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Not everyone is panicking as technology companies leave San Francisco or lay off workers, big stores shutter and a hobbled downtown threatens to drag the city into economic crisis.
Some hope the decline will lower the cost of housing so they and others can afford to move to the city — or avoid having to leave — after persistently high prices pushed or kept them out for years, or had them barely making the rent. That could also help restaurants and other working-class employers replenish their ranks, following a mass exodus during the pandemic.
“Rents haven’t gone down enough for crucial low-wage health care workers,para-educators in the public schools, hotel workers, janitors, who are having a hard time coming back to the city,” said Sarah “Fred” Sherburn-Zimmer, executive director of the Housing Rights Committee of San Francisco. She added that some people earning slightly more, at nonprofits and schools, have been able to move to the city.
In scattered conversations across social media, people wish for lower rents and hope that a “doom loop” could deliver them.
“Can someone explain to me why the ‘doom loop’ will be bad for those of us who want to stay here indefinitely regardless?” said someone with the usernamemy_life_has_value on internet forum Reddit.
“I feel like I’m missing something, but if remote workers don’t return and major chunks of the city remain more or less empty, how will that not decrease rents?” this person said. “I’m actively looking to move to the East Bay or elsewhere solely for cost of living reasons, but I would love to stay if I could, the rest of it be damned.”
A doom loop is a self-reinforcing economic downturn, characterized in San Francisco by downtown office buildings that emptied during the pandemic and remain so due to remote work, leading to the real estate depreciating in value, tanking tax revenue for City Hall and thinning public services until residents and businesses leave, further shrinking the tax base. Mayor London Breed’s office insists the city is not in a doom loop, but a string of store closings and falling real-estate valuations continue.
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San Francisco’s high cost of living can be a barrier to hiring enough people in these and other crucial fields, such as teachers, emergency-services workers, child care providers and even police. Numerous city departments also face staffing shortfalls.
“When there aren’t enough workers to perform these essential jobs, the city doesn’t function as well,” said Issi Romem, former chief economist at real estate listing site Trulia and founder of research firm MetroSight.
Across all city departments, total vacancies are equal to 4,259 positions, or about 12% of full-time staff, according to data from the city’s Department of Human Resources. Some have greater vacancy levels, like the Port of San Francisco, at 27%, and the Department of Homelessness and Supportive Housing, at about 24%.
Reddit user intrepid-puddle wrote they had just moved back to the city and hoped they could afford to stay.
“Myself and nearly everyone I know lost our rental housing between 2013-19 (evicted one way or another when our buildings were sold to be rented at higher rates),” the poster wrote.
Others suspected the doom loop might usher in a cultural and demographic shift.
“People wanted tech out and to reverse gentrification. It seems like this doom loop would deliver that,” wrote user krad-31337. “If things get bad enough, more and more of the wealthy will leave.”
Rents in San Francisco have generally risen since the mid-1990s as the city became a global technology hub, though the burst of thedot-com bubble in the early 2000s and later small shocks temporarily interrupted climbing prices, according to Patrick Carlisle, chief market analyst for the San Francisco branch of real estate firm Compass. COVID-19 dealt a blow reminiscent of the dot-com crash, cutting average asking rents about 25% in 2020, according to Compass’ analysis. The most severe drops were probably in the relatively new apartment buildings along Market Street in the downtown area, Carlisle said.
But rents have crept back up, and stand now at only about 13 percent below levels for two-bedroom apartments just before the pandemic hit, and 16 percent below the peak in mid-2019, according to estimates from listings site Apartment List. That drop isn’t enough to enable many lower earners to afford housing. As of April, two-bedroom apartments rented for an average of about $2,550 per month, Apartment List data show, while currently on Craigslist the average listing is about $3,900. To comfortably afford a two-bedroom flat that rented for the average of those two prices, a household would need to earn at least about $129,000, the equivalent of about $62 per hour, according to federal affordability guidelines.
That’s far more than the median hourly wage of $17.05 for restaurant servers in the San Francisco metropolitan area, which includes Oakland and Hayward, according to the latest data from the U.S. Bureau of Labor Statistics; it’s $17.21 for bartenders; $19.29 for janitors; $20.41 for cooks. People in other important professions also struggle to live in the city, such as preschool teachers, with a median income of $21.66, and school bus drivers, at $28.18 per hour. Firefighters are more secure, earning a median income of $48.47 per hour, while police patrol officers earn $60.38.
At current levels, lower rents are more a benefit to those who can already afford to live in the city, but who might be able to move to larger or better quarters, or simply save money.
Still, rents could fall again if the city’s economy continues to slide.
“We’re seeing tons and tons of residential vacancies across the city,” saidSherburn-Zimmer of the Housing Rights Committee, and reduced demand would push prices down over time. With more units empty, current tenants will have leverage to negotiate rent levels with their landlords, she said. In one case, a tenant association is trying to negotiate with corporate landlord Veritas over rent increases, Sherburn-Zimmer said.
For AliciaSandoval, born and raised in the Mission District, the pandemic lowered rents just enough that she could return after being priced out for a decade.
A 2010 job loss leftSandoval unable to cover her San Francisco rent, so she moved in with friends and then got her own place in the less expensive Concord area, far from her community. In 2016 she started work as a tenant counselor at the Housing Rights Committee of San Francisco, when in-office work was still the norm, requiring an exhausting two-hour commute each way. But in late 2021 she scored an apartment in the Mission, slicing her commute time and putting her once again near family.
She recalled the first time her parents visited her new home.
“They’re elderly so they’d never been over to where I used to live in Contra Costa,”Sandoval said. “So making them dinner, inviting them over to my place, that’s priceless.”
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