The three-story building which Blondie’s Bar currently occupies at 540 Valencia Street in the Mission is on the market and listed for $2.1 million.
In addition to the ground-floor bar space for which Blondie’s is currently paying $6,363 per month in rent, the term for which has not been disclosed, the building includes a three-bedroom, two bath apartment on each of the two floors above.
One of the sellers, who appears to have inherited the building, currently occupies the 1,750-square-foot unit on the third floor. The second floor three-bedroom apartment is currently rented for $1,200 per month.
And as noted in the offering memorandum which alludes to upside potential, the site is zoned for development up to 55 feet in height.
Good god, a three bed two bath apartment at this location for $1200. Rent control needs to go.
So unfair! Not like the other resident, who presumably worked hard to get the building via inheritance.
that’s irrelevant. even if someone inherited the building it doesn’t change the fact that rent control needs to be revised.
Certainly no “fact” involved there, rent control is fine the way it is.
Sam, I agree with you.
Rent control is a nightmare for SF locals and family formation.
Why?
1 – Because it randomly benefits one part of the population and penalizes another?
2 – Because it doesn’t care how much you make?
3 – Because it prevents normal working families from ever moving into SF?
4 – Because you benefit from rent control and are just selfish?
/rant
Actually I moved away from SF and live in Temescal now. However I’ll say two things, first is that it’s one of the things keeping interesting people in SF at this point, and second it’s good for families. It allows for broader economic diversity in the city, which is good.
Given the boom/bust nature of this city, rent control allows for lower to even upper middle class families to stay in their homes during the booms. I’m sure there would have been plenty of families forced to relocate during the boom of the 90s, and again during the boom now. That’s bad for the kids, and bad for the city.
I have no sympathy for property owners, you knew about rent control and rented anyway. Don’t want to rent in this city? Ok, that’s A-OK with me.
Interesting people? Per what standards? Based on what? There are people more interesting than others?
And about “broader economic diversity” how about the fact that this city is now either a city of older protected tenants or rich newcomers. Someone from the Middle Class (per general US standards) cannot ever move into SF today and have a family. Is that your definition of diversity? And you’re talking about kids? What kids? The more I look around, the more I see kids from wealthy families and less middle class who just skip SF because long timers decided to not move on with their lives.
Rent control is one more nail in the coffin of the Middle Class in SF.
Absolutely no sympathy for landlord. They knew about rent control and they should never have rented. Dumb fool!
Yet for one tenant you need one landlord. People buying rent-controlled buildings today all have an exit strategy, like buy-out, OMI or Ellis. A few will be lucky enough to have a tenant-free building but this is harder to achieve. The rent control system is forcing people to behave like heartless wolves.
Definitely, just like everything that benefits people for longevity rather than merit is a total positive.
anon, you know how people achieve longevity in the good old US of A? Home ownership! Go look it up!
But transforming a transitory means of housing into a permanent government-sanctioned situation is a perversion of the system. Cheap housing is made mandatory due to an arcane system with no connection with the reality of what a rental is.
I forgot, it is mandated on one side only: the landlord. The tenant can leave anytime he wants! This means that laws de-facto declare that the enemy is the landlord, and that the tenant is part of a protected species.
There’s no “positive” in this aside from the pocketbook of the lucky winners of the rent control game.
SFS, I was being facetious. Thought that was obvious.
There is absolutely no way ending rent control makes rents across the board more affordable in a production-constrained market like San Francisco. All ending rent control does is remove lower-income tenants and replace them with higher income tenants.
This is exactly what happened in Boston and Cambridge 20 years ago when a state-wide referendum ended rent control in Massachusetts, which at the time only existed in 3 cities – Boston, Cambridge and Brookline (an inner ring suburb surrounded by Boston, kinda like Piedmont in Oakland). Boston & Cambridge have the same issues as the Bay Area with extremely restrictive zoning systems and multiple veto points for the general public to squash real estate development.
All that happened after rent control ended in Massachusetts is owners of former rent control properties kicked their old tenants onto the street, putting in fancier new interiors and re-rented to wealthier tenants, with average rents in Boston/Cambridge being higher after rent control than before.
The property squatting, rentier class is the last social class we should be concerned about benefiting.
You mean $1200 total and not $1200 per person?!?!??! $1200 per person would still be insane for this area!
Not if you have to live above Blondie’s.
at least in its current form, it does need to die.
3 small changes will greatly improve.
bump the increase to CPI level instead of 60% of CPI. the fact that it cant be increased by inflation levels is absurd
means test it:
no household making over $100K should qualify.
no household with over $500K in assets should qualify
Do we create a new agency to monitor this new program?
yes, socketsite income review committee
LOL
As opposed to the “Fuzzy Logic Randomized Rent Control Subsidy of I Was Here First And No We Will Not Help You Filthy Capitalist” committee of today.
This should be a unique subsidy system. Having one rent controlled tenant paying 1000 and the next 2000 for no reason other than good timing is totally unjustified. Let them pay market rate and have them ask for rental assistance from a new taxpayer-fed fund.
Renters in SF want cheap rent? Let’s spread the effort!
You are completely right. I won’t event mind if all landlord have to pay certain percentage of their rent to fund the rent assistance. The cost should be spread city wide instead of whoever stuck with a long time tenant. It also remove the incentive to evict long term tenant with they are all paying market rent.
Speak for yourself, Wai. I am not paying any percentage of the rents to fund rental assistance w/o a corresponding increase in my tenant’s rent.
@Amewsed, politics will not give my idea any chance. Much like politics will not allow any material change to current rent control law.
Well, there are several parameters to that (we’re in the case where rent control is phased out):
– If you’re collecting market rent today, your rent collected would decrease anyway because of the quick price discovery. Not everyone can afford 4500 for a 2BR and market prices would have to go probably 20 to 30% for all units to be filled.
– If you are NOT collecting market rent, then you would have everything to gain. Your rent would probably increase, and some of it would go to fund rental assistance.
I for one do not favor a tax on rent to fund subsidies, but a tax on income. since there is little that can be done to get a real tax on income at the county level, the next best thing would be a combination of sales tax and business tax.
What matters is that the pain should be shared, so that voters can feel directly involved in their own choices. You vote for a subsidy, you pay for it!
I agree about the limit should match CPI. The way it is the city legislation set the real rent to decrease over time. If the CPI is 10% over a period of time, rent can be raised by 6%, which means it decrease by 3.6% in real term, which is absurd.
Yes, but sen if we are at 100% it is far from enough since SF in the past 30 years has been transformed not the major tech hub that it is today. Even with 100% CPI this 3BR would have been in the range of 1600-1800 today, instead of the current market value which should be north of 5000.
Maybe not enough. But this is a no brainer thing that should be fixed. Everytime a landlord raise the rent, they should feel bad for losing out even more. When a tenant get a note of rent increase, they should laugh at it because their rent has been decreased in real term. The best outcome of landlord is for CPI to remain at 0 so that they never have to raise the nominal rent.
agree that it is not ideal, but it is at least an incremental improvement that could probably pass without a ton of pushback. less than inflation is just absurd
Since we’re in a quasi-deflation environment, that’s a low risk proposition to say the least…
Many buildings I have lived in SF there has been seniors on social security. The last place was in Noe Valley and it was two brothers in a three bedroom with a formal dinning room. They must pay nothing as they got subsidized meals delivered to them. But I had no issue with them. The issue was the couple who also paid nothing where one partner had a 14K pension (that he bragged about) and the other owned a small consulting business. They owned houses elsewhere and an extra bedroom while my family of 4 had to squeeze into a tiny 1.5 bedroom place. San Francisco rent control kills family formation
Yes, there are so many family-sized units in SF and yet so few actual families in them.
The trend to fewer families was going on in SF long before rent control. Rent control is helping preserve families in the Mission. I’ve posted some of the stats for that neighborhood. The numbers are striking.
For SF in general, the percentage of the population that is under 5-years-old is the same now as when rent control started 30+ years ago.
The decline in the population of SF school age kids has been going on since the 1960s and was steepest in the 1970s. Rent control did not accelerate that trend at all.
You’re forgetting to mention that the 60s and 70s saw the flight to the suburbs. Families left in droves to live in cleaner more safe areas. This greatly pollutes the data.
For the past 1 or 2 decades we are actually witnessing the opposite trend in some socio-economical circles, mostly middle class. People want access to culture, nightlife. They do not see adulthood as the recognition that they have to live entirely for their kids. Now many cities are seeing middle class families coming back to their downtowns. But in SF the only ones who can actually do that are the upper middle class to upper class.
It doesn’t “pollute the data” at all. It actually supports the conclusion that rent control has not and does not impede family formation in SF.
For most US cities the ‘flight’ continued into the 1980s. Reagan’s policies and massive funding changes damaged cities and encouraged suburban growth.
Before rent control SF had been losing families with kids at a rate of about one thousand a year for two decades. Since rent control the number has about stabilized.
Aside from the massive suburban sprawl in the east and south bay in the past 50+ years, the dominant demographic change in the Bay Area since 1960 is that half of the population growth has been foreign born. Back in 1960 only 10% of the population was foreign and now it is 30+% (total population doubled, so 10% in 1960 + 50% of growth is ~30% now).
In SF the foreign born account for more than 100% of the growth. Specifically, in SF now there are fewer native born than in 1960 and more than twice as many foreign born.
The US has changed immigration policies many times since the 1960s to allow more people in, both more people from more countries (got rid of some racist quotas) and expanded programs for immigrants with various knowledge/skills. I think the changes are mostly beneficial, but they unquestionably have had a dramatic impact on SF and the Bay Area, and more here than in most US metro areas.
In the Mission specifically, the population has declined as families with children are priced out and replaced by young adults with higher incomes and no children.
All the evidence shows that rent control helps to keep rent prices lower than they would be otherwise. All the evidence, though not all the anecdotes and all the handwaving and moaning.
Rent control keeps rent prices lower? It makes market rent prices much much higher. It is extremely difficult for families to form in SF because of rent control unless you want to live in your mom’s basement with your wife and kids or stay in that one bedroom you rented when you were 20.
Is there a single mainstream economist in the world that thinks rent control of rental housing is a net benefit to society?
White flight was a time when there was less demand for SF housing so the effects of rent control were neutered and close irrelevant.
Yes there was a flight to the suburbs, but we should have witnessed a massive move back since the 90s. But we’ve not because the people who moved in when SF was cheaper are likely to stay here.
About your Mission example, yes the newcomers are wealthier, since rents have become so expensive. But this is as much a result of constrained supply as it is the consequence of the economical forces. A 4500/m 2BR would cost 3000 or 3500 without rent control tenants hogging places for dirty cheap.
Not to mention landlords would rather choose a single person or roommates than a small family for an apartment. The chances a family will stay much longer are greater especially now that the court had ruled that children not party to a rental contract can inherit a lease.
I appreciate you stats usually but find them pretty pointless in this argument.
rent control may not have then because families did not want to live in SF but it is certainly doing so now that tastes have changed.
It is a fact that rent control results in big time space hoarding by those who otherwise would not. It is a fact that rent control results in prices for market rate housing which are much higher. It is a fact that when you have kids you need more space. And it is a fact that more people now with kids desire to live in the dense family friendly parts of SF more than before.
In a more normal market as our family grew we would have just rented a new place but in the current SF for most people you are now stuck in the apartment that you have rent controlled because the incentives are so perverse. So we paid 50% market as long as we could stand it and then when the second one came we had to go and moved.
Zig, you are mistaking the effects of rent control on some individual properties and some individuals with how it affects the market at the neighborhood and city level. You are missing the forest for the trees.
Just imagine the tenderloin or mission without rent control. There would be a huge turnover in the population as poorer people would be priced out and replaced by richer people. A higher income population would support higher commercial rents and investments to improve property to appeal to a wealthier population. The entire neighborhood would become more expensive, including the previously non-rent controlled properties (Valencia St for example or my neighborhood South Park). This is what happened in Boston/Cambridge when they removed rent control.
I have linked to the economic studies that found rent control depresses investment in properties of all kinds in the areas around them. Remove rent control and you will see billions invested in fixing up and raising the rents and sales prices for residential and commercial property. Everyone can collect higher rents and prices (rising tide…), not just the previous rent control properties. Whole neighborhoods bear the cost, not just the specific rent control properties. And the city foregoes the extra taxes that would be collected by having more expensive property and higher income residents. Regardless of the merits of the policy, the costs are community-wide, though like any other costs some pay more even as all pay some.
Anyone that thinks rent control increases the market price simply doesn’t know the actual facts drawn from the evidence of real world experience. Rent control has many pernicious effects, including depressing market values and prices.
Yes people would invest and improve the city. Is that a bad thing? Isn’t this how SF has always functioned?
All those buildings we are enjoying today were built to collect as much rent as possible for the investment. People wiped out entire neighborhoods of shacks and built what was very decent quality at the time. It’s hypocritical to say to our youth today: Sorry, we’re not going to build more housing for you, even though our elders did this very thing for us, and the reason is that we do not want to change the way we live.
I am not sure MARKET rents would really increase, even with an improvement in quality. After all there’s a limit in the supply of people ready to pay 5K for rent. AVERAGE rents will go up, there’s no doubt about it. But MARKET? I don’t think so. This is not Cambridge, MS.
SF has a long, ugly, and repeated history of displacing one group for the economic gain of another. Unless you want to dredge all that up and have it dumped on you, you might want to avoid giving “wiped out entire neighborhoods” history lessons. Not a winner in this town.
As for our youth, well, thousands of the youth of SF live in rent controlled property which their parents couldn’t afford at current market rate.
When you are ready to explain how SF would handle the tens of thousands that would be displaced by eliminating rent control, then maybe this will be worth trying to convince you of the economics.
And no, this isn’t Cambridge, MS (which doesn’t exist, btw). More importantly, California and SF aren’t going to eliminate rent control anytime soon. The lessons of Cambridge, MA are instructive.
If the Cambridge example is instructive where are these depressed market rate apartments in predominately rent controlled areas like the North Mission and Noe Valley because when my family wanted to move we could not find a decent apartment for a family for less than 4k.
You seem to be confusing pricing with availability. Those apts were there, but already leased out to other people. Who knows, maybe rented to some to the 510,000 H1Bs in the USA today that weren’t here when you were a kid in SF. Today and probably for some time, there have been very few apts vacant and available to rent in that area at any price.
As I mentioned above, rent control depresses prices for all property, both old and new. That reduces the potential ROI for developers which over time means less supply and thus less availability.
If SF went all out and eliminated rent control and also increased the zoning height in that area, then developers would certainly build more units. But they wouldn’t do it in a way to drive down the prices, not unless they screwed up and misread the market, which is what they did when the dotcom bust left them with many newly built lofts. Asking rents dropped 25% within a couple years and developers stopped building until prices went back up, even though there was plenty of land and idle construction workers available. The entire Mission Bay project south of the creek sat idle for decades until the developers thought they could profit enough. So, there will be swings, but the market overall and over time (5-10 years in a healthy economy like SF tends to have) will have lower prices and less inventory because of rent control.
If it seems like some paradox that SF can have both lower prices and less inventory, then just remember that within a 30-50 minute commute of the SF CBD there are a couple million housing units to choose from. If SF doesn’t provide the housing, then people can live elsewhere.
Anyway, thanks for the example of how to misunderstand the market forest because of your personal anecdotal tree.
“Just imagine the tenderloin or mission without rent control. There would be a huge turnover in the population as poorer people would be priced out and replaced by richer people.”
equating the two neighborhoods is odd, one. Secondly, one could argue that rent control in the Mission is precisely one of the factors that has augmented its desirability all along, as it has fostered a unique culture.
Funny, “people can live elsewhere” is exactly what rent control detractors say. At least everyone agrees on that.
So….in short, rent control is Obamacare. (And not just because I could see Ted Cruz adding “imagine the tenderloin or mission without rent control” to his announcement speech.)
Both solve a small set of market failures, both are sweeping enough to inevitably have press-worthy unintended consequences, and discussion of either inevitably gets tripped up on the “and replace it with what?” question — at least in that the detractors for both are stuck daydreaming politically impossible alternatives.
Jake, would you mind linking to some of these macro analyses you keep referring to in your apologies? It might be helpful to post those instead of cranking out hundreds of words simply claiming that the studies exist and argue with the handful of people who seem to be familiar with them.
Jake, those research was studying the first period when self-sufficient people move out of the rent controlled neighborhood to escape the rising crime. However, tide has turned now and urban living is now becoming desirable. During this phase of urban renaissance, the come-back of self-sufficient people was forced to bear the higher cost caused by rent control.
So people are correct to assert that rent control has increased market price for both market rate rental and market rate for sale prices.
Most of the research has certain assumptions, often times implicit.
arbb, “or” is not “equals” and I did not mean it to be. FWIW, we could just as easily imagine what would happen to North Beach if rent control were eliminated and it was rezoned to allow buildings the height of South Beach and the objections of the THD were ignored.
You are welcome to argue all you want about mystical formulae that make a neighborhood desirable. Folks in the Mission have been making those arguments as part of their resistance to various redevelopment schemes since the 1960s. However much you or I or they value unique neighborhood culture, I’m confident the investor and developer spreadsheets have bottom lines in greenbacks.
kbbl, the best study to start with is “Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts” by Autor, Palmer, and Pathak. If you google that you can find a few versions of their academic paper as well as links to most of the related literature and some blog level interpretations by other economists. There are also separate studies of Boston, but this is the best.
For people that don’t want to plow through all that, there is a brief summary version that touches the main points relevant to SF.
And for people that don’t want to bother with even that, here is the conclusion from the summary:
“we estimate that the total impact of rent-control removal on the value of Cambridge’s housing stock was quantitatively large, contributing $2 billion to the $7.7 billion that Cambridge residential property appreciated in the decade between 1994 and 2004. Of this total effect, only $300 million was attributable to the direct effect of decontrol on formerly controlled units, while $1.7 billion was due to the indirect effect. The majority of this indirect effect ($1.1 of $1.7 billion) in turn stems from the differential appreciation of never-controlled units. In net, our estimates imply that more than half (55 percent) of the capitalized cost of rent control was borne by owners of never-controlled properties, illustrating both the importance of spillovers in housing markets and the potential unintended side effects of price ceilings.”
BSF, I’m not quite sure what you are saying. You seem not to have read the studies or else not understood them. Whatever, the study I linked to above is solid and even conservative in it’s assumptions. No amount of incoherent handwaving is going to undermine their conclusions.
FTR, Boston was booming in the 1980s. I spent plenty of time there then and witnessed the gentrification of Back Bay and some other hoods long before the end of rent control. Some may recall Dukakis ran on the “Massachusetts Miracle” in 1988. And when has Cambridge ever been undesirable?
Rent control should only be based on income AND disability/ age restrictions. A 30 year old pot smoker should not be having his rent subsidized by the rest of the city.
Rent control has destroyed SF, Oakland and Berkeley. It destroyed rent controlled tenants. The rent controlled tenants have lost the motivation and mobility, especially for the low and middle income tenants. It is like a prison made of candy, tastes good but it is still a prison.
its directly above a popular noisy bar. i would say $1200. is the most they could get.
lol
someone hasn’t priced apartments lately. They could get $4-5k easy for an apartment this big at this location, even if it was above a smelly factory tossing off 12o decibel sounds 24 hours a day.
i am well aware of the inflated market. but unless you work swing shift….. there is NO way anyone would be willing to pay market rent and be disrupted by that kind of noise for 8 hrs every night.
you’re completely wrong. many would.
this would easily go for $5,000 to $6,000 per month. It is in the middle of everything and many people like that. There are 3 bdr apartments going for over $5K in the inner richmond where I live, and its nowhere near as popular.
Good lord, the cluelessness. Do you have any places to rent? I’d love to rent something from you for 25% of the market value.
Iconic??
Ah…It’s a bar.
yes, Blondie’s is iconic for that area. no doubt about it.
blondies was great in the 90s. after that, it has kinda suckked.
Futurist beat me to it. All these comments about rent control, and all I can think of is “Iconic? What have you been smoking?”
it opened far before it was the ‘coolest’ hood in sf. it was an anchor establishment in the early 90’s when there wasn’t much but crackheads and pimps on Valencia st. so, yeah, i would say it’s pretty iconic.
Well, it was pioneering and it has persevered. Pretty good criteria for “iconic.”
In the late 90’s I went there, Skylark and the Albion but it had a largely non white and/or suburban crowd by the early 2000s
All of this redevelopment starts to get a little sad when lived-in buildings get tore down for another 10 feet of height—and especially when it houses something currently operating well.
There are plenty of vacant lots across this neighborhood, and throughout the city, that need to be built on before we start going after spots like this and those alike.
you’re jumping the gun juuuuuuuuuust a little bit, aren’t you? put away your handkerchief
I’m not crying about it, in anyway. I just don’t believe that this sort (potential) development is the best. Maybe incremental… at best.
Is it really worth tearing down a 3 story building, to displace a business, two units (with probably 9 people) for another floor / maybe an additional 2 units? Seems like a waste.
Aside for the probable increase in square footage, a few things come to mind: a garage, better insulation, seismic resistance, fire resistance, a space more adapted to people’s lifestyles, and in general a principle that says that people should be able whatever they want to do if the laws allow them.
Myself, I would not touch anything. But that’s just me. The problem with the current situation is that the ROI of any investor will be too small for the capital involved. Therefore the game will be a simple formula:
$ prior construction + $ cost of rebuilding + $ profit = $ resale price of new quality building
you don’t know what you’re talking about at all, starting with the garage space thing, and then going on
Unless you seriously think that whoever buys this place isn’t going to explore options to rebuild… let alone clear the building out? I guess that could be an option… touché on that behalf.
there are zoning laws and just b/c you WANT to tear down and rebuild higher, does not mean you are able. this is zoned for 1 commercial and 2 residential. period.
and before it was zoned that way it wasn’t zoned that way, get it? Zoning laws can be changed with the stroke of a pen, and that’s what he’s advocating, just the same as you’re advocating not changing them.
It’s incredibly hard to get permits that require demo of even vacant rent control housing. Unless the place burns to the ground.
Where do you find this marketing material? Whos the agent?
Link to marketing statement.
Thanks for the materials. I was looking more at the map where all the hip eateries are — now I know and where I should park before walking.
People mentions “the rich” too liberally imho. Self-sufficient people should not be labeled as “the rich”. There is nothing to be ashamed to be self-sufficient and pay the market rent with one’s own hard earned income.
Sure, nothing to be ashamed of. That doesn’t mean that you’re not rich though.
what is the definition of rich in SF?
Dunno, whatever you want it to be. For me, I’d say someone with more income and/or assets than 95% of the population of whatever jurisdiction being discussed. “Rich” is a relative term.