Anecdotally most of us have understood for years that the San Francisco luxury condo market is attracting buyers from afar in search of second or third homes or pied-a-terres, much like the Manhattan condo market. This phenomenon is newer for S.F., however, relatively speaking, and it forms a core piece of the progressive argument against Mayor Ed Lee's supply-and-demand solution for the city's housing crisis. Now, 48Hills has done the property-records legwork and has the data to show for it: On average, 39 percent of condos built since 2000 have absentee owners, and for newer buildings like One Rincon Hill, that number is 50 percent or above.
48Hills found in property records that, unsurprisingly, high-end spots like the Four Seasons residences (765 Market Street) and the St. Regis (188 Minna Street) had upwards of 60 percent absentee ownership something which makes sense when you consider the fact that the developers were building concierge-served penthouses on top of luxury hotels that would be attractive to out-of-towners. The Millennium Tower with its 426 units has 213 absentee owners, or exactly half. They also note that a few of these properties with views can be spotted regularly on Airbnb and VRBO, renting for crazy amounts like $6,905 a night.
But what does this mean for San Francisco's ongoing housing shortage and the mayor's ballot initiative to set a 33 percent goal for affordable housing? Well, it fuels the fury over the notion that the only housing getting built is not serving the needs of the existing San Francisco middle class. The left has been arguing for years that these high-end units are getting snapped up by wealthy tech elites moving up here from the Peninsula or other cities, and the remainder of them being bought by well off empty-nesters from the North and South Bay who want to spend more time in the city, and jet-set investors who spend the majority of their time elsewhere.
The difficult piece of this argument is that for the vast majority of real-estate markets in the U.S., including popular resort areas that draw second-home buyers, the law of supply and demand is readily evident to the people who sell real estate. The market fluctuates, prices are kept in check by a finite amount of demand. But for places like Manhattan and San Francisco which are both thriving business centers and desirable playgrounds for the wealthy, not to mention desirable hangouts for rich people from abroad, there is always going to be a complicated layer added to the supply-and-demand theory that forces prices up and keeps demand strong via outside sources. There is no question that the middle class in San Francisco (defined here, basically, as people who make less than $150,000 but more than $60,000 a year) is left with few options except to rent, buy fixer-uppers, or to wait for the promised "middle-income" housing that Mayor Lee has given much lip-service to in the last six months.
Perhaps you should, in fact, be more angry when developers try to skirt what minimal affordable-housing requirements we have now.
And you can take the 48Hills data as you will either to fuel your outrage or to inform your pragmatic view on the ongoing, economic- and population-booming roller coaster we're on. And keep these figures in your back pocket the next time this topic comes up in conversation, which it probably will at least two more times this week, assuming you leave the house much.
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