a building at any point in time drops (when the short term buyer segment goes away), with rents constant or higher. Exclusively long term holders will need to be compensated for the lack of liquidity they accept (minimum 5 year holding period).

            Whatever one thinks about interest rates now, they are likely to be very different in 5 years.

          • Posted by Mr. Me Too

            You nailed it.

            I see further monopolization and consolidation of the market that will occur due to this. SF is such a tiny market compared to other global world cities. It would take but a few corporations or a couple Joe Billionaires to absorb this tiny inventory. What mom and pop LL won’t risk, corporation or Joe Billionaire will gladly take on. 5 years is nothing when you have deep pockets and are juggling thousands of units. At that level you can maintain the constant churn of the market while dictating prices. Prop G is a complete and utter sellout to the rich elite. Why else would they exempt properties with 30+ units? It’s completely absurd that you would hammer 2-30 units, but you let them (wealthiest 30+ units) slide. What kind of REGRESSIVE tax BS is that! Completely counter to what are acting like this proposition is doing.

  3. Posted by otherwise

    This statistic would be more meaningful if we new how many of these properties were being offered for sale after being owned for less than five years and if *that* is a significant increase from past years, since those are the properties that will be hit by Prop G.

    • Posted by Faceword

      The tax affects all multiunit owners because the pool of buyers is reduced. The buyer has to gamble that they won’t need to sell for any reason for 5 years. That is a pretty big gamble to take.

  4. Posted by SFCitizen

    If Prop G passes and doesn’t get thrown out after the lawsuit, I think I will sell my two unit building as a TIC. I’ve owned for over twenty years and it would give me a good feeling to have my one rent controlled unit removed from the RC pool. I’ve had it with this city’s anti-landlord rules.

    • Posted by parklife

      I feel the same. When my tenant leaves, I will sell the unit as a TIC rather than rent it out. The increasing number of anti-landlord legislation and propositions are going to drive out most small landlords over time and the available rentals will only be in larger buildings. Oddly enough, those are the same buildings exempted from Prop G.

      • Posted by HowToHelpPoor

        Why doesn’t the large apartment buildings evict their tenants and sell their units as TICs? It seems that it does not make financial sense to keep any rentals in SF.

        • Posted by NoeNeighbor

          ummm… did you just move here? Do you have any idea how hard it is to just evict tenants?

        • Posted by SFCitizen

          HTHP – If you define “large apartment building” as having more than 30 units then Prop. G would not apply. Prop. G is only supposed to apply to 2-30 unit buildings, but I don’t think it only applies to pre-1979 buildings (rent control).

      • Posted by NoeValleyJim

        It is much easier to deal with a tenant than a co-owner. Almost everyone I know who lives in a multi-unit building with co-owners has conflicts with them. Even in San Francisco, a landlord has more say over what happens in their building than a tenant.

        • Posted by EcceMorons

          Co-owners aren’t taking money out of your pocket each month.

          • Posted by abomb

            I’ve heard this sentiment repeatedly, and don’t quite understand it. Could you explain how having a tenant that pays you monthly rent “tak(es) money out of your pocket each month”?

          • Posted by san FronziScheme (formerly known as lol)


            When the rent a tenant pays is much less than market rent, the landlord is forced to take less rent than he could due to forced subsidy.

            This means the tenant gets more than what he pays for, and the landlords gets less than he what he provides for. You can sum it up to a tenant going into the landlord’s pocket.

            There’s also some extreme cases where rent doesn’t even cover the cost associated with the day-to-day management of a building. I have seen it quite a few times. When this happens the Ellis wolves will be circling the tenants foaming at the mouth, because there’s a lot of meat on those bones…

          • Posted by Jake

            by formerly-lol’s logic, when the market rate drops (recessions happen too), then all landlords who continue to collect above market rents because they are entitled to by their lease agreements are “going into” their tenant’s pocket and the tenant is getting less than they are paying for and the landlord is getting more than they provide.
            Instead of thinking of these as either good or bad deals and the timing as either opportune or unfortunate, we should really castigate whoever has the better end of the deal and condemn them as immoral.
            I’m going to enjoy having that conversation with my commercial landlord friends next recession.

          • Posted by parklife


            That’s not a similar situation. If the market rate for a tenants unit. Is less than he/she is paying then it is a simple task to ask the landlord for a rent reduction or move. There are no statutes preventing the tenant from exercising their rights nor is the city attempting to impose payments on the tenant for moving out.

            I think that that landlords would be more than happy to structure leases that are similar to commercial leases.

          • Posted by Jake

            Of course it is similar. Any party can ask for a change to an existing contract. Doesn’t mean they will get it.
            I’ve never tried to “move” while in the middle of a lease without negotiating a settlement, which may not be a “simple task”.
            I have signed and/or executed many commercial leases in SF, including a nice 40 pager that the landlord (a civil litigator) insisted on interpreting every phrase as advantageously as possible. That was years of fun.
            There are no statutes preventing any party from exercising their “rights”, otherwise the statute can be found unconstitutional and void as may happen with this Ellis tenant relocation law. Or are there some divine rights of property owners beyond the law?
            Bad as these laws are they don’t “force” people to buy rent-controlled properties or sign contracts and the overarching law has been around long enough for people to adapt to it and the political clown show surrounding or get out of the rent-controlled property business, which, according to the real estate agent flyers I get in the mail so often, is a simple task.

          • Posted by San FronziScheme

            Jake, and as parklife said, a residential tenant can decide to terminate his lease with a one-month notice if he wants to move to a cheaper place. A landlord who has a rent controlled tenant paying less than the current market rate cannot shop for a better tenant. These are facts pretty hard to dispute. The law is strongly skewed towards tenants and denying that would be disingenuous.

          • Posted by Jake

            If a tenant breaks a lease just to find a cheaper place to rent they remain obligated for the damages to the landlord of breaking the lease. They don’t have some magic ‘get out of lease for free’ card.
            The landlord is obligated to mitigate the damages and the costs to the tenant. Usually, they do this by shopping for a new tenant. In a strong market like SF has been, that shouldn’t take long and the costs may be covered by the security deposit, but there are plenty of places and times when a tenant is legally obligated for months of rent. I wouldn’t be surprised if there are collection agencies trying to hunt some of them down this very day.
            I’m not sure how to measure the skewness of a law, but if we have moved the conversation towards mathematics and away from moral umbrage, then I’m happy.

          • Posted by San FronziScheme

            Jake, nobody said he was breaking the lease, just that he decided to use his right to terminate it. A right that a landlord does not have.
            There’s the very small case of a tenant who will leave within the first year, and there are compensations for this in the rental agreement.
            But we are not talking about these in the case of rent controlled tenants who are paying less than market rate. A tenant can leave anytime he wants on a month-to-month portion of the lease, which is, for subsidized rent controlled tenant, almost 100% of the time.
            There is no equivalence. The tenant has more rights than a landlord in San Francisco.

          • Posted by Jake

            Both parties have conditions under which they can legally terminate the lease. The conditions differ with the roles, as do the consequences.
            A lease that begins as annual and converts to month-to-month would be a choice of the landlord. San Francisco Rent Ordinance §37.9(a)(5) provides that a tenant can be evicted if
            “The tenant, who had an oral or written agreement with the landlord which has terminated, has refused after written request or demand by the landlord to execute a written extension or renewal thereof for a further term of like duration and under such terms which are materially the same as in the previous agreement…”
            I don’t know how one measures the quantity of rights of either party or why you would even want to reduce all this complexity down to more/less, equal/not equal, etc.
            I don’t like the law and would very much like to see it (and prop 13) phased to something more rational, but to me the moralizing from both sides signals a lack of confidence in the merits and impedes compromise.

          • Posted by FormerAptBroker

            > Bad as these laws are they don’t “force” people to buy rent-controlled properties

            They just “force” many people to rent their units for thousands less per month…

          • Posted by Jake

            Nonsense. When someone decides to buy rent-controlled property they should understand how the laws affect the rent they can collect. They aren’t forced to become landlords and if they don’t like it they can get out of the business.

            I choose to grant them the respect that they are intelligent adults capable of making informed business decisions and living with the consequences, even if some of them whine and complain in ways that make others doubt it.

          • Posted by San FronziScheme

            There we go again with the “business decision”.

            Say someone buys property in 1978. One year later rent control laws come into effect. Then comes the extra layers of crap added by tenant advocates to keep the gravy train going. Some landlords react and get punished for doing so. Things become out of control and landlords want to give up, and get punished for it again.

            It’s not business by any measure. It’s politics.

          • Posted by Jake

            An aspect of every business is the laws that govern the business and the politics that determine the laws. No one is entitled to a permanent freeze on the laws affecting their business nor immune to changing politics.
            Leaving aside the immediate property tax cut that “someone buys property in 1978” in California received, they have had decades to unwind their position if they didn’t like the rent-control laws and politics.
            To sit on your real estate position for over 35 years certainly seems like a business decision to me or is there some political force that compels them to hold on despite the agonizing pain of rental income?

        • Posted by parklife


          As someone who has lived in both situations, I agree that co-owned buildings can be problematic and fraught with conflict. Doesn’t sound that different to many landlord/tenant situations.*

          * I have a good, (although way undermarket) tenant, however the majority of rentals on my block seem to be an unbending battle between angry landlords and angrier tenants.

    • Posted by NoeValleyJim

      A TIC is still subject to rent control if built before 1979. You might sell it to two owners, but if they ever decide to rent, the unit will be subject to rent control still.

      • Posted by EcceMorons

        No TIC owner in their right mind would ever rent out their TIC. If they need to move, they’ll sell it to another owner-occupant.

        Anything else is financial suicide.

        • Posted by san FronziScheme (formerly known as lol)

          It is not impossible but TIC owners will tread very lightly when it comes to renting. Since it is a sort of co-ownership only 1 OMI will prevent other TIC partners from doing their own OMI. Also mosy of the time your TIC partners have their say as to who you rent.

      • Posted by san FronziScheme (formerly known as lol)

        Yes but TICs are destined for owner occupancy. It is not imposed per se but few TIC owners would want to deal with the agravation of a rent controlled tenant.

      • Posted by SFCitizen

        NVJ – My plan was to sell both units in my building. I would be moving. Either to Colma (dead) or maybe Portland. I love roses. I just want to avoid the Prop. G tax and have the rental unit out of the rental pool. I would really like to live until the percentage of owner occupied properties in the City exceeds the percentage of tenants. I would really like to see the political landscape change here. I would like to think that my actions would help that along.

        • Posted by SFrentier

          But you’ve owned your 2u for 20 years. Prop g doesn’t apply to you. When your other unit becomes vacant, you could sell it off and do a quick condo conversion with the new owner. Guaranteed you are helping the rent/own ratio doing that! And, you get to stay in the city and fight the good fight against the Rent Control Industrial Complex ™.

          • Posted by Realestateguru

            what do u mean it doesn’t effect you? anyone who ones a multi-family unit can mark their building down by at least 10% since no one will pay pre Prop G market value due to the sales tax.

          • Posted by abomb

            Exactly. The proposition only applies to the seller who sells a multi-unit property (which was not their primary residence) within 5 years of original purchase. Prop G wouldn’t apply to you at all in this scenario, nor would it apply to the buyer of the property. Totally irrelevant.

  5. Posted by J

    Yeah, the first buyer of a “new” TIC is inherently an owner-occupant. But you’d be surprised how many of these owners eventually rent out their units, although most do remain owner-occupied. In addition to the socialist rent control and eviction laws, the condo conversion laws also penalize renting out TICs. Which of course is incredibly ironic because the socialists who run this city then claim we have a “housing crisis”. Which they created themselves…

  6. Posted by Jeff Schlarb

    Thank you editor for bringing up such an important topic. Here is what I think:

    1. well intended legislation. the Board of Supes who wrote this (who are they again?) are trying to put an end to tenant evictions and ellis acts. Understood, personally I agree there need to be some changes and solutions.
    2. This does not help anybody.
    a. Ices the whole real estate market until they figure out the lawsuit, diminishing inventory as sellers will have a lot of questions trying to figure out if they will be taxed, including SFR.
    b. When icing the inventory and sales, this hurts designers ( I am an interior designer ) architects, builders, painters, plumbers, electricians, lighting stores, furniture stores, restaurants, agents, mortgage brokers, socket site editors (thrown in to see if anybody is reading) escrow officers, appraisers, surveyors, engineers, historical consultants, soils experts, hospitality, etc.
    c. Lower inventory, no place to buy, forces newly minted tech buyers to return to renters pool vs. buyers pool and then there is more pressure on the diminished amount of rental units. More competition, prices rise, again for renters.
    d. Good luck trying buy a SFR, as this will be in short supply, developers will gobbling them up, as they are the only property that seems to have liquidity. Values go up, so if you Already own a Single Family Residence, you are winning. ( I own a SFR Whoo Hoo! not really )
    e. this type of law will further disincentivize landlords who are mom and pop, to consider renting out their extra units. Does anybody know the count on how many un-rented, rentable units there are. The ones that just sit idle, as so many fed up landlords tolerate no rent, vs. rents.

    Let’s just say that an individual just doesn’t care that this sweeps all investors and home owners with 2 units – 30 all into the same bucket as a few bad acts. Let’s just say that people don’t even care that most owners of multi-unit buildings bought because they scrimped, saved, sacrificed and invested in SF. And let’s just say that means nothing. Still, after knowing all of that is ‘okay’, there has got to be some self preservation, and a conclusion that says, ‘this is not good, this will have the reverse effect than intended.’ You can’t Tax an entire sector, retroactively, sincerely screw owners of real estate and expect good to net from this. Woowa weeeewa!

    There is a great debate to be had about how to solve this issue. Build more, change policies, stream line planning dept, etc. etc. But this is not the time to discuss this. This is time to defeat Prop G. I hope that this smattering of thoughts is in any way helpful for anybody who is on the fence. I am voting No on G, even as I think that is some ways I might win, I am voting because I don’t think that it is right, it is a whole lot of wrong.

    • Posted by San FronziScheme

      Higher market rents is a big win for me. Plus I will get past the 5 years of ownership in 11 months. Though I will not sell, I always enjoy the higher equity provided by the new idiotic restrictions.

      Yes to Higher Market Rents! Yes to Higher Equity! Yes on Prop G!


  7. Posted by Realestateguru

    Could not have said it betterJeff Schlarb. Prob G is a horrendous law that would actually hurt renters by incentivizing mult-unit owners to combine units to a single family homes, lower property taxes in by devaluing multi-family units, and disincentize multi-unit owners from investing in their buildings due to lower property values.

    • Posted by San FronziScheme

      Property values will not go down.

      1 – Among the pool of buyers there are some speculators, but overwhelmingly people who want to stay in their place. They will still shop for property. Instead of 5 bids you’ll get 4. Big deal.

      2 – Supply WILL BE affected, big time. Anyone who has bought in the past 4 years will hold off from selling, which will restrict the number places on the market for the next 5 years.

      My take: demand will still be strong, but supply will be more restricted. In such a tense environment things always tend to balance out, which means that prices could go up by 20-ish % on property affected by this law simply to make up for the new constraint.

      As a rule of thumb: any new law makes everything more expensive.

      • Posted by Realestateguru

        So is that why there is a 30% increase in the # of multi-family homes for sale now vs last year? Who is there right mind would pay the same market value and risk a 24to 10% tax if they have to sell within 5 years year?

        • Posted by San FronziScheme

          yes, there’s a temporary surge of property on the market. Then supply will flatline once this inventory is eaten through. It’s not rocket science. Speculators are cashing out before their property gets confiscated.

  8. Posted by Mr. Me Too

    In actual practice. LLs will simply tack on the cost of this tax (or even the threat of this tax) onto new Market rate tenants. A de facto tax on tenants, whether intended or not. Then there’s the means-ends test which this tax does not address whatsoever. If dissuading evictions is the goal, how does taking (stealing) money from a property owner advance this goal? The money isn’t earmarked towards this goal or anything for that matter. Just outright theft with zero accountability of its true impact which is further reduce supply, increase market rents, and to punish current and future property owners who are not to blame for the city’s problems. The true criminals have truly unveiled themselves this time and I think if Prop G passes the courts will see it this way.

  9. Posted by San FronziScheme

    Once again tenant advocates see owners/landlords as the enemy. They do not seem to grasp the concept that landlords are people too. You kick them, they kick back. You kick them harder, they kick harder. The current situation is totally ridiculous. Rents are ridiculous. Property values are ridiculous. The hatred from both part is at an extreme.

    Antagonism hasn’t worked. If anything it has backfired big time. Time to bury the hatchet and get rid of rent control.

  10. Posted by JustLooking

    My perspective. I don’t actually care about Prop. G. What I really want is a stable and consistent set of rules for the ownership of real estate in San Francisco. This allows me to make long-term investment plans and understand potential scenarios. What drives me (and I would guess others) crazy is that the city keeps changing the rules (“tilting the playing field”) to the advantage/disadvantage of certain groups.

    I agree with Mr. Me Too, property owners impacted by Prop. G will simply pass the costs onto tenants – unless our betters at city hall decide that certain costs are not allowed to be passed onto tenants and come up with some new mind bending legislation.

  11. Posted by Realestateguru

    So is that why there is a 30% increase in the # of multi-family homes for sale now vs last year? Who is there right mind would pay the same market value and risk a 24to 10% tax if they have to sell within 5 years year?

    • Posted by FormerAptBroker

      > Who is there right mind would pay the same market value and
      > risk a 24to 10% tax if they have to sell within 5 years year?

      The large number of investors who have NEVER sold a piece of real estate…

  12. Posted by JR "Bob" Dobbs

    A couple of thoughts.

    Landlords will not be able to just “pass on the costs to tenants.” The landlords will be able to charge as high as the market will bear and no more, and they are already charging that amount. If they could just “pass on the costs” they would increase the asking rents now. Econ 101.

    Also, people keep talking about a lawsuit. What would be the legal claim? I can’t think of one. This is plainly not a “taking” as 2 minutes of legal research will demonstrate. And we currently have a transfer tax, which is legal. This just increases it. There may be a claim out there, but I’ve not yet heard one. I would not count on the courts doing anything with this should it pass (and my bet is that it will).

  13. Posted by Realestateguru

    Its far from totally irrelvant. Everyone is missing the point. Regardless how long you own your mult-family building, the price you will eventually sell it for will be lower than the Pre Prop G because the buyer will have to take the risk he/she won’t have to sell it for 5 years.

  14. Posted by two beers

    Nobody’s property is getting confiscated, but thanks for the inflammatory alarmism.

    • Posted by Hola

      Just a quarter of the value…

    • Posted by San FronziScheme

      A tax on a profit is one thing, but a tax on VALUE is another thing. You can apply a tax proportional to a value when you have a valid justification (pay for the transfer paperwork, fund the school system, etc, …) but 20+% cannot find another justification but a punishing tax.

      San Franciscans are capitalist too. They’ll vote No on G.

  15. Posted by CB

    Good intentions in the service of inadequate ideas, that said this one may not really even be backed with good intentions. Why was this not better fleshed out so more of the board of supervisors could back? Why not just increase the transfer tax again? Or take this current proposal and limit to one year and carve out hardship issues? Why was it rushed through?

    I find the language used to promote this targeted to be as inflammatory as possible…. Being new to the city, I am amazed at the ratty looking 2-5 unit buildings even in the so called best neighborhoods, wonder why?…….

    A strong no to G

  16. Posted by Keep all units vacant

    As an owner of a 4-unit building, I have been keeping two of the units vacant for a year. I am so tired of the extreme views of the communists (Campos, Avalos, Kim, Mar). When my building is all vacant, I’ll sell the building as TICs. Many of my friends who own multi-units are doing the same thing. There are already many vacant units. There will be even more after prop G. Who in the right mind want to deal with the communists? Campos, Avalos, Kim and Mar are the Gang-of-Four in the Communist Party of San Francisco. They treat property owners as the enemy. They are hurting tenants with their extremely stupid ideas. God help us all.

    • Posted by BetterSF

      You can just do an Ellis eviction and convert to TIC. TIC is a great utilization of the property in the current regulation scheme.

  17. Posted by Hitman

    @Keep all units vacant – I’m doing the same thing

    Today Judge Breyer overturned the Ellis payment legislation put forth by the communist block you refer to. Ellis payments are again back to low levels. It is time to decimate the rental stock of SF. We landlords must organize as well as the Comrades. We must break the system in order to fix it!

  18. Posted by sanfranciscotax

    Vote No on G. Nothing but a property grab by the communists Compost, Avalos & Mar. Taxation of the entire value of property, not accounting for cost/basis, is unconstitutional. All the communists want to do is tap into the 1031 exchange traffic and get a piece of the action. Sec. 1102(d) is not clear how 2+ units defined, it includes weasel language “intended”, so what does that mean, it can mean anything. Sec. 1105(d) adds communist power grab language to authorize the Board of Supervisors to enact ordinances, without further voter approval, you never want any language like that because they will later distort and argue that since voters approved language in one section that they meant approval for other sections also. The exemptions are weak for property owners, it is virtually impossible to sell a property within a year of a death of an owner, even if property titled to avoid probate. There are many other reasons to title property as Corp/LLC/Trust, not just to enable 1031 exchange, but for asset protection. The communists can’t stand that individuals can create other entities to shield them from overreaching governments. And why should survivor have to sell within a year to have exemption. And why is Board of Stupidvisors focused on 2 to 30 units. Why are large property owners exempted. The individual should have the opportunity to invest and grow without the communists determining what is fair. Reminds me of the SFUSD parcel tax. So 555 California Street worth 1B+ pays $300 parcel tax, same as an owner of a $1M property. Well, the regressives are going to try to push this through but I think SF voters will take it down and even if it passes it will be held unconstitutional. Vote No on G.

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